Investment Priorities Plan (IPP) 2014-2016

 IPP 2014

FOREWORD

With its strategic shift of strategy towards industry development which it started in January 2012, the DTI-BOI has now taken a proactive role in steering the country’s industrialization, and thus a revisit of the annually published Investment Priorities Plan (IPP) became necessary.

This IPP effected major changes from previous IPPs as it takes off from Chapter 3 (Competitive and Innovative Industry and Services Sectors) of the updated Philippine Development Plan (PDP) 2011-2016, wherein six (6) broad sectors, i.e., agroindustry, manufacturing, IT-BPM, tourism, logistics and construction are prioritized. This will be a 3-year document that considers the end-of-plan targets of the PDP subject to an annual review.

With the updated PDP as its foundation, the IPP espousing the new industrial policy now serves both as a developmental tool for investment decisions of the private sector and a promotional tool for government to encourage first movers in new investment areas and to provide appropriate responses to the most binding constraints that the prevent entry of investments or prevent industries from moving up the value chain. The new industrial policy aims to transform and upgrade the manufacturing industry with the long-term vision to develop globally competitive industries supported by strong forward and backward linkages.

In developing the 2014 List, a decision framework for the prioritization of economic activities was adopted. The framework focused on the potentials of the sectors to generate employment, move up the value chain, create spillovers and promote competitiveness in the market as well as closing the supply or value chain gaps as indicated in the sectoral roadmaps and available studies. The most binding constraints to the growth of the industries were identified and appropriate policy responses were recommended.

The IPP supports the thrust of the current Administration, thus, the theme “Industry Development for Inclusive Growth,” to emphasize that the Philippines is focusing on industry resurgence to promote sustainable and comprehensive growth.

In this connection, the 2014 IPP contains the following priority investment areas:

1. Preferred Activities that includes 4 broad sectors (manufacturing, agribusiness and fishery, services, and infrastructure and logistics) and 4 specific activities (energy, housing, hospitals and PPP projects);

2. Export Activities that cover the production and manufacture of export products, services exports and activities in support of exporters;

3. Activities with Special Laws that provide for either the mandatory inclusion of the activity in the IPP and/or the grant of incentives under E.O. 226; and

4. ARMM List, which encompasses priority investment areas that have been determined by the Regional Board of Investments of the Autonomous Region in Muslim Mindanao (RBOI-ARMM) in accordance with E.O. 458.

This IPP was formulated through a participative, analytical, and multi-sectoral process. Four regional consultations were held in Metro Manila, Cebu, Davao, and Baguio City, along with four sectoral (manufacturing, services, infrastructure and power, and agriculture and fishery) consultations. There were also two inter-agency consultative meetings conducted, peer review sessions with the country’s leading economists, and on-line consultation to encourage the widest participation possible nationwide.

GREGORY L. DOMINGO

Chairman, Board of Investments

Secretary, Department of Trade and Industry

 

EXECUTIVE SUMMARY

The 2014 Investment Priorities Plan (IPP) was formulated based on the updated Philippine Development Plan (PDP) 2011-2016 and the new Philippine industrial policy. Its main objectives and strategies are consistent and aligned with the PDP’s primary goal of inclusive growth and its strategies focusing on promoting investments in physical infrastructure, transparent and responsive government, and human development.

The 2014 IPP takes off from Chapter 3 of the PDP, which envisions globally competitive and innovative industry and services sectors that contribute significantly to inclusive growth and employment generation. The emphasis is on improved business environment, increased productivity and efficiency, and enhanced consumer welfare.

The New Industrial Policy

Embedded in the IPP is the new Philippine industrial policy, which aims primarily to upgrade and transform the manufacturing industry to create more decent jobs. This strategic thrust provides the framework for an investment policy regime that focuses on improving productivity, developing human resources, and upgrading technologies.

Emphasis on reviving the manufacturing industry started in 2012 when the Department of Trade and Industry (DTI) and the Board of Investments (BOI) engaged industry associations to craft industry/sectoral roadmaps, plotting their industry’s contribution to sustain economic growth, among others. To date, 29 roadmaps have been submitted to the DTI-BOI, including the Manufacturing Industry Roadmap (MIR) formulated by the Philippine Institute for Development Studies (PIDS) based mainly on the roadmaps submitted by various industry associations.

