Legal Basis and Authority
- RA 5186, Investment Incentives Act, governs investment priorities and incentives.
- RA 6135, Export Incentives Act, focuses on export promotion and incentives.
- The Board of Investments is authorized to prepare and recommend priority plans.
Classification of Projects and Definitions
- Pioneer (P) projects: Those involving new products or technologies.
- Non-pioneer (NP) projects: Established or existing product lines.
- Combination (P/NP): Status determined case-by-case.
- Variable capacity denotes flexibility based on domestic demand or export potential.
- Pioneer status may be revised upon public hearing if new processes offer economic advantages.
Scope of Covered Industries and Products
- Industries covered include forestry products, fiber products, crop production, food processing, livestock, fishing, metallic and non-metallic minerals, chemical products, iron and steel based industries, tools, machinery, electrical equipment, transport equipment, and more.
- Specific products and their processing capacities for local and export markets are enumerated.
Conditions on Project Registration and Operation
- Some projects have conditions such as integration with processing facilities or geographic location requirements.
- Several projects require generation of export revenues within the first five years to avoid penalties.
- Export-oriented projects benefit from registration under IPP or EPP with certain conditions on production capacity and export proportions.
Export Priorities Plan (EPP) - Lists of Exportable Products
- List A: Exportable products of existing firms entitled to incentives except tax exemption on capital equipment importation unless certain conditions are met (commercial exportation, full capacity utilization, export commitment for expansion).
- List B: Exportable products of preferred investment areas, many require at least 50% of production to be exported for tax-free importation of machinery.
- Exportable products cover food processing, chemical products, metallic and non-metallic products, machinery, textiles, pharmaceuticals, and handicrafts.
Incentives and Penalties
- Registered projects under these plans can avail of incentives under the respective laws, including tax exemptions and duty-free importations subject to conditions.
- Failure to meet export revenue obligations subjects projects to prescribed penalties.
Role of the Board of Investments
- Responsible for classifying pioneer status.
- Reviews and approves allocation of project capacities.
- May revise project status based on new technology or economic benefits after public hearing.
Strategic Economic and Regional Development Goals
- Emphasis on developing new fields especially in agriculture.
- Encourages integration of production and processing.
- Promotes export diversification and industrial modernization.
- Supports geographic decentralization by limiting certain enterprises in Greater Manila area.
Operational Guidelines for Specific Facilities
- Storage and processing centers for grains have detailed capacity and location requirements.
- Manufacturing projects must generate export revenue in proportion to foreign exchange capital utilized.
- Some products require beneficiation or integration (e.g., mineral processing).
This comprehensive plan guides investment priorities and export strategies, providing incentives to promote economic growth and diversification in the Philippines.