BOI not likely to grant full incentives to $300-M Philip Morris project

The Board of Investments (BOI) is not inclined to extend incentives to the $300 million cigarette manufacturing project of Philip Morris International.

Under the rules of the BOI and the Philippine Economic Zone Authority (PEZA), firms targeting 70 percent of their production for the domestic market are not entitled to any incentives.

Philip Morris is planning to export only 30 percent of its output.

However, Trade and Industry Secretary Manuel Roxas II who is also the concurrent chairman of the BOI indicated the possibility that the government may be willing to discuss the issue of incentives when top officials of Philip Morris visit the country this month.

Roxas said that Philip Morris officials are scheduled to meet with President Arroyo on March 22.

Roxas said the government may be willing to grant some incentives on a pro-rata basis, if Philip Morris would increase its export targets.

Earlier, Philip Morris informed Roxas of its plan to invest $300 million in the country by building a new factory somewhere in Southern Tagalog which would serve as Philip Morris new production base in the region.
The new plant would have a production capacity of 30 billion sticks annually.

In the past Philip Morris Philippines was only the local licensee of PMI. It also had a tie up with La Suerte Cigar & Cigarette Manufacturing Co. PMI Intends to maintain that partnership.

PMP currently employs about 1,200 employes in its Paranaque plant which has a production capacity of up to 20 billion sticks annually.

PMP posted sales of P14.33 billion in 1999 and raked in a profit of P251.58 million in the same year.

Roxas said that aside from cigarette manufacturing, PMI has not discussed any other plans for its food manufacturing operations.

Roxas was optimistic that the $300 million investment of PMI is a "good start" especially "if this is successful, it would improve our chances of obtaining other relocations."