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House panel approves flexible ODA funding, tourist VAT refund bills

A HOUSE BILL proposing a “blended financing” framework that hopes to unlock private-sector participation in development projects was approved the committee level on Monday.

The House ways and means committee approved an unnumbered substitute bill proposing to broaden the funding base for development projects to leverage the limited amounts of Official Development Assistance (ODA) available.

The panel also approved a bill seeking to allow value-added tax refunds for foreign tourists to encourage more visitor spending.

“Our neighbors and peers now benefit from blended financing in ODA (official development projects),” committee chairman Jose Ma. Clemente S. Salceda told the panel, noting that India and China are top recipients of blended financing. He added that European partners prefer this kind of framework to allow their private sector to contribute fundwing and expertise to participate in development projects.

If signed into law, the bill will allow an ODA grant component of only 15%, with the current 25% no longer deemed appropriate for the country’s stage of development, according to Mr. Salceda. The Finance department will be required to sign off on the rate, terms and grant component for ODA classified as ‘concessional.’

The measure also allows “the donor government, bilateral or multilateral agency, or international or multilateral lending institution (to) mobilize financing from private or commercial institutions in funding the loan or grant.”

The loan must be covered by a bilateral and multilateral agreement.

LGUs cwan also access ODA, but will still be subject to LGU borrowing guideliness.

The committee also approved a substitute bill proposing a value-added tax refund mechanism for non-resident tourists on goods that cost at least P3,000 and are exported from the Philippines within 60 days from purchase.

Nueva Ecija Rep. Mikaela Angela B. Suansing, who chaired the technical working group, said the amended threshold is similar to minimum transaction amounts of Thailand and Indonesia.

The Secretary of Finance may adjust the threshold amount based on changes in the administration cost for the refund; consumer price index; as well as changes in other market conditions.

It clarified that a tourist refers to a non-resident individual owning a foreign passport not engaged in trade and business in the Philippines.

John Paolo R. Rivera, associate director of the Asian Institute of Management, said that VAT refunds are common in countries with developed economies and self-sufficient tourism industries.

“VAT refunds will somehow encourage foreign tourists to come but remember that foreign tourists comprise approximately 20% of tourism receipts,” Mr. Rivera said in a Viber message. He also raised concerns on whether the government can make up for foregone revenues.

President Ferdinand R. Marcos Jr. last month expressed his support for a VAT refund scheme for foreign tourists by 2024.

The Tourism department said that 2.02 million international tourists visited the Philippines last year, generating approximately $3.68 billion in revenue. — Beatriz Marie D. Cruz

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