To enable manufacturing firms to upgrade, thrive and become catalysts and engines for sustained and inclusive growth, the industrial policy focuses on implementing vertical (sector or industry specific) measures and horizontal (cuts across sectors) measures that address constraints to growth, and on institutionalizing coordination mechanisms to ensure effective program implementation. The long-term vision of the MIR is to develop a globally competitive manufacturing industry supported by strong backward and forward linkages with both domestic and global supply chains.

Resurgence of Manufacturing

Complementing the policy of supporting the manufacturing industry is the Manufacturing Resurgence Program (MRP), designed to revitalize the country’s contracting manufacturing sector. The thrust is to intensify government intervention in addressing market failures and cumbersome business procedures.

The MRP is identified by the government as a priority program under National Budget Memorandum (NBM) No. 118, and designates the DTI as lead implementing agency. Other government agencies involved are: the Departments of Labor and Employment (DOLE), Science and Technology, (DOST), Agriculture (DA) and Energy (DOE), and DOLE’s Technical Education and Skills Development Authority (DOLE TESDA), Commission on Higher Education (CHED), Philippine Coconut Authority (PCA), National Power Corporation (NPC), and the National Electrification
Administration (NEA).

Through the implementation of the MIR, the blueprint of the MRP, manufacturing contribution to the economy is targeted to account for 30 percent of total value added and generate 15 percent of total employment by year 2025.

The New IPP 2014-2016 Process

The new approach of the DTI-BOI in the formulation of the 2014 IPP adopts an analytical framework and a more rigorous process of identifying the priority economic activities to promote. The framework employs a mechanism for evaluating the potential contribution of these activities and industries to create quality jobs, move up the value chain, diversify the country’s industrial base, generate “spillover effects,” and engender a more competitive environment.

From this evaluation, the most challenging issues preventing the entry of new firms, and of existing firms from moving up the value chain are likewise identified. The process evaluates further the most effective government intervention to address these constraints – either through incentives or other policies and measures, or a combination of both (the sectoral analysis is found in Appendix 1 of the IPP).

Strengthening the research process of the 2014 IPP is a core group of prominent economists that conducted peer reviews and a series of consultation sessions with the public and private sectors and civil society. A total of four (4) sectoral/cluster, two (2) inter-governmental agency, and four (4) regional sessions were conducted. In addition,
the draft 2014 IPP was posted on the BOI website for more interactive consultations with the public.

The 2014 IPP

The DTI-BOI pursues a more integrated approach that embeds the investment strategy into the country’s industrial policy and development plan. The new IPP focuses on competitiveness, skills development, technology upgrading, infrastructure modernization, and improvements in overall business environment. Together with the governance reforms and good macroeconomic performance of the Philippines in more recent years, this bodes well for attracting investments and achieving economic transformation.

Success stories from other countries have shown that having the right fundamentals simultaneous with an investment incentive program – placed within the context of national development strategies – results in increased investments. Research findings reveal that investment incentives are seriously considered in making investment decisions. In particular, when political and economic stability, infrastructure, transport costs are equal, taxes exert significant impact on enterprises.

In implementing the new approach, the DTI-BOI takes a more proactive role by facilitating and coordinating government efforts to correct market failures and encouraging producers to take risks. By creating an environment conducive for business to flourish and embarking on initiatives to strengthen industries, the government can promote the success of domestic firms in both the local and international markets. A favorable business environment will unleash the full potentials of our industries to take advantage of the market opportunities and become effective engines for sustained and inclusive growth.

I. INTRODUCTION

Since the Board of Investments (BOI) was established in 1987 under Executive Order no 226, the Investment Priorities Plan (IPP) has been the country’s basic policy document that enumerated the areas or sectors of the economy that were deemed priorities of the state for investments and development. Government agencies and the private sector referred to the IPP when making investment decisions as well as promotional activities.

Every year, for the past 27 years, the IPP has been crafted by the BOI in consultation with government agencies and the private sector. After a reasonable period of time within which to receive written position papers from stakeholders, the IPP is consolidated and finalized. Without fail, the final form of the IPP was a list of specific economic activities and general economic categories (mostly, the latter) declared as priority activities.

Based on this list, fiscal incentives will be granted by the State for enterprises that venture into these priority areas, provided they qualify for certain criteria and fulfill the terms and conditions of their registration.

