SMC eyes $500-M bottling plant in Batangas

San Miguel Corp. (SMC), the country's largest food and beverage group, is planning to put up a new bottling plant in Batangas City at a cost of up to $500 million.

This was revealed yesterday by Internal Revenue Commissioner Dakila Fonacier who recently met with SMC officials.

Fonacier said the food giant's problem now is not the supply of beer but the lack of bottles.

"Their bottleneck now is lack of bottles. This is why they indicated their plan to put up a new plant in Batangas," he said.

The BIR chief, however, said SMC might postpone temporarily this plan pending the passage of the amendments to the Omnibus Investment Code of 1987 in Congress.

"If they will withhold their plan, they may avail of the incentive under the Omnibus Investment Act," he said.

Fonacier said the National Government is likely to propose to bring down from $500 million to $350 million the amount of investment in order to qualify for a 12-year income tax holiday (ITH).

Fonacier, who was vice-chairman of the Board of Investments (BOI) before he joined the BIR, said this law will have trickle down effects on the economy.

"If there are more investors, there will be more jobs. If there would be more, jobs, there would be more taxes," he said.

The bill presents a revised set of incentives that will make the Philippines at par with its ASEAN neighbors. It is expected that the influx of investments brought about by this package of incentives will create more jobs, increase technology and consequent multiplier/growth effects.

In his meeting with the SMC officials, Fonacier said he learned that beer sales for the last quarter of the year had gone up 21 percent while hard liquor volume also increased by 25 percent.

He said this shows that the economy improved in the past two months as reflected in the BIR's ability to meet its target collections for the months of January and February 2000.

He noted that the country's gross domestic product and gross national product for the last quarter of 1999, grew by 4.8 percent and 4.6 pecent respectively. "These are a dramatic improvement from the last quarter of 1998, when the two indicators were recorded at 1.2 percent and -- two-percent growth rates," he added.

"Although economic growth is still led substantially by the least taxed sector -- the agricultural sector at 7.4 percent -- the taxable sectors of the economy nonetheless showed considerable improvements," he said.

He said the services sector recorded a 4.4- percent growth rate, while the industrial sector, which had lagged for most of 1999, produced an impressive showing in the last quarter of the year, with a 3.1-percent growth rate.

"These improvements in our economic performance ultimately translated into considerable tax revenues for the first two months of the year 2000, hence the improved collection performance," Fonacier said.

He attributed the improvement in tax collection to the establishment of two new tax services in the BIR, namely the Large Taxpayers Services and the Excise Tax Services that are expected to account for 80 percent of the total collection of the bureau in the next two years.

He said they expect to meet the P397-billion revenue collection target for this year through implementation of various measures.

Fonacier said they expect to raise about P20 billion from the new withholding tax scheme they would adopt with the Department of Budget and Management (DBM) and national government agencies.

He said the tax computerization program of the bureau that would need about P550 million fund would also help the BIR meet its target collection this year.