Telecom, automotive sectors to get smaller incentives under 2008 IPP

Established companies belonging to the telecommunications and the automotive industries will be enjoying smaller incentives this year “because they can afford to pay the proper fees,” Trade Secretary Peter B. Favila told The STAR in an interview yesterday.

Favila said telecommunications companies and the car manufacturers have high income, enough to expand their business without much government support.

According to him, the 2008 Investment Priorities Plan (IPP) will focus on start up industries and small and medium sized enterprises. He said they are already applying the finishing touches to the IPP draft.

Unlike the 2007 IPP which came out in the middle of last year, Favila said DTI will submit the draft to Malacañang by April.

Earlier, Board of Investments (BOI) Managing Head Elmer C. Hernandez said they are looking at trimming the list of priority sectors in accordance with the government’s fiscal consolidation.

He said the 2008 IPP aims to balance fiscal consolidation and the need to attract more investments for economic development.

“This IPP is really focused in terms of the priority areas that we really need for economic development,” Hernandez said.

The six priority sectors included in the draft are: Agriculture and agri-business, infrastructure, tourism, engineered products, research and development, and strategic investments.

Investments for the construction of roads, tollways, railway system and mass housing will still enjoy tax incentives under infrastructure. Investments in power specifically in renewable energy will also get income tax holidays.

Logistics like airports and ports, and logistics-related IT services will also enjoy ITH (income tax holidays) provided these are part of a logistics hub.

Engineered products include manufacturing of steel and iron, production of flat steel, production of billets, shipbuilding, machinery and equipment, and motor vehicle parts and components.

Meanwhile, strategic investments include projects with a cost of $300 million and will generate big employment or use world-class technology.

Also under the draft IPP, micro, small and medium enterprises (MSMEs) will automatically be entitled to ITH if they invest in any of the IPP-listed projects.

On the other hand, the BOI will no longer give incentives to projects qualifying under the retention and expansion and diversification scheme.

The priority sectors in the 2007 IPP are steel and iron, agriculture, fishery, and support services; healthcare and wellness products and services; information and communications technology; electronics; motor vehicle; energy; infrastructure; tourism; shipbuilding/shipping; machinery and equipment, raw materials and intermediate inputs in support of the activities listed in the IPP, and R&D.