These incentives would typically include Income Tax Holiday from 4 years to a maximum of 8 years, depending on whether the activity is pioneering or not, provided the registered enterprise meets the targets of its project. Registered projects also have the privilege of importing capital goods free of duties. Other forms of assistance are provided to BOI registered enterprises to help ease their way into the business environment.

Although the IPP has served as a practical tool for identifying the State’s priority areas and economic activities as well as attract investors through incentives, there is a need to strengthen the IPP as a tool for industrial development and economic growth. Hence, this new approach of the IPP of 2014-2016.

The New IPP

Aligned with the goals, priorities and strategies of the updated Philippine Development Plan (2010-2016), the IPP takes off from the six priority areas of economic activity under the PDP, namely: agro-industry; manufacturing; IT-BPM; logistics; tourism; and, construction.

Departing from tradition, the 2014 IPP attempts to break down these general categories into specific economic activities that -based on industry studies, plans and roadmaps – are strategic or critical to complete or enhance a particular industry or product’s value chain. In other words, applying a modified and more rigorous methodology, the 2014 IPP is more strategic, targeted and focused. The PDP’s strategies, including investment in physical infrastructure, transparent and responsive government, and human development, are also carried over to the new IPP.

Directly relevant to the IPP is Chapter 3 of the updated PDP, which envisions a globally competitive and innovative industry and services sector that contributes significantly to inclusive growth and employment generation. Three broad themes permeate this chapter: improving the business environment, increasing productivity and efficiency, and enhancing consumer welfare.

Consistent with these goals and themes, the new IPP applies a framework of analysis that includes a set of criteria to identify the priority general or broad economic categories and specific economic activities. After this filtering stage is a process of understanding the key or “most binding” constraints that hamper or stifle growth and prevent more value added production. From this premise stems the analysis of which among the State’s reserve of policy tools and forms of interventions would be the most effective response to address these constraints, with fiscal incentives being one of the interventions.

After conducting a thorough study of the priority sectors, its subsectors and specific economic activities, and depending on the availability of quality industry roadmaps and studies, the 2014 IPP proceeds to enumerate the activities the government should incentivize to meet national development goals. Although the general objective of the new IPP is to target as clearly as possible investment opportunities and needs that would fill gaps in the supply or value chain, boost sectors with latent or obvious competitive advantage, and offset market imperfections. There will still be broad economic categories on the list of investment priority areas/activities. It is simply not possible to have all the data and information needed to arrive at sound evaluation of each activity in the national economy.

However, a few novel features of the 2014 IPP will address this information gap. First is the principle of geographical application, meaning the relevance and impact of an economic activity in a particular region, province, or a cluster of local government units. For instance, a cold storage facility is included in the category of agricultural services to be incentivized, but when a project actually presents itself for evaluation, the BOI will evaluate it through a geographical analysis to determine if such a facility is lacking in the area where it is proposed to be constructed.

Second, instead of crafting a new IPP annually, the 2014 IPP will be a rolling three-year plan to ensure continuity, consistency and predictability – factors seriously considered by domestic and foreign investors. This new IPP will, however, be reviewed annually, also improving the BOI’s monitoring and assessment system to execute the IPP over a three-year period.

Finally, there will be new mechanisms of coordination and convergence among relevant government agencies to ensure the effective and efficient execution of the 2014 IPP, providing venues for enhanced partnership and cooperation with the private sector.

These unique features and the new approach transforms the 2014 IPP from just a list of economic categories or specific activities to be incentivized into a policy instrument that lays down the State’s industrial policy, strategies, and the array of tools to be used to achieve meaningful and inclusive growth for priority industries identified in the PDP.

II. A NEW INDUSTRIAL POLICY

Reviving and Transforming Philippine Manufacturing

A long hiatus in Philippine economic policymaking necessitates the mainstreaming into government thought and action, a new approach to industrial policy.

In early 2012, the DTI and BOI called on the private sector to craft industry roadmaps to envision the future of their industries or sectors; identify short, medium and long term goals; identify gaps in their supply chains; and propose recommended policy reforms and actions to grow their industries.

With DTI-BOI initiating and facilitating the industry roadmap project, the lead role of the private sector in crafting their roadmaps is an innovation that differentiates the new industrial policy from previous attempts of its kind in the country.

