MEMORANDUM ORDER NO. 211, April 04, 2006

[ MEMORANDUM ORDER NO. 211, April 04, 2006 ]

APPROVING THE 2006 INVESTMENT PRIORITIES PLAN

Pursuant to Article 29 of the Omnibus Investment Code of 1987, the attached 2006 Investment Priorities Plan (IPP) is hereby approved.

This Memorandum Order shall take effect fifteen (15) days after its publication in at least one newspaper of general circulation as required under Article 31 of the Omnibus Investments Code of 1987.

Done in the City of Manila, this 4th of April in the year of Our Lord, Two Thousand and Six.

(Sgd.) GLORIA M. ARROYO

By the President: (Sgd.) EDUARDO R. ERMITA Executive Secretary

Part I PRIORITY INVESTMENT AREAS

The descriptions/coverage and the entitlement to incentives of the following listed activities shall be defined and clarified in the General Policies and Specific Guidelines to be issued by the Board of Investments (BOI).

All projects with sovereign guarantee and/or guaranteed rote of return shall not be entitled to income tax holiday (ITH).

Industry Cluster and modernization activities as well as the establishment and operation of Centers of Excellence are applicable to all listed activities except when specifically excluded.

I. PREFERRED ACTIVITIES

Agribusiness

This covers the commercial production and commercial processing of agricultural and fishery products including their by-products and wastes.

Healthcare and Wellness Products and Services

This covers hospital services, medical and dental services, other human health and wellness products/services, retirement villages, medical zones and related services. This also covers the manufacture of drugs and medicines in accordance with the Philippine Drug Formulary of the Department of Health (DOH), supplements limited to Vitamin A, iron and iodine for use in the Food Fortification Law, and herbal medicines.

Information and Communications Technology

This covers IT and IT-enabled services and ICT support services.

Electronics

This covers all segments within the value-chain structure of the industry such as Original Design Manufacturing (COM), electronics manufacturing services (EMS), the manufacture of electronic products (except home appliances), IC design, the manufacture of parts and components of electronic products including the inputs for the manufacture of such components, and the manufacture of production supplies (e.g., molds and dies, precision tools, etc.) used by the electronics industry. This also covers the establishment of test and other service facilities.

Motor Vehicle Products

This covers the production and/or manufacture of motor vehicle parts and components, and the manufacture or assembly of mo or vehicles provided that the activity includes a program for the development of motor vehicle parts and components.

Energy

This covers the exploration, development, and/or utilization of energy sources. This also covers activities using energy technologies leading to energy efficiency and conservation in accordance with the program of the Department of Energy (DOE).

Infrastructure

This covers the development of infrastructures, telecommunications, logistics, transport systems and mass housing. This also covers infrastructure projects under the BOT Law.

Tourism

This covers the development of tourism economic zones, tourist estates, eco-agri tourism facilities, and the establishment of tourist accommodation facilities. This also covers historico-cultural heritage projects and services provided by tourist operators as endorsed by the Department of Tourism (DOT).

Shipbuilding/Shipping a

This covers shipbuilding, ship repair, shipyard operations (excluding shipbreaking), and overseas, domestic and RORO shipping and terminal operations.

Jewelry

This covers the manufacture of fine jewelry and costume jewelry.

Fashion Garments

This covers the production of fashion garments as endorsed by the Department of Trade and Industry (DTI). Fashion garments essentially refer to wearing apparel for a specific season with a distinct style and color based on international trends.

Machinery and equipment, raw materials and intermediate inputs in support of the activities listed in the IPP b

This covers the fabrication of machinery and equipment and the production/manufacture of raw materials and intermediate inputs in support of the activities listed in the IPP.

II. MANDATORY INCLUSIONS

All areas/activities, which as provided for .under existing laws, specifically require their inclusion in the IPP.

LAW

ACTIVITY

P.D. 705

Industrial Tree Plantation

7103

Iron & Steel

R.A. 7942

Exploration, mining, quarrying, and processing of minerals c

R.A. 8047

Publication or printing of books or textbooks d

R.A. 8479

Refining, storage, marketing and distribution of petroleum products e

R.A. 9003

Ecological Solid Waste Management e

R.A. 9275

Clean Water Act d

7277

Rehabilitation, Self-Development and Self-Reliance of Disabled Persons

R.A. 6957

Build, Operate and Transfer (BOT) Law as amended by R.A. 7718 (For projects in excess of PhP 1 Billion) e

Activities covered under Bilateral Agreements

III. EXPORT ACTIVITIES d

This covers the production/manufacture of non-traditional export products and services in support of exporters as identified under the Medium-Term Philippine Development Plan 2004-2010 (MTPDP) or the Philippine Export Development Plan 2005-2007 (PEDP).

