Proposed 2014 Investment Priorities Plan 2014 IPP Old.pdf · Proposed 2014 Investment Priorities Plan ... policies and guidelines, includes the Planning process, the Core Strategies,

Proposed 2014Investment Priorities Plan

Theme: Industry Development for Inclusive Growth

FOR CONSULTATION ONLY

Comparative Matrix of 2013 IPP vs Proposed 2014 IPP2013 Proposed 2014

Purpose Provide the list of activities entitled to incentives under E.O. No. 226

Fundamental investment policy tool on DTI/BOI’s industry development strategies including, among others, the provision of incentives under E.O. No. 226

Duration/Validity 1-year document 3 –year document; consider end-of-term objectives/goals of the PDP

Content List of preferred activities, policies and guidelines

more than the list of activities, policies and guidelines, includes the Planning process, the Core Strategies, and sector write-ups

List of Economic Activities

Broad sector coverage: 13 Preferred Areas plus Exports & 9 Mandatory Inclusions

More focused: sub-sector, specific supply/value-chain gaps

Spatial Dimension None except for the ARMM List

considers regional needs and industry clustering

Process 3 Public hearings; 1 inter-agency consultation; BOI website posting

more areas for public hearings; more inter-agency consultations; sectoralconsultations; internet-based consultations


Presenter

Presentation Notes

22 April 2014 – Comments from the Secretary: review after 1 year; can add or remove from the list After 3 years, total review; end of incentives On solid waste management under mandatory list, okay for the Sec. to extend incentives but with collatilla – evaluate lack of capacity on an area to be covered so that prior entrants will not be disadvantaged by new entrants Okay for new sectors/greenfields; measured capacity on a national level for new players, there has to be regional consideration

Outline1. Introduction: 2014 IPP Process

2. PDP as the Basis of the IPP

3. Basic principles & empirical evidence on role of investment incentives

4. IPP 2014: Goals, Strategies, & Analytical Framework

5. Sectoral Analyses (examples)

6. 2014 IPP Proposed List of Activities


2014 IPP Process• Research

– Review of all existing Plans, roadmaps, industry studies– Review of relevant empirical work on investment incentive

• Peer Review of IPP 2014 Framework to a core group of economists:– Dr. Cielito Habito, Dr. Ramon Clarete, Dr. Mario Lamberte,

Dr. Enrico Basilio• Consultations

– BOI Board– DTI-BOI (intra-agency)– Inter-agency– Peer review to a wider group of economists & experts– Multi-sectoral: industry groups, academe, civil society, labor

groups– Industry Clusters – Regional Consultations


Philippine Development Plan


Philippine Development Plan (PDP)

I. Goal: inclusive growth (sustained growth, creates jobs, reduces poverty)Strategies: Investment in physical infrastructure

Transparent and responsive government

Human development

Complementary strategies (macroeconomic stability, conservation, protection and rehabilitation of the environment, social development, peace and order)


Presenter

Presentation Notes

Paramount to all the national plans considered is the PDP, on which the IPP is anchored. As stated earlier, the theme for the 2014 IPP is industry development for inclusive growth.

Vision: Globally-competitive and innovative industry and services sector contributing to inclusive growth and employment generation

Goals & Strategies:Improved business environment

• Improve governance• Strengthen economic zones• Strengthen national brand identify and awareness

Increased productivity and efficiency• Intensify the culture of competitiveness• Focus interventions in key industry areas• Enhance firm-level support to MSMEs

Enhanced consumer welfare• Encourage consumer products and services satisfaction• Improve supply chains of basic and prime commodities

Philippine Development Plan (PDP) Chapter 3: Competitive Industry and Services Sector


Presenter

Presentation Notes

IPP falls under the key strategies to promote competitive industry and services sector (Chapter 3 of PDP) which emphasizes focused intervention in key areas.

Basic Principles & Empirical Evidence on Role of Investment

Incentives


PDP & New Industrial Policy: foundation of IPPUpdated PDP: globally-competitive and innovative industry & services

sector contributing to inclusive growth & employment generation

New PH Industrial Policyo Pro-active government: coordinator/facilitator to address most

difficult challenges preventing entry of new firms & moving-up the value chain

o Access to raw materials, access to finance, necessary infrastructure, measures to encourage first movers in new areas

o Key to generating investment, employment, & innovation

Develop highly competitive industries with strong forward & backward linkages not only domestically but globally (GVCs)

Investment policy: formulated within the context of PDP & new industrial policy

o Focus: productivity, HRD, technology upgrading

o Ireland & Singapore (Blomstrom & Kokko 2003)

o Agro-industry o IT-BPM o Tourism

o Manufacturing o Logistics o Construction


The Significance of Incentives Recent literature: increasing globalization, investment incentives have become

significant factors in location decision of investors

o Morriset & Pirnia (2002): when political & economic stability, infrastructure, transport costs more or less equal, taxes exert significant impact

o growing tax competition in regional groupings like EU, within the US


Country CIT Tax Holidays

PH 30 3-8 years after start of commercial activity

CAMBODIA 20 Either 6-9 years or 3-6 years

CHINA 25 2-3 years

INDONESIA 25 3-8 years

MALAYSIA 25 5-10 years

SINGAPORE 17 Up to 15 years

THAILAND 20 3-8 years

VIETNAM 22 1-8 years

The Significance of IncentivesWith globalization, both exports & import-substitutes are exposed to external competition

