1. Philippine Government Support to Investors
Good Morning!
First of all, I would like to thank the organizers of this event for inviting me to be part of this occasion and for giving me the opportunity to do this presentation.
Earlier, you were briefed on the specific opportunities in the Philippines available for Italian investors.
Now, I would like to share with you pertinent information on the kind of support/assistance the Philippine government extends to investors to help them do business in the Philippines with greater ease. I believe government support is one of the critical factors companies consider when deciding on a new investment location.
So I hope that my presentation would give you an idea how the Philippine government handholds investors throughout the entire investment process, from the time they do exploratory/due diligence work, until after they have established their business in the country, to help them achieve their business goals.

2. Philippine Investment Climate
But before we proceed with that, let me first give you an overview of the current investment climate in the Philippines. As the next slides will show, we have been growing in the investment arena for several years now, and I think that one of the factors contributing to this is government’s support to investors that helps create a business-enabling environment for them.

3. Philippine Investment Trends (In Billion Pesos)
73% growth
Here are some historical figures on total Philippine investments.
An accelerating trend, particularly during the 5-year period , may be noted as total investments more than doubled from P billion in 2004 to its peak of P billion in 2008.
In 2009, the global economic crisis took its toll on the country’s investment performance as total investment approvals declined to P billion.
Investments, however, rebounded in 2010 as total investments soared by 73% to P542.6 billion compared with the approved investments posted in 2009.
Please note that there were no investments from Italy for the last three (3) years. The last recorded FDI from Italy to the Philippines was in 2007 at PHP 21.1 million, which made a negligible contribution to total FDI at 0.01%. This is why we would like to encourage more investments from Italy.
Source: National Statistical Coordination Board (NSCB)

4. BOI-PEZA Approved Investments (In Billion Pesos)
69% growth
As for approved investments from BOI and PEZA, the strong growth in investments in 2010 was largely due to the staggering 143% rise in total investments committed through BOI (from P124 billion in 2009 to P302 billion in 2010).
The combined BOI-PEZA approved investments, on the other hand, increased by almost 70% to over P506 billion in 2010 compared with the P300 billion posted in Investor confidence remained high with foreign investment inflows continuing to reflect a positive outlook on the economy.
Source: National Statistical Coordination Board (NSCB)

5. The Foreign Investments Act
Non-Philippine Nationals (individual or juridical) may invest in domestic or export-oriented (at 60% export) activities up to 100% of its capital provided these are not listed in the Foreign Investments Negative List (FINL):
LIST A
Areas of activities reserved to Philippine nationals where foreign equity participation in any domestic or export enterprise engaged in any activity listed therein shall be limited to a maximum of 40% as prescribed by the Constitution and other specific laws.
LIST B
Areas of activities where foreign ownership is limited pursuant to law for reasons of security, defense, risk to health and morals, and protection of SMEs
FDI has been an important source of economic growth for the Philippines. As such, as early as 1991, the government has liberalized the entry of foreign investments into the country through the passing of the the Foreign Investments Act. This Act is considered as one of the major catalysts of FDI inflows into the Philippines.
So what is the FIA?
Under the FIA, Non-Philippine nationals are permitted up to 100% ownership in many areas of investment, except in areas that are identified in the Foreign Investments Negative list (FINL), which is reviewed every two (2) years. List A of the Foreign Investments Negative List consists of (read from the slide), while List B consists of (read from the slide)…
For Foreign owned firms catering mainly to the domestic market, a paid–in capital of at least US$200,000 is required. This can however be lowered to US$100,000 if the activity involves advance technology or if the company employs at least 50 direct employees.
Of course, the government encourages not only foreign but also local investments. The following slides will show you the various kinds of support the government extends both to foreign and local investors.