Manufacture of Export Products/Services

This covers the production/manufacture of non-traditional export products and services with capability to export at least 50% of its output, if Filipino-owned or at least 70%, if foreign-owned. To qualify for incentives, industrial goods for export should have undergone manufacturing; mineral products for exports should have undergone processing. Production of industrial goods involving simple processing covering any or a combination of activities such as but not limited to cleaning, sorting, cutting, shredding, pulverizing, grinding, crushing, compacting, dissolving and filtration are excluded.

Exports of mineral products without processing shall not be entitled to ITH, e.g., mineral production without processing such as (i) quarrying and mining only, (ii) mining of direct shipping ore, (iii) minor processing as cleaning, sor1ing or size reduction.

Export of recycled materials with no or with simple processing involving any or a combination of activities such as but not limited to cleaning, sorting, cutting, shredding, pulverizing, grinding, crushing, compacting, dissolving and filtration shall not qualify for registration for purposes of incentives.

The BOI may, if national interest requires, withhold registration of an export product including industry inputs that are in short supply domestically.

Activities in Support to Exporters -this covers the following:

Services comprising a portion of the manufacturing process;

Sub-assembly of parts/components of the final export product;

Fabrication of parts/components of final products wherein the raw materials are provided by the direct exporter;

Product testing and inspection; and,

Repair and maintenance.

IV. PROJECTS UNDER THE RETENTION, EXPANSION AND DIVERSIFICATION (R.E.D.) PROGRAM

This covers activities of existing investors that are encouraged for retention, either to maintain, expand or diversify their operations in the country. Activities under the R.E.D. Program shall be subject to minimum investment requirements and other conditions as defined and clarified in the General Policies and Specific Guidelines to be issued by the BOI.

RETENTION projects are the existing activities that are encouraged for continued operation in the Philippines. Retention projects may only be granted non-fiscal incentives;

EXPANSION projects are existing activities that are encouraged to increase existing capacities within the country; and,

DIVERSIFICATION projects are new activities of existing investors that are distinct from existing operations.

Trading and other activities enumerated under Article 11 of E.O. 226 are excluded.

V. RELOCATION ACTIVITIES

This refers to projects from other countries relocating to the Philippines that shall be subject to minimum investment requirements and other conditions as defined and clarified in the General Policies and Specific Guidelines to be issued by the BOI.

Trading and other activities enumerated under Article 11 of E.O. 226 are excluded.

VI. ARMMLIST

The ARMM List covers priority activities, which have been independently identified by the Regional Board of Investments of the ARMM (RBOI-ARMM) in accordance with E.O. 458. The RBOI-ARMM can grant registration and administer incentives to activities in the IPP, provided these are located in ARMM and subject to the General Policies and Specific Guidelines.

EXPORT ACTIVITIES

Export Trader and Service Exporters

Support Activities for exporters

AGRICULTURE, FOOD AND FORESTRY-BASED INDUSTRY

Processed Food

Production and processing of Halal Meat and Halal foods

Leguminous and other vegetable - based protein (textured, palletized or liquid

Spices Processing (e.g., hot pepper, black pepper, ginger, etc.)

Note: May be integrated with plantation

Vegetable Oils (e.g. peanut oil, rice bran oil, sunflower and soybean oil)

Production of Food Crops

Note: Maybe integrated with post-harvest processing and other vegetables (such as Tomatoes)

Integrated Coconut Processing and plantation

Seaweeds Production and Processing

Cassava Processing and other root crops

Note: Maybe integrated with plantation

Fruit Processing (e.g. durian, mangosteen, jack fruit, marang, banana, mango, passion guava, calamansi, and guyabanos) and plantation

Aquaculture (Fish Production and Processing) such as, but not limited to:

Frozen fish

Chilled fish

Canned fish

Abalone

Crab fattening Eel production

Squid processing

Carp and Tilapia Production and Processing

Tropical Fish Production and Processing

Shrimps/Prawn

Lapu-lapu (Grouper) and other marine products

Com Flour Mill (Integrated with plantation)