• Import competition from low wage countries is associated with higher firm exit with less productive & more labor-intensive firms being relatively more affected (Couke & Sleuwaegen 2008)

• In 8 European countries, large domestic firms incur stronger decrease in survival probabilities than small firms in face of import competition from low wage countries(Colantone et al 2010)

• With the increasing globalization, investment incentives have highly significant impact on survival of SMEs. Enterprises receiving incentives are more likely to survive than those who do not receive incentives (Aldaba 2014, forthcoming ERIA Discussion Paper)

Investment Priorities PlanGoals, Strategies, Analytical

Framework


2014 IPP Objectives

1. Increase employment opportunities by revitalizing growth sectors, especially the manufacturing sector

2. Promote higher value adding activities and deeper SME participation in the supply chains

3. Strengthen participation in global and regional production networks including the ASEAN Economic Community


Presenter

Presentation Notes

Inclusive supply chain – democratizing participation in the supply chain (e.g. wider participation by SMEs and small players), expanding horizontal links 22 April 2014– Briefing with S/GLD: Redefine “inclusive supply chain” – link it more to SME; partnering with SMEs e.g., big businesses to use SMEs and spin-off some of their in-house requirements to provide revenues to small firms

Strategies

1. Support activities that generate high employment 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


Presenter

Presentation Notes

22 April 2014 – comments from the Secretary:

1987 EO 226: Legal Basis of the 2014 IPP

• Article 2: Investment policy will accelerate economic development…dispersal of industries, promotion of SMEs, under conditions which will encourage competition& discourage monopolies – “The State shall extend to projects which will

significantly contribute to the attainment of these objectives, fiscal incentives without which said projects may not be established….Fiscal Incentive system shall be devised to compensate for market imperfections, to reward performance contributing to economic development”


First Filter: Economic Criteria

① Potential to create employmento Labor intensity, employment multipliers

② Potential to move up the value chaino Moving to higher value added segments of the

value chain

③ Potential to create spillover effectso Horizontal and vertical spilloverso Backward and forward linkageso Output Multipliers

④ Potential to create a competitive marketo Market behavior, market structure


Presenter

Presentation Notes

Art. 28 of E.O. 226 is instructive on the criteria to be used in selecting economic activities in the IPP. These are: Economic soundness of the specific activity as shown by its economic internal rate of return Extent of contribution of an activity to a specific developmental goal Other indicators or comparative advantage Measured capacity Market and technical aspects and considerations of the activity proposed to be included Further, “No economic activity shall be included in the Investment Priority Plan unless it is shown to be economically, technically and financially sound after thorough investigation and analysis by the Board. The determination of preferred areas of investment to be listed in the Investment Priorities Plan shall be based on long-run comparative advantage, taking into account the value of social objectives and employing economic criteria along with market, technical, and financial analyses.” EO 226 Article 20. "Measured capacity" shall mean the estimated additional volume of production or service which the Board determines to be desirable in each preferred area of investment in order to supply the needs of the economy at reasonable prices, taking into account the export potential of the product, including economies of scale which would render such product competitive in the world market. Measured capacity shall not be less than the amount by which the measurable domestic and country's potential export market demand exceeds the existing productive capacity in said preferred areas. For export market industries, when warranted the Board shall base measured capacity on the availability of domestic raw materials after deducting the needs of the domestic market therefor. In view of these, we have come up with these 3 criteria for prioritization: 1: Potential to create employment Definition - Labor intensity; Backward and forward linkages Measurement - I-O employment multiplier Benchmark- Above the median 2: Potential to move up the value chain Definition - Moving to higher value added segments of the value chain Measurement - Value added (comparative); Usui’s product complexity measure; Revealed Comparative Advantage (RCA); Qualitative assessment Benchmark - International and regional benchmarks 3: Potential to create spillover effects Definition - Horizontal and vertical spillovers Measurement - I-O output multiplier; Qualitative assessment Benchmark - Above the median

A SUPPLY CHAIN GAP?

•UPSTREAM•MIDSTREAM

•DOWNSTREAM

HOW TO MAINTAIN COMPETITIVENESS

MOST BINDING CONTRAINTS

PREVENTING ENTRY AND /OR MOVING UP

VALUE CHAIN

HIGH PRODUCTION COST•Power•Logistics•Raw Materials•Lack of scale

HIGH RISKS •Huge capital requirements•New technology

HUMAN CAPITAL•Skills gap•Labor mismatch

GOVERNMENT REGULATIONS•Licenses•Smuggling

OTHERS•Financing•Competition•Standards, quality, etc.