A second distinguishing feature of the new approach is its sharp focus or heavy emphasis on the country’s manufacturing sector as a key result area.

The country’s experience over the past two decades has shown that we cannot leapfrog industrialization and that relying on the services sector alone will not bring about sustainable and inclusive growth. A second leg, the manufacturing sector, is needed to support the country’s economy.

The historical performance of our manufacturing sector has, unfortunately, been weak, owing to the absence of the economy’s structural transformation – from one that is agriculture-based to one that is industry-led. Observers have noted that the country’s industry sector has been quickly overtaken by services and that manufacturing has lagged behind those of other countries in the region.

With the advent of the ASEAN Economic Community in 2015, it is imperative to revive and transform our manufacturing industry into a catalyst to address the challenges and seize the opportunities of an integrated regional economy. This is the essence and main thrust of the country’s industrial policy.

This new industrial policy aims to upgrade and transform the manufacturing industry to one that addresses the most binding constraints to manufacturing growth, strengthen industries and improve the business environment within which they operate.

Formulated within the context of the PDP and the new industrial policy, the investment strategy focuses on improving productivity, human resource development, and technology upgrading.

A. The Manufacturing Resurgence Program

Adopting the policy objective to support the manufacturing industry, the national government has allocated Php2.3 billion for the Manufacturing Resurgence Program to support the implementation of the Philippine Manufacturing Industry Roadmap (MIR). As Figure 1 shows, the MIR aims to increase the contribution of manufacturing from the current 22 percent to 30 percent of total output and from 9 percent to 15 percent of total employment by the year 2025.

IPP 2014 Figure 1

In the short term (2014-2017), it is imperative to maintain the competitiveness of our industries with comparative advantage, strengthen emerging products, and rebuild the capacity of existing industries, especially those with strong potential to generate employment, address missing gaps, move up the product ladder and create linkages and spill-over effects in sectors such as automotive, electronics, food, garments, motorcycle, shipbuilding, chemicals, and allied or support industries. During this stage, the Philippines intends to deepen its participation in regional and global production networks of the automotive, electronics and garments industries.

In the medium term (2017-2021), there will be a shift to activities with higher value added, increase investments in upstream or core sectors (such as in the iron and steel and other metals industry, as well as in parts and components), and link industries within the national economy.

In the long term (by 2025), a globally competitive manufacturing industry with strong forward and backward linkages is envisioned as the Philippines plays a vital role in the regional and international production networks of automotive, electronics, garments and food. Our target is for the country to serve as a hub for regional and global production networks.

Action Agenda

To achieve these goals the new industrial policy calls for three basic action items or agenda: 1) proactively address the most binding constraints to manufacturing growth; 2) strengthen industries (raising industry competitiveness); and, 3) improve the business environment.

These actions or interventions must be aimed towards the following elements: (a) vertical measures; (b) horizontal measures; and, (c) coordination mechanisms. Below is an illustration of these interventions.

IPP 2014 Figure 2

a. Vertical Measures. To achieve the specific objectives outlined in Figure 2, overcome the most binding constraints to growth, upgrade industries and make markets work, the following vertical or industry specific measures are recommended:

  1. Address gaps in industry supply chains; and,
  2. Expand the domestic market base and utilize it to grow exports.

b. Horizontal Measures. To address the cross-cutting constraints, the following horizontal measures are recommended: 

  1. HRD and Skills Training programs. Design human resource development and training programs to improve skills and form alliances with universities and training institutions. With educated and well-trained workers, it will be easier to learn new skills and enter new trades.
  1. MSME Development and Innovation. Support MSME development through appropriate innovation incentives and mechanisms such as common service and R&D facilities, clustering, and industry-academe linkages for new product development and applied technology for indigenous products/raw materials. Grants, loans, innovation vouchers, and counterpart funding to innovative firms and technical assistance to promote long-term research collaboration between universities and business are also important.
  1. Investment Promotion. Pursue aggressive and strategic promotion and marketing programs to attract more investments particularly foreign direct investments to introduce foreign technologies. Consolidate and intensify the investment promotion efforts of the BOI, PEZA, Clark Economic Zone, and Subic Bay Freeport Zone.
  1. Business Environment improvement. Improve the business environment by addressing smuggling, the high cost of power and domestic shipping (including port charges), and inadequate transport infrastructure. Expedite and facilitate the implementation of Private Public Partnership (PPP) programs to finance ports, airports, highways, electricity grids, telecommunications and other infrastructure along with improvements in institutional effectiveness particularly in curbing smuggling.
  1. Competitive Exchange Rate. Maintain a competitive exchange rate to support and strengthen the new industrial policy of the government. Manage the exchange rate in support of exports, prevent the surge of capital inflows and avoid excessive appreciation of the peso.

