Introduction

Nowadays, the Philippines is one of the Asian countries that is to be considered when investing because of the low cost in doing business in which the companies tend to save more. Aside from the cost of doing business, the Filipino workforce is one of the most compelling advantages the Philippines has over any other Asian country. With higher education priority, the literacy rate in the country is 94.6% among the highest. English is taught in all schools, making the Philippines the worlds third largest English-speaking country. As to location, the Philippines is located right in the heart of Asia today the fastest growing region. It is located within four hours flying time from major capitals of the region. Sited at the crossroads of the eastern and western business, it is a critical entry point to over 500 million people in the Association of Southeast Asian Nations (ASEAN) market and a gateway of international shipping and air lanes suited for European and American businesses. It is also a fact that the Philippines has abundant resources, being an archipelago it offers diverse natural resources, from land to marine to mineral resources. It is also the biggest copper producer in Southeast Asia and among the top ten producers of gold in the world. It is also home to 2,145 fish species, four times more than those found in the Bahamas. The Philippines also has a liberalized and business-friendly economy, being an open economy it allows 100% foreign ownership in almost all sectors and supports a Build-Operate-Transfer (BOT) investment scheme that other Asian countries emulate. And as a part of ASEAN it offers unlimited business opportunities.

The Board of Investments (BOI), as the national investment promotion agency of the government, reflects the countrys keen interest in keeping its doors open to investors both foreign and domestic. BOIs efforts are based on the governments set goals of encouraging more economic activities that will take the country to a higher level of global competitiveness, and opening more opportunities that will generate more gainful employment for the people.

Investment Priorities Plan

Investment Priorities Plan as provided for in Article 26 of the Omnibus Investments Code of 1987 (Executive Order No. 226):

ART. 26. Investment Priorities Plan shall mean the overall plan prepared by the Board which includes and contains:

(a) The specific activities and generic categories of economic activity wherein investments are to be encouraged and the corresponding products and commodities to be grown, processed or manufactured pursuant thereto for the domestic or export market; (b) Specific public utilities which can qualify for incentives under this Code and which shall be supported by studies of existing and prospective regional demands for the services of such public utilities in the light of the level and structure of income, production, trade, prices and relevant economic and technical factors of the regions as well as the existing facilities to produce such services; (c) Specific activities where the potential for utilization of indigenous non-petroleum based fuels or sources of energy can be best promoted; and (d) Such other information, analyses, data, guidelines or criteria as the Board may deem appropriate.

The specific and generic activities to be included in the Investment Priorities Plan with their status as pioneer or non-pioneer shall be determined by the Board in accordance with the criteria set forth in this Book.

This plan outlines the sectors in which the Filipino government is actively promoting investment with incentives and a favorable regulatory framework. Every year, the Board of Investments, after consulting the different appropriate government agencies and private sectors submits to the President an Investment Priorities Plan. It must be shown that the economic activity included in the Investment Priorities Plan is economically, technically and financially sound after thorough investigation and analysis by the Board. The determination of preferred areas of investment to be listed in the Investment Priorities Plan shall be based on long-run comparative advantage, taking into account the value of social objectives and employing economic criteria along with market, technical; and financial analyses. Article 28 of Executive Order No. 226 provides for the criteria in investment priority determination wherein it enumerated the criteria that the Board shall take into account when preparing for the Investment Priorities Plan. The Board shall submit the same to the President, who shall proclaim the whole or part of such plan as in effect or return the same to the Board for revision. Pursuant to Article 30 of Executive Order 226, an Investment Priorities Plan can be also a subject to amendments as long as it will not impair whatever rights may have already been legally vested in qualified enterprises which shall continue to enjoy such rights to the full extent allowed under this Code. y Upon approval of the plan, in whole or in part or upon approval of an amendment thereof, the plan or the amendment, specifying and declaring the preferred areas of investment and their corresponding measured capacity shall be published in at least one (1) newspaper of general circulation and all such areas shall be open for application until publication of an amendment or deletion thereof, or until the Board approves registration of enterprises which fill the measured capacity.

To suffice the investors need for a stable and predictable business environment as reflected in the governments investment priorities, the 2012 Investment Priorities Plan (IPP) has been carried over as this years IPP. Advancing the same theme: A New Day for Investments: Coherent, Consistent and Creative, and moving towards the same goal of having More Investments, More Jobs, the 2013 IPP has been further refined to target investment areas to achieve a more focused IPP consistent with the objectives to: Maximize the opportunities from the implementation of free trade agreements (FTAs); Enhance public-private partnerships (PPP); Strengthen the countrys competitiveness; and Promote a green economy, which, in turn, would create more jobs, enhance the delivery of basic social services, and address the challenges of climate change.

2013 Investment Priorities Plan

The 2013 IPP contains the following priority investment areas:

The Regular List, which has thirteen (13) priority investment areas that were identified to support the current priority programs of the government. The Export Activities, which covers manufacture of export products, services exports and activities in support of exporters. The Mandatory List contains areas/activities where the inclusion in the IPP and/or the grant of incentives under Executive Order (EO) No. 226 is mandated by law. The ARMM List, which encompasses priority investment areas that have been determined by the Regional Board of Investments of the Autonomous Region in Muslim Mindanao (RBOI-ARMM) in accordance with EO 458.

The coverage, description and entitlement to incentives of the following listed activities shall be defined and clarified in the General Policies and Specific Guidelines to be issued by the Board of Investments (BOI). The extent of entitlement to incentives shall be based on the projects net value added, job generation, multiplier effect and measured capacity.

