Approval of 1996 Investment Priorities Plan ( Memorandum Order No. 353 )

March 15, 1996

March 15, 1996



Pursuant to Article 29 of the Omnibus Investments Code of 1987, the attached 1996 Investment Priorities Plan (IPP) is hereby approved.

This Memorandum Order shall take effect fifteen (15) days after its publication as required under Article 31 of the Omnibus Investments Code of 1987.

DONE in the City of Manila, this 15th day of March, in the year of Our Lord, Nineteen Hundred and Ninety-Six.


Part I

Priority Investment Areas


In general, both Filipino-owned and foreign-owned enterprises may engage in the following activities with the benefits of BOI registration, provided that they meet the qualifications for registration under Art. 32, Title I of E.O.226 as amended.


Export-oriented industries include export producers, export traders, service exporters, tourism oriented activities, agri-export processing estates, and those engaged in activities in support of exporters.

An export producer is a manufacturer of non-traditional export products directing at least 50% of its output to exports, if the enterprise is Filipino-owned, and at least 70% if foreign-owned. The enterprise may export its goods directly or indirectly. In enhancing global competitiveness of Philippine products, the export products eligible for registration must contribute to an increase in the local value added of the sector and/or use of improved production technology and/or the production of which would generate additional employment for the industry.

An export trader is an enterprise that consolidates non-traditional export products for eventual sale in the export market. To qualify for registration, the export trader must comply with the conditions for export products stated in the preceding paragraph.

To be eligible for a pioneer status, an enterprise must commit to export US$10.0 million annually, including products of small and medium enterprises (SMEs).It must also be able to assist these enterprises by providing financing, raw materials, components or equipment and access to technology.

Service exporters shall refer to those that effect the transboundary movement of any two (2) of the following: (a) goods; (b) information; (c) people; and (d) equipment. An enterprise committing to export any of the following services shall be entitled to a pioneer status:

1. engineering design and construction services;

2. telecommunications-network-based enhanced services;

3. computer services; and

4. agriculture, forestry or mining services involving indigenous technology.

Activities considered in support of exporters shall cover any one of the following:

1. services comprising a portion of the process involving the manufacture of final export product; or

2. sub-assembly of parts/components of the final export product; or

3. fabrication of parts/components of the final export product wherein raw materials are provided by the direct exporter.

The enterprise must direct all of its services or products to direct exporters registered with the Board of Investments (BOI), Philippine Economic Zone Authority (PEZA), Subic Bay Metropolitan Authority (SBMA), etc. with a commitment to export at least 70% of their production.

The development of agri-industrial processing estates refer to the transformation of large and suitable tracts of land primarily for the use of a community of export-oriented agricultural processing industries and services catering to these industries. These estates shall be under a unified and continuous management. The minimum area shall be 25 hectares of contiguous land for development in conformity with land-use regulations preferably in any of the regional agri-industrial growth centers (Table I).The estate shall provide the area and facilities for at least 5 locators. The developer shall provide paved roads, power and water supply, communication systems, common waste-water and sewage treatment facilities and solid waste disposal systems and drainage systems. Applications for registrations shall include Certification of Exemption/Conversion from Department of Agrarian Reform (DAR) and Environmental Compliance Certificate from Environmental Management Bureau (EMB) Department of Environmental and Natural Resources (DENR).Developers of agri-export processing estates shall be accorded pioneer status.

Tourism projects eligible for registration include the operation of new tourist accommodation facilities, expansion and modernization of existing facilities, the development of tourism estates, and the operation of tourist buses. Applications for registration must be endorsed by the Department of Tourism.

"Tourist accommodation facilities" refer to hotels, resorts, inns, pensiones, and special interest resorts. The establishment of new facilities and expansion of existing facilities outside Metro Manila as well as the modernization of existing facilities all over the country shall be eligible for registration.

New tourist accommodation facilities shall be accorded pioneer status if they meet the following:

Type of Facility Minimum Project Cost
  Less Developed Area Elsewhere
  (excluding Metro Manila)  
De luxe/First class US$ 50,000 per room US$ 100,000 per room
New Class AAA US$ 5.0 million per resort US$ 10.0 million per resort

Expansion projects shall be eligible for pioneer status if they involve the addition of guest rooms exceeding 25% of existing facilities of a de luxe or first class or the equivalent tourist accommodation facility. Expansion of facilities below the de luxe or first class or the equivalent shall be granted a non-pioneer status. Only expansions of tourist accommodation facilities outside Metro Manila may be eligible for registration.

A modernization program eligible for registration is the upgrading of an existing facility to at least the class it is registered for with the DOT. This program is extended to facilities in Metro Manila in consideration of the need to upgrade tourism-related facilities, Metro Manila being the major entry point of foreign tourists. However, applications for registration under this program for tourist accommodation facilities in Metro Manila shall be accepted only up to September 30, 1996 and the registered enterprises must commit to start operation not later than November 1, 1996. Applications for registration of modernization projects elsewhere shall be accepted while the 1996 IPP is in effect. A project must entail a cost of at least P300,000 per room to qualify for a pioneer status.

Operation of tourist buses will be eligible if this is covered by Land Transportation Franchising and Regulatory Board (LTFRB) franchise, and will utilize brand-new units with a seating capacity of at least 20 for mini-bus and 40 for bus. In general, locally-built units will be entitled to incentives. Imported completely-built units (CBUs) may be given incentives if these are not deemed locally available.

The development of a large tract of land into an integrated resort complex may be registered as a tourism estate. The estate must have tourist facilities such as but not limited to accommodations, food and beverage outlets, convention, sport and recreational centers and commercials outlets, and provided with roads, water supply facilities, power supply, drainage and sewage systems and other necessary infrastructure. The estate shall be under a unified and continuous management. The estate must be located outside Metro Manila.

An estate with a minimum area of 100 hectares will be extended a pioneer status. Those less than 100 hectares but not less than 50 hectares will be on a non-pioneer status. A tourism estate in an island with an area less than 50 hectares may be registered provided development would cover the whole island.


This covers industries that show potentials of developing into export oriented industries as they already indicate a comparative advantage.


