Manufacturing investments to double this year – BOI

The Board of Investments (BOI) sees a doubling of this year's share of manufacturing projects in the country's total investment generation in light of strong interests, particularly from Chinese and Japanese manufacturing companies.

Trade and Industry Undersecretary Ceferino Rodolfo, who is also BOI managing head, told reporters the share of projects engaged in manufacturing could double this year to 22 percent from 11 percent in 2016.

The manufacturing sector generated a total of R49-billion investments in 2016 or 11 percent of total 2016 investments of R441.8 billion. The 2016 total investments also registered a 20.4 percent growth versus total 2015 investment stream of R366.7 billion.

"That is why we have broadened the definition of manufacturing," said Rodolfo referring to the wider coverage of economic activities under the manufacturing listing in the 2017 Investment Priorities Plan (IPP).

On Friday, Malacanang issued Memorandum Order 12 implementing the 2017 IPP, which is good until 2019, with the theme “Scaling Up and Disbursing Opportunities.” Projects listed under the IPP are entitled to a generous package of tax incentives including the income tax holiday for a maximum of eight years for pioneering investments.

Rodolfo, however, said there will be no upward revision of this year's investments growth target of R500 billion despite the expected influx of manufacturing projects. This year’s IPP, he said, is also expected to draw huge investments in the government’ infrastructure projects, power and energy.

"That is already the highest investment level so far," said Rodolfo.

Backing up Rodolfo’s bullish manufacturing growth projection are very promising interests from various foreign investors.

For instance, Rodolfo noted of inquiries in areas such as cement manufacturing which investments could fetch $400 million to $500 million for a greenfield manufacturing plant.

There have been strong interests from China and Japan. Five Chinese companies just signed letters of intent for its $10.3 billion worth of investments in steel, aviation, green energy, downstream oil, and ship building/repair industries.

These firms are Aviation Industry Corporation of China (AVIC) International Aero-development Corporation, Liaoning Bora Enterprise Group Co., Ltd., Huili Investment Fund Management Co., Ltd., Dalian Wanyang Heavy Industries Co., Ltd., and YiDingTai (YDT) International. These investments are expected to start pouring in this year.

Also, DTI Secretary Ramon M. Lopez reported last week of R14.5-billion fresh investments from Japan's shipbuilding giant Tsuneishi and housing components fabricator Ichijo Co. Ltd. plus another yet unnamed Japanese firm which have operations in the country.

Lopez was able to firm up these new investments during a recent meeting with Japanese counterpart, Minister of Economy, Trade and Industry (METI) Hiroshige Seko in Tokyo as they discussed various cooperation in multilateral trade agreements, industrial cooperation, the 2025 World Trade Expo in Osaka and the Regional Comprehensive Economic Cooperation.

The influx of Chinese and Japanese investments in the country was a result of the official state visits by President Duterte to these two countries last year.

But Rodolfo said these new investments are on top of the huge economic benefits committed by the two countries to the Philippines during Duterte’s visit.

Rodolfo also said that minerals processing projects may also be registered with the agency upon compliance of requirements by the Department of Environment and Natural Resources.

Aside from manufacturing and agri processing, the 2017 IPP also listed agriculture, fishery and forestry; strategic services; infrastructure and logistics including local government unit publicprivate partnerships; healthcare services including drug rehabilitation; mass housing; inclusive business models; environment and climate change; innovation drivers; and energy as eligible for government tax perks.

Rodolfo said there has been no application yet for drug rehabilitation projects but said companies may put up these centers as part of their corporate social responsibility.

Also considered priorities are export activities, activities based on special laws that grant incentives, and the Autonomous Region in Muslim Mindanao.

The new IPP will also provide fiscal support for inclusive business models or activities in agribusiness and tourism sectors that benefit micro and small enterprises.

It also reduced the price ceiling for mass housing units to R2 million from R3 million previously. Except for in-city lowcost housing for lease, only projects outside Metro Manila may qualify for incentives.