On 28 February 2017, President Rodrigo Duterte approved the implementation of the 2017 Investment Priorities Plan (“IPP”) which encourages investments in key sectors and is aimed at expanding job opportunities in the country. The IPP lists the investment sectors that may be given incentives by the government, and includes manufacturing, agriculture and fisheries, drug rehabilitation, and micro, small, and medium enterprises (“MSMEs”).
The investment policy of the Philippines aims to attract, promote, and welcome productive foreign investments in activities that significantly contribute to national industrialisation and socioeconomic development. To attract foreign investments, the Omnibus Investments Code (“OIC”) of the Philippines, through tax incentives and other benefits, encourages investments in preferred areas of economic activity, as specified by the Bureau of Investments (“BOI”) in the IPP.
The new IPP is expected to generate more investments to strengthen manufacturing sector and expand job opportunities for more sections of the population.
With the theme Scaling Up and Disbursing Opportunities, the new IPP brings significant additions and changes to the 2014 IPP, which include emphasis on the following:
- innovation-driven and job-generating businesses
- inclusive business for agribusiness and tourism
- broadened coverage of manufacturing
- information technology and IT-enabled services for the domestic market and telecommunications services for new market players
- environment and climate change-related projects
- local government initiated Public-Private Partnership projects
- drug rehabilitation centres
- state-of-the-art engineering, procurement and construction (EPC) services
- lifting of geographical restrictions for most agriculture and tourist accommodation facilities.
Other effects of the 2017 IPP include:
- new industry players who establish connectivity for fixed and mobile broadband services may qualify for registration with the BOI and consequently receive incentives
- a reduction in the price ceiling for BOI-registered mass housing units
- projects located outside Metro Manila, except for in-city low-cost housing for lease, may qualify for investment perks
- a broadening of the scope of manufacturing activities entitled to fiscal perks beyond the positive list in the 2014 plan
- in the information technology and business process management sector, the insertion of a sunset clause which states that incentives to business-process outsourcing (BPOs) firms in Metro Manila that are registered with the BOI will only be granted until 2019, with hopes of creating jobs in areas outside of Metro Manila.
The IPP takes effect on 18 March 2017 and will be effective until 2019.
If you have any questions or require any additional information, please contact Felix Sy, Lorybeth Baldrias Serrano or the ZICO Law Partner you usually deal with.
This alert is for general information only and is not a substitute for legal advice.