1. Fine Jewelry

The activities that may be registered shall include the fabrication of precious metal jewelry with or without stones, cutting and polishing of precious and semi-precious stones, manufacture of parts and components such as wires, sheets, findings and the manufacture of synthetic or imitation gemstones. Projects costing at least US$600,000 shall be eligible for pioneer status.

2. Composite Board

This covers the manufacture of composite boards (such as reconstituted particle board, fiber board, woodwool, ricehusk, bagasse and other similarly processed boards) using natural resource-based or industrial waste materials as major raw materials. A pioneer status may be granted to projects costing at least P1.0B.

3. Drugs and Medicines

The activity that may qualify for registration should involve the manufacture of bulk chemicals including those derived from indigenous medicinal plants. Operations may be integrated with the growing of medicinal plants. Mere formulation or the preparation of bulk drugs into dosage forms is not eligible for registration. A DOST endorsement of the application for registration is required. Activities under this heading shall be granted a pioneer status.

4. Shipbuilding/Shiprepair/Shipbreaking

Shipbuilding and shiprepair projects shall be given pioneer status if the minimum berthing capacity is 10,000 dead weight tons. It shall include the construction/repair of cargo, passenger and cargo-passenger vessels designed to support the needs of the shipping sector. A shipbreaking facility must have the capability to dismantle vessels of at least 100,000 dead weight tons to be granted pioneer status. Steel re-rolling and/or steel scrap supply agreements with local millers must be submitted in support of the application.

5. Processed Foods

Only projects involving the introduction of new products and new technology with use of indigenous raw materials shall be eligible for registration. Activities under this heading shall be granted a pioneer status.

Modernization of plants may be registered on a non-pioneer status and modernization must be completed within one (1) year from date of registration. Projects qualified for modernization are: canned fish (covers canning, preserving and processing of fish, crustaceans and other seafoods),cocoa, chocolate and confectionery products, fruits and vegetables processing.

For projects involving the use of new technology, the application must be endorsed by the Department of Science and Technology.

6. Cement

Expansion projects may be registered provided a new line is installed.

A project with a capacity of at least 1,000,000 MTPY (clinker base) without the introduction of new process/technology in cement manufacture may qualify for pioneer status but (1) the ITH shall be limited to four (4) years; and, (2) no bonus years to enjoy the ITH shall be granted.

Cement manufacturing integrated with mining or quarrying shall be limited to a maximum foreign ownership of 40%.In an operation without mining or quarrying, operations, foreign ownership to the extent of 100% is allowed.


Production of planting materials, breeders, genetic materials and fingerlings

This covers the commercial production of quality/certified seeds and/or seedlings (e.g., for reforestation and forest plantation development especially indigenous, dipterocarp and first class wood species),breeder stocks of livestock and poultry or its genetic materials, and fingerlings of fish and crustaceans.


This refers to industries that have been effected by the restructuring of tariffs, the adverse effect of which may be overcome with the introduction of new technologies.

A. Textiles

This covers activities in spinning, weaving, knitting and finishing. Only projects eligible for pioneer status shall be registered. Other than projects involving the introduction of new technologies/process, specialized mills with project cost of at least P1.0B shall be granted a pioneer status.

The modernization of textile mills shall be on a non-pioneer status. Mills located in Metro Manila may be registered, provided the textile mill was registered with the BOI prior to January 1989. Modernization must be completed within one (1) year from date of registration.

B. Organic Chemicals

This covers the manufacture of petrochemicals (up to intermediates and synthetic fibers and filament yarns) and cocochemicals (excluding fatty alcohols, fatty acids, methyl esters and glycerine).Only projects eligible for pioneer status shall be registered.

C. Leather Tanning/Finishing

Leather tanning is encouraged outside the traditional areas, i.e., Bulacan and Metro Manila.

D. Sugarcane Plantation and Mills/Sugar Refineries

This covers the establishment of new expansion sugar mills and refineries and the development of new expansion areas of sugar cane plantations.

Sugarcane areas which have not been cultivated for the said crop for at least the past two (2) years shall also be eligible for registration as new or expansion, as the case may be. Registered enterprises should adopt appropriate farming methods/technologies such as mechanization, irrigation and drainage, and planting of high yield varieties (HYVs),among others. Modernization of sugarcane farms may be registered and should also comply with the aforementioned requirement of the registered enterprise and should be able to attain a yield of at least 70 ton canes per hectare per year.

E. Packaging Products

Only the manufacture of packaging products that are not locally manufacture or, if locally manufactured, introducing state-of the art technology shall be eligible for registration.

F. Machinery and Equipment, Parts and Components

This includes the manufacture of metal and woodworking machinery, special industrial machinery, agricultural machinery, equipment for power generation, communications equipment and apparatus (excluding radio and television) and office computing and accounting machinery. Only projects eligible for pioneer status shall be registered.

Modernization of plants may be registered on a non-pioneer status and modernization must be completed within one (1) year from date of registration.

G. Coconut Plantation and Mills/Coconut Oil Refineries

This covers the establishment of new and expansion coconut oil mills and refineries; the development of new and expansion areas of coconut plantation; and modernization of existing mills and/or refineries.

The development of coconut plantation must attain at least 2 tons (in copra term) per hectare per year.

Modernization of existing coconut oil mills must attain at least 65% recovery rate.


This includes infrastructure and services, environmental support facilities, research and development projects that the Government has declared to be priority programs because of their importance to the social and economic development of the country. The development of such activities will help push the growth of our industries to the levels of their counterparts in the international market. Benefits to our country's most valuable asset, human resources, are also considered.


1. Industrial Estates

A large tract of land primarily for the use of a community of manufacturing industries and services catering to these industries is referred to as an industrial estate. The estate shall be under a unified and continuous management. Industrial estates may include science and technology parks, technology incubation centers and science and technology centers.

Minimum area shall be 25 hectares of contiguous land except in the provinces of Laguna and Cavite where the minimum area shall be 50 hectares. The estate shall provide area and facilities for at least 5 locators. In meritorious cases, the Board may consider registration of an industrial estate with an area less than 25 hectares.

The developer shall provide paved roads, power and water supply, communication systems, common waste-water and sewage treatment facilities and solid waste disposal systems and drainage systems.

Applications for registration shall include at least, an approval of the land conversion from the LGU, Environmental Compliance Certificate and clearances from the Department of Environment and Natural Resources and other relevant agencies such as the Laguna Lake Development Authority, the National Water Resources Board and the local government units.

