DIRECTOR ANGELICA M. CAYAS

BOARD OF INVESTMENTS

INVESTMENT OPPORTUNITIES & DOING BUSINESS IN THE PHILIPPINES

Presentation Outline

I. Business Opportunities• 2017 Investment Priorities Plan• Sectors for Promotion to Germany• Investment Incentives• Other Areas for Investments

II. Doing Business in the Philippines

Business Opportunities:

2017 Investment

Priorities Plan

2017 Investment Priorities Plan

A. Preferred Activities

6. INFRASTRUCTURE & LOGISTICS INCLUDING LGU-PPPs

7. INNOVATION DRIVERS

8. INCLUSIVE BUSINESS MODELS

9. ENVIRONMENT OR CLIMATE CHANGE-RELATED PROJECTS

10. ENERGY

1. ALL QUALIFIED MANUFACTURING ACTIVITIES INCLUDING AGRO-PROCESSING

2. AGRICULTURE, FISHERY AND FORESTRY

3. STRATEGICSERVICES

4. HEALTHCARE SERVICES

5. MASS HOUSING

2017 Investment Priorities Plan

B. Export Activities

C. Special Laws

Manufacture of export products

Services exports

Activities in support of exporters

Industrial Tree Plantation (PD 705)

Mining (RA 7942) (limited to capital equipment incentive)

Publication or Printing of Books/Textbooks (RA 8047)

Refining, Storage, Marketing and Distribution of Petroleum Products (RA 8479)

Rehabilitation, Self-Development and Self-Reliance of Persons with Disability (RA 7277)

Renewable Energy (RA 9513)

Tourism (RA 9593)

Business Opportunities:

Sectors for Promotion to Czech Republic

• Philippine manufacturing growth in 2010-2014 is higher than the global industry growth and highest in ASEAN

• In 2016, Manufacturing is the third largest amount of committed FI (PhP 95.9 billion or 43.8% share of PH GDP), while it is the largest recipient in 2015 (PhP134.6 billion or 54.9% share)

• Largest contributor to the manufacturing GVA is food processing (34.25%), followed by electronics (17.67%) and chemicals (12.54%) in 2015.

• Renewed focus on the sector through the Manufacturing Resurgence Program (MRP) initiated by the DTI in 2012.

Source: www.unido.org

Manufacturing

• Manufacturing subsectors:

Automotive/ Auto parts

Aerospace

Electronics

Chemicals

Shipbuilding

Iron and Steel

Manufacturing

IT-Business Process Management

State:

• Fastest growing sector in the economy with a compound annual growth rateof +/- 17 percent over a six-year period (2010-2016)

• Number 1 in voice BPM provider in the world and Number 2 in non-voiceservices and global in house centers (GICs)

• US$22.9 billion in revenues employing more than 1.150M direct employees in2016.

Opportunities:

• Voice and Non-Voice Business Process

Management

• Software Development & IT Outsourcing

• Global-In-House Centers (GICs)

• Healthcare Information Management (HIM)

• Animation & Game Development

Energy

State:

• Most liberalized power sector in South East Asia

• Dependable capacity of 17,925 MW (20,055 MW installed) of generating plants (as ofDecember 2016)

• Energy sources: Fossil Fuel- 52% (9,267MW); Nat Gas- 16% (2,780MW); RE- 33%(5,878MW)

• An average of 6.9% demand growth rate (with an 8% GDP target) for 2016-2020

• Additional capacity demand of 17,338 MW by 2030, 60% from RE sources

Opportunities:

• Exploration and development of energy sources

• Power generation plants

• Ancillary Services

• Energy efficiency projects

State:

• Priority sector with public spending targeted to reach as much as 7% of GDP

• 2017 public infrastructure budget is US$18.49 billion (P860.7 billion) or about 5.4% ofGDP

• In terms of PPP, 15 projects have already been awarded with project cost of US$7.05billion and 8 projects under procurement

Opportunities:

• Establishment and operation of physical infrastructure and logistics such as airports, seaports, (air, land and water) transport, LNG storage and regasification facilities, pipeline projects for oil and gas, bulk water treatment and supply,

training facilities, testing laboratories and domestic industrial zones

• PPP projects including those initiated and/or implemented by

Local Government Units (LGUs)

Infrastructure & Logistics

Agriculture, Fishery and Forestry

State:• Contributed 8.8% to the country’s GDP, with Php 710.6 Billion in

Gross Value Added (GVA) in 2016.• Exports totaled to US$3.51 billion (FOB value) in 2015 with coconut,

shrimps, bananas, canned pineapple, and banana chips among ourtop earners.

• Growth in the Beverage sub sector’s Volume of Production Index isat 20%, while the growth in Value of Production Index stands at 40%between 2011-2015

• Employs around 11.49 million (2015) or 30% of the totalemployment in PH.

