INCLUSIVE business models are now able to avail government incentives as it is now included in the 2017 Investment Priorities Plan (IPP) of the Board of Investments.
Lucita Reyes, member of the BOI Board of Governors, said the inclusive business model used to be simply a policy but now, for the first time, they are officially including it among investment priorities.
Reyes, who was a speaker during BOI's roadshow on the 2017 IPP at Pinnacle Hotel and Suites, Davao City, said under the 2017 IPP, inclusive business models will cover business activities of medium and large enterprises in the agribusiness and tourism sectors that provide business opportunities to micro and small enterprises (MSEs) as part of their value chains.
According to the 2017 IPP Inclusive business projects may qualify for Pioneer status with entitlement of five years of income tax holiday, subject to Section 16, Rule VI of the implementing rules and regulations of Executive Order 226, also known as the Omnibus Investments Code of 1987.
It is also stated in the 2017 IPP that qualified agribusiness and tourism projects may opt to undertake inclusive business models by submitting a duly notarized inclusive business plan in the required BOI format upon application for registration.
However, Reyes pointed out that inclusive business model projects applying for incentives must be able to achieve certain targets.
Under the 2017 IPP, within three years of commercial operation, qualified agribusiness shall target and accomplish all of the following: at least 25 percent of total cost of goods sold are sourced from registered and/or recognized MSEs as evidenced by a duly notarized contract; at least 300 farmers, fisherfolk, suppliers, or individual beneficiaries engaged, of which, at least 30 percent are women; and at least 20 percent increase in average income of individuals engaged from MSEs, cooperatives or any organized entity duly recognized by a government body from the baseline year to third year of actual operation.
The agribusiness must also be able exhibit innovation in the business model through any of the following: provision of technical assistance or capacity building to MSEs and/or individual farmers and fisherfolk that increases productivity and/or quality; facilitation of access to finance either directly or provides linkages to sources of financing through a third party; or provision of inputs and/or technology to MSEs and/or individual farmers and fisherfolk that would increase productivity or improve quality.
For tourism enterprises, they shall target and accomplish all of the following within three years of commercial operations: at least 25 percent of total cost of goods or services sold are sourced from MSEs; at least 25 direct jobs (regular employment) generated for individuals in the identified databases (e.g. DSWD Conditional Cash Transfer Graduates, NCIP List, PWD, among others) of which, at least 30 percent are women; and at least 20 percent increase in average income of individuals engaged from MSEs, cooperatives or any organized entity duly recognized by a government body from the baseline year to third year of actual operation.
The tourism enterprise must be also able to exhibit innovation in the business model through either provision of technical assistance or capacity building to MSEs and/or individual farmers and fisherfolk that increases productivity and/or quality or through facilitation of access to finance either directly or provides linkages to sources of financing through a third party.
The 2017 IPP also states that a BOI-registered new project engaged in agribusiness or tourism activity may qualify for upgrade to pioneer status under Article 17(3) of the Omnibus Investments Code and be entitled for another year of income tax holiday (ITH) if it intends to undertake an inclusive business model.
However, the registered project must meet the following: it has yet to avail of the ITH or is within its first three years of ITH entitlement period at the time of the registered enterprise's filing with the Board of a request for upgrade to pioneer status; the enterprise has filed the request for upgrade to pioneer status including a duly notarized inclusive business plan in the required BOI format within 12 months from the effectivity of the guidelines; and will or has accomplished the requirements for inclusive business model enumerated in the above criteria relevant to its activity.
Based on the theme "Scaling up and dispersing opportunities," the 2017 IPP will serve as a blueprint in guiding Filipino and foreign investors in matching their entrepreneurial and financial capacities with the identified opportunities to steer the country's economic growth to a broader and sustainable path.
President Rodrigo Duterte approved the 2017 IPP on February 28 and became effective on March 18. The implementing guidelines that include the General Policies and Specific Guidelines took effect on June 18.
Published in the SunStar Davao newspaper on September 22, 2017.
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