I. PREFERRED ACTIVITIES

1. Agriculture/Agribusiness and Fishery

This covers commercial production and commercial processing of agricultural, herbal and fishery products (including their by-products and wastes). This also covers agriculture- and fishery-related activities such as irrigation, post harvest, cold storage, blast freezing, and the production of fertilizers and pesticides.

a. Commercial production

This covers the production of agricultural (crops, poultry and livestock) and fishery products. In general, crop production should involve new plantation areas to qualify for registration. This also covers intercropping of high value crops as identified by the Department of Agriculture (DA). Application for registration must be accompanied by an endorsement from the Department of Agriculture (DA).

b. Commercial processing

This covers the following:

i. Conversion of agricultural and fishery products, their byproducts and wastes, to a form ready for further processing or final consumption;ii. Extraction of higher value substances from agricultural and forest-based raw materials through bioprocessing as endorsed by the concerned government agency; andiii. Production of animal and aqua feeds excluding those for game animals, fowls and other species for pet/leisure purposes.

Processing of agricultural products should involve domestically produced raw or semi-processed agricultural products, unless the raw or semi-processed raw materials are not locally produced (NLP) or not in sufficient quantity (NISQ). If using imported raw or semi-processed agricultural products that are locally produced (LP) or in sufficient quantity (ISQ), the project may qualify for registration, provided that the finished/final product is for export, or the project qualifies for pioneer status.

c. Services in Support of Agriculture / Agribusiness and Fishery

IrrigationThis covers irrigation system primarily intended to render service to agricultural farms. Irrigation system shall include water source, distribution lines and control mechanisms. The system may also include prime movers, pumps, generators and transformers. System capacity is expressed in terms of cubic meters of irrigation water per year. Only revenues generated from services rendered to other agricultural farms may be entitled to ITH.

Harvesting ServicesThis covers mechanized harvesting services.

Post Harvest FacilitiesThis covers the establishment and operation of the following facilities:

i. cold storage,ii. freezing,iii. bulk handling and storage,iv. packing houses,v. trading centers,vi. ice plants in LDAs, andvii. triple A slaughterhouses as endorsed by the National Meat Inspection Service (NMIS).

Only revenues generated from services rendered to other agricultural enterprises may be entitled to ITH.

Philippine Agriculture has enormous potential because of its favorable geographic location to export markets and large arable land. Investment opportunities for the following: High value crops coffee, avocado, squash, red hot chili, peanuts, mongo beans. New varieties of coconut (higher yields and faster maturities) Intercropping (cacao with coconut) Convert commodities to specialty products Agri-tourism Constraints to Philippine Agriculture Underinvested in Agricultural Sector Research and development is low priority Lack of agricultural credit support and ability of farmers to access capital Corruption

2. Creative Industries/Knowledge-Based Services

This covers business process outsourcing (BPO) activities, and IT and IT-enabled services that involve original content. This covers creative industries/knowledge-based services with original content such as but not limited to software development, animation, engineering and architectural design, product design, and game and applications development.

Prior to registration, applicant must submit proof of ownership or rights over the intellectual property concerned, such as copyright filed with National Library/Supreme Court Library or their deputized agencies. All ICT projects shall install internal security system compliant with ISO 27001 or its equivalent.

Information technology and business process outsourcing (IT-BPO) is the fastest-growing employment and one of the highest revenue generating economic sectors in the Philippines today. IT-BPO is the biggest of our Seven Big Winners, because of its current size, high growth rate, and potential to employ millions of Filipinos. The sector originated from data-entry and software-writing services in the pre-Internet years and has grown exponentially during the past decade. Beyond call center services (including customer relationship management and technical support), a wide variety of other business processes are fulfilled over the Internet or leased lines by providers in the Philippines. These include finance and accounting, creative services, billing and collections, document digitization and search engines, engineering design, financial and legal research, human resource management, medical transcription and coding, and publishing.

3. Shipbuilding

This covers the construction and repair of ships. This also covers shipbreaking / shiprecycling.

The following are the qualifications for registration:

1. For Shipbuilding, vessels to be built must be at least 500 GT.2. For Shipbreaking / Ship recycling, facilities must have a dry-docking or dismantling slipway with a minimum capacity of 1,500 DWT. Registered enterprises must comply with DOLE Department Circular No. 1 series of 2009 on the Guidelines on Occupational Safety and Health in Shipbuilding, Ship Repair and Shipbreaking Industry and secure a copy of Department of Environment and Natural Resources (DENR) issued Environmental Compliance Certificate (ECC).

Registered enterprises involved in shipbreaking/ship recycling must comply with the requirements of the Hong Kong International Convention for the Safe and Environmentally Sound Recycling of Ships including the preparation of a Ship Recycling Facility Plan and the Technical Guidelines for the Environmentally Sound Management of the Full and Partial Dismantling of Ships.

Any of the following may qualify for pioneer status:

1. Shipbuilding or ship repair facilities with a minimum lifting capacity of 20,000 DWT.2. Shipbuilding or ship repair facilities with a minimum berthing capacity of 7,500 DWT

Prior to start of commercial operation, the registered enterprise must submit a copy of its License/Authorization or its equivalent from the MARINA or other concerned agency.

So far, the Philippines is the fourth largest shipbuilder, next to Korea, China and Japan. The arrival of foreign shipbuilders in the Philippines propelled the export growth of Philippine-made ships in the international market. After being recognized as the fourth largest shipbuilder in the world, shipyeards established in the Philippines are now building more ships of larger tonnage capacities like bulk carriers, container ships and passenger ferries. The construction of 180,000-DWT commercial ship by Hanjin Heavy Industries Corporation, a South Korean shipbuilding giant, shows that the Philippines can really build world-class ocean-going vessels. Shipbuilding has a big opportunity in the export market Shipyards in major shipbuilding countries are often fully booked for new orders. Existing shipbuilders expand their operations in neighboring countries in response to the increasing number of vessels being ordered by foreing shippers. Shipbuilding is now shifting to Asia. The Philippines, which specializes in production, will likely exceed market shares of the traditional shipbuilding nations. Ships built in the Philippines are partnered together with their durability and quality.

