Highlights of Sen. Pia Cayetano's responses to Sen. Joel Villanueva's interpellation on CREATE

Sen. Villanueva asked what sectors face the biggest threat vs. automation

Sen. Pia: Security of our labor force and decent jobs is part of SDG 8. So embedded in every possible nook and cranny of the CREATE bill is the attainment of our SDGs. And that is why the most basic investments would automatically receive Tier 1 incentives, precisely because the fact that they add jobs and are focused on helping us achieve our sustainable goals, we are already incentivizing those businesses.

The World Economic Forum says by 2030, 50 percent of jobs will be changed by automatio... But it does not mean 50 percent will lose their jobs. Only 5 percent of jobs will be eliminated. In other words, the effect of automation is that workers need to upskill... By upskilling, by putting to good use TESDA, we will be able to address this issue. By accepting that the world is a volatile world, there are changes coming all the time, and we are ready to accept it by continuous upskilling, we will survive and thrive... Nine out of 10 jobs will require digital skills...

The most vulnerable workers in the future are really from agriculture, fisheries, and forestry. Most likely 90 percent of them will be affected. That is why I cannot overemphasize that I told the DA to study what is the future of food because gawa pa rin tayo ng gawa in the same way... Scientists tell us we cannot feed the population at the rate we are using up our resources. We have to start investing in that way. Otherwise, affected talaga ang 90 percent...

The next affected sector would be financial and insurance activities, and then industry except manufacturing... And then transportation, storage, accommodation, and food service. Again, technology will really affect these. And then real estate activities...

What CREATE does is... when there is use of technology, there is innovation, then you will get the highest level of incentives. And then, I must emphasize, there is a misunderstanding that this is simply based on industries. No, it is also tied with geographical location. Anywhere you invest in a less developed area, the incentives will be on the higher side... Because we want to push jobs in those areas, we want to achieve the sustainable goals in those areas...

One of the options for an investor for incentive is to avail of the enhanced deduction. And under enhanced deduction, use of labor will receive a 150% deduction, expense for the training, upskilling of workers includes 200% deduction, and the use of domestic input - and this will spur the growth of MSMEs - is 150% also. In a nutshell, that is how we are addressing this need to reskill and the need to incentivize activities that will assist our people in reskilling...

Sen. Villanueva asked how the trainings will be in line with the Fourth Industrial Revolution

Sen. Pia: It also starts with education... One of the things I learned in Futures Thinking is that we have to ensure that we are teaching our children and youth 21st Century skills. Because if we are still teaching them spoon feeding, in the classroom, "Memorize this, memorize that," those were 20th Century skills because information was not readily available. These days, information is easily available. What we need to teach them are critical thinking skills. Because if they develop those critical thinking skills, then as soon as they are in Senior High or even earlier than that, they can already make use of these skills and easily dive into other specializations.

The point is, it starts with education. And then we have to continually embed in their minds that it's about retooling all the time. That's part of their education. Hindi yung one-track mind na hanggang dito lang kayo. So it starts with education, and after that, we have post-education retooling that happens all the time, and it should be an accepted part of our life...

Sen. Pia: I join his honor in really pushing for the retraining of our workers in the various fields. And we have to also put a budget for that. If I may also add, included in the retraining is also basic research. Because if you also don't know what you are retraining them for, wala din po yun. The good Chair of the Committee on Higher Education knows that I share his frustration that the budget that he included, which I supported, for research in SUCs was not included for the 2020 release... That is so sad. They are the ones on the ground all over the country... They could have contributed. So I hope we would see more support for our push for research also.

Sen. Villar & Sen. Gordon interject

Sen. Pia: One of the reasons why we are creating the FIRB the way we are is precisely because we do not have even the data that is very much needed for us to make certain decisions, for our government agencies to make these decisions...

Sen. Villanueva asked about the proposed enhanced deductions to be offered to businesses under CREATE

Sen. Pia: This option is very enticing because they will really be able to make a lot of deductions. For those running a business well, andami talaga nila made-deduct. So we really anticipate a big number would be availing of these enhanced deductions. The three I always point out are: labor, training, and domestic input.

In a simulation they've [DOF] done for 1,332 firms, they actually have a response to that, and it's 54 percent of the 1,332 firms are interested in availing enhanced deductions.

Sen. Pia: We would incentivize a company if they will invest in our country and they will produce jobs, offer technology and innovation, and are willing to capitalize.

Sen. Pia: The general rule is, all corporations doing business in the Philippines pay taxes. And then we've made a number of exceptions. One exception is for MSMEs. Below 250,000 gross receipts, there is no tax on the income of an MSME. Above 250,000 but with assets below 3 million, they will only be taxed 8 percent. So that is already our exception in the recently passed TRAIN Law that supports MSMEs and their employees. The labor cost is an allowed deduction.

What we do with CREATE is we sweeten the pie. We are providing for those who are creating more business opportunities through specific industries... It could be as basic as any of the SDGs, they would already be qualified to be a registered enterprise receiving incentives. But remember, this is an exception to the rule. So, there are also a lot of training programs... These are programs that the government can provide and should provide. But they are not enhanced deductions in terms of incentives we want to offer companies that are specifically investing in industries that we are promoting. We need to be rational in our identification of these industries and where they are locating... Ito po ang essence ng CREATE.