BOI submits 2006 IPP for Palace approval

The Board of Investments (BOI) has completed the 2006 Investment Priority Plan (IPP) and has submitted it to Malacañang for approval.

This was disclosed yesterday by Trade and Industry Secretary Peter B. Favila and BOI managing head Elmer C. Hernandez.

According to Hernandez, the 2006 IPP basically carries over the provisions of the 2005 IPP but includes three new provisions that would help the government hold on to its investors and attract investors looking to relocate their investments within the region, extend incentives to all types of exports and provide incentives for producers of capital equipment, raw materials and supply chain providers for manufacturers in the Philippines.

The BOI has also decided to include in 2006 the grant of incentives to new investors in the cement industry to address a projected shortfall in cement production in the country.

Last year, the government, through the Department of Trade and Industry had launched its RED (Retention, Expansion and Diversification) program which would encourage investors to retain, expand and diversify their activities in the country.

To further strengthen the RED program, the National Economic and Development Authority (NEDA) Board approved the inclusion of the RED program as a preferred investment activity, entitling it to fiscal perks.

Hernandez had earlier explained that the Philippines wants to provide "the necessary environment" for investors to come in. However, availment of the RED program would still face some limitations and restriction as provided for in Article 11 of the Omnibus Investment Code.

Thus, specifically restricted to avail of the RED program would be commercial banks, savings and mortgage banks, rural banks, savings and loan associations, building and loan associations, development banks, trust companies, investment banks, finance companies, brokers and dealers in securities, consumers’ cooperatives and credit unions, and other business organizations whose principal purpose or principal source of income is to receive deposits, lend or borrow money, buy and sell or otherwise deal, trade or invest in common or preferred stocks, debentures, bond or other marketable instruments generally recognized as securities, or discharge other similar intermediary, trust or fiduciary functions.

The Philippines, in the past, has lost some big investors which chose to locate in other countries in the region due to more attractive incentives offered.

These included Toshiba and Intel which left and then returned. Philippine economic authorities have thus come up with a program that would now encourage and even reward existing investors that choose to retain their investments, expand or diversify their activities.

Incentives would also be extended to companies that are planning to relocate to the country.

Incentives are normally given only to new investors and are for a specified number of years only.

In a move to encourage more exports, the government has decided to include all types of export activity included in the Medium-term Philippine Development Plan and the Philippine Export Development Plan (MTPDP) for listing in the 2006 IPP.

In the 2005 IPP, only a limited number of export activities were listed as preferred investment activities entitled to fiscal incentives.

These included information technology and IT-enabled services, electronics, mining, jewelry, fashion garments, health and wellness, tourism, shipbuilding and agribusiness.

Export activities of the furniture sector, in the past, were not a preferred investment activity and were thus not entitled to fiscal perks.

Likewise, wearables were also not considered a preferred investment activity.

Thus, with the expansion of all export activities as a preferred investment area, investors engaged in export activities listed in the MTPDP and PEDP would now be entitled to fiscal perks.