SparQbites by: Peter Burton

The Philippine government recently released its list of priority industries and service areas which are to be encouraged and provided fiscal and non-fiscal incentives. The annually updated list provides a clear guide for both local and foreign companies on areas of investment which will receive government support. Themed ‘Scaling Up and Disbursing Opportunities’, the 2017 plan upholds many of the existing investment incentives provided in recent years but has broadened its coverage.

The following are the areas that are deemed as priorities for investment in 2017 and as such are eligible to receive incentives from the Board of Investment (BOI), under the Department of Trade and Industry (DTI):

  • Manufacturing including agri-processing
  • Agriculture, fishery and forestry
  • Strategic services
  • Infrastructure and logistics including local government unit public-private partnerships
  • Healthcare services including drug rehabilitation
  • Mass housing
  • Inclusive business models
  • Environment and climate change
  • Innovation drivers
  • Energy

Included in the list is:

  • Export businesses including services, activities in support of exporters, and production and manufacture of export products
  • Activities based on special laws that grant incentives like Republic Act (RA) No. 7942 or the Philippine Mining Act of 1995, RA 9513 or the Renewable Energy Act of 2008 and RA 9593 or the Tourism Act of 2009, among others
  • The Autonomous Region in Muslim Mindanao.

In line with the government’s Manufacturing Resurgence Program (MRP), the revival of the manufacturing sector remains at the top of the list. With a 7% growth rate in 2016, the government envisions sustained double digit growth to be able to become competitive with its ASEAN neighbors.

After years of tepid and even negative growth, there has been a concerted effort to bolster investment in agriculture and agri-processing businesses. The industry has suffered from lack of investment in critical infrastructure and been effected by peace and order issues in Mindanao, where the vast majority of agricultural opportunities are.

The booming IT & business process outsourcing (BPO) industry will continue to enjoy the incentives provided by the DTI through both the Philippine Economic Zone Authority (PEZA) and BOI. There have been suggestions that BPOs setting up in Metro Manila will no longer receive such generous incentive packages; a strategy encouraging firms to set up outside of the country’s capital region. However, this is not likely to be implemented over the next 5 years and infrastructure outside of the capital will improve, allowing more BPOs to operate outside of Metro Manila.

Infrastructure development has a very positive outlook until at least 2022, due to the government’s ambitious infrastructure drive of doubling infrastructure spending to at least 5% of GDP. Seen as the key to unlocking greater and inclusive growth, expanding infrastructure spending will allow other investments to flourish outside of the already well-established business centers.

Having experienced strong economic growth in 2016 of 6.8%, the government is looking to leverage on increased interest in investment prospects in the country, particularly from foreign investors.