by Greg G. Deligero
Exactly 62.89% of the P31.78 billion big ticket investments infused in Davao City during the past one and a half decade were poured into property development, a priority investment area that the city government now ironically wants to be excluded from the list of “preferred projects” that enjoy local tax holidays.
From 1995, or a year after the passage of the Investment Incentives Code of Davao City, there were 209 projects granted under the code to avail of local tax incentives. The total capitalization infused from the so-called big ticket projects until 2010 reached P31.78 billion.
[Note: The covered period excludes the years 1998 and 1999 when no investors were entertained after the code’s implementation was bugged by organizational and operational problems.]
Of the total amount, property development cornered P19.99 billion or 62.89%, followed by tourism with P4.28 billion or 13%; agri-business with P2.93 billion or 9.22%; light manufacturing with P2.77 billion or 8.73%; trans-shipment with P1.79 billion or 5.64%; training facilities with P9.70 million or .03%; and telecommunications with P7.00 million or .02%.
The code had originally specified the following preferred and priority investment areas: tourism and recreational facilities, agri-business and food processing, light manufacturing, property development, transshipment facilities, environmental protection and enhancement projects, branches of foreign banks, telecommunications and the educational, medical, training and sports facilities. In 2008, an amendment was was introduced to include Information and Communications Technology (ICT) as a priority area.
Under the code, investors are entitled to avail of fiscal incentives such as exemption from building permit fees and charges; exemption from mayor’s permit fee, business sales taxes and other fees and charges imposed under existing city ordinances for a maximum of three years; and exemption from basic real property tax for a maximum of two years.
They are also qualified to enjoy non-fiscal incentives such as assistance in securing business licenses and permits, processing of local investment incentives, business matching services, help in finding suitable sites for business or plant location, assistance in finding sources of raw materials, providing of manpower and other production needs and access to the city’s data-banking services.
No investors
As of January 2011, there were no new investors who availed of the incentives in the investment areas of environmental protection and enhancement projects, branches of foreign banks and the Information and Communications Technology (ICT).
In the national level, the preferred investment areas without takers are usually delisted from the list of projects entitled to a package of government tax, fiscal incentives and other perks.
This, according to Lucita Reyes, executive director of project assessment group of the board of investments (BOI), the national government investment promotion lead agency.
She cited the case of fertilizer which was delisted this year from the investment priorities plan (IPP), an annual list of priority projects identified by an inter-government body led by the BOI and are entitled to a package of government tax and fiscal incentives.
Reyes said the national government sees no need to give incentives to fertilizer projects because in the past ten years, “we had it included in our annual IPP, but there were no takers.”
“That means there is no need for these projects to be given incentives. We don’t want to put something there where there are no takers and, historically, no companies or no projects are being submitted to us,” she said.
Opposite
But not in the local level.
For having the most number of takers, the city government is now planning to drop property development projects from the preferred or priority investment areas.
Mayor Sara Duterte said the city will disregard sectors that will anyway still attract investors to the city with or without incentives.
She specifically wants the real estate and property development sector to be removed from the list.
In contrast, despite having no takers since it was included in the preferred list in August 2008, Duterte said the ICT, including the business process outsourcing (BPO) industry, will remain in the priority investment list.
“We need more BPOs,” she said.
Duterte, however, clarified that while there are sectors to be removed from the list, there will be some that may be considered as preferred investment areas.
The mayor said more focused or specific preferred areas of investment are being proposed. For one, agri-processing, which is existing in the incentive code, she said, will be specifically for fruit processing.
She also mentioned that some stakeholders prefer to supply fruit seeds instead of the end-products.
Specific incentives will be defined, according to specific size of business, amount of capital, and number of employment to be provided. “Di pareha sa una nga kuridas lang tanan (unlike before according to sector),” Duterte said.
Subject to further inputs by members of the Investment Incentive Board and other stakeholders from the private sector, the proposed amendments will be completed by the DCIPC after the first semester.
Investment inquiries
Meanwhile, the city government received investment inquiries mostly from property developers, identifying six on-going projects and prospects.
SM Prime Holdings, Inc. is putting up another mall with convention facility and hotel at Lanang, Davao City, which will be completed by 2013.
The owner of an unidentified hotel chain in the country is negotiating with PLDT to buy its idle property at corner C.M. Recto-Uyanguren Streets, and convert it into an eight-storey hotel.
Southcrest Hotel Ventures, Inc. (a joint project of Ayala Group of Companies and Anflocor Group of Companies) is putting up a nine-storey hotel at the Abreeza Compound, J.P. Laurel Ave., Davao City.
An American investor is proposing a partnership with the City by entering a MOA with the intent of taking care of the solid wastes thrown in the sanitary landfill and convert them to power.
Sammy Uy, owner of DIMDI appliances and My Hotel along San Pedro Street, is planning to develop the old abandoned Cuison Hotel along J.P. Laurel Ave. and convert it into a “HOSPITEL” or a medical tourism facility. [With Lorie Ann A. Cascaro]
