1 city, 22 towns in Cebu may benefit from 2017 IPP

ONE city and 22 municipalities in Cebu province can benefit from the 2017 Investment Priorities Plan, which aims to encourage investments in inclusive business by offering enhanced incentives.

This developed after the Board of Investments (BOI) classified one city and 22 municipalities in Cebu province as among the LDAs (less-developed areas). These are Bogo City, Alcantara, Alcoy, Bantayan, Boljoon, Daanbantayan, Ginatilan, Madridejos, Malabuyoc, Medellin, Pilar, Poro, Ronda, Samboan, San Francisco, San Remegio, Santa Fe, Sogod, Tabogon, Tabuelan, Tuburan and Tudela.

The 2017 IPP aims to foster innovative and inclusive industries as well as push relevant infrastructure programs, said Fe L. Del Rosario, OIC-director of the BOI Investments Policy and Planning Service.

Del Rosario discussed the 2017 IPP during a BOI roadshow held Friday.

The new IPP also modernized incentives so the Philippines could be at par with other countries and these strategies aim to enhance employment and entrepreneurship, she said.

To encourage dispersal of economic activities in the countryside, the 2017 IPP provides pioneer incentives like income tax holiday (ITH). Also, investments in LDAs will enjoy additional deduction from taxable income equivalent to 100 percent of expenses incurred in the development of needed and major infrastructure facilities.

Inclusive business models cover business activities of medium and large enterprises in the agribusiness and tourism sectors that provide business opportunities to micro, small and medium enterprises (MSMEs) as part of their value chain.

To avail of the incentives, agribusiness projects are required to source at least 25 percent of the cost of goods sales (COGS) from MSMEs and engage 300 farmers, fisher folks, suppliers and individual beneficiaries.

‘More teeth’ needed

However, economist Fernando “Perry” Fajardo called for “more teeth” in the government’s efforts to disperse industries to the countryside. “But instead of improving, the situation has worsened.”

For example, 24 percent of the total population is in Mindanao but it only accounts for only 14 percent of the country’s gross domestic product (GDP), he pointed out.

He said that the Visayan population is at 19.4 percent but posted only 12.6 percent of the GDP, and in contrast, Luzon, which has around 56 percent of total population, accounts for 73 percent of GDP.

Even within Luzon, the imbalance in development existed, Fajardo said.

He said that bulk of the 73 percent of GDP comes from the National Capital Region, Calabarzon and Central Luzon.

Economic development in the other areas in Luzon lagged behind the three regions, he said.

RDCs

“Since the administration of former President Ferdinand Marcos, the government has been promoting dispersal of industries in the countryside. In fact, the Regional Development Councils were created to attract investments in less developed areas,” Fajardo said in an interview.

He recalled that then President Marcos issued an executive order that limits investment within a certain area around Metro Manila.

“However, investments went nearby, mostly in Calabarzon, which are practically part of Metro Manila,” Fajardo said. “And now they developed Subic and then Clark, which is still part of Metro Manila. What happened was that Philippine development is concentrated in these three parts.”

He noted that more than 60 percent of the country’s total output comes from these three regions only.

“It seems unfair because it was not like that in 1970s when we started RDC. We already recognized that there’s inequality in the development of the regions,” he said.

All words

While the 2017 IPP does encourage investments in the countryside, these are “just all words,” Fajardo said during the open forum.

“The country’s infrastructure has not been dispersed and there’s so much concentration in Metro Manila. And if you do that, the more it will attract more business and population. So, they would be very overcrowded in terms of population, housing and transportation. I think they have reached beyond the saturation point,” he said.