4. Mass Housing

This covers the development of low-cost mass housing. This also covers the manufacture of modular housing components preferably using indigenous materials.

The following are the qualifications for registration:

1. The selling price of each housing unit shall be more than Php450,000.00 but not exceeding Php 3.0 million;2. Must be new or expanding low-cost mass housing project;3. For vertical housing projects, at least 51% of the total floor area, excluding common facilities and parking areas, must be devoted to housing units.

In cases of un-incorporated joint venture and similar arrangements between landowner and developer wherein the sharing scheme is in terms of the number of lots or units built, only the share of the developer may qualify for registration. Projects that have already been completed and have incurred sales (booked sales) of housing packages shall not qualify for registration.

Any of the following may be considered as an expansion project:

1. Construction of additional floors or annexes intended for mass housing units;2. If the project will locate adjacent or contiguous to an existing mass housing project owned by the same entity and shall share common facilities including access to the existing project.

For this purpose, all low-cost mass housing projects must comply withthe following:

1. Socialized housing requirement by building socialized housing units in an area equivalent to at least 20% of the total registered project area or total BOI registered project cost for horizontal housing and 20% of the total floor area of qualified saleable housing units for vertical housing projects.

This may be done through any of the following modes:

i. Development of a new settlement directly undertaken by the registered entity;ii. Development of a new settlement through joint venturearrangements with any of the following:

a. Local Government Unit,b. Subsidiary of the BOI-registered entity,c. Developer accredited by the HLURB.

In the case of joint venture projects, the BOI registered entity shall be required to provide proof of funds transferred to the implementing entity.

1. In lieu of the above modes for compliance with the socializedhousing requirement, vertical mass housing projects may opt to donate provided: (1) the donation is made to BOI accredited NGO and (2) the amount to be donated shall be equivalent to 30% of (20% of the building construction cost based on the actual number or equivalent total floor area of qualified saleable low cost housing units) or not less than 40% of the estimated ITH. Equivalent total floor area refers to the sum total of the floor area of all the registered low-cost mass housing units.2. Compliance with the socialized housing requirement must be completed within the ITH availment period and should be proportionate to the number of low-cost housing units being applied for ITH for the taxable year.3. Non-compliance with the 20% socialized housing requirements on previous registrations shall result in denial of applications for registration for succeeding projects.4. Project shall conform with the design standards set forth in the Rules and Regulations to Implement B.P. No. 220/P.D. No. 957 and other related laws.

Application for registration must be accompanied by a copy of the Development Permit issued by HLURB or concerned LGU. Prior to registration, horizontal housing project applicant must submit copies of License to Sell (LTS) and Certificate of Registration (CoR) issued by HLURB. For vertical housing project, applicant may submit a copy of its temporary LTS provided that the copies of the final LTS and CoR shall be submitted prior to start of commercial operation. Eligible projects in NCR, and Metro Cebu shall be entitled to three (3) years ITH. Interest income arising from in-house financing shall not be entitled to ITH.

Modular housing components

This covers the manufacture of modular housing components preferably using indigenous materials. These include roof/framing systems, wall/partition systems, flooring systems, door/window systems, and finishing/ceiling systems.

Application for registration must be accompanied by an endorsement from AITECH. The firm shall sell at least 50% of total annual production to mass housing projects.

5. Iron and Steel

This covers basic iron and steel products, long steel products (billets and reinforcing steel bars), and flat hot-/cold-rolled products. Basic iron products include refined iron ore and primary steel products.

This also covers the manufacture of flat products, long products and fabrication of machinery, equipment and implements. All iron and steel products must be compliant with the applicable Philippine National Standards (PNS) or International standards.

STEEL DEMAND Continuing growth of real estate developments Reconstruction of typhoon and earthquake affected areas Increased government infrastructure spending STEEL SUPPLY Significant rise of imports for billets, wire rods, rebars, pipes and tubes Significant rise of local production for rebars, pipes and tubes

6. Energy

This covers the exploration, development, and/or utilization of energy sources adopting environmentally-friendly technologies that comply with the Clean Air Act, the Environmental Impact System law, the Biofuels Act, where applicable, and other relevant environment laws.

In the case of coal-fired projects, submission of ECC is a pre-registration requirement. Projects that would utilize raw materials or semi-processed raw materials that are not locally produced (NLP) or not in sufficient quantity (NISQ) are exempt from NVA requirement. Within one (1) year from date of registration, projects with loan components in their financing scheme must have achieved financial closing; otherwise the projects registration shall be subject to automatic cancellation. As evidence of financial closing, the enterprise shall submit a certification, in a form and substance satisfactory to BOI, issued and addressed by the lenders to BOI confirming the financial agreements are in full force and in effect.

Any of the following may qualify for pioneer status:

1. Power generation projects located in missionary areas or off-grid areas;2. Projects that cost at least the Philippine Peso equivalent of US$2 million per megawatt;

For power generation projects, only revenues from power generated and sold to the grid, other entities and/or communities based on bilateral contracts approved by the ERC may be entitled to ITH. Power projects that are built contiguous to existing generating facilities shall be considered as expansion projects. However, if the existing base load plant has consistently dispatched at least 80% of their registered capacity for the past 3 years, the project to be registered may be considered new. The amount of ITH to be granted shall not exceed 10% of the total revenue of generated power. Applications for registration must be endorsed by the Department of Energy (DOE).

7. Infrastructure

This covers transport, water, logistics, waste management facilities, physical infrastructure (tollways and telecommunication facilities) and PPP projects.

a. Transport

This covers air, water and land mass transport.

(1) Air Transport

Air transport operation includes passenger and/or cargo operation for commercial purposes. Lease with option to purchase an aircraft may be allowed. Acquisition of additional brand new aircraft/s may beregistered as new.

