Interview: Raoul R Angangco
Which legal reforms should be prioritised to stimulate growth after the Covid-19-induced recession?
RAOUL R ANGANGCO: The Bayanihan to Recover as One Act (Bayanihan 2) and tax reforms such as the Corporate Recovery and Tax Incentives for Enterprises (CREATE) bill should be prioritised to stimulate growth after the recession, as they form part of the government’s economic stimulus package. The enactment of Bayanihan 2, which allocates up to P165bn ($3.3bn) for pandemic response and recovery, will enable the government to complete the release of funds for the mechanisms established to deal with the impact of Covid-19. Bayanihan 2 will also allow the government to have continuous access to funding for the procurement of Covid-19 drugs and vaccines without the need to enact a new Bayanihan law. Meanwhile, the latest version of the CREATE bill provides for a gradual year-on-year reduction of corporate income tax from the current 30% to 20% for corporations liable to pay income tax. In addition, CREATE will grant exporters and domestic industries an income tax holiday of four to seven years.
How effective will government stimulus measures be at improving the business environment?
ANGANGCO: We expect that Bayanihan 2 will be effective in stimulating economic activity and improving the business environment, as it provides aid to both consumers and businesses. Furthermore, Bayanihan 2 has both short- and long-term interventions. Among the most significant benefits granted through Bayanihan 2 are the lowering of effective lending rates of interests and reserve requirements for lending institutions granting credit accommodations to micro-, small and medium-sized enterprises and cooperatives; the waiving of collateral requirements for loans not exceeding P3m ($59,700) to such companies; provisions of cash or loan interest rate subsidies by the Department of Agriculture to qualified agri-fishery enterprises, cooperatives, farmers, fisherfolk and other agricultural workers; the allocation of P9bn ($179m) to assist critically impacted transport businesses, and to provide temporary support to displaced workers and public utility drivers; the allotment of P4bn ($79.6m) to assist the Department of Education in rolling out digital infrastructure and alternative-learning solutions; the provision of loan interest rate subsidies to tourism enterprises; and the temporary suspension of requirements to secure permits and clearances for the construction of telecommunications and internet infrastructure.
To what extent has Republic Act No. 11032 facilitated the reduction of red tape and the time needed to complete legal transactions?
ANGANGCO: By streamlining excessively complicated administrative procedures and limiting the risk of profiteering, Republic Act No. 11032, or the Ease of Doing Business and Efficient Government Services Delivery Act (Ease of Doing Business Act) has compelled the delivery of faster, more productive services from government agencies. Even throughout the Covid-19 pandemic the Anti-Red Tape Authority (ARTA), the agency tasked with implementing the act, circulated guidelines on its continued enforcement.
With the Ease of Doing Business Act and issuances from the ARTA, individuals can expect to have their requests successfully processed from the safety of their homes within three, seven or 20 days, depending on the complexity. This drastically lowers the risk of infection as well as waiting times.
As seen during the months under ongoing quarantine, many government agencies have rolled out online processing systems and payment gateways for most transactions, including the issuance of licences and clearances. Most offices utilised remote communications before Covid-19, while others are taking advantage of liaising via email or hotlines. We can expect this shift in the delivery of government services to remain as the country moves towards the new normal.
Read More from OBG