6. Government Support

7. Investment Promotion Agencies (IPAs) in RP
To facilitate the provision of support to investors, the government has created several investment promotion agencies throughout the country. Currently we have 13 IPAs and they are as follows:
Board of Investments (BOI)
Philippine Economic Zone Authority (PEZA)
Subic Bay Metropolitan Authority (SBMA)
Clark Development Corporation (CDC)
Bases Conversion and Development Authority (BCDA)
Philippine Retirement Authority (PRA)
Regional Board of Investments – Autonomous Region of Muslim Mindanao (BOI-ARMM)
Phividec Industrial Authority (PIA)
Cagayan Economic Zone Authority (CEZA)
Aurora Pacific Ecozone and Freeport Authority
Zamboanga City Special Economic Zone and Freeport Authority (ZamboEcozone)
Authority of the Freeport Area of Bataan (AFAB)
Tourism Infrastructure and Enterprise Zone Authority (TIEZA)
Aside from promoting investments, these IPAs extend assistance, register, and grant incentives to investors. For the ecozones such as PEZA, SBMA, CDC, etc., their services include the facilitation of the business operations of investors in export-oriented manufacturing and service facilities inside the economic zones.
This network of IPAs has also been tasked to develop and adopt a national marketing plan, called the PIPP (Philippine Investment Priorities Plan). The general objective of having this Plan is to harmonize the investment promotion efforts of IPAs (i.e., conducting common activities and using common collateral) to maximize the use of the country’s limited resources. As part of these synergy efforts, IPAs shall focus their marketing activities on those specific sectors identified as having visible and realistic potential. The IPAs shall also conduct image and awareness-building initiatives for the Philippines through intertwined approaches, as well as jointly advocate for improved investment climate in the country.

8. Proposed Investment Priorities Plan 2011
I. Preferred Activities
II. Export Activities
Regular List:
Agriculture/ Agri-business and Fishery
Ship Building
Mass Housing
Energy
Infrastructure
Research and Development
Green Projects
Strategic Projects
Motor Vehicles
Tourism
PPP Projects
Production and Manufacture of Export Products
Services Exports (including IT& IT Enabled services)
Activities in Support of Exporters
III. Mandatory List
IV. Export ARMM List
Similar to the PIPP is the IPP or the Investment Priorities Plan. The IPP is a list of specific economic activities wherein investments are to be encouraged for the domestic or export market. It aims to improve the efficiency and effectiveness of IPAs in attracting investments by focusing their promotion activities on certain sectors that have exhibited viability and have posed advantages to the Philippines in recent years and on sectors that have been identified as next priority sectors.
The IPP promotes the government mandate of creating jobs for the people and economic development through the grant of fiscal or monetary and non-fiscal incentives for those investors whose proposed activities are deemed qualified for registration.
The 2011 IPP, which is yet to be signed by the President, covers several areas of activities encouraged for investments as shown.
A new addition to the list are the Public-Private Partnership or PPP projects—being the government’s cornerstone strategy for national development. 8 8

9. Comparison of Incentives
Attractive Investment Incentives
Comparison of Incentives
INCENTIVE
BOI
(Executive Order No. 226, as amended)
PEZA
(Republic Act No. 7916, as amended)
CDC / SBMA
(Republic Act No – Bases Conversion Devt Authority
Income Tax Holiday
(ITH)
4 – 6 years (max of 8 years)
Exempted from all local and national taxes - value-added taxes, franchise taxes, excise and ad valorem taxes)
ITH Bonus
3 years provided the firm meets certain conditions
Special Tax Rate of 5% on Gross Income
Importation of Capital Equipment, Spare Parts and Supplies
Duty-free
Tax and Duty-Free
Wharfage Dues and Export Tax, Duty, Impost and Fees
Exempted
No exemption
Simplification of Customs Procedures
Available
Employment of Foreign Nationals
Foreign nationals may be employed in supervisory, technical or advisory positions within 5 years from a project’s registration, extendible for limited periods. The positions of president, general manager, and treasurer or their equivalents, of foreign-owned registered firms may be retained by foreign nationals for a longer period.
All foreign employees may bring with them their spouses and unmarried children under 21 years of age.
As mentioned in the previous slide, the government’s primary support to investors is the granting of attractive investment incentives.
The government has come up with a liberal program of fiscal and non-fiscal incentives to attract foreign capital and technology that complements local resources.
Different incentives schemes are available relative to the location and registration of the proposed business activity. Thus, there are several options for an enterprise to choose from.
For projects listed on the Investment Priorities Plan, specifically infrastructure, government incentives are in the form of 4 to 8 years of Income Tax Holiday, zero percent duty on imported capital equipment, exemption from 12% input VAT on allowable local purchase of goods and services, unrestricted use of consigned equipment, and employment of foreign nationals.
Our complete menu of incentives for other sectors which could locate in any of our economic zones include 5% tax rate on gross income after the lapse of ITH and tax and duty exemption on imported capital equipment. 9

