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By Katrina Mennen A. Valdez, Reporter
IN ITS bid to raise revenues, the
government has trimmed the number of investment projects qualified
to enjoy tax and other perks this year, according to the Board of
Investments (BOI).
Trade Undersecretary Elmer C.
Hernandez, who is also BOI managing head, told reporters the agency
has identified only six preferred sectors for this year’s
Investment Priorities Plan (IPP), down from the 11 sectors in the
2007 list.
“In principle, the board
has approved the draft for the framework of the [IPP]. However, this
is still subject to usual interagency consultation and public
hearing,” he said.
Hernandez said the agency removed
the mining industry from the 2008 IPP, and limited the grant of the
full suite of incentives to the power sector by extending this only
to investments in renewable energy projects.
Also, projects enjoying
government guarantees, such as those extended by the Philippine
Export Import Credit Agency, would no longer qualify for income tax
holidays.
“According to [our] review and
analyses, the industries that have been removed no longer need
income tax holidays,” Hernandez said.
Among the sectors that may still
benefit from the full suite of incentives are infrastructure,
research and development (R&D), constructive and direct exports,
micro, small and medium enterprises, agriculture and agribusiness,
tourism, engineered projects and strategic investments.
Hernandez said these six
preferred sectors are in line with the government’s Medium Term
Development Plan.
”Even the six industries to be
listed may not be granted full incentives,” he said.
Considered part of
infrastructure are mass housing, roads, highways and toll ways, mass
railway transport, airports, ports facilities, air transport and
warehousing. Shipping projects should be located within government
identified logistics hub for them to qualify for perks.
Those considered part of R&D
are projects that will pave the way for the enhancement of centers
of excellence, either in house or commercially.
Information technology has been
folded into the constructive and direct exports.
The BOI official said expansion
projects that will be undertaken by existing investors will no
longer be entitled for income tax holidays.
“Indirect exporters will
no longer be entitled for [income tax holidays] or full incentives,
unless [they] are micro, small and medium enterprises,” he said.
Since micro, small and medium
enterprises form the backbone of the country’s economy, they will
automatically enjoy full incentives if they choose any of the six
sectors listed in the IPP.
“If [they] are not [such
enterprises], then a stringent screening will be needed to determine
whether these certain investments still need fiscal incentives and
other perks,” Hernandez said.
Agriculture and agri-business
ventures qualified for tax holidays will be limited to commercial
production, processing of fishery products, feeds and organic
fertilizers.
“There should be a
contract growing scheme to qualify in order to support the
farmers,” the BOI official said.
For tourism projects, the
government will still extend perks to hotels and resorts, and the
development of healthcare and wellness facilities.
On engineered products,
incentives will be granted to shipbuilding, machineries and
equipment including parts and components, iron and steel products,
and hot rolled and cold rolled projects provided they are integrated
with basic iron and steel facilities.
“[We] will only allow billet
facilities for modernization, since [we] already have enough of this
kind of facility. However it is not entitled for [tax holidays],”
Hernandez said.
Motor vehicles and their
parts and components are also covered by engineered products in line
with the government’s Motor Vehicle Development Program.
With respect to strategic
industries, an investment of at least $300 million is required to be
considered as such, provided they also create a big number of jobs
or use new and innovative technology.
“This kind of investment
could be put up in one country in a region, and that the Philippines
is on the race to win these kinds of investments,” Hernandez said.
The BOI official said
strategic investments however are subject to consultation with the
National Economic and Development Authority and the Department of
Finance.
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