Application for registration must be accompanied by an endorsement from the Civil Aeronautics Board (CAB), whenapplicable. Such endorsement must contain information on the routes to be served.

Prior to start of commercial operation of each aircraft, the registered enterprise must submit a copy of the Certificate of Airworthiness issued by Civil Aviation Authority of the Philippines (CAAP).

Only revenues derived from cargo air freight fares, passenger air fares, and income from ancillary revenues on refund, cancellation and rebooking fees shall be entitled to ITH. Incidental revenues such as those earned from excess baggage (including prepaid baggage), seat selector options, merchandise sales such as sale of meals/beverages, souvenirs, travel related products and other commodities, package tours and other incidental revenues as may be determined by the Board shall not be entitled to ITH.

(2) Water Transport

This covers domestic/inter-island shipping, i.e. pure cargo, passenger, and passenger-cargo vessel operations including RORO Terminal System operations.

The following are the qualifications for registration:

1. Must comply with the following age requirements:

Type of Vessel Maximum Age from Original Date of Launching

Tankers 10 yearsHigh-speed Craft 5 yearsPassenger/Cargo 15 years

The age of the vessel shall be reckoned from the ships date of launching based on the Builders Certificate or Vessel Registry and must be complied with at the time of application.2. Tankers, High-speed Craft, RORO Vessels serving primary routes and Passenger/Cargo vessels must have gross weight of 150 GT and above.

Application for registration must be accompanied by the following:

i. an endorsement by MARINA; andii. proof of accreditation of the shipping enterprise by MARINA.

Prior to start of commercial operation, the registered enterprise must submit the following:

i. proof that the vessel is registered with MARINA, andii. copies of Class and Statutory Certificates as required by MARINA.

RORO operator /enterprise serving missionary routes, as indicated in the Certificate of Public Convenience (CPC) issued by MARINA, may qualify for pioneer status. Acquisition of additional vessel/s may be registered as new project. Lease or charter of foreign-owned vessel with option to purchase may be allowed. Pure lease or bareboat charter may be allowed provided the lease contract is for a minimum of five (5) years.

(3) Land Mass Transport

This covers mass transport using brand new Alternative Fuel Vehicle (AFV) buses. AFV buses shall be limited to buses that run on electric batteries, compressed natural gas, or hybrid vehicles that run on electric batteries and gasoline/diesel/other fuels.

The following are the qualifications for registration:

1. Must utilize brand new electric buses or other AFV buses with at least Euro 4 compliant engine and using Euro 4 fuel;2. Must have its own terminal and garage that can accommodate all the buses under its franchise(s).

Application for registration must be accompanied by a copy of the application for franchise with the Land Transportation Franchising & Regulatory Board (LTFRB). Prior to start of commercial operation, the registered enterprise must submit a copy of its franchise(s) from the LTFRB.

b. Water Supply and/or Distribution

This covers bulk supply projects and new water distribution systems. Application covering both supply and distribution projects shall be unbundled showing the revenue and cost structure of each. Supply of water shall be limited to treated water and should be in accordance with the Philippine National Standard for Drinking Water. Distribution activity should include extraction of water, treatment and installation of distribution lines and flow metering systems. Application for registration must be accompanied by a copy of the Water Permit.

Prior to start of commercial operations, the registered enterprise must submit a copy of the Certificate of Public Convenience (CPC). Projects involving any of the foregoing areas of water operations dedicated to a particular industrial estate, industrial community, or subdivision are not qualified for registration under this listing.

c. Logistics

This covers ports, terminals (cargo terminals/container yards,LNG/CNG storage terminals, natural gas refueling stations and charging stations for electric vehicles), and warehouses.

(1) Ports

This covers the development and operation of airports and seaports.

Application for registration must be accompanied by an endorsement from the CAAP or the Philippine Ports Authority (PPA), whichever is applicable.

(2) Terminals

(a) Cargo terminals/Container yards

This covers terminals/yards handling solid or liquid cargo.

The following are the qualifications for registration:

1. Must have new facilities; and2. Must have a system of ingress and egress to prevent traffic buildup/obstruction of thoroughfares on a 24-hour basis as certified by DOTC, MMDA and/or other concerned agency.

(b) LNG/CNG storage, distribution and marketing

This covers the establishment and operation of storage, distribution and marketing facilities for the bulk handling/sale of natural gas in accordance with relevant Philippine National Standards (PNS).

This also covers the establishment and operation of natural gas refueling station and related infrastructures and facilities in accordance with relevant Philippine National Standard (PNS). Foreign-owned stations must comply with the Retail Trade Law (R.A. No. 8762).

For marketing, distribution and refueling stations, the registered enterprise must submit a copy of its Permit to Operate and Supply Natural Gas issued by the DOE prior to start of commercial operations. For storage, the registered enterprise must submit a copy of its Permit to Operate issued by the DOE prior to start of commercial operation.

The following are the qualifications for registration for storage, marketing and distribution:

1. Must have new facilities;2. Must cater to power plants, industrial plants, shipping vessels, commercial establishments or land transport; and3. Must cater to at least one (1) clientele, other than the proponents own business.

(c) Charging stations for electric vehicles

This covers the establishment of charging stations for electric vehicles. The charging stations could refer to a service station designed to simultaneously fast charge multiple vehicles similar to gasoline/diesel stations or a network of at least 5 charging stands. Application for registration must be accompanied by an endorsement from the Department of Energy (DOE).

(3) Warehouses

This covers the establishment of automated warehousing facilities with automated retrieval systems, conveyors, cranes and other cargo handling equipment. This also covers distribution or fulfilment centers. Only revenues generated from services rendered to other enterprises may be entitled to ITH.

d. Waste Management Facilities

This covers the establishment of toxic and hazardous waste (THW) treatment facilities.

