Gov’t to limit perks for hiring to exporters

Only companies that export goods can qualify for hiring incentives under the 2010 draft of the Investment Priority Plan (IPP), a Board of Investments (BoI) official said. The draft deviates from last year’s plan, which awarded tax perks to any firm that hired or retained workers despite being affected by the global downturn. "Heeding the National Economic and Development Authority’s (NEDA) assessment, we retained the contingency list but placed it only in the export section of the 2010 IPP," Rudy B. Cana, BoI director for special projects, told BusinessWorld in Filipino on the sidelines of a chemical industry group’s membership meeting. The draft does not provide an expiry for the incentive, Cana said, contrary to earlier reports that it would be available only for six months. The tax perk comes even as exports are projected to grow by 7-9 percent this year, according to official estimates, after plunging by 27 percent to $31.3 billion in 2009. Already, January export sales have surged by 42.48 percent to $3.578 billion over the same month last year. "It is almost finalized. BoI Undersecretary Elmer C. Hernandez had requested [Trade] Secretary Peter B. Favila [last Monday night] to endorse it to the President," Cana said. Favila, recently appointed to a longer tenure at the Monetary Board after resigning from his Cabinet post, is slated to turn over his post to Education Secretary Jesli A. Lapus next week. The hiring incentive granted in last year’s investment priority plan was an income tax holiday lasting up to three years. It would kick in once a firm’s earnings computed before tax and depreciation are in the black. The BoI initially nixed this listing in the draft 2010 plan presented to the public back in February, claiming that the NEDA had declared the crisis over. Rules provide that the incentive will be lifted if such a NEDA declaration is made. NEDA acting Director-General Augusto B. Santos has clarified, however, that he had only said the worst was over. The BoI can thus retain hiring incentives this year. It also can also limit the perk to eligible industries. Sergio R. Ortiz-Luis Jr., president of the Philippine Exporters Confederation, which had petitioned for the retention of the hiring incentives, said the tax perk was direly needed by small companies.