Telco investments to continue even sans perks

The removal of telecommunications in the list of industries being encouraged through incentives will not affect investment in the sector, an economist said.

In an interview, Cielito Habito, economics professor at the Ateneo de Manila University said excluding telecommunications will not necessarily translate to slower investments. "The big companies do not need incentives."

Habito was referring to Globe Telecom and Smart Communications. According to him, competition should be enough to drive firms in thriving industries such as the telecoms industry to invest.

In fact, Globe Telecom president and chief executive officer Gerardo Abalza said the number of mobile phone users is expected to reach 58 million by 2010 or a 60-percent penetration rate, which means that 60 percent of the population will be using cellular handsets in three years’ time.

Trade and Industry director Lucita Reyes said the telecommunications sector was "totally excluded" from the 2007 Investment Priorities Plan (IPP).

"There was no submission from the National Telecommunications Commission (NTC). It (inclusion of telecommunications) cannot be justified," Reyes told reporters after the hearing.

The director said that although there are big investments coming into the sector, the DTI cannot include it in the IPP list. "We are not talking magnitude of investment."

This year, the DTI changed the procedures for inclusion in the list. Instead of the DTI studying which sector should be included, Reyes said the various agencies had been asked to submit a position paper and nominate a certain industry.

Reyes said they have informed the NTC about the change in procedures but the commission failed to comply with the requirement. "We have completely deleted it because we cannot justify the inclusion."

However, Reyes said it is not too late for the NTC to remedy the situation. She said the NTC can still submit a proposal asking to be included in the IPP.

As with the 2006 IPP, the 2007 IPP listed 12 preferred areas. However, two areas were deleted from the 2006 IPP–the jewelry and fashion garments. Replacing these sectors were iron and steel and research and development/training institutions.

Reyes said the jewelry and fashion garments were removed because the two are mainly for exports.

The proposed 2007 IPP in infrastructure is similar to the 2006 IPP except for the deletion of the telecommunication sector.

In the agribusiness/agriculture, fishery and support services, the 2007 IPP proposed building support facilities and services. It also covers commercial production and commercial processing of agricultural and fishery products including their by-products and wastes.

Healthcare and wellness on the other hand covers hospital, medical, dental and ambulatory services, wellness spa, traditional healthcare services and the manufacture of healthcare and wellness products.

The information and communications technology sector expanded to cover business knowledge process outsourcing, software development, animation, data transcription, engineering design and ICT support services.