DOF: CREATE Act to spur knowledge-based sectors to invest and do business in PH

The Department of Finance (DOF) said the rise of a science and technology (S&T) park in Batangas could clear the way for startups from India and other countries to establish their presence in the Philippines and accelerate the country’s shift to the new knowledge economy. 

DOF Secretary Carlos Dominguez III said the soon-to-be enacted Corporate Recovery and Tax Incentives for Enterprises (CREATE) bill will open numerous doors of opportunities for the Philippines and India to put up S&T joint ventures, and serve as stimulus that would encourage knowledge-based industries to locate here.  

Dominguez lauded the Batangas State University (BatStateU) for its “visionary leadership” in venturing to establish the Knowledge, Innovation, and Science Technology Park (KIST) inside its campus, and thanked the Embassy of India for supporting the initiative. Their cooperation on this initiative was formally launched recently.

“We need more forward-looking innovative projects such as the KIST Park. We are moving towards an economy where knowledge is the main driver of growth. The next generation must be trained in cutting edge science and technology to support our aspirations for a truly inclusive and competitive economy,” Dominguez said in his videotaped message during the event delivered via Zoom. 

Dominguez thanked Ambassador Shambhu S. Kumaran for expressing India’s keen interest to assist in the Philippines’ digitalization programs and in funding the creation of small information technology (IT) centers in schools and universities nationwide.

Under the Duterte administration, he said the DOF has used fiscal policy as a tool to promote a system that rewards innovation and the creation of new knowledge by pushing the Congressional passage of the CREATE bill. 

Once enacted into law, Dominguez said CREATE will grant a 100% additional deduction on research and development (R&D) expenses for enterprises to incentivize the creation of new knowledge and products, on top of lowering the corporate income tax (CIT) rate from 30 percent to 20 percent for micro, small and medium enterprises (MSMEs), and 25 percent for all other businesses. 

Dominguez said he expects the enactment of CREATE to strengthen the culture of R&D and innovation in the Philippines. “CREATE prioritizes industries that make use of the knowledge economy in their activities. The types of investments that will be pursued are activities consistent with the Fourth Industrial Revolution (FIRe),” he added.  

He said “CREATE will open up numerous doors of opportunities for the Philippines and India to collaborate in the knowledge economy, and this momentous event is just the start of our close partnership in this field.” 

Dominguez said the cooperation between BatStateU’s KIST Park and India “will take the Philippines’ and India’s partnership to a higher plane,” as this clearly demonstrates how the two countries can complement their respective advantages. 

The Philippines’ strength lies in its highly educated, tech-savvy and young workforce, while India is a rising power in S&T with a strong cadre of digital technology experts, he said. The two countries, he said, are “natural partners” as they are both English-speaking democracies with aligned trade and development interests, he said. 

“This is an opportunity for India to create an ecosystem for its leading startups to establish their presence in the Philippines. Our country can even serve as India’s Asean (Association of Southeast Asian Nations) regional base,” Dominguez said. 

“Both our countries will benefit from this partnership through enhanced knowledge sharing, increased investments, and more job opportunities for our two peoples,” he added. 

He said that with the Covid-19 pandemic amplifying the Philippines’ need to rapidly modernize its processes and shift to the New Economy, the government should encourage forward-looking innovative projects such as the KIST Park if it is to accelerate this transition.

“This accelerated trend towards an economy driven by technology and innovation will continue to flourish. The Philippines must evolve and take advantage of this trend,” he said.

Dominguez said technological innovations will build new industries and create many employment and investment opportunities, which, in turn, will allow both the Philippines and India to bounce back stronger from the pandemic and help ensure the long-term recovery of their economies. 

Also at the launch for the Philippines-India cooperation to put up S&T joint ventures, either physically or virtually, were Agriculture Secretary William Dar; India Ambassador to the Philippines Shambhu Kumaran; Batangas Rep. Mario Vittorio Mariño; Dr. Tirso Ronquillo, who is president of BatStateU; officials from the Philippine Economic Zone Authority (PEZA); and representatives of KIST Park’s partner-industries and potential investors.

Four memoranda of understanding (MOUs) that aim to jumpstart investments in the KIST Park were also signed during the event. Three of them were signed by BatStateU with Indian companies. 

These are the MOU on the Geographic Information Systems (GIS) Application in Marine Fisheries Development and Developing Satellite-based Parametric Insurance Products for Marine Fisherfolk and Fisheries Value Chain that was signed with FBFP-Filsatelles Geospatial-Number8 India; the Philippines-India Garlic and Onion Seeds Development Project, through Digital Extension Services and Post-harvest Technologies, with FBFP-KR Agro India; and the Blockchain and Crypto-Enabled Edutech Cooperation for Transitioning and Upskilling Students and Professionals for the ‘New Normal’ Knowledge Economy Global Careers, with AICA AiCademy based in Kerala, India. 

An MOU on Farm-to-Market Digitalization of Organic and Fresh Produce and Agricultural Supply Chain with Traceability to Consumers and Retail Stores was also signed by Organic Options Philippines SourceTrace Systems and Aumra Agri-Food Philippines.