Manila Bulletin, Philippines
By BERNIE C. MAGKILAT
A strategic plan for the rehabilitation of the domestic garment industry has called for the industry to piggy back on the country’s booming business processing sector by providing a special set of incentives to attract the huge foreign garment and textile manufacturers to put up their back office support operations here to support their own manufacturing processes.
The plan, adopted from the Macau model, was crafted by the industry led by the Confederation of Garment Exporters of the Philippines (CONGEP). The concept paper was submitted to the Department of Trade and Industry for review.
CONGEP is headed by Donald Dee as Chairman and Lawrence delos Santos, as President.
Under the Macau model, creation of an incentives program specifically for the BPO firms of big garment and textile companies that would locate in the so-called Qualified Business Processing Zone is the key attraction.
Incentives under the Macau plan include exempting BPOs from corporate income taxes, individual income tax for expatriates and other tax-related perks.
There are also minimum requirements imposed by the Macau government under the plan, of which the Philippine government can also imposed, similar to those imposed on existing BPOs in the country such as minimum amount of investments, employment generation, and additional incentives to spin-off operations with additional employment.
The industry said that this scheme has successfully worked for Macau.
Major garment manufacturing companies in China have used the Macau incentive plan to house the various support activities through the setting-up of offshore companies in Macau that basically allow administrative, support and intermediary functions such as auditing, accounting, invoicing, intermediary services such as logistical support design and IT services.
The industry has also noted the urgency of this program because the Macau incentive plan is due to expire this year.
“The implementation of this plan would provide an opportunity for the Philippines to entice major buyers and garment manufacturing companies in China to move their BPO offshore services to the Philippines,” the concept paper said.
CONGEP has also urged the government to test run the feasibility study in a governmentowned economic zone.
The industry further said that its earlier proposal for the creation of a Qualified Garment and Textile City could be an offshoot of the core program of the “Qualified Business Processing Zone for BPOs”.
In the immediate term, CONGEP said the industry needs reprieve from the escalating costs of power, water and labor.
The industry has also pushed its proposal for the creation of a permanent committee dedicated to the garments and textile industry.
“The proper interventions defined in this paper cannot at all materialize without the full support of government,” CONGEP said.
The Garment and Textile Exports Board, which administered quota allocation, was abolished along with the abolition of the quota system and the industry has been lumped along other industries under DTI’s supervision.
The industry has lost its luster as more companies have decided to close shops and put up operations in more cost efficient countries such as Vietnam, China and Bangladesh.
What used to be as the country’s number one dollar earner is now labeled as a sunset industry.(BCM
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