Php 221.6 Wind Power Projects Endorsed for Green Lane, Slated for Operation in Negros and Iloilo

MAKATI CITY – Two wind power projects will soon operate in Western Visayas, as the Philippine Board of Investments (BOI), through its One-Stop Action Center for Strategic Investments (OSACSI), granted green lane certificates to the partnership of the Triconti Windkraft and Sea Wind Holdings AG on January 12, 2024.

Trade Undersecretary and BOI Managing Head Ceferino Rodolfo handed the Green Lane Certificate of Endorsement to the officials of the Triconti Windkraft Group (TWG) during a brief awarding ceremony at the BOI Main Office.

Guimaras Strait Wind Power Project (under Triconti Southwind Corporation) and Guimaras Strait II Wind Power Project under (Jet Stream Windkraft Corporation) were among the first awarded Offshore Wind Energy Service Contracts by the Department of Energy. With a combined initial investment cost of Php 221.6 billion, the two projects will operate offshore Negros Occidental and Iloilo Province and have a total target capacity of 1.2 GW. The projects are being undertaken in partnership with Sea Wind Holdings AG (Seawind), a Liechtenstein based developer. Together, the Triconti-Seawind partnership is currently developing a total of over 1.65 GW of offshore wind capacity in Luzon and the Visayas.

Significantly, the projects will engender huge economic impacts for Filipinos, projected to generate 3,600 direct and indirect jobs. Aside from the demand for local labor, the project will boost the economic activity in Negros and Iloilo because of the possible development of eco-tourism.

TWG President and CEO Lilibeth Rosenberger was joined by Director and Head of Offshore Projects Bjorn Rosenberger, and Director of Regulatory and Markets, Theo Sunico. The officials recognized the young and talented demographics of the Philippines which they are eager to develop and utilize.

The Philippines features an exceptionally high potential for wind energy generation particularly because of the country’s topography. There are already a number of onshore wind projects in the country but TWG was among the first to be awarded contracts to develop such projects.

The company has been helpful to the BOI in identifying industry gaps as well as determining strategies for the promotion and development of the offshore wind industry in the country. As the single point of entry for strategic investments and coordinating body for Green Lanes, OSACSI will play a pivotal role in addressing issues and concerns in the Renewable Energy industry. This streamlined approach ensures the swift materialization of energy investments in the country.

DTI CHIEF VISITS THE ARRIVAL OF THE FIRST REACTIVATED LUFTHANSA A380 AT THE LTP’S MRO FACILITY

PARAÑAQUE CITY—During the onsite visit held on 30 January 2023, Trade and Industry Secretary Fred Pascual welcomed Mike-Kilo at the Lufthansa Technik Philippines (LTP) MRO facility located at Villamor Airbase. This is in support of the collaboration between the Department of Trade and Industry (DTI) and LTP in promoting the MRO industry in the country. The Lufthansa Aircraft that arrived in the country from Frankfurt, Germany is the first reactivated A380 aircraft of Lufthansa to undergo extensive C-Check in preparation for the increased travel demand.

"With the collaboration of young and talented minds in the aviation and aerospace industry, the Philippines is transitioning to a highly cost-competitive environment that will make its strategic location a viable MRO hub in Asia." Secretary Pascual said.

Likewise, with several Philippine companies that are AS9100 and NADCAP-certified, MRO operation in the country guarantees a wide range of services that will cater to the growing demand of the aviation industry globally.

Since its inauguration in 2020, Lufthansa Technik Philippines has been committed to its role of promoting competence as a MRO for commercial aircraft, including the largest Airbus available.

Further, Secretary Pascual added that "their opening of another hangar last August 2022 is a testament to faith and confidence in the country’s significant role in the global value chain for aerospace."

Through its partnership with the private and public sectors, DTI, through the Board of Investments (BOI), is committed to delivering its promise of making the Philippines the hub for manufacturing and aftermarket services in the aerospace industry. With the Aerospace Industry Roadmap, the Department looks forward to a favorable economic climate for the aviation and aerospace industry by promoting the Philippines as a globally-recognized MRO hub.

Manufacturers Join the Fight Against Covid-19, Re-Purposes Products

Heeding the government’s call to address the deficient supply of COVID-19 related products in the Philippines, many of the country’s manufacturers are undertaking re-purposing initiatives.