FRAMEWORK for PRIORITIZATION of ECONOMIC ACTIVITIES

P O L I C Y R E S P O N S E

GOVERNMENT POLICIES•Tax•Labor•Foreign Equity Restriction

I N C E N T I V E S +O T H E R P O L I C I E S (WITHOUT INCENTIVES)

1. Employment contribution? H,M,L

2. Potential to move up the value chain, Latent comparative advantage?H, M, L

3. Spill over effects and forward & backward linkages? H, M, L

4. Create competitive market? H, M, L

N

Y

Presenter

Presentation Notes

22 April Board meeting: Make this in the format of a Decision Tree in one vertical or horizontal representation Ideally, we should have started with the Comprehensive National Industrial Strategy (CNIS) to consider the industrialization path that the country wants/needs to follow including the sectoral priorities that would allow Philippine industries participate on a deeper scale in the regional and global production networks. (Note: The completion of the CNIS is still pending with PIDS) In the absence of the CNIS, we have devised this framework for prioritization of economic activities. Conceptually, the whole economy is considered (i.e., all sectors are subjected to the 3 criteria). Sectors that passed the benchmarks set would then be tested for supply chain gaps (upstream, midstream, or downstream) based on available references such as the PDP and other national plans (e.g. Philippine Export Development Plan (PEDP) 2011-2016; Philippine Investment Promotion Plan (2010-2014); National Framework Strategy on Climate Change (NFSCC) 2010-2022; National Science and Technology Plan (NSTP) 2002-2020; MSME Development Plan (2011-2016); Agriculture and Fisheries Modernization Plan; Philippine Energy Plan; and Philippine Tourism Plan), sectoral roadmaps, sectoral studies, etc. However, pending the submission of the I-O analysis currently being undertaken by the USAID-COMPETE Project, present work went ahead to the “binding constraints” analysis. The identified supply chain gap (big auto parts manufacture) and/or core activity (e.g. motor vehicle assembly) would then be subjected to the “binding constraints” analysis and see whether incentives would be the right policy response to the identified constraints. Samples of binding constraints are shown on the slide. Only those core activity and/or supply chain gap that had policy responses involving the grant of incentives, i.e., incentives +, would be listed in the 2014 IPP. It should be emphasized that granting incentives should be a short term/temporary measure and that the underlying cause of key constraints to establish competitive industries should be simultaneously addressed.

Sectoral Analyses


A SUPPLY CHAIN GAP?UPSTREAM• IC Design• R&D• Wafer fabricationDOWNSTREAM• Diversified Products (Automotive electronics, EDP, consumer electronics, PV, LED (& other high growth subsectors)


PREVENTING ENTRY AND /OR MOVING UP VALUE CHAIN

HIGH PRODUCTION COST•Power•Raw Materials


OTHERS• Lack of SME development,

especially for localization• Lack of R&D and product

innovation• Shortage of highly skilled workforce

A N A L Y S I S F O R E L E C T R O N I C S


I N C E N T I V E S• Higher value products/niche

products and services e.g. IC Design• Support industries

O T H E R P O L I C I E S •Promote R&D for new products•Industry + academe linkages

1. Employment contribution? HIGH (Semicon-1,465)

2. Potential to move up the value chain, Latent comparative advantage?HIGH

3. Spill over effects and forward & backward linkages? HIGH

4. Create competitive market?HIGH

+

Presenter

Presentation Notes


A SUPPLY CHAIN GAP?

NONE

HOW TO MAINTAIN COMPETITIVENESS

HIGH PRODUCTION COST•Power

A N A L Y S I S F O R E L E C T R O N I C S


O T H E R P O L I C I E S • Support measures to reduce energy cost• Strictly enforce of customs laws and technical regulations

1. Employment contribution? HIGH (1,181)

2. Potential to move up the value chain, Latent comparative advantage?LOW

3. Spill over effects and forward & backward linkages? LOW

4. Create competitive market?LOW

A N A L Y S I S F O R C E M E N T



GOVERNMENT REGULATIONS•Smuggling

Presenter

Presentation Notes


Agriculture/Agribusiness and Fishery

Supply Chain Gaps

• Lack of producers of agricultural inputs such as veterinary medicine, fertilizers, pesticides

• Lack of agricultural infrastructure facilities such as post harvest facilities (AAA slaughterhouses, cold storage, dying, testing laboratories, AAA dressing plants), irrigation facilities, farm to market roads, state-of-the-art fish ports.

• No producer of mechanically deboned meat (for use of meat processors).

Policy Response Key Constraints

• High cost of production• High investment cost

• Incentives to encourage investments in:• Agricultural inputs

production (e.g., feeds, animal nutrition, fertilizers, pesticides, other related crop protection products, etc.)

• Provision of agricultural support services, facilities and infrastructure (e.g., drying facility, slaughter house, cold storage, dressing plant, state-of-the-art fish ports etc.)