Projects may be registered on a pioneer status if located in a less developed area and on a non-pioneer status if located elsewhere, except Metro Manila.

2. Industrial Communities

A large of land for development with a carrying capacity for town facilities and activities located within a 20 kilometer radius from an industrial estate or center is called an industrial community. Facilities shall include accommodations, multi-purpose centers, health centers, drugstores schools, livelihood centers, places of worship, recreational and commercial centers, and provided with roads, power and water supply systems, drainage and sewerage systems and other infrastructures. It shall be under a unified and continuous management. aisadc

Minimum area shall be 50 hectares of development in conformity with land-use regulations and must comply with conditions under paragraphs 3 and 4 of Item IV. A. 1 of this section. Only industrial communities outside Metro Manila, Laguna and Cavite shall be eligible for registration.

3. Power Generation and Transmission

Generated power may be sold to the grids or sold directly to consumers outside the grids or for industrial plats' own use.

New and expansion projects may be registered. Modernization/rehabilitation of the power plants of the National Power Corporation may be registered as new projects.

The following documents must be submitted with the application for registration: (1) an endorsement of application for registration by the Department of Energy (DOE),(2) power supply contract, and (3) Environmental Compliance Certificate.

Power plants qualified for a pioneer status are those that will not use petroleum fuels or if petroleum will be used, they must have a generating capacity of at least 50MW.

Transmission lines with a project cost not less than P1.0 billion shall be eligible for the pioneer status.

4. Common Carriers

The Constitution limits foreign ownership to only 40%.

5. Inter-island Shipping

The application for registration of an inter-island shipping project must be endorsed by the Department of Tourism and accompanied by a Maritime Industry Authority (MARINA) accreditation of the enterprise.

Pure cargo vessels must not be older than 10 years; passenger-carrying vessels not older than 15 years.

A registered enterprise plying the secondary and tertiary routes, as indicated in the Certificate of Public Convenience and Necessity (CPCN) shall be granted the incentives available for pioneer projects.

6. Air Transport Facilities

The application for registration must be endorsed by the Civil Aeronautics Board. The Air Transportation Office (ATO) shall certify that each aircraft meets safety standards.

7. Telecommunications

The Constitution limits foreign ownership to only 40%.

Activities eligible for registration include the establishment and operation of local exchanges, municipal calling offices, international gateway, backbone and cellular mobile phones. The use of the digital system is encouraged.

A National Telecommunications Commission (NTC) endorsement should be submitted with the application for registration.

8. Industrial Ports

The project must be endorsed by the Philippine Ports Authority (PPA).

The port may cater to one industrial plant, an agri-industrial or industrial estate, or a community of industries. The project may include cargo handling and storage facilities.

9. Agricultural Services related to Crops, Livestock, Fish Production and Post Harvest Facilities

This covers the establishment and operation of facilities purposely to render services to agricultural and fishery producers, e.g.,cold storage, farm machinery and equipment services, irrigation, etc. Registered operators may be allowed to utilize not more than 20% of capacity for its own requirements. The establishments of ice plants, as a separate activity, is not qualified for registration.


1. Waste Management/Treatment/Control

Not more than 30% of capacity shall be utilized for operator's own or affiliates' requirements.

Environmental Compliance Certificate (ECC) from the Department of Environment and Natural Resources (DENR) shall be submitted with application for registration.

A pioneer status shall be granted to those adopting integrated systems (from collection to treatment/disposal) and treatment methods new in the Philippines.

2. Industrial Tree Plantation

This covers the establishment of forest tree plantations for commercial/industrial purposes utilizing timber and or non-timber forest species. The plantation may be on private land or covered by an Industrial Forest Management Agreement (IFMA).

The activity may be integrated with nursery establishments.

Copies of the IFMA or proof of ownership or control shall be required as part of the application for BOI registration.


Both in-house R&D activities of any manufacturing/producing firm and the commercial R&D activities of private firms and research institutions, whether new or existing shall be eligible for registration. The research activities shall fall within the Science and Technology Agenda for National Development (STAND) of the Department of Science and Technology (DOST).

R&D facilities should be located within the premises of the applicant/firm's manufacturing/production facility. Research institutions may be located near industrial estates or export processing zones, in academic campuses or in agricultural and industrial areas.

The project must be endorsed by the Department of Science and Technology (DOST).

All projects under this heading shall be eligible for a pioneer status.


1. Rice and Corn Production

This covers development of new/expansion areas and modernization of existing farms, involving the growing or cultivation up to storing of dried grains.

Registered enterprise should adopt the following techniques: 1) use of certified seeds; 2) farm mechanization; and 3) installation of irrigation facilities if the area is not covered by an existing irrigation project. The project should attain an average yield of at least 3.5 tons for palay and 5 tons for corn per hectare, per cropping.

New area refers to newly opened and developed rice or corn farmlands, or farmlands which have been idle/not cultivated for the said crops for the past two (2) years or more.

Preferred locations are those areas listed in the Key Grains Areas of the Department of Agriculture's Medium Term Agricultural Development Plan.

2. Production and Processing of Livestock and Poultry

This covers the integrated production of swine or poultry; cattle raising for beef and/or dairy; and crocodile farming; etc. However, this excludes game animals/fowls and other species for pet/pleasure purposes.

Integration refers to growing/raising in combination with at least one of the following activities: breeding/hatchery operation; feedmilling; and dressing/slaughtering, the capacity of which should be balanced with the registered capacity.

Corporate operate or contract growing is allowed.

Preferred locations are those areas listed in the Key Livestock Development Areas of the Department of Agriculture's Medium Term Agricultural Development Plan.

3. Housing Components for Socialized Housing Projects

The fabrication of major mass housing components using non-traditional and structurally sound, environment-friendly materials/technology are eligible for registration. Such components include roof/framing systems, partition systems, flooring systems, doors/windows systems, finishing/ceiling systems and water supply/sewerage systems.

Project should be jointly endorsed by the Housing and Urban Development Coordinating Council and the Department of Science and Technology.