The Board of Investments (BOI) is assisting manufacturers by helping them strengthen their capabilities, navigating them through as they re-purpose their existing product lines. Their work is part of a broader campaign to support businesses through the Covid-19 pandemic.

BOI assistance focuses on the manufacturer’s strengths in product development, logistics, production systems, and skilled workforce. For example, alcoholic liquor used to create alcohol disinfectants, ready-to-wear garments transformed into protective uniforms, or even medical gloves fashioned from rubber balloons.

In particular, BOI helps manufacturers by creating linkages between raw materials suppliers and manufacturers to ensure a steady supply of products needed to combat the pandemic.

The work is already bearing fruit. Australian-based packaging firm Tacca Industries has announced that it plans to step up its role in the production of personal protective equipment (PPE) in the Philippines. Tacca is hiring just under 100 new members of staff in the country as it makes the move, with the jobs based at their plant in Laguna.

Firms interested in following in Tacca’s footsteps can book an appointment via BOI’s Facebook page to find out more about the help and incentives on offer. A dedicated specialist will help businesses strengthen their PPE related capabilities, navigating them through the process.

Trade Undersecretary and BOI Managing Head Ceferino Rodolfo, said: “We are delighted to launch this initiative and look forward to working with manufacturers in the Philippines repurpose their production lines. This will be good for everyone – it will help manufactures expand their business while providing desperately needed Covid-19 products”

Clem Tacca, CEO of Tacca Industries, said: “The number one priority is to keep the employment and keep people in jobs and this extra project that we will do in the mask material will be good for the economy and everybody in general. It’s crucial that health workers in the Philippines are cared for and making sure that they get the right equipment so that they are very safe and sound. That is also a priority which everyone in the Philippines has been raising with me and it’s something that we’ll bring into the country because of our name. We are already in contact with some people that the BOI has put us in touch with. BOI’s help has been invaluable.”

DOT and BOI Finalized Incentives to Tourism Firms’ COVID-19-Proofing Investments

Responding to a request from Tourism Secretary Bernadette Romulo-Puyat, the Board of Investments (BOI) has approved investment incentives for tourism and tourism-related industries that are upgrading and modernizing their facilities aimed at ensuring the health, safety and wellness of their clients in view of the new normal brought about by the COVID-19 pandemic.

“We recognize that the tourism sector has been one of the worst affected of all the major sectors of the economy due to the current health crisis. By way of providing investment incentives, we hope the sector, which was a major driver of the economy’s growth pre-Covid-19, will stay afloat, continue their business operations, and recover the soonest they can,” said Trade Secretary and BOI Chairman Ramon Lopez.

Following discussions with the Department of Tourism (DOT) on the tourism stakeholders’ plea on the possible measures to ensure continuity of their business operations, the BOI crafted and approved the policy to help the tourism sector. The tax incentives to be granted by BOI are income tax holiday for a period of three years and duty-free importation of capital equipment (only VAT will be paid) for tourism projects that will renovate to enhance health and safety features and processes. The income tax holiday to be given will be pro-rated according to the amount of upgrade/renovation.

“Tourist accommodation facilities who would like to undertake improvements to make their facilities COVID-proof may consider registration of such with the BOI as modernization projects subject to qualification requirements,” Secretary Lopez said. “For existing tourism accommodation facilities in Boracay, which is currently covered by the locational restriction policy, the BOI will look into the possibility of likewise qualifying their COVID-proof improvements as modernization projects that may be entitled to a three-year income tax holiday (ITH) incentive.”

“While we currently have locational restrictions for new and expansion of tourism facilities in Boracay, we may qualify modernization of those in the area. All these, to help the tourism industry recover faster and provide comfort/safety in our tourism facilities,” he said.

Tourism enterprises that are eligible to apply for investment incentives include hotels and resorts, meetings, international conventions, and events (MICE) facilities, and tourist transport companies nationwide, including those in Boracay.

For tourist transport, these should be locally-assembled vehicles with sanitation features. The motor vehicles to be acquired or to be upgraded/modernized will have such sanitation and hygiene features including but not limited to barriers, payment portals, deionizers, seat organizers for sanitation kits, and other features that would promote physical distancing.