c) Coordination Mechanism. Throughout the processes of industrial transformation and industry upgrading, mechanisms are being established to coordinate policies and necessary support measures to address obstacles to the entry and expansion of domestic firms. Towards this, the Philippine government revived the Industry Development Council or the IDC, consisting of representatives from national government agencies and stakeholders from the private sector. The IDC’s primary task is to ensure the effective and efficient implementation of the country’s Comprehensive National Industrial Strategy. This strategy will link manufacturing with agriculture and services; strengthen forward and backward linkages in the economy; and, build globally competitive Philippine industries.

III. THE 2014 IPP: A NEW APPROACH

A. Evidence-based and Inclusive

Crafting the 2014 IPP began in the latter part of 2013 with the traditional inter- agency consultations which surfaced official views of the different government agencies. The BOI also collated and analyzed data on the different sectors of the IPP over the past five years to evaluate the economic impact of the incentives provided. Indicators included the actual investments generated, the jobs created, and government revenues from the projects. The result of these internal studies and assessment were later on presented in the cluster consultations to stimulate discussions and gather feedback.

An internal team was created to review all government development plans, industry roadmaps and studies, as well as relevant empirical work on investment incentives to ensure alignment and harmonization.

The evaluation process was prepared and subjected to several “peer review” sessions with a core group of the country’s prominent economists. Extensive consultations were likewise conducted with government agencies, the private sector and civil society through a series of consultative workshops in the national capital and key regional centers in the three main island groupings of the country. The evaluation process, along with its annexes such as the roadmaps, was posted in the BOI website to elicit more feedback and comments from the public. By far, this method has been the most inclusive and participatory exercise ever conducted for the IPP. Shown in Figure 3 is an illustration of the IPP process.

IPP 2014 Figure 3

B. Objectives and Strategy 

The 2014 IPP reinforces the PDP’s focus on inclusive growth by setting specific objectives meant to optimize the impact of incentives in attracting investments and generating employment opportunities. These are:

  1. Increase employment opportunities by revitalizing growth sectors, especially the manufacturing sector;
  2. Promote higher value adding activities and deeper MSME integration in the supply chains;
  3. Strengthen participation in global and regional production networks including the ASEAN Economic Community.

To attain these objectives, the IPP will employ the following key strategies:

  1. Support activities that generate high employment, encourage inclusive business practices and foster stronger intra- and inter-industry linkages;
  2. Raise productivity by upgrading technology and developing industry clusters;
  3. Identify and develop market niches to enable participation in the global and regional production networks.

C. The Evaluation Process

Under Chapter 3 of the PDP, “Competitive and Innovative Industry and Services Sectors” the following areas are identified for promotion in the medium-term: 1) Agro-industry; 2) Manufacturing; 3) IT-BPM; Logistics; 4) Tourism; and, 5) Construction.

Focusing on this list, the first step of this process determines if a particular economic sector or activity meets certain criteria that are consistent with the IPP’s stated objectives. This set of criteria help assess the potential of the industry, sector or activity to generate the following:

  1. Employment contribution. Labor intensity of an activity measured by its employment multiplier (see Appendices 2 [A2-2] and 3) and its contribution to the total employment
  1. Move up the value chain. Potential to move up the global value chain and whether the activity presents a latent comparative advantage (see Appendix 2)
  1. Create spill-over effects. Impact on output of other sectors measured by output multiplier (see Appendix 3)
  1. Create competition which is important to ensure that promotion of the activity would not impair competitive outcomes in both input and output markets.

Note that the analysis takes the geographic context into account by defining markets based on products (good or service being produced) and geographic areas (location of producers and consumers).

If the economic sector or activity meets this set of criteria, the next step is to determine if there are gaps in the industry’s supply or value chain (upstream, midstream or downstream) that prevent or hinder the industry from growing or moving up the value chain. The identification of gaps in the industry supply or value chain guides the government and the private sector in designing more focused and targeted interventions.

