Monday, October 21, 2019

BWorld 373, CITIRA, IPR and investments

* My article in BusinessWorld on October 01, 2019.

Among the contentious bills in Congress now is the proposed Corporate Income Tax and Incentives Rationalization Act (CITIRA), formerly the TRABAHO bill. The Department of Trade and Industry (DTI) has a good proposal for this.

During the launching of the report, “The Importance of IPR for Progress: Reform Agenda for ASEAN Countries” on Sept. 24 at the Holiday Inn Makati, DTI Secretary Ramon M. Lopez gave the Keynote Speech and he suggested that the Income Tax Holiday (ITH) under CITIRA for innovation firms should be four years as base for products that are expanding and moving up the value chain; five years for activities like Agribusiness and investments outside Metro Manila; seven years for intermediate parts and components; and 10 years for superior to high-tech products that are not yet present in the Philippines.

These are good proposals and are related to the DTI flagship program for innovation, the “Inclusive Innovation-led Industrial Strategy” (i3S) that seeks to attract more businesses and investments to the country and see Filipinos’ innovations contribute to high value-added activities in regional and global value chains. The i3S also highlights the importance of intellectual property rights (IPR) in creating an innovation and entrepreneurship ecosystem.

Secretary Lopez also showed numbers on IPR applications in the Philippines in 2018. I expanded the numbers he gave by getting data from 2014 to 2019 first half (H1) and the data indeed saw big expansion in IPR applications: a 17% rise in 2017, 13% in 2018 and 11% in 2019 H1 (see Table 1).

In his presentation, Geneva Network (UK) Executive Director Philip Stevens explained that the report is a collaboration among five independent think tanks from five ASEAN countries plus the Geneva Network. The report will help raise awareness of the importance of IPRs for economic progress and proposed principles and recommendations for a high standard IP system in the region.

Philip cited the World Intellectual Property Organization (WIPO) report where one-third of the value of manufactured goods sold globally ($5.9 trillion) comes from intangible capital. Small businesses’ greatest opportunity then is to integrate into global value chains, offering specialized services or manufacturing capabilities.

On trademark in particular, Philip said that trademark-intensive industries are worth about 20% of the Philippines’ GDP. Trademark protection is essential for investment by foreign companies and the Philippines’ economic progress, but counterfeits are widespread: reported were P8.2 billion of counterfeit goods seized in 2017, up from P6.5 billion in 2016, and these include fake medicines, machine spare parts, IT goods, luxury items.

I checked trademark application (direct and via the Madrid system) data at the WIPO website — the Philippines’ numbers were low compared to its neighbors but the pace of expansion was impressive, only 18,600+ in 2011 to 31,000+ in 2017 (see Table 2).

Reactors to the presentation by Philip were Josephine R. Santiago, Director General of the Intellectual Property Office of the Philippines (IPOPHL), Jesus B. Varela, Director for Intellectual Property of the Philippine Chamber of Commerce and Industry (PCCI), and Kristine F. Alcantara, a Fellow of the Foundation for Economic Freedom (FEF).

Ms. Santiago narrated how IPOPHL encourages more use of IPR by Philippine businesses (see Table 1 again), clamping down on fakes and counterfeits. Mr. Varela urged collaborative effort to fight illicit trade, counterfeit products and services that steal from legitimate businesses, by enhancing transparency of the supply chain, and how GS1 barcoding helps here. Ms. Alcantara spoke about the Philippines’ compliance with international IPR commitments.

Forum emcee, George Katigbak, also of FEF, eloquently summarized many points and elicited questions from the audience, topics and concerns that included compulsory licensing of patented innovator medicines, drug price control, and patent linkage, among others.

This coming Oct. 16, another IPR-related international forum will be held in Manila. It is the global launching by the Property Rights Alliance (PRA, Washington DC) of the International Property Rights Index (IPRI) 2019 Report, to be held at Fairmont Hotel Makati. Co-sponsoring with PRA in this big event will be FEF and Minimal Government Thinkers.

After the official launch of IPRI 2019, to be led by author Dr. Sary Levy-Carciente, and PRA Executive Director Lorenzo Montanari, I will discuss my paper, “Banning brand: economic and consumer impact of plain packaging.” IPOPHL Director General Josephine Santiago, Kristine Alcantara and an officer of International Trademark Association regional office in Singapore will react to my paper. More discussions on IPR, trademark and corporate brand in this column in the next few weeks.

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