Examples of renovations/upgrade that can qualify for such tax incentives include renovation of guestrooms, food and beverage outlets, function/meeting rooms, recreation areas and/or other common areas; investment in new or upgrade of laundry, kitchen, housekeeping, employee facilities and other back of house facilities; building of full, partial or movable partitions; installation of built-in thermal scanners, hygiene gates, and/or booths; upgrade or improvement of ventilation, air conditioning, air filtration systems, water systems, water treatment facilities (STP); a mobile check-in system; non-touch or no contact door lock systems and non-touch control panels in elevators and other areas.

“The BOI will continue to work closely with the DOT in the review of our relevant policies to provide the necessary support to our tourism stakeholders and restore industry vigor and growth at the soonest possible time,” Secretary Lopez said.

The BOI has been supportive of the local tourism industry, implementing many initiatives to further improve the sector’s competitiveness. Just early this year, pre-COVID-19, it conducted capacity building activities on securing international certifications for particularly for the medical travel and wellness tourism sector with the aim of making the industry prepared not only for the growing needs of the Filipinos, but also for the growing opportunities in the medical tourism industry. The capacity-building initiatives support and help enable the healthcare facilities and services, especially those licensed by the Department of Health (DOH) and/or accredited by the DOT.

The capacity-building is part of the many initiatives the BOI is implementing to further develop globally competitive industries through its Industry Development Program (IDP). The Roadmap on Medical Travel and Wellness Tourism was completed in 2015 with the active participation of relevant stakeholders.

Among the recommendations in the Roadmap are the implementation of a uniform system of data collection, analysis and dissemination and the development of a brand strategy for the country. The capacity building activities seeks to ensure that the sector, prior to the brand strategy launch, will have the right healthcare facilities that are internationally recognized and accredited that can multiply the people-value the country is known for.

DTI, DENR Align Policies for Stricter Environmental Standards and Modern Technologies in Steel Industry

QUEZON CITY – The Department of Trade and Industry (DTI) and Department of Environment and Natural Resources (DENR) are pushing for stricter environmental standards and more modern and cleaner technology in steelmaking industry to ensure manufacturers produce quality and safer steel products as well as encourage industries to be environment-friendly.

During a meeting between DTI Secretary Ramon Lopez and DENR Secretary Roy Cimatu last Monday, the agencies agreed to review existing environmental standards and production technologies used in steelmaking, considering reports that several used induction furnace facilities have been set up, which can be more pollutive and produce inconsistent quality and non-conforming steel products.

“What we need in the country are modern, environmentally friendly technologies that will consistently produce quality products,” said Sec. Lopez.

China, which has the top three steelmakers in the list of the top six largest in the world, has phased out and eradicated induction furnaces in 2017 because of its pollutive process and inconsistent quality products manufactured.

“We do not want those used pollutive induction furnaces to transfer to our country,” the trade chief added.

DTI is intensifying its campaign for safer and higher quality steel products; thus, it is reviewing its policies and regulations on this matter.

“This collaboration with DENR will help us in promoting industrial capacity building with the use of advance technology in steel making while protecting our environment. This is also a testament that as we drive economic growth, we encourage responsible businesses in the country,” said Sec. Lopez.

The DTI and the DENR are set to form a Technical Working Group (TWG) to align its policies and strategies in ensuring steelmaking facilities are compliant with environmental standards and product quality. The TWG will likewise review the compliance of steel producers with an online monitoring system linked to the DENR.

According to the Trade Secretary, the move is also in pursuit of the United Nations Sustainable Development Goal No. 12: Sustainable Consumption and Production, which is actively pursued in the ASEAN region.

Sec. Cimatu expressed DENR’s commitment in the collaboration. He assured that the Environmental Management (EMB) as well as the Mines and Geosciences Bureaus (MGB) will be in coordination with the DTI-Consumer Protection Group and the Board of Investments (BOI) in this agenda.

Sec. Lopez said that both agencies are studying proposed regulations on the use of secondhand equipment or machineries in the steel industry.  Moreover, a study on the possibility of making the approval for all environmental compliance certificates (ECC) for critical heavy industries like steelmaking and cement be on a national level.  This is to ensure more comprehensive and faster review of ECC applications, as well as enjoining a more intensive environment and production monitoring of steelmaking facilities.

The TWG shall also review the proposed increase in penalties imposed on manufacturers violating environmental standards or the terms and conditions in the ECC.