• MDM production facilities



Supply Chain Gaps

• Few producers of high value-added agricultural products

Policy Response

• Incentives to encourage production of high value-added agricultural products such as natural ingredients

• Intensify development of technologies (R&D) and expand extension

• Development and implementation of climate-change mitigation and adaptation measures

• Continuous R&D for the control and prevention of agri pests and diseases; R&D to develop climate change-resilient varieties and methods

Key Constraints

• High cost of production• High investment cost• R&D for Technology

Development• Poor production and/or

processing technologies• High cost of technology• Access to technology

• Reliability of agricultural raw material supplies (typhoon, El Niño, pest and diseases, limited diversification, etc.)



Supply Chain Gaps Policy Response

• Strengthen certification systems (e.g. Good MfgPractices, Hazard Analysis Critical Control Point, ISO 22000)

• Establish certifying bodies for Halal and Kosher food

• Assist in building capacities to comply with international standards and improve branding/packaging

• Improvement of government support to SMEs in the agrisector

• Promotion of integration between small farmers and large enterprises

• Promote block farming (e.g. sugarcane and other scale-sensitive crops)

• Stricter implementation of laws on smuggling

Key Constraints

• Market-related constraints • Difficulty in complying

with international market standards

• Unattractive packaging/labeling

• Lack of certifying bodies, e.g., Halal, Kosher, etc.

• Industry structure-related constraints• Predominance of SMEs

(backyard scale operation) in the agriculture sector vis-à-vis economies of scale issue

• Inadequate marketing network

• Access to financing• Smuggling


Output & Employment Multipliers for Food Processing

Sub-sector Total Output Total Employment

Slaughtering & meat packing

3.23 1937

Meat & meat products 3.45 1748

Milk processing 2.47 1087

Canning & preserving fruits

2.57 1465

Fish canning 2.75 1276

Fish drying, smoking, mfr of other seafood products

2.39 1087

Coffee roasting & processing

2.55 1418


A SUPPLY CHAIN GAP?UPSTREAM•Agri inputs, e.g., fertilizers, pesticidesDOWNSTREAM•Processed agri & fishery productsINDUSTRY-WIDE•Agri Infrastructure facilities



HIGH PRODUCTION COST•Agri Inputs•High cost of new technology•Volatility of agricultural raw material

supplies (typhoon, El Niño, limited diversification, etc.)

HIGH RISKS • New technology• High investment cost

for infra and support facilities

GOVERNMENT REGULATIONS•Smuggling

OTHERS•Access to

technology

ANALYSIS FOR AGRICULTURE/AGRIBUSINESS & FISHERY


I N C E N T I V E S• Extraction of natural ingredients• Mechanized agri services• Agri support infrastructure

O T H E R P O L I C I E S • Strengthen certification systems• Government support to SME• Capacity building

1. Employment contribution? HIGH

2. Potential to move up the value chain, Latent comparative advantage?HIGH (bio processing and food processing)


4. Create competitive market? HIGH

+

Presenter

Presentation Notes


A SUPPLY CHAIN GAP?

UPSTREAM•Raw Materials •High Quality Products


PREVENTING ENTRY AND /OR MOVING UP

VALUE CHAIN

HIGH PRODUCTION COST•Raw Materials


OTHERS•Shortage of tool & die engineers and specialist


I N C E N T I V E S•New investments in tool

and die

O T H E R P O L I C I E S • Support R&D and technology upgrade through MIRDC• Encourage Joint Ventures with foreign companies• Tool and Die TESDA courses and tool and die engineering

courses




4. Create competitive market?HIGH

A N A LYS I S F O R TO O L & D I E

Presenter

Presentation Notes


IT-BPM• Sector Coverage:

– Voice BPO and non-voice BPO, Corporate Services, KPO, IT Outsourcing, Software Products and Development, Healthcare Information Management, Creative Services and Products, Engineering Services

• Output: 5.5% of GDP (2012)

• Employment: 776,694 (2012)

• Market: USA, UK, Japan, Australia, New Zealand, Canada, other EU and other Asian


Presenter

Presentation Notes

Output= GVA (ASPBI 2010)

IT-BPM

Supply Chain Gaps

• Talent Supply Gap

Policy Response

• HR programs (e.g., Intensify Industry-academia-training provider collaboration to introduce Standardization and Certification)

• Provide financing for marketing and promotion

• Creation of an industry-directed venture capital ecosystem/fund for the industry

• Incentives not a sole solution to the identified key constraints

• Consider under export activities of the IPP

Key Constraints

•Skills mismatch between graduates and industry needs

•Lack of support for marketing and promotion

•Capital bottleneck (lack of funds for scale-up /investments in marketing; Minimal support from banking, angel funds and capital markets; and High energy cost)


Presenter

Presentation Notes

Roadmap; from PDP:

A SUPPLY CHAIN GAP?Talent supply gap

(game development, animation, health management, software

development, engineering design)



A N A L Y S I S F O R I T - B P M


I N C E N T I V E S• For export of IT-BPM services

O T H E R P O L I C I E S •HR programs•Support marketing and promotion•Industry-directed venture capital/financing system