The third step in the evaluation process is to determine the obstacles preventing firms from investing in the potential areas and upgrading the quality of their products such as barriers or most difficult challenges that may be discouraging firms from moving up the value chain. Based on research and the industry roadmaps, the different constraints are listed below.

  1. High production cost, power, logistics infrastructure
  2. Lack of raw materials or suppliers of intermediate inputs
  3. Lack of scale economies
  4. High risks for first movers especially for activities requiring large capital
  5. Government regulations: franchises, licenses, smuggling (due to inefficient regulation)
  6. Others: finance access, inability to comply with international product standards and quality, lack of R&D, lack of skilled workers, lack of competition, etc.

The fourth step is to determine the policy mix that will help address challenges to the entry of new firms and moving up the value chain and participation in regional production networks. These are grouped into two broad categories, namely:

  1. Policy reforms, sound and reasonable regulations, and other non-fiscal interventions, and
  2. Fiscal incentives with other non-fiscal interventions and support

The policy mix will consist of horizontal and vertical interventions as well as coordination mechanisms to allow firms and industries to increase their competitiveness, latch on to regional production networks, increase capacity to export and enable domestic firms (especially MSMEs) to grow and develop. Figure 4 shows an illustration of the evaluation process to identify the 2014 IPP list of preferred activities.

IPP 2014 Figure 4

Introducing this new evaluation process brings rigor to the policymaking process for industry development and encourage more meaningful collaboration between the government and the private sector in formulating and executing sound policies and other interventions that would develop domestic industries, and prepare them for regional economic integration.

More important is the way the new approach improves the IPP formulation process and how the IPP is used and perceived by the stakeholders and the BOI. From just a list of economic activities that can be granted incentives by the BOI as incentives administrator, the new IPP is a strategic policy pronouncement of the government, contributing to the national development goals in the PDP, through a new industrial policy under the stewardship of the DTI-BOI.

IV. PREFERRED ACTIVITIES OF INVESTMENTS

Using the evaluation process discussed in the preceding section, the BOI reviewed all available national and sectoral development plans, industry roadmaps, sectoral studies and researches (see Appendix 4); and evaluated the comments and inputs from the various consultations, including a peer review with a core group of economists. Appendix 1 contains the sectoral analyses made by the BOI.

The following activities comprise the recommended list of preferred activities for investments under the 2014 Investment Priorities Plan:

I. Preferred List of Activities

1. Manufacturing

a. Motor vehicle (based on Logistics Efficiency Index; excluding motorcycles, e-bikes and golfcarts) and motor vehicle parts and components:

  • Body panel stamping
  • Engines, transmissions, and transaxle
  • Large injection moulded parts
  • Bumpers; instrument panel; door trims; center console; grill; wheel house finisher; lamps; shock absorber; wiper motor/blade; engine mounts; electric power steering; combination meter; instrument cluster; chassis & sub-frame; interior finishing; switches; seat mechanism; retractable seat belts; window regulator; constant velocity joints/transmission; aluminium radiators; plastic fuel tanks; fuel pumps; brake system and components; evaporators and condensers; relays; flame laminated automotive fabric; door & rear view mirrors; automotive glass; engine parts & assembly; and transmission parts & assembly
  • Controller assembly, motor, and battery (other than lead acid) for electric vehicle

b. Shipbuilding including parts and components

c. Aerospace parts and components

d. Chemicals

  • Oleo-chemicals
  • Petrochemicals and derivatives
  • Chlor-Alkali Plants

e. Virgin paper pulp

f. Copper wires and copper wire rods

g. Basic iron and steel products, steel grinding balls, long steel products (billets and reinforcing steel bars), and flat hot/cold-rolled products

h. Tool and Die

  • Simple, Compound and Progressive Dies for metal stamping or metal forging
  • Molds for die casting, for plastic injection or blow molding, glass blow molding, forging, encapsulation molds
  • Jigs and fixtures for metal cutting and metal forging

2. Agribusiness and Fishery

a. Commercial production (Subject to geographical supply considerations. In the case of poultry and livestock production, this is limited to areas in ARMM, Mindoro and Palawan.)