Products should conform with the Modular Coordination System (MCS) of the Construction Industry Authority of the Philippines (CIAP).All dimensional specifications shall be expressed in the metric system and performance standards of the Bureau of Product Standards (BPS) and other government regulatory agencies concerned.

4. Automotive Parts and Components

This includes the production of automotive parts and components for the domestic and export markets. A pioneer status shall be given to companies producing high-tech parts being made for the first time in the country which will spark the development of the metals and engineering sector, as well as high-tech parts the export of which will enable program participants to earn foreign exchange for the importation of their completely knocked-down (CKD) requirements.

Modernization of plants may be registered on a non-pioneer status and modernization must be completed within one (1) year from date of registration.

5. Refined Petroleum Products

With the impending deregulation of the downstream of oil industry and to encourage the entry of new players, the local production of refined petroleum products needs government support in terms of fiscal incentives in order to encourage investments in the manufacturing sector and not merely in the importation/distribution of finished petroleum products.

Expansion projects may be registered provided a new complete line is installed/established.

Only projects eligible for pioneer status shall be registered.

Projects with a minimum annual processing capacity of 36 million barrels per year even without the introduction of new process/technology may qualify for pioneer status.

Projects are encouraged to locate in Visayas or Mindanao and shall qualify for pioneer status regardless of capacity and technology.

Projects must be endorsed by the Department of Energy.

6. Social Services

The activities eligible for registration shall include the establishment of new educational/training institutions and health service facilities as well as the upgrading of existing ones.

Educational/training institutions being encouraged are those specializing in developing skills for the manufacturing, agricultural, mining, infrastructure and services sectors. The curriculum must be approved by the Department of Labor and Employment/Technical Education and Skills Development Authority (DOLE/TESDA) in consultation with industry associations.

The registered educational/training institutions must provide complete equipment for training such as testing laboratories and laboratory scale manufacturing equipment. Applications for incentives on the acquisition of these equipment shall be endorsed by the DOST.

Applications for the registration of health services must be endorsed by the Department of Health (DOH).The project must locate in an area identified by the DOH.

A pioneer status will be given to projects which will install diagnostic and treatment facilities of superior technology as certified by the DOH.


These include economic activities given eligibility to avail of BOI Investment incentives under existing laws.

A. Projects as defined under the B.O.T . Law (Republic Act No. 7718 — The Amended BOT Law)

Applications for registration must be accompanied by: 1) endorsement from concerned government agency or corporation or Local Government Unit (LGU) with a certification that BOI incentives have been considered in the supply contract; 2) copy of supply contract; and 3) Environmental Compliance Certificate.

Projects costing at least P1.0 billion and complying with the requirements of individual listings, e.g., power projects, are qualified for pioneer status.

B. Mining (Republic Act No. 7942: The Philippine Mining Act of 1995)

1. Exploration and development of mineral resources.

Projects under this listing shall carry a pioneer status pursuant to Art. 17, Title of E.O. 226, as amended.

Projects with approved Financial and/or Technical Assistance Agreement (FTAA) under E.O. 279, series of 1987 or under Republic Act No. 7942 may qualify.

Foreign-owned corporations as defined under R.A. 7942 and who are holders of exploration permits may qualify.

All projects are not entitled to income tax holiday (ITH) incentive.

2. Mining, quarrying and processing of minerals

Projects involving river bed operations, cave mining and beach mining are not eligible for registration.

Projects that will involve only mining or quarrying without processing shall be entitled only to capital equipment and non-fiscal incentives.

Mining or quarrying integrated with mineral processing shall be entitled to full incentives.

Processing without mining or quarrying shall be entitled to full incentives.

All processing plants must locate outside NCR.

All marble processing projects, whether or not integrated with mining or quarrying, to qualify for registration, must export at least 50% of production, if Filipino-owned and at least 70% of production, if foreign-owned.

Projects with approved FTAA under E.O. 279, series of 1987 or under R.A. 7942 are considered pioneer with ITH limited to four (4) years for new projects unless complying with Art. 17, Title 1 of E.O. 226, as amended. Foreign-owned corporations as defined under R.A. 7942 and holders of valid mineral processing permits may register their mineral processing projects on pioneer status but with ITH limited to four (4) years for new projects unless complying with either criterion under Art. 17, Title 1 of E.O. 226, as amended.

Rehabilitation projects may be registered only on a non-pioneer status.

C. Iron and Steel — (Republic Act No. 7103: Iron and Steel Act)

The following activities may be registered only on a pioneer status and must meet any of the criteria under Art. 17, Title I of E.O. 226, as amended.

1. Basic iron and steel making integrated with slabmaking

2. Flat products manufacture except those where only roll forming is involved

3. Seamless pipes production

4. The production of medium and large size shapes rolled from blooms (one side of which shall be at least 150 mm)

5. Galvanizing integrated with steel fabrication in support of infrastructure projects as transmission towers, electric poles, highway guards, pier sheet pilings, industrial tanks, structural bridge members, street light poles, steel columns and beams for industrial plants and buildings, agricultural grain silos and highway steel culverts

The manufacture of steel billets may be registered on a pioneer status if the project will involve a capacity of at least 100,000 MTPY but with the ITH limited to only four (4) years without benefit of bonus years. Projects, regardless of capacity may be registered on pioneer status provided they meet any of the criteria under Art. 17, Title 1 of E.O. 226, as amended. In such a case, full incentives may be given.

Modernization projects may be registered only on a non-pioneer status.

D. ASEAN Industrial Cooperation Projects — (Draft Basic Agreement on ASEAN Industrial Cooperation Scheme)

Participating companies shall have a minimum of 30% national equity.

The manufacture of all products other than those in the General Exception List of the Common Effective Preferential Tariff (CEPT) Agreement shall be eligible for registration.

Part II

Additional Priority Investment Areas

for the Autonomous Region in Muslim Mindanao (ARMM)

Presented in this section is the list of priority areas which have been independently identified by the Regional Board of Investments of the Autonomous Region in Muslim Mindanao (ARMM),in accordance with E.O. 458. The BOI-ARMM can grant registration and administer incentives to activities listed herein, provided these are located in the ARMM. Notwithstanding the separate listing for the ARMM, the policies specified in Part III hereof shall apply to activities under this regional listing, whenever applicable. Furthermore, activities registered with the National BOI are not at all prevented from locating in the ARMM.


