Thai agri firm appeals for retention of tax incentives

MANILA, Philippines - Embattled Charoen Pokphand Foods Philippines Corporation (CP Foods) is appealing for understanding from the government regarding the tax incentive issue raised by local agribusiness groups, saying a reduction of incentives would send a negative message to other investors.

CP Foods is the local arm of Thai multinational conglomerate Charoen Pokphand Group (CP) which in engaged in agro-industrial and aquaculture business.

The Thai firm has a workforce of 450 employees in its six facilities in Luzon.

It invested at least P7 billion to develop its swine, broiler and feed business.

In an interview yesterday, CP Foods senior vice president for Livestock Feed Business Arnnop Jeanprasert said CP Foods conformed to the requirements set by the Board of Investments (BOI) for foreign investors.

“We came here to the Philippines in response to government offer and their strong desire to attract foreign investors like us. We came in with good intentions and in good faith, and with the desire to bring our expertise, technology and capital towards helping the country in its agricultural modernization drive and addressing its food security concerns just as we have already been doing in other countries where we operate,” he said.

“If the Philippine government decides to reduce the incentive already given to us, we cannot do anything but respect the decision. But on the other hand, it would really keep us seriously wondering what was our fault and where did we go wrong. Removing or reducing incentives midway does not not improve foreign investors’ confidence in this country and its leaders. It would send a very negative message to other investors doing business in the country,” he added.

Jeanprasert said CP has not yet received word either from the Department of Trade and Industry (DTI) or Malacanang on the assessment of the petition of farmers to scrap or reduce the tax incentives given to the company.

“We hope the Philippine government is reasonable and understand our position. We have high regard to the government and the Filipino people,” he said.

CP maintains that it was given the standard incentives applicable to foreign and local businesses.

For its swine, it was granted a four-year income tax holiday (ITH) and six year ITH for its broiler project.

On both projects, the company was granted duty-free importation of capital equipment but is made to pay the 12 percent Value-Added Tax (VAT).

The company explained that it was allowed duty-free importation of capital equipment because of the duty-free provisions under the ASEAN Free Trade Agreement (AFTA) Plus China, Japan and South Korea.

The company has not yet availed of the ITH for both projects because it had just started its commercial operation last month and would only realize profit next year.

CP Foods currently operates a 600-sow nucleus farm in Floridablanca, Pampanga. The parent stock was imported from Canada and would serve as the grandparent stock.

By 2014, the farm is seen to have 4,000 heads.

The company is constructing a fattening farm in Concepcion, Tarlac which would be operational in 2014.

For it broiler business, the company has started operating since the last quarter of 2012 a parent stock farm in Gerona Tarlac, housing 30,000 birds.

The parent stocks are supplied by Cobb-Vantress Philippines .

Produced from 30,000 birds are 60,000 day-old chicks weekly which are brought to the broiler farm in San Ildefonso, Bulacan to be raised.

The broiler farm, which started operations in the last quarter of 2012, produces about 50,000 to 60,000 broilers per growing cycle of 30 to 35 days.