The following are the qualifications for registration:

1. Must involve treatment, storage and disposal (TSD)2. Must be capable of handling THW3. Must handle only locally generated wastes

Prior to start of commercial operation, the registered enterprise must submit a copy of its TSD Registration Certificate issued by the Environmental Management Bureau (EMB) of the DENR. If handling radioactive wastes, the registered enterprise must submit a copy of the License to Operate a Radioactive Waste Management Facility from the Philippine Nuclear Research Institute (PNRI) of the Department of Science and Technology (DOST) in addition to the TSD Registration Certificate.

e. Physical Infrastructure

This covers tollways, and telecommunication facilities.

(1) Tollways

This covers the development, including rehabilitation, upgrading, and/or expansion, and/or operation of tollways. Upgrading of existing physical infrastructure may be registered as a new project provided that the cost of upgrading already approximates at least 90% of the prevailing cost of constructing a new physical infrastructure, as certified by the concerned agency.

If the cost of upgrading of the physical infrastructure is less than 90% of the prevailing cost of constructing a new physical infrastructure, the project may be registered as a modernization activity but not entitled to ITH. For projects that will involve the development and operation of physical infrastructure to be undertaken by separate entities, both the developer and operator may qualify for registration. However, the developer may be entitled only to incentive on capital equipment directly needed for the operation of the physical infrastructure.

(2) Telecommunication infrastructure

This covers the establishment of new telecommunications infrastructure in the provinces particularly in the rural areas as endorsed by the National Telecommunications Commission (NTC) and utilizing at least fiber optic technology.

f. PPP Projects

This covers projects implemented under Republic Act 6957, as amended by Republic Act 7718 (Amended Build-Operate-and-Transfer Law).

8. Research and Development

This covers R&D activities and the establishment of research/testing laboratories, Centers of Excellence (COE) and technical vocational education and training institutions.

a. Research and Development

This covers all R & D activities including the establishment of research/testing laboratories (e.g., for pharmaceuticals, electronics, construction, etc.). This also covers the establishment and operation of facilities for the conduct of clinical trials (e.g. Clinical Research Organization or CRO). The registered CRO must submit a copy of Permit for Clinical Investigational Use (PCIU) issued by Food and Drugs Administration (FDA) before the conduct of each clinical trial. Application for registration must be accompanied by an endorsement from the DOST or other concerned agency, as may be deemed necessary.

b. Center of Excellence (COE)

This covers the establishment of the following:

1) Entrepreneurial/ technology/business incubation centers,2) Common service facilities, and3) Manufacturing, service and agribusiness entities located in the premises of state universities and colleges (SUCs) outside Metro Manila and with a special arrangement with the SUC to develop competencies in entrepreneurship, and research and development.

c. Training/Learning Institutions

This covers the establishment of institutions specializing in the technical vocational education and training (e.g., engineering, culinary arts, etc.) in support of the activities listed in this IPP.

The following are the requirements for registration:

1. The curriculum must be approved by either the Technical Education and Skills Development Authority (TESDA) for training courses or the Commission on Higher Education (CHED) for degree courses or other concerned government agencies/authority and endorsed by the appropriate industry association.2. The registered education/training/learning institutions must provide training laboratories and equipment, if applicable.

9. Green Projects

This covers the manufacture/assembly of goods and the establishment of energy efficiency-related facilities (such as district cooling systems), where either utilization of which would significantly lead to either the efficient use of energy, natural resources or raw materials; minimize/ prevent pollution; or reduce greenhouse gas emissions. Mere installation of energy efficiency-related equipment/device/fixtures shall not qualify for registration.

To qualify for registration, assembly operations must be integrated with the manufacture of at least one part/component for use in the assembly. Green Projects covers only projects other than those already listed in this IPP.

10. Manufacture of Motor Vehicles

a. Manufacture/assembly of motor vehicles

The project shall involve the manufacture/assembly of brand new motor vehicle units, excluding 2-stroke engine motorcycles and traditional tricycles that are compliant with the prevailing national standards and regulations on the registration, use and operation of motor vehicles.

Any of the following may qualify as new:

1. Projects that will involve the establishment of a factory complete with production machinery/equipment and facilities such as welding section, assembly section, metal treatment section, painting section, testing facility for road worthiness and emission standard compliance, and predelivery inspection section.2. Projects of an existing motor vehicle manufacturer/assembler of passenger car/commercial vehicle that involves the production of a new model or a full model change (FMC), provided there is new investments of at least Php 200 million which may include manufacture of parts and components.

Any of the following may qualify for pioneer status:

1. Projects covered under paragraph a.1 above for manufacture/assembly of passenger cars and/or commercial vehicles with investments of at least US$50 million and for the manufacture/assembly of motorcycle with investments of at least US$4 million. Investments may include the cost of the acquisition of an existing assets or facilities.2. Projects covered under paragraph a.2 above with investments of at least US$20 million for passenger cars and/or commercial vehicles, US$1.5 million for motorcycles 3. Projects on the manufacture/assembly of alternative fuel vehicle and electric vehicles.

Alternative fuel vehicles include the following:i. Hybrid vehicles are vehicles that run on electric batteries and gasoline/diesel/other fuels.ii. Electric vehicles are vehicles that run solely on electric power.iii. Flexible-fuel vehicles are vehicles that run on gasoline/diesel in combination with alternative fuel such as butnot limited to:

a. Bioethanol vehicles that run on gasoline and a minimum ethanol content/blend of at least 20%b. Biodiesel vehicles that run on diesel and a minimum biodiesel blend/content of at least 5%c. Compressed Natural Gas Vehicles are vehicles that run on Compressed Natural Gas (CNG)d. Other vehicles powered by LPG, fuel cell and other alternative fuels.

iv. Manufacture/assembly of brand new three or four-wheel Philippine utility vehicles for cargos and/or passengers Entitlement to ITH is subject to a Net Value Added (NVA) of at least 40% with full exemption for projects with NVA of at least 65%. ITH exemption for projects with NVA between 40% and 60% shall be subject to pro-ratio.

b. Manufacture of parts and components

This covers the manufacture of motor vehicle parts and components either as original equipment manufacturer (OEM) or after-market products.