A. Export Trader

1. Barter Trader (NP)

a. The barter trading activity is limited to Jolo, Sulu.

b. Banned, regulated and/or restricted items shall not be included in the list of barter traded items.

c. Subject to the guidelines to be developed by the BOI-ARMM in coordination with the national BOI in the dispension, control and supervision of incentives.

B. Support Activities for Exports (NP)

Support services to exporters such as operation of customs-bonded manufacturing/trading warehouses for the raw requirements of exporters


A. Processed Food (NP)

1. Halal meat

2. Leguminous and other vegetable — based protein (textured, palletized or liquid)

3. Spices

May be integrated with growing

4. Vegetable oils

5. Peanut oils

6. Rice bran oil

7. Sunflower and soybean oil

B. Cutflower Production (NP)


A. Textile and textile products

1. Yarns and fabrics (P/NP)

2. Non-woven textiles (NP)

3. Specialty fabrics (NP)

4. Tire cord fabrics (P/NP)

Must be integrated with weaving and dipping units.

5. Ramie (degummed, staple fiber, combed tops, noils and slivers) (NP)

6. Fish nets (NP)

B. Fertilizers (P/NP)


A. Rubber Products (NP)

1. High pressure and hydraulic rubber hoses

2. Rubber bolts

3. Industrial rubber rollers

4. Rubber tires (NP)

B. Leather products (NP)


A. Public utilities

1. All passenger/cargo airlines (NP)

2. electric distribution system (NP)

3. Buses (NP)

These activities are not entitled to income tax holiday.

B. Tourism

i. Endorsed by the Department of Tourism.

ii. New and expansion projects may be registered.

1. Tourism estates (P/NP)

— Subject to guidelines developed jointly by the BOI-ARMM and DOT.

2. Tourist accommodation facilities

— Entitled to applicable incentives except the ITH unless located in LDAS.

a) Hotels (P/NP)

b) Resorts (P/NP)

c) Other tourist accommodation facilities such as apartels, pensione houses, tourist inns, etc. (NP)

3. Tourist transport facilities (NP)

Limited to capital equipment incentives only.

a) Air

b) Water

c) Tourist buses

C. Infrastructure/Industrial Service Facilities

1. Common Service Facilities (NP)

i) Not entitled to ITH.

ii) The following criteria must be met:

(1) The project will serve the common needs of the industry in the locality; and

(2) The project will improve the relative status and comparative advantages of the industry.

a. Testing and quality control laboratories.

b. Training and demonstration centers

c. Toolshops and similar facilities

d. Metalworking

(1) Electroplating

(2) Foundry

(3) Forging

(4) Machining

(5) Heat treatment

e. Furniture

(1) Kiln drying

(2) Treatment and processing facilities

f. Ceramics

(1) Kiln

(2) Glazing

g. Food processing

(1) Bottling and canning

(2) Vapor heat treatment

(3) Slaughterhouse

2. Development of Retirement Villages (P/NP)

i. Shall include health and medical facilities including amenities required by the Philippine Retirement Authority (PRA).

ii. Subject to guidelines to be approved by the BOI-ARMM in consultation with the PRA, the Department of Health, the national Economic and Development Authority and other concerned agencies.

iii. Pipeline Bulk Transport Systems for Petroleum and Natural Gases and Liquids and Coal Slurry (Underwater and underground) (P/NP)


A. Engineering Products (P)

Motor vehicle parts and components

The above parts and components exclude batteries and mufflers.

B. Electronics and Telecommunication Products (P)

Part III



UNDER E.O. NO. 226

I. Regional Dispersal of Industries

To balance economic development and to reduce regional disparities, the BOI uses the incentives package under E.O. 226 to influence industry dispersal. In 1996, the BOI aims to further encourage enterprises to locate outside NCR such that at least 75% of registered enterprises shall be sited in the other regions of the country.

All registered projects locating in Less Developed Areas (LDA),listed in Table II enjoy a six (6) year income tax holiday regardless of status (pioneer or non-pioneer) or type of project (new or expansion) as well as additional deductions from taxable income equivalent to expenses incurred in the development of necessary and major infrastructure facilities. This privilege, however, is not granted to projects engaged in mining, forestry, and the processing of minerals and forest products since they would naturally locate in certain areas to be near sources of their raw materials.

A. Locational Restrictions

Complementary to the provisions of the law granting maximum incentives to registered enterprises in LDAs, the Board limits incentives to firms that locate in congested urban centers. Initially, the locational restriction applies to the NCR as follows:

1. Projects locating in Metro Manila are not entitled to ITH and capital equipment incentives.

2. Exemption from the above locational restriction may be given to:

a) Projects locating in the following government industrial estates declared as such by national law or by presidential proclamation prior to 1 January 1989:

(1) Dagat-Dagatan (PD 569 dated 30 Oct. 1974)

(2) Vitas Industrial Estate, Tondo (EO 1086 dated 31 Jan. 1986)

(3) Bagong Silang Industrial Estate, Caloocan City (Presidential Proc. No. 843 dated 26 April 1971)

(4) FTI, Taguig (LOI 900 dated 25 July 1979)

(5) Navotas Fishing Port Complex (EO 772 dated 8 Feb. 1982)

b) Service-type projects with no manufacturing facilities, such as, but not limited to, software development, data encoding, film production/animation, editorial services, design and pattern-making for export-oriented industries, gemstone cutting and polishing, dentures/prosthetics, and cold storage facilities for agricultural products.

c) Infrastructure and public utility projects except power generating plants; and

d) Expansion projects for export.

Expansion projects of export-oriented enterprises within Metro Manila are eligible for registration and incentives provided that they filed applications for registrations prior to January 1, 1989 and were consequently registered; provided, further that in addition to the usual guidelines for registration of expansion projects, all of the following conditions are met:

(1) Expansion shall be effected within the firm's existing premises;

(2) The enterprise has a good track record of exports and has no record of violation of the terms and conditions governing its existing registration(s);

(3) One hundred percent (100%) of the production output from the expansion shall be committed to exports;

(4) As a general rule, only the acquisition of brand new equipment shall be subject to incentives;

(5) Use of production processes/equipment that meet environmental standards.