4. Potential to create competitive markets? HIGH

+

HIGH PRODUCTION COST•Power

HUMAN CAPITAL•Skills gap•Middle managers

OTHERS•Financing for scaling up, marketing and promotion

Presenter

Presentation Notes


2014 IPP Preliminary List of Activities


I. Preliminary List of Preferred Activities

1. Manufacturinga.Motor vehicle assembly excluding motorcycles

(based on Logistics Efficiency Index)

b.Engineered Products• Body panel stamping• Engines, transmissions, and transaxle• Large injection moulded parts for motor vehicles• Controller assembly, motor, and battery (other than lead

acid) for e-vehicles• Aerospace parts and components• Shipbuilding parts and components


Presenter

Presentation Notes

22 April Board meeting: Questions on inclusion of textile, paper pulp, modernization/rehab of paper mills, iron and steel Check with sectoral champions why we want to include them 22 April Briefing with Secretary: Motor vehicle can be retained but with requirement of value added of no lower than 50% Use Logistics Efficiency Index similar to the auto policy No to modernization/rehabilitation- we want upgrading of technology therefore new equipment Only brand new plant, equipment 23 April Sectoral meeting with Usec: Review policy on expansion – could be allowed if all new production line or limited use of existing equipment for the new capacity 1. Manufacturing: Listed activities as are identified in the sectoral analyses. Motor vehicle assembly excluding motorcycles – auto assembly identified a cost handicap that can be reduced in part with the grant of incentives, especially the ITH. This was not identified in the case of motorcycles. Both, however, identified the need for a strong supply chain (parts manufacturing base) to support the assembly operations. Engineered Products, e.g. Body panel stamping; Engines, transmissions, and transaxle; Large injection molded parts for motor vehicles; Controller assembly, motor, and battery (other than lead acid) for e-vehicles; Aerospace parts and components; and Shipbuilding parts and components (e.g. navigational and safety equipment, engine assembly and components) – identified parts or critical supply chain gaps in moving up the value chain. Textile – Garments will be covered under Exports as production for domestic consumption are not proposed to be incentivized. In support to the garments industry, investments in textile plants will be encouraged. Chemicals Fertilizers – as farm input, in support to the agriculture sector Pesticides – as farm input, in support to the agriculture sector Oleochemicals – moving up the value-chain for the coconut and palm oil industries; this would also be in support of value-adding in the pharmaceuticals, food (food additives), cosmetics, household care products Petrochemicals and derivatives Copper wire rod – as identified in the copper industry roadmap to close the upstream value-chain gap. A pre-FS for a copper wire rod facility has already been done by the industry. Paper pulp – as identified in the paper industry roadmap to close the upstream value-chain gap. The industry is currently looking for financial support to undertake the pre-FS for such an activity. Tool and Die – as a support industry to the core industries (automotive, electronics, rubber, plastics, etc.) Modernization/Rehabilitation – these industries (iron & steel, shipyards, ceramic tiles, paper mills) identified outdated plants/technologies as part of the sectoral constraints. New investments in modernizing existing plants may be encouraged and increasing capacity utilization rather than encouraging new plants that may not help the industry, in general. New investments may be done by the existing owners/players or new investors either thru JV or buy-in. This listing is subject to further discussion during the sectoral consultations.

I. Preliminary List of Preferred Activities (cont’d)

1. Manufacturing, cont’dc. Chemicals

• Fertilizers• Pesticides• Oleo-chemicals• Petrochemicals and derivatives

d.Copper wire rode.Paper pulp f.Tool and Die

• Simple, Compound and Progressive Dies• Molds for forging, plastics injection or blow moulding, die

casting, glass blow moulding• Jigs and fixtures used for cutting and shaping different

materialsFOR CONSULTATION ONLY

Presenter

Presentation Notes

22 April Board meeting: Questions on inclusion of textile, paper pulp, modernization/rehab of paper mills, iron and steel Check with sectoral champions why we want to include them 22 April Briefing with Secretary: Motor vehicle can be retained but with requirement of value added of no lower than 50% Use Logistics Efficiency Index similar to the auto policy No to modernization/rehabilitation- we want upgrading of technology therefore new equipment Only brand new plant, equipment 23 April Sectoral meeting with Usec: Review policy on expansion – could be allowed if all new production line or limited use of existing equipment for the new capacity 1. Manufacturing: Listed activities as are identified in the sectoral analyses. Motor vehicle assembly excluding motorcycles – auto assembly identified a cost handicap that can be reduced in part with the grant of incentives, especially the ITH. This was not identified in the case of motorcycles. Both, however, identified the need for a strong supply chain (parts manufacturing base) to support the assembly operations. Engineered Products, e.g. Body panel stamping; Engines, transmissions, and transaxle; Large injection molded parts for motor vehicles; Controller assembly, motor, and battery (other than lead acid) for e-vehicles; Aerospace parts and components; and Shipbuilding parts and components (e.g. navigational and safety equipment, engine assembly and components) – identified parts or critical supply chain gaps in moving up the value chain. Textile – Garments will be covered under Exports as production for domestic consumption are not proposed to be incentivized. In support to the garments industry, investments in textile plants will be encouraged. Chemicals Fertilizers – as farm input, in support to the agriculture sector Pesticides – as farm input, in support to the agriculture sector Oleochemicals – moving up the value-chain for the coconut and palm oil industries; this would also be in support of value-adding in the pharmaceuticals, food (food additives), cosmetics, household care products Petrochemicals and derivatives Copper wire rod – as identified in the copper industry roadmap to close the upstream value-chain gap. A pre-FS for a copper wire rod facility has already been done by the industry. Paper pulp – as identified in the paper industry roadmap to close the upstream value-chain gap. The industry is currently looking for financial support to undertake the pre-FS for such an activity. Tool and Die – as a support industry to the core industries (automotive, electronics, rubber, plastics, etc.) Modernization/Rehabilitation – these industries (iron & steel, shipyards, ceramic tiles, paper mills) identified outdated plants/technologies as part of the sectoral constraints. New investments in modernizing existing plants may be encouraged and increasing capacity utilization rather than encouraging new plants that may not help the industry, in general. New investments may be done by the existing owners/players or new investors either thru JV or buy-in. This listing is subject to further discussion during the sectoral consultations.


