BOI drops 6 sectors from list

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Monday, May 12, 2014


FROM 13 preferred areas last year, only seven business activities have made the list in the draft of the Investment Priorities Plan for 2014.

However, Board of Investments’ (BOI) Industry Development Service executive director Corazon Dichiosa assured that industry organizations have until May 22 to submit their positions and appeals to have their industries included.

Activities that are listed in the IPP are eligible for tax incentives from the Philippine Government. Some of the industries delisted from this year’s plan include the information technology-business process management sector, green projects and creative industries. Some of the delisted activities have been moved to the export list while some have had no registrations over the years and have thus been removed.

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Dichiosa explained that for this year’s IPP, they opted to make changes and focus on where industries needed the most support. She said that after careful review, some industries only needed policy changes, not incentives, to take off.

Affordable housing only

As an example, she said that they limited incentives for mass housing projects to those in the economic housing and socialized housing projects, while the more expensive units will not be eligible for incentives.

She also showed a sectoral analysis of the cement industry, which showed no supply chain gaps and low potentials for moving up the value chain, spillover effects and creating competitive markets. They identified high costs of power and smuggling activities as the most binding constraints for the industry.

In response, the BOI felt that rather than incentives, the government could support measures to reduce energy costs and strictly enforce customs laws and technical regulations.

Rather than just come up with a list of activities entitled to incentives, Dichiosa said this year’s IPP will serve as a “fundamental investment policy tool” on the BOI’s industry development strategies, including a provision for incentives.

Also, rather than become a one-year document, they hope to make the 2014 IPP cover three years, to consider the end-of-term objectives of the Philippine Development Plan. The IPP will also contain policies and guidelines, the planning process, core strategies and sector reports used in determining the IPP.

Dichiosa explained that they focused on subsectors and considered areas that could fill specific supply and value chain gaps. This year’s IPP will also consider regional needs and industry clustering.
What made the list?

To make the planning more comprehensive, the BOI held additional sectoral, internet-based and inter-agency consultations, rather than just the three public hearings and one meeting.

This year’s priority list included manufacturing (motor vehicle assembly except motorcycles, engineered products, chemicals, copper wire rod, paper pulp and tool and die), agribusiness and fishery (extraction of natural ingredients, mechanized agriculture support services and agriculture support infrastructure), services (IC design, ship repair, specific testing facilities, e-vehicle charging stations, industrial waste treatment and maintenance, repair and overhaul of aircraft), economic and low-cost housing, energy, public infrastructure and logistics and PPP projects.

Dichiosa said that some items in last year’s list that are no longer in the 2014 IPP could fall under the exports list because they produce and manufacture export products, serve foreign markets or have activities that support exporters.

One such area that has been delisted in this year’s IPP is the IT-BPM sector. She noted that majority of the IT-BPM companies in the country are registered with the Philippine Export Zone Authority, which is outside of the BOI’s jurisdiction. Most companies also get their revenue from foreign sources.

Dichiosa, though, said that during their Manila consultation, the feedback from the IT-BPM organizations was that many of their companies are also serving local markets. She mentioned that a big fastfood chain has enlisted the services of a BPM company to handle its finance and accounting needs.

Other items removed from the list that have not been moved to the exports list include iron and steel; research and development; green projects; strategic projects (high social economic returns that will significantly contribute to the country’s economic development); hospital and medical services; and disaster prevention, mitigation and recovery projects.

Chance to speak up

Asked why important kinds of investments have been delisted, Dichiosa said that these have been in the list for three to 10 years but they have had no registrations for such projects.

She explained that without a properly-backed industry organization championing the delisted activities, they “cannot defend” the inclusion of these activities on the list.

Dichiosa said that much of what they come up with will depend on the participation of the private sector. She said any documents, studies and report that a sectoral organization has on hand can be useful in crafting policies.

Since what she presented is still a draft, she said organizations can still plead their case and send their positions to the BOI.

Other industries can also register for incentives if the country has special laws mandating the BOI to provide incentives for the development of investments in specific areas. These include industrial tree plantation; capital equipment incentives for mining; publication or printing of books; refining, storage, marketing and distribution of petroleum products; rehabilitation, self development and self reliance of persons with disability; renewable energy and tourism until the implementing rules and regulations of the Tourism Act are issued. Incentives for ecological waste management and clean water projects have been removed from the IPP as the mandate for these have lapsed.

The BOI hopes to submit a final draft of the IPP to the Office of the President for approval by June. It will take effect 15 days after the approved IPP is published in a national newspaper.

Published in the Sun.Star Cebu newspaper on May 13, 2014.

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