Opportunities:• Commercial production and processing of agricultural, fishery and

forestry products• Production of seeds and seedlings and establishment of nurseries

and hatcheries and support services and infrastructure (e.g. facilities for drying, cold chain storage; packing houses, trading centers)

Business Opportunities:

Competitive Investment Incentives

INCENTIVE Board of Investments (BOI)

(Executive Order No. 226, as amended)

Philippine Economic Zone Authority (PEZA)

(Republic Act No. 7916, as amended)

Income Tax Holiday (ITH) 4 – 6 years (max of 8 years)

ITH Bonus 3 years provided the firm meets certain conditions

Special Tax Rate of 5% on Gross Income

None Special Tax Rate of 5% on Gross Income

Importation of Capital Equipment, Spare Parts and Supplies

0% Duty Tax and Duty-Free

Importation of Raw Materials & Supplies used in Export

Tax Credit Tax & Duty-Free

Value Added Tax Zero Rating for Exports 0%

Employment of Foreign Nationals

Special Non-Immigrant Working Visa within 5 years from project’s registration including spouse and unmarried children under 21 years of age

Competitive Investment Incentives

Philippines’ GSP+ Status with EU

Grant of GSP+ Status

to the PH by EU

• Approved in December 2014.

• Provides duty free entry to the EU for some of the most important PH exports including fruit and foodstuffs, coconut oil, footwear, fish and textiles.

Benefits

• The PH now has leverage for businesses with agricultural and manufacturing facilities who wish to enter the EU market.

• PH’s total exports to EU is expected to grow by 12%, creating additional 267,000 jobs.

Market

Opportunities

• Industrial investments insectors with zero tariffsunder GSP+

• These include established Filipino exports that are labour intensive such as pineapple juice, garments, preserved fruits, tuna, fruit jams and jellies, and footwear.

Business Opportunities:

Other Areas for

Investments

Other Areas for Investments

Bank Liberalization Law (RA 10641)• Allows foreign ownership up to 100% of domestic banks

• Capital requirements:

• Locally Incorporated Subsidiaries - equal to that prescribed by the Monetary Board for domestic banks of the same category

• Foreign Bank Branches - permanently assigned capital of not less than the U.S. dollar equivalent of two hundred ten million pesos (P210,000,000.00)

Retail Trade Liberalization Act of 2000 (RA 8762)• Category B – with minimum paid-up capital of $2,500,000.00

• Category D – with $250,000.00 paid up capital per store; specializing in high-end or luxury products; can be wholly owned by foreigners

100% Foreign Equity Allowed in Financing sector (RA 10881)• Entitled “An Act Amending Investment Restrictions in Specific Laws Governing Adjustment Companies,

Lending Companies, Financing Companies and Investment Houses Cited In The Foreign Investment Negative List And For Other Purposes” lapsed into law in July 17, 2016.

• Prior to this, foreigners were only allowed to own up to 60% of investment houses, finance companies and lending firms and up to 40% for insurance adjustment firms.

Doing Business in the Philippines

*as of 31 October 2016

http://www.peza.gov.ph/index.php/economic-zones

Business Structures / Options for Entry

Domestic Corporation

Subsidiary Branch

Representative Office

RHQ / ROHQ

Export Market •Up to 100% Foreign Equity

•Minimum 60% Export Requirement

DomesticMarket •Up to 100% Foreign Equity (except in activities listed in the FINL)

•US$200,000 equity requirement (can be lowered to US$100,000 if activity involves advance technology or employs 50 direct employees)

Foreign Ownership

Without Incentives (Foreign Investment Act of 1991)

Export Market •Up to 100% Foreign Equity

•Minimum 70% Export Requirement

Domestic Market

Sectors must be listed in the current Investment Priorities Plan (IPP

•Up to 40% Foreign Equity or

•Up to 100% Foreign Equity (pioneer status)

Foreign Ownership

With Incentives (BOI EO 226)

Basic Rights & Guarantees of a Foreign Investor

(under Chapter 3 Title 2 of E.O. No. 226)

Protection of Investments

Repatriation of Investments

Remittance of Earnings

Foreign Loans and Contracts

Freedom from Expropriation

Requisition of Investments (in the event of war or national emergency)

Long term lease on private lands for a period of 50 years renewable for another 25 years;

Use of leased area that is reasonably required solely for investment such as establishment of industrial estate, factories, assembly or processing plants, agro-industrial, tourism, etc.

Leasehold right may not be sold, transferred, assigned and/or sub-lease without prior BOI Board approval except when made to a Philippine national;

Termination of lease agreement in case of :

Failure to initiate the investment project within three (3) years from signing of the lease agreement;

Withdrawal of the approved investment without Board approval; and

Use of the leased premises other than that authorized by the Board

Investor Lease Act (RA 7652)

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

THE PHILIPPINE BOARD OF INVESTMENTSYour Window to Infinite Opportunities in the Philippines

International Investments Promotion Service (IIPS)Direct Line: (632) 896-8907

Trunk Line: (632) 897-6682 loc. 246Website: http://www.boi.gov.ph