B. Promoting Investments in Industrial Estates, Agri-Industrial Export Processing Estates and Industrial Communities.

To provide sites for industrial enterprises in other parts of the country, the BOI is encouraging the development of industrial estates and Agri-Industrial Export Processing Estates. These projects should be located outside Metro Manila.

The 1996 IPP is making investments in the countryside more attractive by:

1. Reducing the minimum area of industrial estates outside the NCR, Laguna and Cavite to 25 hectares; and

2. Extending incentives to the development of industrial communities close to industrial estates or centers outside NCR, Laguna and Cavite.

II. Promotion of Small and Medium-Sized Enterprises (SME)

In line with the MTPDP, the BOI promotes the development of small and medium-sized enterprises on account of their contribution to employment generation, countryside development and the formation of new entrepreneurs. The sectors given priority under the SMEs are the activities that will support exports and the priority programs of the government and those with strong or with potential industrial linkage.

In addition to the incentives under E.O. 226, assistance to small and medium sized projects may be made available through BOI. These include:

1. Preparation of investment opportunity studies;

2. Matching of SME suppliers with assemblers; and

3. Assistance in sourcing of finance.

In 1996, the BOI shall be exerting extra efforts to promote investments in SMEs so that at least 80% of registered enterprises shall be SMEs.

III. Encouraging Upstream Linkages of Registered Activities


To best assist the registered enterprises, and at the same time stimulate investments in corresponding SME support industries, the BOI provides an information exchange and assistance facility that will identify SME support companies of a registered enterprise and, thus, encourage intra-sector linkage.

Projects locating in the Autonomous Region for Muslim Mindanao (ARMM) should register with their respective BOI offices.

IV. Incentives to Registered Firms

Incentive privileges may be enjoyed only upon registration. In general, registered enterprises are entitled to the following incentives:

A. Tax Exemptions

1. Duty of 3% on imported capital equipment and its accompanying spare parts

a) Imported capital equipment of BOI-registered firms shall be subject to a duty of 3% up to December 31, 1997, unless duty exempt under RA No. 7369. The same shall be subject to a 10% VAT as provided under Republic Act No. 7716 (Expanded VAT Law).

b) Enterprises locating in Metro Manila shall not be eligible for this incentive, unless exempted from the locational restriction.

c) To be eligible for the incentive, an enterprise must meet the guidelines on the granting of said incentive (Annex A).

2. Income Tax Holiday (ITH)

a) BOI-registered enterprises shall be exempt from the payment of income tax reckoned from the scheduled start of commercial operations as follows:

(1) New projects with a pioneer status of six (6) years;

(2) New projects with non-pioneer status for four (4) years;

(3) Expansion projects for three (3) years

(4) New or expansion projects in less developed areas for six (6) years, regardless of status.

b) The income tax holiday is limited in the following cases:

(1) Export traders may be entitled to the ITH only on their income derived from the following:

(a) Export of new products, i.e., those which have not been exported in excess of US $100.00 in any of the two (2) years preceding the filing of application for registration; or

(b) Export to new markets, i.e., to a country where there has been no recorded import of a specific export product in any of the two (2) years preceding the filing of the application for registration.

(2) Mining Activities

(a) The exploration and development of mineral resources are not entitled to an ITH;

(b) Mining and/or quarrying without mineral processing is not entitled to an ITH;

(3) Iron and Steel

Manufacture of steel billets shall be entitled to a four (4) year income tax holiday regardless of status

(4) Cement

A new cement project granted a pioneer status on the basis of a capacity of at least 1,000,000 MPTY shall enjoy a four (4) year ITH only.

(5) Modernization projects are not entitled to the ITH incentive.

c) Firms may avail themselves of a bonus year in each of the following cases:

(1) The indigenous raw materials used in the manufacture of the registered product must at least be 50% of the total cost of raw materials for the preceding years prior to the extension unless the Board prescribes a higher percentage; or

(2) the ratio of the total imported and domestic capital equipment to the number of workers for the projects does not exceed US$10,000 to one (1) worker, or

(3) the net foreign exchange savings or earnings amount to at least US$500.00 annually during the first three (3) years of operation.

In no case shall the registered pioneer firm avail of the incentive for a period exceeding eight (8) years.

3. Exemption from taxes and duties on imported spare parts

A registered enterprise with a bonded manufacturing warehouse shall be exempt from customs duties and national internal revenue taxes on its importation of required supplies/spare parts for consigned equipment or those imported with incentives.

4. Exemption from wharfage dues and export tax, duty, impost and fees

All enterprises registered under the 1996 IPP will be given a ten (10)-year period from date of registration to avail itself of the exemption from wharfage dues and any export tax, impost and fees on its non-traditional export products.

5. Tax exemption on breeding stocks and genetic materials

Agricultural producers will be exempted from the payment of all taxes and duties on their importation of breeding stocks and genetic materials within ten (10) years from the date of registration or commercial operation.

B. Tax Credits

1. Tax credit on domestic capital equipment and/or spare parts

Tax credit shall be granted on locally fabricated capital equipment. This shall be equivalent to the difference between the prevailing tariff rate and 3% duty imposed on the imported counterpart. If equipment is duty-exempt under R.A. 7369, the tax credit shall be equivalent to 100% of the imposable duty.

2. Tax credit on tax and duty portion of domestic breeding stocks and genetic materials

A tax credit equivalent to 100% of the value of national internal revenue taxes and customs duties on local breeding stocks within ten (10) years from date of registration or commercial operation for agricultural procedures.

3. Tax credit on raw materials and supplies

A tax credit equivalent to the national internal revenue taxes and duties paid on raw materials, supplies and semi-manufactured products used in the manufacture of export products and forming part thereof shall be granted to a registered enterprise.

C. Additional Deduction from Taxable Income

1. Additional deduction for labor expense (ADLE)

For the first five (5) years from registration, a registered shall be allowed an additional deduction from taxable income equivalent to 50% of the wages of additional skilled and unskilled workers in the direct labor force. This incentive shall be granted only if the enterprise meets a prescribed capital to labor ratio.

This additional deduction shall be doubled if the activity is located in a Less Developed Area (LDA)

2. Additional deduction for necessary and major infrastructure works

Registered enterprises locating in LDAs or in areas deficient in infrastructure, public utilities and other facilities may deduct from taxable income an amount equivalent to the expenses incurred in the development of necessary and major infrastructure works.

