The Philippine Department of Finance has issued a release announcing the approval of new incentives by the Fiscal Incentives Review Board (FIRB), which was reconstituted along with the recently completed implementing rules and regulations for the new incentives regime under the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act.
FIRB okays tax breaks, other incentives for 3 investment projects worth P29-B
The Fiscal Incentives Review Board (FIRB) has approved the grant of tax incentives for a mass housing project and two cement manufacturing plants all located outside Metro Manila and worth P29.4 billion combined.
Chaired by Finance Secretary Carlos Dominguez III, the FIRB approved during its third meeting last August 2 the tax incentives for a mass housing project in Iloilo with an estimated project cost of P1.4 billion; a proposed cement plant in Porac, Pampanga, which will cost about P3.1 billion; and another cement plant in Calatagan, Batangas which will cost around P24.9 billion.
The FIRB approved the grant of a 4-year income tax holiday (ITH) plus duty exemptions on importations of capital equipment and raw materials to the Iloilo housing project.
The proposed Pampanga cement manufacturing plant was given a 2-year ITH, five years of enhanced deductions and duty-free exemptions on importations, while the one to be built in Batangas, which will include the installation of clinkering facilities, was granted a 6-year ITH, along with 5 years of enhanced deductions and duty exemptions on importations.
Socioeconomic Planning Secretary Karl Kendrick Chua underscored the importance of introducing new technologies in cement manufacturing to lower costs and increase the competitiveness of local production when the Board approved these two projects.
Trade and Industry Secretary Ramon Lopez said the grant of tax incentives to the Iloilo project encourages the private sector to help the government fill the gap in affordable or low-cost housing for Filipinos.
Finance Assistant Secretary and FIRB Secretariat Head Juvy Danofrata said the Iloilo project covers over 3,000 units classified as "economic" and "low-cost" housing, and is intended to address 1 percent of the housing backlog in Western Visayas, based on data from the Philippine Statistics Authority (PSA).
Citing estimates from the Board of Investments (BOI), Danofrata said the proposed cement manufacturing plant in Pampanga is expected to save the country P866 million annually in import expenses, as this would help fill the cement needs of the infrastructure sector by producing this material locally using new cost-effective technologies.
"The projected net benefits of the investment are driven by the locally sourced capital equipment and raw materials as well as the income taxes that the government will potentially collect from the estimated job creation of the project," Danofrata said.
The Pampanga project is expected to expand the proponent's existing production line of 687,473 metric tons (MT) of cement per year by another 898,560 MT.
The two-phase project proposed in Batangas would entail higher project costs because it would start from the production of clinkers, which are the most expensive aspect of cement manufacturing, according to Trade Undersecretary and BOI Managing Head Ceferino Rodolfo.
Citing BOI figures, Danofrata said the project's two phases will be capable of producing a combined total of 2.5 million MT of cement per year.
Lopez said the approval of the cement manufacturing projects will help "lessen the country's import dependence, increase our local capacity, and encourage competitiveness in the industry."
Rodolfo, meanwhile, said these projects will help mitigate against supply disruptions of cement in the overseas market and modernize the country's industrial capacity, considering that most cement plants operating here now are already 30 to 40 years old, and, hence, not power-efficient.