Last year, the government, through the Department of Trade and Industry launched its RED (Retention, Expansion and Diversification) program which encourages investors to retain, expand and diversify their activities in the country.
To further strengthen the RED program, the National Economic and Development Authority (NEDA) Board has recently approved the inclusion of the RED program in the 2006 Investment Priorities Program (IPP) as a preferred investment activity, entitling it to fiscal perks.
According to Board of Investments (BOI) managing head Elmer C. Hernandez, the Philippines wants to provide "the necessary environment" for investors to come in.
However, availment of the RED program would still face some limitations and restriction as provided for in Article 11 of the Omnibus Investment Code.
Thus, specifically restricted to avail of the RED program would be commercial banks, savings and mortgage banks, rural banks, savings and loan associations, building and loan associations, development banks, trust companies, investment banks, finance companies, brokers and dealers in securities, consumers’ cooperatives and credit unions, and other business organizations whose principal purpose or principal source of income is to receive deposits, lend or borrow money, buy and sell or otherwise deal, trade or invest in common or preferred stocks, debentures, bond or other marketable instruments generally recognized as securities, or discharge other similar intermediary, trust or fiduciary functions.
The Philippines, in the past, has lost some big investors which chose to locate in other countries in the region due to more attractive incentives offered.
These included Toshiba and Intel which left and then returned.
Philippine economic authorities have thus come up with a program that would now encourage and even reward existing investors that choose to retain their investments, expand or diversify their activities.
In a related development, the government has decided to include all types of export activity in the Medium-term Philippine Development Plan and the Philippine Export Development Plan for listing in the 2006 Investment Priorities Plan (IPP).
In the 2005 IPP, only a limited number of export activities are listed as preferred investment activities entitled to fiscal incentives. These included information technology and IT-enabled services, electronics, mining, jewelry, fashion garments, health and wellness, tourism, shipbuilding and agribusiness.
With the expansion of all export activities as a preferred investment area, investors engaged in export activities listed in the MTPDP and PEDP would now be entitled to fiscal perks.
The export community has been seeking government action on four major areas of concerns.