Any of the following may qualify for pioneer status:

1. Manufacture of engines and transmissions;2. Manufacture of tool & die to produce chassis and engine;3. Establishment of common facility for heat treatment, forging, stamping of motor vehicle parts and components;4. Production of electric motors, batteries other than lead acid batteries, controller assembly and battery charger for electric vehicles.

11. Strategic Projects

This covers projects that exhibit very high social economic returns that will significantly contribute to the countrys economic development.

The social economic returns of the proposed project shall be measured in terms of the following:

1. Consumer-based benefits (e.g., price, availability, quality);2. Forward and backward linkages with existing industries in the country;3. Generation of at least 500 direct employment or use of highly specialized or advanced technology;4. Generation of at least US$1 million in foreign exchange savings, when applicable;5. Stature of the proponent as a global player, when applicable.

Notwithstanding the preceding paragraphs, manufacture of packaging products that will involve product or process innovation, which shall lead to significant improvements in quality, and value of the packaged products shall also be deemed as Strategic Project. Likewise, the manufacture of essential drugs and medicines as listed in the Philippine National Drug Formulary (PNDF) shall be deemed as Strategic Project. Projects under these activities will be approved upon determination by the Board in consultation with the Department of Finance (DOF), National Economic Development Authority (NEDA) and other appropriate government agencies.

12. Hospital/Medical Services

This covers the establishment and operation of medical facilities including general and specialty hospitals, and other health facilities. Application for registration must be accompanied by an endorsement from the Bureau of Health Facilities and Services of the DOH. Only facilities outside Metro Manila may qualify for registration.

Only revenues from the provision of medical and diagnostic services shall be entitled to ITH. Revenues from operating a pharmacy, food services and any other non-treatment related services will not be eligible for ITH. Submit copies of License to Operate issued by the DOH and Philhealth Accreditation.

13. Disaster Prevention, Mitigation and Recovery Projects

a. This covers projects that will prevent or mitigate adverse impacts of calamities and disasters, which may include installation of flood control systems; installation of early warning systems for typhoons, earthquake occurrences, tsunami and volcanic eruptions; manufacture or assembly of goods critical to disaster management; construction of dikes; and salvaging operations. These include the manufacture and assembly of equipment and goods that will be used for disasters, calamities and emergencies, the provision of rescue and retrieval services, the provision of information services related to disaster management, the provision of specialized equipment and services needed to restore vital public services in a fast and efficient manner, the provision of training services for first responders and any other activity that will contribute to the goals of mitigating risks to public safety caused by disasters, calamities and emergencies. Salvaging pertains to the rescue of a seriously damaged/incapacitated ship that may include refloating and towing of the ship to a safe place. It also pertains to the removal of a sunken or wrecked ship, derelict or hazards including cargoes thereof. Only income from salvaging operations (excluding income from artifacts/treasure recovered from sunken vessels/ships) may be entitled to ITH.

b. This also covers projects to rehabilitate areas affected by calamities and disasters or areas officially declared under a State of Calamity, which may include rebuilding of roads and bridges and other infrastructure after typhoons, earthquakes/flooding, volcanic eruptions, oil spill clean-up, and other disasters. For projects that will involve the development and operation of physical infrastructure to be undertaken by separate entities, both the developer and operator may qualify for registration. However, the developer may be entitled only to incentive on capital equipment directly needed for the operation of the physical infrastructure.

c. This further covers training for disaster preparedness, mitigation or recovery/rehabilitation/reconstruction. Application for registration must be accompanied by an endorsement from the concerned agency. Disaster Prevention, Mitigation and Recovery Projects covers only projects other than those already listed in this IPP.

II. MANDATORY LIST

This covers activities that require their inclusion in the IPP as provided for under existing laws.

1. Industrial Tree Plantation PD No. 705 Revised Forestry Code of the Philippines This covers extensive plantation of forest land and tree crops (except fruit trees) for commercial and industrial purposes.

Incentives under E.O. No. 226 or the following:

A. Treatment of the amounts expended by a lessee in the development and operation of an industrial tree plantation or tree farm prior to as ordinary and necessary business expenses or as capital expenditures; andB. Deduction from an investors taxable income for the year, of an annual investment allowance equivalent to thirty-three and one-third per cent (33-1/3%) of his actual investment during the year in an enterprise engaged in industrial tree plantation or tree farm.

2. Exploration, Mining, Quarrying and Processing of Minerals RA No. 7942 Philippine Mining Act 1995 This covers the exploration and development of mineral resources, mining/quarrying and processing of metallic and non-metallic minerals.

Incentives under E.O. No. 226 and the following:

A. Exemption from real property tax and other taxes or assessments of pollution control devices;B. Income tax-carry forward of losses; andC. Income tax-accelerated depreciation.

3. Publication or Printing of Books / Textbooks RA No. 8047 Book Puiblishing Industry Development Act This covers printing, re-printing, publication and content development of books or textbooks.

4. Refining, Storage, Marketing and Distribution of Petroleum Products RA 8479 Downstream Oil Industry Deregulation Act of 1998 This covers refining, storage, distribution and marketing of petroleum products.

Incentives

A. Income tax holiday (5 years);B. Additional deduction for labor expenses;C. Minimum tax and duty of three percent (3%) and value-added tax (VAT) on imported capital equipment;D. Tax credit on domestic capital equipment;E. Exemption from contractors tax;F. Unrestricted use of consigned equipment;G. Exemption from the real property tax on production equipment or machineries;H. Exemption from taxes and duties on imported spare parts;I. Such other applicable incentives under Article 39 of Executive Order No. 226.

