Doing Business in the Philippines ( BOI Incentives)

[lc1]

There are many reasons to invest in the Philippines. They could be personal: sun, sea, smiles. Or purely business: cheap skilled labor. But how does our government entice investors in the first place? The Board of Investments (BOI) in fact offers 3 classes of incentives. These incentives are: 1) fiscal, 2) non-fiscal, and 3) incentives for regional headquarters and regional operating headquarters.

But first let’s see exactly how one can be entitled to these incentives.

The Investments Priorities Plan

The IPP lists the preferred areas of investment where the investor may invest and be eligible for BOI incentives. The IPP is issued annually. At the time of this writing, the 2008 IPP[1](approved in May 2008) still applies.

The preferred areas of investment under the current IPP are classified into 4. These are:

1.Preferred Activities which cover: a) agriculture/agribusiness and fishery, b) infrastructure, c) tourism, d) research and development, e) engineered products, and f) strategic activities.

2.Mandatory Inclusions, or those required by law to be included in the IPP. These laws cover: a) Industrial Tree Plantation, b) Exploration, Mining, Quarrying, and Processing of Minerals, c) Printing, Publication and Content Development of Books or Textbooks, d) Refining, Storage, Marketing and Distribution of Petroleum Products, e) Ecological Solid Waste Management, f) Clean Water, and g) Development and Self-Reliance of Disabled Persons.

3.Export Activities namely: a) Manufacture of Export Products/Services, and b) Activities in Support to Exporters

4.ARMM List, or specific projects undertaken in the Autonomous Region of Muslim Mindanao. These cover: a) export activities, b) agriculture, food and forestry-based industry, c) basic industries, d) consumer manufactures, e) infrastructure and services, f) engineering industries, and g) ARMM priority and tourism areas.

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Read the rest on The Legally Inclined Blog.

[1D4LV]

looks good on paper, but it does not work that way in reality.
have experienced setting up a PEZA firm..... hirap.... daming paperworks during the start and paperworks monthly. all activities should be reported to them....

[badkuk]

di na ba included ang IT/outsourcing/BPO?

[1D4LV]

^^kasama pa din bro... pero dapat yung 70% ng production/sales/activities mo dapat overseas. kundi normally taxed pa din.

[Monseratto]

2011 at walang pagbabago. Where does Asia's only Catholic country standing against it's neighbour in term of drawing in business...?

PHL neighbors get more foreign investments – UN report - Business - GMA News Online - Latest Philippine News

PHL neighbors get more foreign investments – UN report
09/23/2011 | 04:34 PM

While President Benigno Aquino III declared that foreign capitalists are “lining up" to invest in the Philippines, the United Nations’ World Investment Report (WIR) 2011 shows that the lines are much longer leading to Vietnam, Malaysia, Indonesia and Thailand.

Plus, investors waiting in line outside the Philippines carry heavier loads of capital.

Last year, foreign direct investment (FDI) in the Philippines, consisting of equity capital, reinvested earnings and intra-company loans, totaled $1.713 billion — roughly a fifth of the FDI Vietnam got, according to the WIR of the United Nations Conference on Trade and Development (UNCTAD).s

Malaysia did slightly better than Vietnam, attracting $9.103 billion in FDI. These two countries trumped Thailand, which received $5.813 billion. Indonesia beat them all by drawing in $13.3 billion.

Emerging markets

In terms of foreign investments in shares of stocks, the Philippines is again a lightweight contender among Southeast Asia’s emerging markets.

Last year, foreign funds placed in Philippine stocks totaled $24.893 billion, or 38 percent compared to Vietnam’s $65.628 billion.

Malaysian stocks got much more — $101.339 billion — while Indonesia’s even exceeded that at $121.527 billion, a level which Thailand surpassed by attracting $127.257 billion.

With outward investments of $4.8 trillion in stocks, the United States is the world’s top investor, compared with Japan’s investments of $831 billion.

Export powerhouses

In terms of exports, the Philippines is a welterweight in Southeast Asia. According to 2010 UNCTAD data, the Philippines exported $51.6 billion, while Vietnam shipped $70.7 billion to foreign markets. Indonesia exported $157.78 billion.

Malaysia, with $198.79 billion, edged out Thailand’s $195.31 billion.

At $351.87 billion, city-state Singapore is the export champion of Southeast Asia.

Lack of competitiveness

The Aquino administration’s economic planners and agencies admit that the Philippines ranks low in various “measures of competitiveness."

In the Philippine Development Plan 2011-2016, the administration said the rankings of the country “reveal weakness in major development aspects compared to the rest of the world."

“In the World Economic Forum (WEF) Global Competitiveness Index Ranking, the Philippines ranked 87th out of 133 countries, and last among the ASEAN-6 subset of countries for the period 2009-2010. In specific categories, the Philippines ranked 113th in institutions; 113th in labor market efficiency; 99th in innovation and 98th in infrastructure," the PDP noted.

The PDP also said that in the IMD Global Competitiveness report, “the Philippines ranked 43rd out of 57 countries and last among five ASEAN members; next to last in infrastructure; and 51st in economic performance." In the Transparency International Corruption Perception Index, the country “placed 139th out of 180 countries and 6th among the ASEAN-6.

The PDP added that last year, “the country ranked 144th among 183 countries and also last among the ASEAN-6 in the International Finance Corporation/World Bank’s (IFC/WB) Doing Business 2010 Report."

Red tape

In the 2011 Doing Business Report, the country was 148th in terms of ease of doing business with and “was listed among the countries with high number of procedures for starting a business, although wide differences exist across different Philippine cities."

The Aquino administration’s economic master plan also admitted that, “there is broad agreement that the process of applying for a business renewal registration is a long, difficult, and tedious process. Starting a business in a Philippine city involves an average of 15 procedures, takes 38 days, and costs 29.7 percent of income per capita." — With Earl Victor Rosero/VS, GMA News