The Philippine garments industry will receive cost relief under the CREATE MORE Law as the government rolls out incentives to cut power and labor expenses. The move aims to help manufacturers retain jobs amid rising production costs and tighter global competition.
In a recent meeting, the Department of Trade and Industry (DTI) told garment manufacturers and exporters that under the law, new projects and registered subsidiaries of existing firms may avail of a 100 percent additional deduction on power-related expenses and a 50 percent additional deduction on direct labor costs.
Export-oriented companies may also qualify for value-added tax zero rating or VAT exemption if at least 70 percent of their sales are exported.
The DTI said it will further study industry proposals to improve overall cost competitiveness, including possible reductions in VAT rates to levels comparable with other ASEAN economies and expanded fiscal support for existing firms.
Trade Secretary Cristina Roque said the industry must also adapt to changing buyer requirements, particularly faster production turnaround and increased use of technology.
“I received direct feedback from buyers abroad that automation is no longer optional; it has become a baseline requirement in the global market,” Roque said. She added that short lead times have become the deciding factor for fast-fashion brands.
To support modernization, the DTI will work with government financial institutions, including the Land Bank of the Philippines and the Development Bank of the Philippines, to provide flexible financing for automation, machinery and production equipment.
Incentives under the Board of Investments will support mechanized and digital garment production, while the Philippine Economic Zone Authority will extend fiscal and non-fiscal incentives to export-oriented firms operating in PEZA zones.
The agency is also expanding workforce training programs with the Technical Education and Skills Development Authority to increase the supply of skilled sewers and machine technicians needed for automated production.
To widen market access, the DTI encouraged manufacturers to identify priority export markets through the Foreign Trade Service Corps’ trade attaché network, which links Philippine producers with international buyers.
