In an effort to attract prospective investors in the Philippine economy, the Department of Trade and Industry (DTI) has submitted the 2014 Investment Priorities Plan (IPP) to Malacañang for approval last July 2014. Unlike previous years where the IPP changed on a yearly basis, the 2014 IPP will be valid until 2016 or 3 years.
The IPP identifies sectors and economic activities that can qualify for government fiscal incentives. The plan is based on recommendations from the government and private sectors.
This year, there are seven preferred economic activities that will benefit potential investors. These sectors are the following:
1. Manufacturing
• This covers motor vehicle assembly, engineered products such as body panel stamping and engines; chemicals including fertilizers, pesticides, oleochemicals, and petrochemicals, and derivatives.
2. Agro business and fishery
• This covers activities including extraction of natural ingredients, mechanized agricultural support services, and agricultural support infrastructure.
3. Services
• This covers integrated circuit (IC) design, ship repair, testing facilities, and charging stations for e-vehicles.
4. Economic and low cost housing
• This covers both horizontal and vertical housing development.
5. Energy
• This covers exploration and development of energy resources and power generation plants.
6. Public infrastructure and logistics
• This covers development in airports, seaports including RO-RO ports for both cargo and passengers. This may be limited to newly bought ships, aircraft, and seaplanes.
7. Public-Private Partnership (PPP) projects.
This year’s proposed IPP did not include some of the preferred activities included in the previous year, including creative industries or knowledge-based services, research and development, green projects, hospital and medical services, and disaster prevention, mitigation, and recovery projects.
Meanwhile, under existing laws, the following activities are also covered by the 2014 IPP. These are included in the mandatory list of the proposed IPP:
1. Industrial tree plantation
2. Mining, limited to capital equipment incentives
3. Oil refining
4. Storage and distribution of petroleum products
5. Tourism
6. Rehabilitation self-development and self-reliance of persons with disability
7. Publication and printing of books
Last year’s IPP included the exploration, mining, quarrying, and processing of minerals, which is revised in this year’s plan to only include capital equipment incentives. Likewise, the 2013 IPP covered clean water projects and renewable energy, both of which are not included in this year’s mandatory list.
There were no changes in the Exports list, which covers manufacturing of export products and exportation of services and activities in support of exporters. The 2014 proposed IPP also did not indicate the priorities in the Autonomous Region in Muslim Mindanao (ARMM).
Incentives
Once approved, prospective investors looking at establishing their presence in the Philippines will benefit from fiscal incentives and tax breaks, including three to eight year income tax holiday, as provided under the Omnibus Investments Code of 1987.
How to qualify for the incentives
To qualify for the 2014 IPP, an economic activity should meet these criteria:
1. Potential to create employment
2. Potential to move up the value chain
3. Potential to create horizontal and vertical spillover effects
4. Backward and forward linkages and output multipliers
5. Potential to create a competitive market
To learn if your company qualifies for this year’s IPP and to know the process of registering a business in the Philippines, contact Dayanan Business Consultancy for more information.