As for the DTI-Bureau of Philippine Standards (BPS), Sec. Lopez committed that there will be a review on the Philippine Standard (PS) license certification scheme procedures for steel products, possibly including steel billets, and more intensive monitoring at the retail trade level.

Present during the meeting were DENR Undersecretary Rodolfo Garcia, MGB Assistant Director Danilo Uykieng, Metallurgical Technology Division Chief Engr. Juancho Calvez, and EMB Environmental Impact Assessment and Management Division Chief Engr. Esperanza Sajul, DTI Undersecretaries Ceferino Rodolfo and Ruth Castelo, DTI-BPS Officer-in-Charge Engr. Neil Catajay, BOI Governor Angelica Cayas and Director Evariste Cagatan.

Investment Incentives Matter for Industry Development and Jobs generation

With rising globalization and  economic integration through free trade agreements, competition for foreign direct investments has heightened. Even within regional groupings like the EU and ASEAN, countries compete and reinforce their tax and other incentives to attract and influence the decisions of investors especially if all the basic infrastructures and investment climate are relatively similar to each other.  In countries like Thailand and Vietnam, investment incentives contributed to achieve rapid growth. Developing countries would even increase incentives to make up for certain infrastructure handicap or disadvantages.

As DTI Undersecretary Ceferino Rodolfo said, “Not all incentives are wasted, not all incentives are bad.  Incentives are able to attract investments into the country which would not have come in considering the advantages of other countries in terms of infrastructure, cost efficiencies, labor costs or resource availability. Incentives can help compensate for the disadvantages in locating in our country.”

Usec Rodolfo added “At this point, and following President Duterte’s mission to make lives of the Filipinos comfortable, we need all the jobs we can generate, to help uplift their lives out of poverty.

“Investors who have availed of incentives have likewise paid revenues on other tax dues coming from their operations.  Taxes were paid such as on withholding taxes from salaries, VAT, real estate taxes and the net effect is positive revenue contribution to the government”, Rodolfo said.

Based on TIMTA data from 2015 to 2017, the top ten PEZA enterprises paid total taxes of P45.3B while income tax incentives availed amounted to P45.1B resulting in a net revenue position of P0.2B.  Their exports which accounted for 22% of the country’s total reached US $40.7B in the same period. Their local purchases totaled P110.1B. In the same period, number of workers per year averaged 165,300.

Rodolfo cited that one high-tech electronics company posted a cumulative net tax revenue of P3B during its presence in the Philippines from 1981-2018, as its total taxes paid stood at P5.2B versus its income tax incentives availed of P2.2B.  During the period, exports totaled $3.9B, local purchases of P22.2B, salaries and wages paid amounted to P67.6B while employment expanded from 3,378 workers in 1990 to 24,222 in 2018, just for that company.

According to Rodolfo, in terms of BOI income tax holiday, companies also contribute revenues to government in the form of other taxes paid and the ratio is around 1:4.7 or for every one peso incentive, the companies pay around P4.70 for other taxes.   In 2017, the BOI Total Incentives Availed was Php27Bn; but Total Taxes Paid was Php128Bn. More importantly, BOI incentives are time-bound. After 4yrs, there is no foregone revenue but the Tax Payments continue on.

Based on the above, Rodolfo concluded that “incentives do not all result in leakages.  They definitely result in investments, job creation, expansion of domestic capacities and Net positive revenues to government.  So let us manage the transition period better.”

He reiterated the DTI Secretary’s position that “We are for the tax reform proposal especially in making the incentives timebound but we have to carefully manage the transition, and not rush the cutting of incentives such as the 5% GIE that we promised to the PEZA locators. Affected exporter-locators have expressed concern that the change in the system may compel them to redirect their expansion plans elsewhere and even risk the possible transfer of their current operations to other countries.  There is a risk and we should minimize all the risks as we need all the jobs we can generate.

We should therefore be careful in the transition for those who are 100% exporters and labor intensive and are paying more than what they receive in terms of incentives. We also need to take into account innovative companies that are upgrading their products and moving up the value chain along with companies whose activities address gaps in and whose operations are crucial to the supply or value chain or activities that would increase competition in the domestic market.”

Specifically we should consider a 5-10 year range of transition.  In the meantime, the GIE can also be brought up to 8% so there can be an immediate additional revenue that can help balance the planned reduction in Corporate Income Tax.