This privilege, however, is not granted to mining and forestry-related projects as they would naturally locate in certain areas to be near their sources of raw materials.

D. Non-fiscal Incentives:

1. Employment of foreign nationals

A registered enterprise may be allowed to employ foreign nationals in supervisory, technical or advisory positions for five (5) years from date of registration. The position of president, general manager and treasurer of foreign-owned registered enterprises or their equivalent shall however not be subject to the foregoing limitations.

2. Simplification of customs procedures for the importation of equipment, spare parts, raw materials and supplies and exports of processed products.

3. Importation of consigned equipment for an unlimited period,subject to posting of a re-export bond.

4. The privilege to operate a bonded manufacturing/trading warehouse subject to Customs rules and regulations.

V. Policies on Project Type

Projects may be considered NEW or EXPANSION based on the following conditions:

A. New Projects

Other than the normal definition of a new project being, one to be established by a newly formed/incorporated enterprise, the following are deemed new projects and shall enjoy the corresponding privileges:

1. A project to be established by an existing enterprise with existing business operation(s) entirely distinct and different from the proposed project in terms of final product, production process, equipment, and raw materials.

2. A project to be established by an existing enterprise along the same line of business as any of its existing operations provided the new project shall be in a site beyond a 50-kilometer radius from any of its existing plants.

3. A project to be established by an enterprise, the stockholders of which do not own more than 70% of the equity in another existing enterprise engaged in the same activity;

4. A project that will involve the reactivation of facilities that has been idle for at least one year; provided, however, that the project shall be undertaken by an enterprise where no more than 70% of the shares of stocks shall be held by previous owners;

5. A rehabilitation or modernization project on a power plant of the National Power Corporation under a Rehabilitate-Operate-Transfer or Rehabilitate-Operate-Own scheme; or

6. A project acquired from the Assets Privatization Trust.

B. Expansion Projects

An expansion project refers to a project that meets any of the following:

1. an increase in capacity of an existing facility by more than 25%;

2. the output shall not be distinct from existing products;

3. the setting up of facilities within 50 kilometers from the existing site, and,

4. 70% or more of its equity is owned by the same set of stockholders/owners of another enterprise engaged in the same activity.

As a general policy, BOI-registered enterprises shall qualify for the registration of an expansion project provided an 85% utilization of its registered capacity (for manufacturing activity) has been attained. If a portion of its existing capacity has been committed to exports, the enterprise should have met at least 70% of this commitment.

VI. Multi-phased Projects

Projects where capacity build-up shall be implemented in several stages over a period of time, shall be registered on a per phase basis. The first phase will be registered as a new project and the succeeding phases may be registered, if qualified, as expansions.

This policy shall, however, not apply to infrastructure projects where commitment for total development is required.

VII. Projects Critical to the Environment

A. New and expansion projects shall be required to secure an Environmental Compliance Certificate pursuant to P.D. No. 1586 (Philippine Environmental Impact Statement System).

B. All projects that would involve handling, transport, processing and/or storage of toxic, hazardous substances and/or nuclear wastes shall be subject to the provisions of R.A. No. 6969 (Toxic and Hazardous Substances and Nuclear Wastes Control Act of 1990) and such other laws and/or presidential proclamations/decrees that may be enacted or issued in the future.

C. No project involving the importation of wastes for final deposition as a material of no economic value to the country shall be eligible for registration.

VIII. Project Milestones

As an assurance that major projects will be implemented on time, the Board has adopted a policy such that an enterprise registered for a project costing P100 million and above shall be required to adhere closely to an approved project timetable. Failure to implement the project accordingly may result, after due process, in the cancellation of its registration unless failure is caused by force majeure (acts of God) such as earthquakes, floods, typhoons and other natural disasters.

The project timetable shall indicate the schedules for (a) preparation of basic design and engineering study; (b) development of plants site; (c) major civil works; and (d) acquisition of critical equipment; or whatever milestones shall be applicable. cdt

The above policy will not apply to projects locating in the Autonomous Region in Muslim Mindanao

IX. ASEAN Projects

A project in a preferred activity of the IPP or a regional complementation project involving investments by ASEAN nationals, regional ASEAN or multilateral financial institutions including their subsidiaries may be eligible for registration. The Board may recommend to the President the suspension of the nationality requirement for such projects to the extent that such activities are allowed by the Constitution and relevant laws.

X. Investments in Areas Not Listed in the IPP

Investments in areas considered to have established competitive edge or proven viability, although not covered in the IPP, are nonetheless welcome. The BOI provides all forms of assistance through its Investment Promotion Units, as part of its Investment Assistance Program to all investors, from the conception of the project to its operationalization.

XI. Projects Registered Under Special Laws That Also Provide Incentives

Projects registered under these special laws such as R.A. 7844 (Export Development Act), R.A. 7916 (Creation of PEZA), among others, may still register under E.O. 226 as amended by R.A. 7918, provided that (a) the special laws allow double registration, and (b) there is no double enjoyment or extension of the period of availment of the same or similar incentives. The directory of laws granting incentives administered by other agencies is shown in Table III.



I. General Policy on Brand-new Equipment

A. The equipment directly needed for the production of goods or delivery of services of enterprises in the following industries must be brand-new or factory reconditioned (provided these are certified in good condition) to be eligible for incentives:

1. Cold Storage

2. Composition Board

3. Diagnostic Centers

4. Drugs and Medicines

5. Food Processing

6. Furniture

7. Mass Transport/Tourist Transport (Buses only)

8. Packaging

9. Plastics

10. Printing and Publishing

11. Pulp and Paper

12. Rubber

13. Socialized Housing

14. Telecommunications

15. Textile

16. Tourism and Industrial Estates

17. Modernizing Programs for Tourist Accommodation Facilities, Iron and Steel, Metals & Engineering, and Textiles

B. All quality control, laboratory and testing equipment including those for research and development (R & D) shall be brand-new.

C. Companies transferring or relocating their respective plants to the Philippines may avail themselves of incentives on the acquisition of equipment although used, except for the specific sectors subsectors mentioned in I.A. above.

