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By Chino S. Leyco and Katrina
Mennen A. Valdez, Reporters
THE Department of Trade and
Industry has agreed to include the principal heads of the Department
of Finance in the Board of Investments as proposed by Congress.
Finance Undersecretary Gil
Beltran said DOF will get a seat in the BOI as soon as the two
chambers in Congress pass the bill seeking for it.
The bill was introduced in
Congress to avoid redundancy in the granting of incentives to
eligible investors.
Beltran said the agreement was
reached after a technical working group met in the House of
Representatives as Congress tried to broker the rationalization of
fiscal incentives given to the country’s investors.
Trade Secretary Peter Favila, who
is also the Board of Investments chairman, said the issue of DOF
representation in BOI as a check to the board’s incentive-giving
function was discussed during a meeting last Monday with DOF top
officials Exequiel Javier, Junie Cua and Liwayway Vinzons Chato.
“There has been a consensus in
terms of agreeing and polishing the substitute bill,” Favila said.
The substitute bill aims to
consolidate four proposed bills by lawmakers in view of
rationalizing the granting of fiscal incentives in the country.
Some of the highlights of the
meeting included the strengthening of the “appropriate”
incentives for the exporters and the qualifications under the
“strategic investments,” Favila said.
The BOI is composed of seven
members, four from DTI headed by the trade secretary and three from
the private sector.
In a document obtained by media,
DOF said its participation in BOI might enable finance to air its
opinion on project applications and other investment concerns that
would impact on the fiscal program of the national government.
It added that representation
would institutionalize the current practice of the DOF to make
initial reviews of project applications before they are taken up by
the BOI board.
The International Monetary Fund
has expressed grave concern over the granting of tax incentives,
saying the system does not help generate revenues and provide extra
funds for government’s expenditures.
Meanwhile, Beltran said DOF
agreed to put in place the “sunset provision” where income tax
holidays extended to investors will be phased out slowly starting at
the time the country’s infrastructure spending reaches 5 percent
of gross domestic product.
Favila averred, saying “once
the infrastructures needed by the investors are in place, the
government could resort to the “sunset” provision, or the
granting of less and less fiscal incentives to the investors.”
Moreover, he said DTI has also
agreed to boost infrastructure spending by at least 5 percent of the
gross domestic product to enable the country to put in place the
much needed infrastructure.
Beltran also said DOF, despite
the pressure to improve tax administration, understands the need to
raise the government’s infrastructure spending to be able to
compete with neighboring countries in attracting more foreign direct
investments.
He said the country’s
infrastructure spending only reached 2.7 percent of GDP last year.
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