The Philippine government should amend existing tourism-related laws, improve infrastructure, beef up tourism security, and level the playing field for domestic and foreign players if it wants to encourage more investments and business from the EU region.
This was the message by the European Chamber of Commerce of the Philippines (ECCP) for the tourism industry after launching a 95-page book yesterday during the 2nd EU-Philippines Business Dialogue. A compilation of 22 advocacy papers, the book enumerates the recommendations made by European businesses in the Philippines to improve local business environment and boost investments in 13 sectors.
Four pages of the book have been dedicated for the tourism sector. According to representatives of European national chambers, tourism is among the most attractive Philippine industries for EU investors, including energy, agriculture, and healthcare.
On top of ECCP’s wish list for tourism is the amendment of Republic Act 10378 to extend the exemption of taxes to cargo revenues. Passed in 2013, the law exempts foreign carriers operating in the Philippines from paying Gross Philippine Billings Tax (GPBT), on the basis of reciprocity, and Common Carriers Tax (CCT) on revenues earned from passenger business.
“Despite the positive effects of RA 10378 eliminating the CCT for air passengers and deeming the GPBT subject to reciprocity, both CCT and GPBT are still applicable to the carriage of cargo. Taking into account that passenger carriers also carry cargo, this reduces the benefits of RA 10378 for passenger carriers, as they still incur additional costs,” wrote ECCP.
RA 10378 was signed into law after foreign carriers complained about double taxation in the Philippines. Despite the passage of the law, no new European carrier had opened a service in the Philippines over the last two years. Air France-KLM is the only European carrier operating in the country.
European investors also see a large potential in entering hotel development in the Philippines, but key issues need to be fixed. The ECCP urged the government to consider allowing foreign players to own land under certain conditions and offer incentives. The Department of Tourism must also improve its data collection methodologies to help businesses make better forecasts, the group said.
Eight policy recommendations by the ECCP for tourism have been laid out:
- Extension of RA 10378 provisions to include the exemption of cargo from CCT and GPBT
- Amendments to Paragraph 4.3 of RR No. 15-2013, to ensure preferential income tax rates or exemption of income tax for offline carriers
- Improvement of tourism transportation infrastructure, including air, sea, and road travel
- Inclusion of specific measure for strengthened security in the IRR for the creation and operation of TIEZA zones
- Increase and institutionalization of the “tourism-oriented police for security and safety”
- Inclusion of the limited nature of security concerns in tourism promotion campaigns
- Adoption of incentives for foreign players in the tourism industry, following best practices seen abroad
- Application of more consistent and detailed data collection methodologies for the supply side of tourism by DOT
The advocacy paper for tourism came a week after the World Economic Forum released its biennial Travel & Tourism Competitiveness report, which ranked the Philippines eight places higher than its 2013 standing.