3 Japan firms defer expansion plans

MANILA, Philippines - A Department of Finance (DOF) Resolution that dealt with the exclusivity of incentives has delayed more than P3 billion worth of investments from three different Japanese semiconductor firms.

In an interview, Board of Investments (BOI) executive director Lucita P. Reyes said Section 12 of DOF Circular 3-08 deals with the exclusivity of incentives.

Department Order 3-08 was issued on February 2008 as implementing rules and regulations for RA 9400 also known as The Bases Conversion and Development Act. Section 12 of the Department Order contains a critical condition, stating “Exclusivity of Incentives” where the order prescribes “No double enjoyment of the same or similar Incentives”

Reyes said that the law is silent on availing multiple incentives. However, the Implementing Rules and Regulations (IRR) of the said circular prevents firms from receiving multiple incentives.

Reyes said that Nidec Corp. has put on hold their P3 billion worth of expansion project in Clark. Likewise, Widus and Nanox said they will not expand their current operations here until the matter has been resolved.

Reyes said the issue has been pending before the DOF since the time of then Secretary Margarito Teves. She said the past administration opted not to do anything about it since their term was about to expire. Current Finance chief Cesar V. Purisima still has no comment on the issue.

Earlier, the Joint Foreign Chambers of the Philippines (JFC) wrote to the DOF regarding the circular. JFC asked DOF to delete section 12.

“Since foreign investors believe investments should be for the long term, they plan steps to expand their operations. But if the referred Department Order impedes granting an ITH, potential investors may regard CSEZ and CFZ as unacceptable for future investments,” the group said.

In case an enterprise, operating in an export zone, is going to expand its operations, the enterprise cannot enjoy income tax holiday (ITH) due to the referred Department Order, the JFC said.