Question & AnswerQ&A (LETTER OF INSTRUCTION NO. 66)
The purpose of Letter of Instruction No. 66 is to announce the approval and effectivity of the Sixth Investment Priorities Plan and Fourth Export Priorities Plan under the Investment Incentives Act (RA 5186) and Export Incentives Act (RA 6135).
Republic Act No. 5186 (Investment Incentives Act) and Republic Act No. 6135 (Export Incentives Act) provide the basis for the preparation of the Sixth Investment Priorities Plan and Fourth Export Priorities Plan, respectively.
President Ferdinand E. Marcos approved and proclaimed the effectivity of the said plans on March 22, 1973.
Pioneer (P) status refers to projects or products that are new or innovative, which are entitled to special registration and incentives. Non-pioneer (NP) status refers to existing or non-new projects. The Board reserves the right to reclassify areas from NP to P after public hearing if there is use of a new or better manufacturing process with economic advantages.
Projects registered under the plan must generate export revenues within the first five years of commercial operation, aggregating at least the difference between the total foreign exchange capital cost of the project and the product of actual project employment and $4,000. Failure to comply may result in prescribed penalties.
The term 'variable' denotes a likelihood of a domestic demand-supply gap or an export potential that is not fixed and may fluctuate depending on market conditions.
Enterprises must have already commercially exported their registered products, be utilizing close to 100% of their capacity, and demonstrate that at least 50% of the expansion capacity applied for will be used substantially for export. Exceptions to tax exemption on imported capital equipment may be allowed on a case-to-case basis.
Firms registered under List A are entitled to all incentives granted under Republic Act No. 6135 except for tax exemption on imported capital equipment, except under specific conditions as provided in the plan.
The enterprise must agree to export at least 50 percent of its total production to qualify for tax-free importation of machinery.
Projects are classified as Pioneer (P), Non-Pioneer (NP), or Pioneer/Non-Pioneer (P/NP), with P/NP being determined case-by-case. Pioneer projects are entitled to preferential treatment and incentives, recognizing their novelty or significant economic benefit, while non-pioneer projects are typically existing or less innovative ventures.