2. Agribusiness and Fisherya.Extraction of natural ingredients

b.Mechanized agriculture support services, e.g. harvesting, plowing, and spraying/dusting

c.Agriculture support infrastructures, e.g. drying, cold chain storage, blast freezing, bulk handling and storage facilities; packing houses, trading centers, ice plants in Less Developed Areas, AAA slaughterhouse


Presenter

Presentation Notes

22 April briefing with Secretary: No takers for R&D Geothermal is already competitive; we are no. 2 in the world Should not be mass housing but Economic and Low-cost housing 2. Agribusiness and Fishery: Limited coverage for commercial processing that encourages the production of higher-value products such essential oils, pharmaceutical or food-related ingredients extracted from fruits and vegetables. Excluded now are the production of crops and livestock for the domestic market. Instead, activities listed include those that would support the core activities such as infrastructure and support services as listed on the slide. Note that based on Chapter 3 of the PDP, support will be given to farmers in terms of product development, value-adding, and integration to big enterprises for marketing and financing purposes. Meanwhile, Chapter 4 of the PDP has identified the following challenges of the Agri sector: 1) low productivity and production; 2) limited access to credit and insurance; 3) low adoption and application of technology; 4) incomplete land ownership transfer under CARPER; 5) slow market growth and poor linkage to value-adding activities; 6) limited diversification of production and products; 7) limited connectivity (farm-to-market roads, inter-island shipping); 8) inefficient and inadequate post-harvest and other marketing facilities; 9) weak capacity of farmers and fisherfolk for entrepreneurship; 10) smuggling; 12) weak institutions and policies; 11) weak agriculture extension service; 12) inadequate support for R&D; 13) overlapping functions and contradicting policies; 14) resource degradation due to weak enforcement of regulations; and 15) vulnerability to climate risks and disasters and inadequate climate risk-resilient technologies. 3. Services: Listed activities as are identified in the sectoral analyses.


3. Servicesa.IC Design

b.Ship repair

c.Testing facilities (specify)

d.Charging stations for e-vehicles

e.Industrial waste treatment

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


Presenter

Presentation Notes

22 April briefing with Secretary: No takers for R&D Geothermal is already competitive; we are no. 2 in the world Should not be mass housing but Economic and Low-cost housing 2. Agribusiness and Fishery: Limited coverage for commercial processing that encourages the production of higher-value products such essential oils, pharmaceutical or food-related ingredients extracted from fruits and vegetables. Excluded now are the production of crops and livestock for the domestic market. Instead, activities listed include those that would support the core activities such as infrastructure and support services as listed on the slide. Note that based on Chapter 3 of the PDP, support will be given to farmers in terms of product development, value-adding, and integration to big enterprises for marketing and financing purposes. Meanwhile, Chapter 4 of the PDP has identified the following challenges of the Agri sector: 1) low productivity and production; 2) limited access to credit and insurance; 3) low adoption and application of technology; 4) incomplete land ownership transfer under CARPER; 5) slow market growth and poor linkage to value-adding activities; 6) limited diversification of production and products; 7) limited connectivity (farm-to-market roads, inter-island shipping); 8) inefficient and inadequate post-harvest and other marketing facilities; 9) weak capacity of farmers and fisherfolk for entrepreneurship; 10) smuggling; 12) weak institutions and policies; 11) weak agriculture extension service; 12) inadequate support for R&D; 13) overlapping functions and contradicting policies; 14) resource degradation due to weak enforcement of regulations; and 15) vulnerability to climate risks and disasters and inadequate climate risk-resilient technologies. 3. Services: Listed activities as are identified in the sectoral analyses.