10. IPA Services Due diligence assistance
Information support
Visit program development & investment briefing
Business matching
Business registration facilitation
Networking with IPUs and other government agencies on pre-operational business requirements
Fast tracking with registration procedures
Assistance with local government requirements
Aftercare service
Presence of government network to quickly respond to concerns
Regular supervision & monitoring
Aside from incentives, IPAs provide other forms of support/assistance to investors. The following services are extended to both existing and potential investors in the Philippines.
Due diligence assistance
Information support for all those needing any information about the Philippines and its investment policies
Visit program development & investment briefing for incoming delegations
Business matching with local partners, if requested by foreign or even local investors
Business registration facilitation
Fast tracking with registration procedures with concerned agencies of the government
Assistance with local government requirements, particularly for their business permits and licenses
Aftercare service
Presence of government network to quickly respond to concerns of existing investors with the end goal of making them stay in the Philippines and grow their business even stronger
Regular supervision & monitoring of activities to avoid problems, if possible and if there is one brewing already, maybe to assist in resolving the concerns in the shortest time possible. 10

11. Strategic Investors Aftercare Program (SIAP)
SIAP is a PROACTIVE program designed to create a high quality, trust-based, working relationship between BOI and existing investors in ensuring continuing business in the country.
The BOI ensures that investors’ issues and concerns are addressed and managed with the following partners:
Investments Promotion Unit (IPU) Network
National Economic Research and Business Assistance Centers (NERBACs)
For the aftercare service, the government, specifically the BOI, designed a proactive program called the Strategic Investors Aftercare Program (SIAP) that aims to create a high quality, trust-based, working relationship between BOI and existing investors in ensuring continuing business in the country.
It aims to provide a mechanism that ensures a smooth and sustained interface between the BOI and existing investors when investors avail of the services of the government.
Investor issues and concerns are addressed and managed with the following partners:
Investments Promotion Unit (IPU) Network
National Economic Research and Business Assistance Centers (NERBACs)
Fast facilitation of investors issues and concerns
Effective and sustained interaction
Open access to public sector on investment related policy 11

12. IPU NETWORK
BSP BI
BOC
BFAD
BIR
CSC
NCIP
CICT DA
DOE
DENR
DOF
DFA
DILG
DOLE
DPWH
DOST
DOT
DOTC
HLURB
MIAA
NEDA
NICA
POEA
BOI
(secretariat)
DAR
OMB
SEC
dispatcher / monitor
The OMB has discussed its intention to facilitate Issues raised by the investors to NGA’s thru their resident ombudsman for recommendation to OMB
The Investment Promotion Unit (IPU) Network is a group of 28 government agencies with MOA signed last 25 April 2007 aiming to fast track the investors’ issues and concerns. The BOI provides the secretariat functions thru its Investment Aftercare Services Department. As secretariat, the BOI acts as the dispatcher of investor issues and concerns and monitors its progress. All 28 government agencies, including the BOI are bounded by the MOA to act on all investor issues and concerns within 72 hours from receipt whenever possible but not later than the 15 working days deadline per the code of ethics of government officials and employees (RA 6713).
Act on I/C within 5 working days for simple transaction and 10 working days for complex transaction per Anti-Red Tape Law

13. Discover the Philippine Advantage! 13 So that ends my presentation.
I hope that my presentation was able to show you our government’s serious intent to provide a stable and strategic investment environment for investors. Rest assured, the Philippines will remain committed in improving the investment climate in the country to ensure that businesses that locate here continue to grow and prosper.
Thank you and again, good morning to all. 13

14. Contact details: Asst. Secretary FELICITAS AGONCILLO-REYES Investments Promotion Group Board of Investments Industry and Investment Building 385 Sen. Gil Puyat Avenue, 1200 Makati City, Philippines Tel: (632) / ext Fax: (632) Website: 14