5. Ecological Solid Waste Management Ra No. 9003 Ecological Solid Waste Management Act of 2001 This covers the establishment of waste recycling facilities.

Incentives

A. Duty exemption on imported capital equipment, vehicles and spare parts;B. Tax and duty exemption of donations, legacies and gift;C. Non-fiscal incentives under E.O. No. 226.

6. Clean Water Projects Ra No. 9275 Philippine Clean Water Act of 2004 This covers the establishment of wastewater treatment facilities and sewage collection integrated with treatment facilities and the adoption of water pollution control technology, cleaner production and waste minimization.

Incentives

A. Tax and duty exemption on imported capital equipment, vehicles and spare parts;B. Tax and duty exemption of donations, legacies and gift;C. Non-fiscal incentives under E.O. No. 226.

7. Rehabilitation, Self-Development and Self-Reliance of Persons with Disability RA No. 7277 Magna Carta for Persons with Disability This covers the manufacture of technical aids and appliances for the use and/or rehabilitaion of persons with disablity, and the establishment of special schools, homes, residential communities or retirement villages solely to suit the needs and requirements of persons with disablity.

Incentive

Incentives under E.O. No. 2268. Renewable Energy- RA No. 9513 Renewable Energy Act of 2008 This covers developers of renewable energy, including hybrid systems. This also covers manufacturers, fabricators and suppliers of locally produced renewable energy equipment and components.

Incentives

A. Income tax holiday (7 years);B. Duty-free importation of RE machinery, equipment and materials;C. Net Operating Loss Carry-Over (NOLCO);D. Corporate tax rate of 10% after ITH; E. Accelerated depreciation;F. VAT- zero rate on sale of fuel or power generated;G. Cash incentive for missionary electrification;H. Tax exemption of carbon credits; I. Tax credit on domestic capital equipment and services

9. Tourism RA No. 9593 Tourism Act of 2009 This covers tourism enterprises that are outside the tourism enterpise zones (TEZ) and are engaged in the following:

1. Touris transport services whether for land, sea or air for tourist use;2. Establishment and operation of:

Accomodation establishments such as but not limited to hotels, resorts, apartment hotels, tourist inns, private homes for homestay, ecolodges, condotels, serviced apartments, and bed and breakfast facilities; Convention and exhibition facilities or meetings, incentives, conventions and exhibitions (MICE) facilities; Amusement parks; Adventure and ecotourism facilities; Sports facilities and recreation centers; Theme parks; Health and wellness facilities such as but not limites to spas; Agri-tourism farms and facilities; and Tourism and training centers and institutes.

3. Development of retirement villages.4. Restoration/ preservation and operation of historical shrines, landmarks and structures.

Incentive

Incentives under E.O. No. 226

III. EXPORT ACTIVITIES

This covers the manufacture of export products, services exports and activities in support of exporters.

IV. ARMM List

The ARMM List covers priority activities that have been identified by the Regional Board of Investments of the ARMM (RBOI-ARMM) in accordance with E.O. No. 458. The RBOI-ARMM may also register and administer incentives to activities in this IPP for projects locating in the ARMM.

E.O. No. 458 states that Section 27, Article XIII of Republic Act No. 6734, otherwise known as the Organic Act of the Autonomous Region in Muslim Mindanao (ARMM) provides that the Autonomous Regional Government (ARG) shall regulate and exercise authority over foreign investments within its jurisdiction in accordance with its goals and priorities subject, however, to the Constitution and national policies; xx

Additionally, certain powers and functions were devolved by the Board of Investments were devolved to the Autonomous Regional Government. Among them are:

xxx

D. Evaluation of incentives to be availed by enterprises registered with the ARG;

xxxF. Assume promotion of investments within the ARMM consisted with the Investments Priorities Plan.G. Grant additional incentives, aside from those incentives under BOOK I- Title III, Article 39 of Executive Order No. 226, series of 1987, to wit:1. Income tax holiday;2. Additional deduction for labor expense.3. Tax and duty exemptions on imported capital equipment;4. Tax credits on domestic capital equipment;5. Exemption from contractor's tax;6. Simplification of Custom's procedures;7. Understricted use of consigned equipment;8. Employment of foreign nationals;9. Exemption on breeding stocks and genetic materials;10. Tax credit on domestic breeding stocks and genetic materials;11. Tax credits for taxes and duties on raw materials;12. Access to Bonded Manufacturing Trading Warehouse System;13. Exemption from taxes and duties on imported spare parts; and14. Exemption from wharfage due and export tax, duty, impost and fee.

xxxAdditionally, Sec.3 of the said Order states that the ARG is the group or entity responsible for the list of priority investments, which will be integrated in the National Investment Priorities Plan, and who shall, thus, receive incentives mentioned above. The submitted Regional Investment plan will be subject to the approval of the President. This is in accordance with the provisions of the Omnibus Investment Code, specifically Articles 27-31. Executive Order No. 458 quoted Article 28 of the Omnibus Investment Code which provides for the Criteria in Investment Priority Determination. It is thus stated therein that:No economic activity shall be included in the Investment Priority Plan unless it is shown to be economically, technically and financially sound after thorough investigation and analysis by the Board.The determination of preferred areas of investment to be listed in the Investment Priorities Plan shall be based on long-run comparative advantage, taking into account the value of social objectives and employing economic criteria along with market, technical, and financial analyses.The Board shall take into account the following:(a) Primarily, the economic soundness of the specific activity as shown by its economic internal rate of return;(b) The extent of contribution of an activity to a specific developmental goal;(c) Other indicators or comparative advantage;(d) Measured capacity as defined in Article 20; and(e) The market and technical aspects and considerations of the activity proposed to be included.In any of the declared preferred areas of investment, the Board may designate as pioneer areas the specific products and commodities that meet the requirements of Article 17 of this Code and review yearly whether such activity, as determined by the Board, shall continue as pioneer, otherwise, it shall be considered as non-pioneer and accordingly listed as such in the Investment Priorities Plan or removed from the Investment Priorities Plan.The list created was the same as the 2012 IPP.

