BOI restores incentives for export recovery

MANILA, Philippines – It’s final. Contingency projects of export enterprises given special incentives last year have been extended for two more years.

The contingency projects aim to help them keep their workers while getting battered by a global trade slump.

The decision was relayed by Board of Investments executive director Efren V. Leaño to Philippine Exporters Confederation Inc. (Philexport) president Sergio R. Ortiz-Luis Jr. in a letter received by the umbrella organization of exporters this week.

Leaño said in his letter that in response to the comments of Ortiz-Luis on the draft 2010 Investment Priority Plan in which the contingency incentive was already dropped, the BOI has favorably acted on the export leader’s requests.

The incentives will cover reinvestments to reinstate laid-off workers to equal their pre-crisis number by the end of 2010 and incremental increases in the number of workers by 2011. These privileges have been renamed Export Recovery Projects and will be effective until next year.

It will also cover investments in opening new markets including, but not limited to, new trading partners like China, Korea, India, Australia and New Zealand.

A third area are investments in trade recovery projects to regain lost markets in the United States, Europe and Japan, the three highly developed economies hit hard by the global recession of 2008-2009.

This covers existing projects and activities affected by the global economic crisis that will at least retain investments and maintain current number of workers, reinstate laid-off workers to equal the pre-crisis number or increase current number of workers.

It likewise covers projects of small and medium exporters.

For the same period, the BOI also suspended the basic qualification of exporters entitled to the incentives to have a track record of having exported an average of 70 percent of their production a year.

The two-year suspension of the volume of export requirement and the Export Recovery Projectsare based on our experience that it took the export industry three years to surpass the pre-crisis level of exports following the 16 percent slump in 2001,Leano said.

The suspension is likewise meant to provide exporters fiscal incentives to launch export promotions projects in Asia, the Middle East and other territories where the Philippines has little or no presence until today.

Finally, suspending the 70 percent export threshold will give more teeth to the inclusion of exporters in this IPP list, since otherwise, exporters will not qualify for the incentives anyway due to the trade slowdown.

The BOI official said that the incentives are now in effect after it was approved by outgoing President Gloria Arroyo. – PHILEXPORT News and Features