BOI-approved investments up 66% to P138 billion in Q1

by Louella Desiderio (The Philippine Star), 20 Apr 2021

MANILA, Philippines — Total projects approved by the Board of Investments (BOI) rose 66 percent in the first quarter from a year ago, a top trade official said.

“For 2021, we hit P138 billion as of March, a 66 percent improvement from P83 billion in the same period last year,” BOI managing head and Trade Undersecretary Ceferino Rodolfo said in a statement yesterday.

With the recent signing into law of the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act, the BOI is encouraging Chinese firms to invest in the Philippines.

Rodolfo pitched the BOI investment approvals performance during a briefing with members and officers of the Chinese Enterprises Philippines Association (CEPA) last April 15 on the latest business environment policies in the country, including the recently enacted CREATE Act which would reduce the corporate income tax (CIT) rate and introduce changes to the incentives system.

Established in the Philippines 20 years ago, the CEPA has around 90 members composed mostly of state-owned companies into agriculture, manufacturing, construction, and technology.

Rodolfo said the CREATE Act would be helpful to Chinese investors as it “provides the government with the flexibility to grant fiscal and non-fiscal incentives for high-value strategic investments, including the longer period for enjoying income tax holiday (ITH) and tax subsidies for key cost items.”

He cited the case of Shenzhen Grandsun Electronics Co. Ltd., a subcontractor of a European company with plans to expand its operation in the country in one of the economic zones in Batangas City.

“Under CREATE, the firm can get four years of ITH and even up to six to seven years because of the level of technology/location. It will be followed by 10 years of either Enhanced Deduction (ED) or special CIT of five percent on gross income earned. Its component suppliers that will establish operations here are also entitled to the same incentives. It will be the choice of companies to go for either ED or the special CIT,” he said.

He added the BOI now allows the use of second-hand equipment as long it is modern and up to date in terms of technology.

“It can be registered for qualified projects. This is specially targeted for companies that are exploring relocation of production facilities, to secure a more efficient, more resilient, and more stable supply chain,” he said.

Under CREATE, he said companies engaged in research and development, high-tech manufacturing, and the generation of new knowledge may avail of longer incentives.

“This is attractive for companies that are looking to diversify their location or for complementary business locations as the CIT will be reduced from 30 to 25 percent for large firms. This will open up cash flows to support the efforts of businesses to rebuild during this pandemic and allows the country’s recovery and boost our long-term growth,” he said.

He urged CEPA member enterprises, especially those engaged in innovation-driven fields of infrastructure, equipment manufacturing/construction, and information and technology (IT), to expand and diversify their businesses in the country.

“Through continued strong partnership and collaboration with Chinese representatives in the Philippines such as the Chinese Embassy, the Bank of China, and CEPA, we are not far from realizing our goal of being among the region’s top investment destinations,” he said.

For his part, CEPA president Deng Jun said Chinese businessmen remain committed in the Philippines through stronger business partnerships and collaboration with local industry players.