I. Preliminary List of Preferred Activities

4. Economic and Low-cost Housing (horizontal and vertical)

5. Energya.Exploration and development of energy sources b.Power generation plants

6. Public Infrastructure and Logisticsa. Airports and seaports (includes RO-RO ports) for cargo and passengerb. Newly purchased ships, aircrafts, seaplanes, RO-ROc. Duty-free importation of equipment for mass transport (boats, buses,

trains)

7. PPP Projects


Presenter

Presentation Notes

22 April Briefing with Secretary: Include Public Infra and logistics Airports and seaports (includes RO-RO ports) for cargo and passenger Newly purchased ships, aircrafts, seaplanes, RO-RO Duty-free importation of equipment for mass transport (boats, buses, trains) 5. Energy: Included, in view of the need for additional supply of power, particularly for baseload plants (coal-fired) and for the reserve capacity (oil-fired). Renewable energy projects are covered under Special Laws (RE Law) 6. PPP Projects: Covers infrastructure projects under the PPP Program of the government. According to the PPP Center, it would be good if all infrastructure projects would be under the PPP Program and passed through the PPP Center to ensure a holistic approach to the whole infrastructure development. The inclusion of non-PPP projects would be for further discussion during the sectoral consultations. II. Exports: The listing is the same with 2013 IPP. Export activities, based Article 32 of E.O. 226, are to be qualified for registration with the Board.

II. Exports

1.Production and manufacture of export products

2.Services Exports

3.Activities in support of exporters


Presenter

Presentation Notes

22 April Briefing with Secretary: Include Public Infra and logistics Airports and seaports (includes RO-RO ports) for cargo and passenger Newly purchased ships, aircrafts, seaplanes, RO-RO Duty-free importation of equipment for mass transport (boats, buses, trains) 5. Energy: Included, in view of the need for additional supply of power, particularly for baseload plants (coal-fired) and for the reserve capacity (oil-fired). Renewable energy projects are covered under Special Laws (RE Law) 6. PPP Projects: Covers infrastructure projects under the PPP Program of the government. According to the PPP Center, it would be good if all infrastructure projects would be under the PPP Program and passed through the PPP Center to ensure a holistic approach to the whole infrastructure development. The inclusion of non-PPP projects would be for further discussion during the sectoral consultations. II. Exports: The listing is the same with 2013 IPP. Export activities, based Article 32 of E.O. 226, are to be qualified for registration with the Board.

III. Special Laws

1. Industrial Tree Plantation

2. Mining (limited to capital equipment incentive)

3. Publication or Printing of Books/Textbooks

4. Refining, Storage, Marketing and Distribution of Petroleum Products

5. Rehabilitation, Self-Development and Self-Reliance of Persons with Disability

6. Renewable Energy

7. Tourism (pending issuance of the IRR of Tourism Act)


Presenter

Presentation Notes

Removed from the List are the Ecological Solid Waste Management Projects and Clean Water Projects in view of the expiry of the 10-year period reckoned from the effectivity of the respective laws for the grant of incentives. The identified gap of the rubber sector for nurseries and plantations are covered under the Industrial Tree Plantation (ITP). In the case of natural health products, this may be covered under ITP if source is a tree or it may be covered under Agribusiness (extraction of natural ingredients), particularly if it will involve processing of herbal plants. Review all special laws with Legal Service Double check also AFMA

Comparative Analysis


Comparative Matrix of 2013 IPP vs 2014 IPP2013 Proposed 2014

I Preferred Activities

1 Agriculture, Agribusiness & Fishery

Commercial Production, Commercial Processing, Fertilizers, Agri-Support Services

Extraction of natural ingredients through bioprocessing; Agri-Support Services and Infrastructure; Fertilizers; Pesticides

2 Creative Industries/ Knowledge-basedServices

IT and IT-enabled services with original content

Transferred to Exports

3 Shipbuilding Building of vessels 500GT and above, Ship Repair & Ship Recycling

Transferred to Exports

4 Mass Housing Low cost horizontal and vertical housing projects & modular housing components

Economical and Low cost horizontaland vertical housing projects

5 Iron & Steel Basic iron and steel products, long steel products, and flat hot-/cold-rolled products

None

6 Energy Exploration, development, and/or utilization of energy resources adopting environmentally-friendly technologies

Same


Presenter

Presentation Notes

Agriculture, Agribusiness & Fishery - Limited coverage for commercial processing that encourages the production of higher-value products such essential oils, pharmaceutical or food-related ingredients extracted from fruits and vegetables. Excluded now are the production of crops and livestock for the domestic market. Instead, activities included are those that would support the core activities such as infrastructure and support services. Creative Industries/Knowledge-based Services – Under Exports since majority of BOI registrants are export-oriented anyway. Also, it was informed that even the underdeveloped subsectors would be more viable if servicing the Export market as the domestic market is quite small. Identified under Pillar 1 of the Pillars for Industry Development (Sustaining the Growth), main government support would be in the areas of marketing and promotion. Shipbuilding – Under Exports since domestic is quite small. Companies would have to export to increase its viability. Mass Housing – As identified under PDP, a critical segment of the Construction industry. Also, for social goals considering that housing/shelter is a basic necessity. Iron & Steel – Limited to modernization. New investments in modernizing existing plants may be encouraged and increasing capacity utilization rather than encouraging new plants that may not help the industry, in general. New investments may be done by the existing owners/players or new investors either thru JV or buy-in. This listing is subject to further discussion during the sectoral consultations. Energy - Included, in view of the need for additional supply of power, particularly for baseload plants (coal-fired) and for the reserve capacity (oil-fired). Renewable energy projects are covered under Special Laws (RE Law)