  • Coconut, corn, cassava, coffee, cocoa, fisheries, poultry and livestock;
  • High value crops – rubber, spices, vegetables and fruits;
  • Emerging commodities – sampaloc, jackfruit, peking duck, native pigs, siling labuyo, peanuts, monggo, and achuete.

b. Commercial processing (Subject to geographical supply considerations. In the case of poultry and livestock production, this is limited to areas in ARMM, Mindoro and Palawan.) 

  • Extraction of higher value substances from agricultural and forest-based raw materials through bioprocessing;
  • Conversion of agricultural and fishery products, their by-products and wastes, to a form ready for further processing or final consumption.

c. Production of animal and aqua feeds excluding those for game animals, fowls and other species for pet/leisure purposes (Subject to geographical supply considerations. In the case of poultry and livestock production, this is limited to areas in ARMM, Mindoro and Palawan.)

d. Production of fertilizers and pesticides (Subject to geographical supply considerations. In the case of poultry and livestock production, this is limited to areas in ARMM, Mindoro and Palawan.)

e. Modernization of sugar mills

f. Mechanized agriculture support services, e.g. harvesting, plowing, and spraying/dusting (Subject to geographical supply considerations. In the case of poultry and livestock production, this is limited to areas in ARMM, Mindoro and Palawan.)

g. Agriculture support infrastructures, e.g. facilities for drying, cold chain storage, blast freezing, bulk handling and storage; packing houses, trading centers, ice plants in Less Developed Areas, AAA slaughterhouse, AAA dressing plant (Subject to geographical supply considerations. In the case of poultry and livestock production, this is limited to areas in ARMM, Mindoro and Palawan.)

3. Services

a. Integrated Circuit Design

b. Creative Industries/Knowledge-Based Services (Covers start-ups of small newly incorporated domestic players/enterprises only.):

  • Animation
  • Software development (Covers only those with own Intellectual Property that are developed for commercial sale.)
  • Game development
  • Health Information Management Systems

c. Ship repair

d. Charging stations for e-vehicles

e. Maintenance, Repair and Overhaul (MRO) of aircraft

f. Industrial waste treatment

4. Economic and Low-cost Housing (horizontal and vertical) (Based on a price ceiling of Php3.0 million and subject to geographical considerations.)

5. Hospitals (Subject to geographical considerations.)

6. Energy

a. Exploration and development of energy sources (including energy crops or upstream biofuels)

b. Power generation plants (Subject to capacity installation gap based on DOE’s five-year supply-demand forecast or up to 2019, i.e., if forecast is 6000MW, then the first 6000MW capacity receives the incentives, and said installation gap will be divided among areas in Luzon, Visayas and Mindanao.)

c. Ancillary services

7. Public Infrastructure and Logistics

a. Airports and seaports (includes RO-RO ports) for cargo and passenger

b. Air, land and water transport (Limited to brand new ships, aircrafts, seaplanes, RO-RO; buses, boats, mass rail – limited to capital equipment incentive only)

c. LNG Storage and Regasification Facility

d. Bulk water treatment and supply

8. PPP Projects

II.  Export Activities

1. Production and manufacture of export products

2. Services Exports

3. Activities in support of exporters

III. Special Laws

1. Industrial Tree Plantation (P.D. 705)

2. Mining (R.A. 7942) (limited to capital equipment incentive)

3. Publication or Printing of Books/Textbooks (R.A. 8047)

4. Refining, Storage, Marketing and Distribution of Petroleum Products (R.A. 8479)

5. Rehabilitation, Self-Development and Self-Reliance of Persons with Disability (R.A. 7277)

6. Renewable Energy (R.A. 9513)

7. Tourism (R.A. 9593)

IV. ARMM List

The ARMM List covers priority activities that have been identified by the Regional Board of Investments of the ARMM (RBOI-ARMM) in accordance with E.O. No. 458. The RBOI-ARMM may also register and administer incentives to activities in this IPP for projects locating in the ARMM.

