DTI rolls out CREATE MORE incentives for garment sector

The Philippine garments industry is set to receive cost relief under Republic Act No. 12066 (CREATE MORE Law), with incentives aimed at lowering power and labor expenses to protect jobs and restore competitiveness amid rising costs and tighter global competition.

The measures were discussed during a recent dialogue between the Department of Trade and Industry (DTI) and garment manufacturers and exporters, in line with President Ferdinand R. Marcos Jr.’s directive to support job-generating industries.

Under the policy, new projects or registered subsidiaries of existing garment firms may avail of a 100 percent additional deduction on power-related expenses and a 50 percent additional deduction on direct labor costs to help reduce operating expenses and support job retention.

Export-oriented garment companies may also qualify for value-added tax zero-rating or Value-Added Tax (VAT) exemption if at least 70 percent of their total sales are exported.

The DTI said it is also studying industry proposals to further improve cost competitiveness, including possible reductions in VAT rates to levels comparable with other ASEAN economies and expanded fiscal support for existing firms and subsidiaries.

Beyond cost concerns, DTI Secretary Cristina A. Roque said the Philippine garment industry must adapt to changing buyer requirements, particularly in production speed and technology adoption.

“I received direct feedback from buyers abroad that automation is no longer optional; it has become a baseline requirement in the global market. They expressed a clear preference for exporters with modern, automated production equipment, as short lead time is now the deciding factor, especially for fast-fashion brands,” Roque said.

To support this shift, the DTI said it 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.

The agency added that incentives under the Board of Investments will support mechanized and digital garment production, while incentives from the Philippine Economic Zone Authority (PEZA) will offer a comprehensive package of fiscal and non-fiscal support for export-oriented garment firms located in proclaimed PEZA special economic zones.

Workforce capability development will also be expanded through training programs in partnership with the Technical Education and Skills Development Authority, aimed at increasing the supply of skilled sewers and machine technicians needed for automated production.

To widen market access, the DTI said garment manufacturers may coordinate with the Department to identify priority export markets, which can be pursued through the Foreign Trade Service Corps’ trade attaché network to connect Philippine producers with international buyers and global trading companies.

Roque said the dialogue reflects the administration’s push to quickly stabilize the garment industry as a major source of employment, adding that the DTI will act on measures within its mandate while coordinating with other agencies on broader policy issues affecting the sector.