7 Infrastructure Transport; water; logistics; waste management facilities; physical infrastructure; & PPP Projects

Public infrastructure and logistics, PPP Projects and Waste treatment under Services

8 Research & Development

R&D activities; Establishment of research/testing laboratories; Centers of Excellence (COE); and technical vocational education and training institutions

None

9 Green Projects

Manufacture/assembly of goods and the establishment of energy efficiency-related facilities (such as district cooling systems), where utilization of which would significantly lead to either the efficient use of energy, natural resources or raw materials; minimize/prevent pollution; or reduce greenhouse gas emissions

None

10 Motor Vehicles

Assembly of motor vehicles, including alternative fuel vehicles (AFVs) and electric vehicles (EVs) but excluding 2-stroke motorcycles; & Manufacture of motor vehicle parts and components

Assembly of motor vehicles excluding motorcycles; & Manufacture of motor vehicle parts and components (Logistics Efficiency Index)FOR CONSULTATION ONLY

Presenter

Presentation Notes

7. Infrastructure – Limited to projects under the PPP Program of the government. According to the PPP Center, it would be good if all infrastructure projects would be under the PPP Program and passed through the PPP Center to ensure a holistic approach to the whole infrastructure development. 8. Research & Development – listed under Services and limited to commercial R&D activities. Testing laboratories listed separately under Services. Just recently, the first testing center for helmets was registered ith BOI. COEs (business incubation centers and common service facilities) are now considered as needed government interventions since no applicants noted since listing. 9. Green Projects – None. The only projects registered under this Category are “District Cooling Systems” for the different business centers of the Ayala group. 10. Motor Vehicles - Motor vehicle assembly excluding motorcycles – auto assembly identified a cost handicap that can be reduced in part with the grant of incentives, especially the ITH. This was not identified in the case of motorcycles. Both, however, identified the need for a strong supply chain (parts manufacturing base) to support the assembly operations. Hence, critical parts manufacturing were identified and listed under Engineered Products, e.g. Body panel stamping; Engines, transmissions, and transaxle; Large injection molded parts for motor vehicles; and Controller assembly, motor, and battery (other than lead acid) for e-vehicles.


11 Strategic Projects Projects that exhibit very high social economic returns that will significantly contribute to the country’s economic development

None

12 Hospital/Medical Services

Medical facilities incl. general and specialty hospitals and other health facilities

None

13 Disaster Prevention, Mitigation & Recovery Projects

1. Projects that will prevent or mitigate adverse impacts of calamities and disasters

2. Projects to rehabilitate areas affected by calamities and disasters

3. Trainings for disaster preparedness, mitigation or recovery/rehabilitation/reconstruction

None

II Exports 1. Production and manufacture of export products

2. Services Exports3. Activities in support of exporters

Same


Presenter

Presentation Notes

11. Strategic Projects – None; Projects listed to date under this Category are petrochemicals, which is now considered under Manufacturing; and a pharmaceutical project, which was an expansion of a Unilab subsidiary. This may be subject to further discussions if such a listing is still needed to cover unanticipated but necessary investments/projects. 12. Hospital/Medical Services – None. While there were few registrants in the past, there is no available reference to determine the demand-supply gap in hospital services. If servicing for the poor, these are supposed to be addressed by the health centers under the LGUs. If for tourism purposes, these are covered under the Tourism under the Special Laws listing. If servicing for the regular/paying patients, this could be discussed during the sectoral consultations. A regional needs assessments may have to be done to be relevant. 13. Disaster Prevention, Mitigation & Recovery Projects – None. Only 1 project has been registered since its listing, an additional vessel for salvaging in 2012. During the inter-agency consultations when it was first listed in the IPP in 2009, it was viewed that these types of projects are usually undertaken by government and thus, no private investments are expected. An opportunity that may be considered here could be the manufacture/production of goods for disaster relief and management (e.g. fiberglass boats) and could be listed under Manufacturing.


III Mandatory/SpecialLaws

1. Industrial Tree Plantation2. Mining3. Publication or Printing of

Books/Textbooks4. Refining, Storage,

Marketing and Distribution of Petroleum Products

5. Ecological Solid Waste Management Projects

6. Clean Water Projects7. Rehabilitation, Self-

Development and Self-Reliance of Persons with Disability

8. Renewable Energy9. Tourism

Same except for • Ecological Solid Waste

Management Projects &• Clean Water Projects

Presenter

Presentation Notes

Same except for the Ecological Solid Waste Management Projects and Clean Water Projects in view of the expiry of the 10-year period reckoned from the effectivity of the respective laws for the grant of incentives.

Sectoral Analysis


Documents

Proposed 2014 Investment Priorities Plan 2014 IPP Old.pdf · Proposed 2014 Investment Priorities Plan ... policies and guidelines, includes the Planning process, the Core Strategies,