Industrialists call for overhaul of corporate rehab law
Beatriz Marie D. Cruz
THE Federation of Philippine Industries (FPI) urged legislators to overhaul the laws governing corporate rehabilitation in light of the business closures caused by unfair competition from smugglers and rival firms that do not pay the correct taxes, as well as the impact of the pandemic.
Speaking at the House banking committee hearing on Thursday, FPI Chairman Jesus L. Arranza said rampant smuggling has caused Philippine companies “to sell less,” and noted “aggressive competition from companies who are not paying the VAT (value-added tax) and the corporate tax.”
“Therefore, we lose to them, and so the end result is unemployment (and) less utilization of capacity,” he said.
Mr. Arranza, who also chairs the Fight IT (Illicit Trade), said last year that the government loses over P250 billion in revenue yearly due to smuggling.
House legislators are conducting a separate investigation into alleged smuggling and price manipulation in the onion market. An ongoing investigation in the Senate is looking into smuggled sugar.
Under discussion at the House committee was House Resolution No. 797, which seeks to investigate whether the Financial Rehabilitation and Insolvency Act of 2010 (FRIA) has helped struggling businesses recover from the coronavirus disease 2019 (COVID-19) pandemic.
Mr. Arranza said in calling for amendments: “We have a lot of members who suffered some losses during the pandemic and we foresee that in the future, there will be more companies may be in the same predicament as those mentioned.”
He cited the now-liquidated Uniwide Group of Companies, Hanjin Heavy Industries, and Westmont Investment Corp.
SAGIP Party-list Rep. Rodante D. Marcoleta, author of the resolution, said, “There is a need to determine whether the existing provisions of the FRIA have indeed effectively or assisted financially-troubled persons or entities (to) recover from business reversals… which ultimately benefit the economy and prevent wastage of resources.”
The committee has yet to schedule another hearing to further discuss the resolution.