A. EXPORT ACTIVITIES

  1. Export Trader and Service Exporters
  2. Support Activities for Exporters

B. AGRICULTURE, AGRIBUSINESS/AQUACULTURE & FISHERY

This covers the production of processed foods (production of “Halal” meat and foods), vegetable oils, food crops, integrated coconut processing and  plantation , activated carbon, production of beverage crops and plantation, seaweeds production and processing, fruit processing, aquaculture (fish production and processing), young/sweet corn production, potato and sweet potato plantation/processing, cutflower production/processing, abaca plantation/processing, oil palm plantation/processing/refining and germinated oil palm seeds, feeds production, sugarcane plantation/processing and refineries, quality seed and seedlings of fruit trees and other planting materials propagated asexually or by tissue culture, pearl culture/processing, production of livestock and poultry that includes processing, crocodile farming and processing, sericulture, feeds production and production of plantation crops and other pharmaceuticals, medical herbs/essential oil plants, biomass, rubber, carrageenan, mangosteen and moringa.

C. BASIC INDUSTRIES

This covers the production of pharmaceuticals such as antibiotics and medical devices, textile and textile products,  inorganic and organic fertilizers using solid wastes materials, exploration and development of natural gas and mineral resources which includes small scale as defined under P. D. 1899 but to exclude river beds in operations and processing of minerals such as beneficiation and other metallurgical methods) and cement production of at least 1.0 million MTPY capacity (clinker based).

D. CONSUMER MANUFACTURES

This covers processing of rubber products to be integrated with plantation and leather products.

E. INFRASTRUCTURE AND SERVICES

This covers public utilities with developmental route of the five provinces and one city of  ARMM and other adjacent cities and provinces such as common carriers, electric transmission/distribution, electric motor vehicle and its parts and components, water supply facilities/waterways and sewerage systems, buses/cargo trucks, other specialized mass transport systems, power generation like hydro power, geothermal and natural gas, and telecommunications with international gateways.

F. INDUSTRIAL SERVICE FACILITIES

This covers the following activities: common centers to include  testing and quality control laboratories, training and demonstration centers, tool shops and similar facilities, metal casting, metal working, furniture, ceramics and food processing., petrochemical complex and industrial gases.

G. ENGINEERING INDUSTRIES

This covers engineering products, electronics and telecommunication products, fabrication of construction materials and hydro power plant.

H. LOGISTICS

This covers shipping of cargoes (air, sea and land) and forwarders.

I. BIMP – EAGA TRADE AND INVESTMENT ENTERPRISES

This covers enterprises located or have their base of operation in the BIMP – EAGA, namely, Brunei; Sabah and Sarawak in Malaysia; Malusu, Sulawesi, Kalimantan and Iringaya in Indonesia; and Mindanao and Palawan in the Philippines, who shall invest and engage in economic activity in the ARMM including SMEs.

J. TOURISM

This covers the establishment of  tourism estate subject to guidelines developed jointly by RBOI-ARMM and the Department of Tourism – ARMM, tourist accommodation facilities, tourist transport facilities and development of retirement villages  which shall include health and medical facilities including amenities required by the Philippine Retirement Authority (PRA) and subject to the guidelines to be approved by RBOI-ARMM in consultation with the PRA, the Department of Health (DOH), the Regional Planning and Development Office (RPDO) and other concerned agencies.

K. HEALTH AND EDUCATION SERVICES AND FACILITIES

The ARMM has the lowest indication in the country regarding health and education as reflected in the Human Development Index. For this purpose, there is a need for incentives to be given to investors in the health and educational sectors such as putting – up of private hospitals, medical clinics, wellness centers, primary education, secondary education, tertiary education (colleges, universities and vocational – technical schools) and ancillary services including any and all health and  education – related investments.

L. HALAL INDUSTRY

The MTPDP 2004 – 2010 provided that ARMM shall be the production and processing center for the Halal industry. ARMM being the only Muslim region in the country, has a comparative advantage in the Halal industry. Any Halal related business enterprises shall be covered. Halal refers to the permissible products and services under Islamic Law.

APPENDICES

Appendix 1 – Sectoral Analyses

Appendix 2 – ADB’s Top 20 “Nearby” Products Based on Sophistication Level and Labor Intensity

Appendix 3 – Output Multipliers, Income Multipliers, Employment Multipliers, and Production Linkages

Appendix 4 – References

X X X X X X X X X X X X X X X X X X X X

Memorandum No. 74, s. 2014 – Approving the 2014 Investment Priorities Plan

Memorandum Circular No.  2015-01 – General Policies and Specific Guidelines to Implement the IPP, 2014-2016