D. In subsectors where technology change is not so rapid, such as in the garments, leather goods, toys, gifts, and housewares sub-sectors, and in metalworking, mineral exploration, mining and mineral processing the use of second-hand equipment may be allowed. However, the "technological genre" of the equipment must be specified and or considered as belonging to the state of the art classification, e.g.,computerized in the case of sewing machines, or CNC in the case of machine tools. The sectors/sub-sectors under I.A. are not covered by this exemption.

E. Export traders shall qualify for incentives on the acquisition of equipment for quality control, packaging, and materials/information handling.

II. Transport Equipment

Transport equipment acquired by registered enterprises may be eligible for incentives if they are any of the following:

A. The equipment will be used exclusively in moving and handling of raw materials from its sources to the processing plant.

B. The equipment shall be off-highway vehicles with gross vehicle weight of 30 metric tons and above.

C. They will be acquired by operators of tourist transport facilities or tourist accommodation facilities to transport their guests. In the case of the latter, the number of vehicles that may be acquired with incentives shall be determined by the following:

N = n x C x R    
  where N is the number of seats
    n is the number of guests at full occupancy
    C is the average occupancy rate:
      60% for hotels and 50% for resorts
    R is the number of guests expected to need 
      the use of vehicles (100% in area 
      inaccessible by public transport and 50%
       elsewhere provided that the tourist
       accommodation facility shall have at
       least 50 rooms.

III. Export Traders

New export traders shall qualify for incentives on the acquisition of equipment for quality control, packaging and in-plant materials/information handling.

IV. Auxiliary Equipment

The equipment enumerated below may be subject to incentives:

A. For the supply of utilities (together with accessories and auxiliary equipment)

1. boilers

2. compressors

3. power generators

B. In-plant/in-farm material handling equipment and post harvest equipment;

C. Maintenance equipment;

D. Transport equipment such as those used in mining, tourism and in logging;

E. Laboratory equipment for quality control/assurance;

F. Pilot plant equipment;

G. Pollution control equipment;

H. Devices for the protection of equipment and workers provided these are not classified as supplies;

I. Computers used in aid of production;

J. Fixed fire-fighting facilities;

K. Special structural building components required to be able to maintain a controlled environment inside the plant such as those used in buildings for yarn manufacturing or those used in maintaining a clean room environment for semiconductor plants or those used in greenhouses.



Implemented by DTI

Region Location
CAR Baguio City Epz
  Loakan, Baguio City
I Bacnotan, La Union
II Bgy. Tagaran, Cauayan
  Port Irene, Sta. Ana.
III Bataan EPZ,
  Marivelez, Bataan
  Bgy. Pandatung, Hermosa,
IV Cavite EPZ, Rosario, Cavite
  Bgy. Tabangao
  Batangas City
V Bgy. Homapon,
  Legaspi City
VI Bgy. Mali-ao
  Pavia, Iloilo
VII Mactan EPZ
  Mactan, Cebu
VIII Bgy. New Kawayan
  Tacloban City
IX Ayala de Zamboanga
  Ayala, Zamboanga City
X PHIVIDEC Industrial Estate
  Tagoloan and Villanueva,
  Misamis Oriental
XI Espina Industrial Center
  Bgy. Labangal, Gen. Santos City
  Bgy. Panacan
  Davao City
XII Linamon, Lanao del Norte
  Cotabato City
ARMM Polloc Port
  Parang, Maguindanao
Table II
Region Province
CAR: Abra*
  Mountain Province*
2: Nueva Vizcaya
3: Bataan**
4: Aurora*
  Oriental Mindoro
  Occidental Mindoro
5: Masbate*
  Camarines Norte
6: Antique*
7: Siquijor
  Negros Oriental
8: Eastern Samar*
  Northern Samar
  Western Samar
  Southern Leyte*
9: Basilan*
  Zamboanga del Norte
10: Misamis Occidental
11: Davao Oriental
  Davao del Norte
12: Sultan Kudarat
  North Cotabato
13: Agusan del Sur*
  Surigao del Sur*
ARMM: Lanao del Sur

* Presidential Council for Countryside Development (PCCD) — declared priority depressed provinces until 1998.

** Lahar-affected provinces treated as LDAs during the effectivity of this IPP.

Table III



    Effectivity AGENCY  BENEFITED
R.A. 7916 Special February 24, Philippine In any sector of
  Economic 1995 Economic Zone industry, international
  Zone Act of (approval) Authority trade and commerce,
  1995   (PEZA) subject to minimum
        investment and other
R.A. 7227 Bases March 13, Bases In any sector of
  Conversion 1992 Conversion industry and
  and (approval) Development commerce; financial
  Development   Authority and investment
  Act of 1992   (BCDA)/Clark center
R.A. 7844 Export January 1, Dept. of Trade All accredited
  Development 1995 and Industry/ exporters
  Act of 1994   Export  
R.A. 6938 Cooperative March 10, Cooperative All registered
  Code of the 1990 Development cooperatives
  Philippines   Authority  
R.A. 7942 Philippine April 9, 1995 Dept. of Mining/mineral
  Mining Act of   Environment processing industry
  1995   and Natural  
      Resources/Bu. *In addition to BOI
      of Mines & incentives, Net
      Geo-sciences Operating Loss
        Over (NOLCO) and
        Depreciation are
P.D. 972 Coal August 27, Energy All new as well as
  Development 1976 Development current holders of
  Act of 1976 (approval) Board (EDB) valid and existing coal
        revocable permits and
R.A. 7471 Philippine May 5, 1992 Maritime Philippine shipping
  Overseas (approval) Industry enterprises (Filipino
  Shipping   Authority citizens, or
  Development   (MARINA) or corporation
  Act     organized under
        Philippine laws,
        which is at least 60%
        owned by Filipinos)
R.A. 7279 Urban March 3, 1992 National Participating private
  Development (approval) Housing Developers
  and Housing   Authority  
  Act of 1992   (NHA)  
P.D. 538 Creating and August 13, PHIVIDEC Veterans and AFP
  Establishing 1974 Industrial Retirees
  the   Authority  
  Ind'l Autho.      
R.A. 7103 An Act to August 8, Board of Iron and Steel
  Strengthen the 1991   industry
  Iron and Steel   Investments  
  Industry   (BOI)