A. Export Activities

1. Export Trader and Service Exporter2. Support Activities for Exporters

B. Agriculture, Agribusiness/Aquaculture & Fishery

This covers the production and processing of agricultural and fishery products (production of Halal meat and foods) vegetable oils, food crops, integrated coconut processing and plantation, activated carbon, production of beverage crops and plantation, seaweeds production and processing, fruit processing, aquaculture fish production and processing), young/sweet corn production potato and sweet potato plantation/processing, cutflower production/processing, abaca plantation/processing, oil palm plantation/processing/refining and germinated oil palm seeds, feed production, jatropha plantation/processing, sugarcane plantation/processing and refineries, quality seed and seedlings of fruit trees and other planting materials propagated asexually ot by tissue culture, pearl culture/processing, production of livestock and poultry that includes processing, crocodile farming and processing, sericulture, feeds production and production of plantation crops and other pharmaceuticals, medical herbs/essential oil plants, biomass, rubber, carrageenan, mangosteen and moringa.

C. Basic Industries

This covers the production of pharmaceuticals such as antibiotics and medical devices, textile and textile products, inorganic and organic fertilizers using solid wastes materials, mining exploration and development of mineral resources (mining and quarrying of metallic and non-metallic minerals which includes small scale as defined under P.D. 1899 but to exclude river beds in operations and processing of minerals such as beneficiation and other metallurgical methods) and cement production of atleast 1.0 million MTPY capacity (clinker based)

D. Consumer Manufactures

This covers processing of rubber products to be integrated with plantation and leather products.

E. Infrastructure and Services

This covers public utilities with developmental route of the five provinces and one city of ARMM and 0ther adjacent cities and provinces such as common carriers, electric transmission /distribution, water supply facilities/waterways and sewerage systems, buses/cargo trucks, other specialized mass transport systems, power generation like hydro power, geothermal and natural gas, and telecommunications with international gateways.

F. Industrial Service Facilities

This covers engineering products, electronics and telecommunication products, fabrication of construction materials and hydropower plant.

G. Engineering industries

This covers engineering products, electronics and telecommunication products, fabrication of construction materials and hydropower plant.

H. Logistics

This covers the transportation of cargoes and/or passengers (air; sea and/or land) and freight/cargo forwarding.

I. BIMP EAGA Trade and Investment Enterprises

This covers enterprises located or have their base of operation in the BIMP EAGA, namely, Brunei; Sabah and Sarawak in Malaysia; Maluku, Sulawesi, Kalimantan and Iringaya in Indonesia; and Mindanao and Palawan in the Philippines, who shall invest and engage in economic activity in the ARMM including the age old Traditional Barter Trading System in the BIMP EAGA.

Because of BIMP-EAGAs resources it has allowed its members to produces agricultural and industrial crops, livestock and poultry, and aquaculture and marine products. It also provides tourist attractions which can be on an eye level with other counties. Its main goal is to be the food basket not only in ASEAN countries but for the whole Asia and as an economic destination.

J. Tourism

This covers the establishment of tourism estate subject to guidelines developed jointly by RBOI-ARMM and the DOT-ARMM, tourist accommodation facilities, tourist transport facilities and development of retirement villages which shall include health and medical facilities including amenities required by the Philippine Retirement Authority (PRA) and subject to guidelines to be approved by the RBOI-ARMM in consultation with the PRA, the DOH, the Regional Planning and Development Office and other concerned agencies.

K. Health and Education Services and Facilities

This covers the establishment of private hospitals, medical clinics, wellness centers, primary education, secondary education, tertiary education (colleges, universities and vocational-technical schools) and ancillary services including any and all health and edication related investment.

L. Halal Industry

This covers services and the production and processing of products under Muslim or Islamic law.

The word Halal, generally means, permitted or lawful in Arabic

Overview of 2014 Investment Priorities Plan

The Investment Priorities Plan (IPP) is annually issued for the past 40 years by the Board of Investments (BOI) providing for a list of promoted areas of investments which are eligible for government incentives. The 2014 IPP, however, will have a three-year effectivity period. The three-year period is in line to the governments aim for a consistent, coherent, and a predictable policy environment which attracts serious investors to choose the Philippines as their investment destination according to Trade Undersecretary and BOI managing head Adrian Cristobal Jr.

The 2014 IPP, however, is yet to be issued as the BOI has not yet finalized the final list of the priority sectors eligible for fiscal incentives. Currently, the BOI has been conducting series of inter-agency consultations and deliberations for the 2014 IPP framework taking into consideration the actual needs of industries. Likewise, industry roadmaps, national development plans, industry studies, and relevant empirical work related to incentives are being analysed and reviewed.

During its first public hearing, the BOI unveiled preliminary 7 specific sectors that would be entitled to government tax incentives and other policy interventions in the next three years in an effort to create more quality jobs and achieve inclusive growth for most Filipinos. The seven sectors include:

1.) Manufacturing that covers motor vehicle assembly like engineered products, body panel, stamping, engines; chemicals such as fertilizers, pesticides, copper wire rod, , paper pulp etc; 2. Agribusiness and fisheries like extraction of natural ingredients, mechanized agri-support services and infrastructure; 3. Services like integrated circuit design, ship repair, testing facilities, and charging stations for e-vehicles; 4. Economic and low- cost housing horizontal and vertical; 5. Energy; 6. Public infrastructure and logistics like airports and PPP projects; 7. Sectors mandated by law to be entitled to incentives like tree plantation, mining, refining, storage and distribution of petroleum products, renewable energy and tourism

Annex A

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