DTI: New Technologies Will Not Lead to Job Loss but Will Bring in New Types of Jobs, Better Productivity

Trade and Industry Secretary Ramon Lopez dispelled fears over possible job losses due to the emerging new technologies in various industries.

"Technology leads to innovation and new approach in doing things. It won’t always lead to loss of jobs but rather provide opportunities for the industry to increase productivity and introduce new high-paying jobs for Filipino workers. We should welcome it and be ready to adapt to this phase of industrialization. In fact, continuous innovation is needed if companies are to remain competitive," said Sec. Lopez.

The Department of Trade and Industry (DTI) chief acknowledged technology is essential to improve efficiencies, and productivity.  He also noted that upskilling is an important adaptive strategy for Filipino workforce to remain in demand in any type of business.

"People will have to be upskilled and retrained to upgrade their current skills and acquire new ones to remain relevant.  There are current programs integrating new skillset requirements with schools and training centers to prepare the students and the current workforce. Many companies also provide upskilling and retraining programs as well as apprenticeship opportunities," shared Sec. Lopez.

The trade chief emphasized that technology change is not just happening now as there have been different periods of industrialization-- from the first to the fourth Industrial Revolution-- where forms of jobs changed but the human labor market remained relevant and needed. This started with manual labor to produce things, leading into the advent of mass production and concepts of having production lines where workers learned how to run and work with machines.

Sec. Lopez underscored that when people worked with machines, jobs were not lost as it opened other areas of employment such as manufacturing, servicing, and maintenance of machines.

He cited the entry of automated teller machines (ATMs) in banks as an example, noting that there was a fear back then that bank tellers would lose their jobs. As of today, bank tellers are still present and needed with more value added functions, focusing on account management and customer service. Jobs were not lost since the ATMs also serve the transaction needs of customers 24/7, beyond office hours and tellers were not performing these tasks anyway. Thus, the use of ATMs provided greater customer service and better productivity.  Sec. Lopez added that the loading of cash in each ATM as well as its maintenance still require human labor.

The coming of internet and connectivity brought a lot of new opportunities in e-commerce, more buyer-seller platforms such as Airbnb, eBay, Grab, and tons of opportunities such as Youtube-ing, in game development and gaming, digital advertising and networking.

"The case of ATMs is the same with the advent of robots and mechanization, which usually perform repetitive, dangerous or high-precision jobs.  Humans are still needed to design, manufacture, program or train the system software and maintain the robots" Sec. Lopez added.

In the era of Artificial Intelligence (AI), chatbots and data analytics, the trade chief said that new skillsets are required. Many things are happening and bound to change. Some systems are now AI-enabled, making the jobs of people easier. But people are also the ones developing and maintaining the AI systems.

Upon consultation with AI industry experts, Dado Banatao and George Yang of AI-Pros, the DTI Secretary noted that the use of AI in the Business Process Outsourcing (BPO) industry is a win-win for both the industry and Filipino workforce. While AI is cost-effective for completing multiple tasks faster and with less error, it will also allow the human workforce to increase their competitiveness in performing tasks ranging from simple to complex within the same timeframe, which are high-value and high-paying tasks.

"By combining the sizeable Filipino workforce possessing the appropriate skills and talents with AI-powered technologies, the Philippines will be poised to be the AI-driven BPO capital of the world," said Sec. Lopez.

“We are now seeing people in the BPO industry operating AI-enabled systems, where previously rejected job seekers in BPOs are now finding themselves with more job opportunities to do simpler tasks in operating AI-enabled systems. We’ve seen BPO operations in Manila where AI and chatbots are the first line of contact of clients. However, these were managed by a human operator, who is also now capable of managing two or three simultaneous calls attended by the AI-enabled system,” shared the trade chief.

According to George Yang, AI also widens the reach of opportunities to the underprivileged, citing that even high school graduates, market workers, or street vendors can be trained to operate AI-enabled systems. The most vital requirement is just the ability to understand and speak English, which Filipinos are very good at.

"Such is an example where technology can even make the opportunities more inclusive.  Yes, there are challenges but there are more opportunities. Our education and training systems, including TESDA, are now offering training programs to enable our workforce to catch up on the new job trends and prepare them for the ever-changing technology. But we're confident that we can achieve this goal of creating job and employment opportunities that are more inclusive even in the future,” Sec. Lopez concluded.