Young Corn Production Note: May include processing/canning

Mushrooms Culture and Processing

Sweet Potato Plantation and Processing

Crocodile Farming and Processing

Cutflower Production

Pearl Culture and processing

Industrial Tree Plantation (Include Rubber, Rattan, Bamboo, etc.) and wood processing (cement wood board and fiberboard) reconstructed veneer

Shipbuilding / Ship breaking / Ship repair and Watercraft

Abaca Pulp Plantation and Processing

Palm Oil Plantation / Processing/ refining and germinated oil palm seeds

Coffee Processing (Maybe integrated with plantation)

Panicle Board (use of agri-based waste material such as rice straw, wood waste, etc.)

Activated Carbon Manufacturing (use of coconut shell, wood based, etc.)

Feeds Production (Animal feeds and feeds for aquaculture)

Tobacco Plantation and Processing

Production of Beverage Crops (but not limited to)

Cacao Beans

Coffee Beans (Arabica variety)

Production of Plantation Crops and other Medical Herbs/Essential oil plants (including flower extracts)

Production of Livestock and Poultry (including Dairy products)

Beef (including cow-calf and feedlot operations)

Carabao (water buffalo) production

Goats and Sheep

Frozen semen and embryos

Note:  includes natural method and artificial insemination and embryo transfer technology

Bricks and Roofing Tiles production

Quality seeds and seedlings of fruit trees and other planting materials propagated asexually or by tissue culture

Sugarcane plantation, processing and Refineries

Sericulture

Mosquito coil processing

BASIC INDUSTRIES

Pharmaceuticals'

Antibiotics

Penicillin

Streptomycin Tetracycline Soft gelatin Capsules

Medical Devices

Prosthetics

Diagnostics

Other pharmaceuticals, herbal medicines

Textile and Textile Products

Yams and fabrics

Hand-woven textiles

Specialty fabrics

Tire cord fabrics Note: Must be integrated with weaving and dipping units.

Ramie (degumed, staple fiber, combed tops, noel slivers)

Fish nets

Fabrics made of indigenous raw materials

Fertilizers (organic and inorganic)

Solid waste materials

Mining (Exploration and development of Mineral Resources)

Mining and quarrying of Metallic and Non Metallic Minerals (including small scale as defined under P.D. 1899, but to exclude river beds in operations)

Processing of Minerals (such as beneficiation and other Metallurgical methods)

Cement - At least 1.0 million MTPY Capacity (Clinker based)

CONSUMER MANUFACTURES

Rubber Products such as:

High pressure and hydraulic rubber hoses

Rubber bolts

Industrial rubber rollers

Rubber tires

Leather Products

INFRASTRUCTURE AND SERVICES

Public utilities (with developmental route of the five provinces and one city of the ARMM and other adjacent Cities and Provinces)

Common Carriers (land, air and water transport facilities)

Electric Transmission/distribution

Water Supply Facilities/Waterways and sewerage systems

Buses /Cargo trucks

Other specialized mass transport systems

Power generation like hydro power, Geothermal and natural gas

Telecommunication with International Gateways

Tourism

Tourism Estate

Subject to guidelines developed jointly by the Board of Investments -ARMM and Department of Tourism (DOT)

Tourist Accommodation Facilities

Hotels

Resorts

Other tourist accommodation facilities such as apartel, pension houses, tourist inns, and others

Tourist Transport Facilities

Air

Water

Tourist Buses and taxi/van

Note:  *Endorse by the DOT

**New and expansion projects may be registered

Industrial Service Facilities

This will cover the following activities:

Common Centers:

Testing and Quality Control Laboratories

Training and Demonstration Centers

Tool Shops and Similar Facilities

Metal casting

Foundry Die casting Powder Metallurgy

Metal working

Die and mold Electroplating Forging Machining Heat Treatment Brass Making

Furniture

Kiln Drying Treatment and processing facilities

Ceramics

Kiln Glazing

Food Processing

Bottling and Canning of Distilled Water Industrial salt Vapor Heat Treatment Slaughter house/abattoir

Automotive Battery Plate Manufacturing

Note: The following criteria must be met: *    The project will serve the common needs of the industry in the locality and; *    The project will improve the relative status & comparative advantages of the industry

Development of Retirement Villages

Shall include Health and Medical facilities including amenities required by the Philippine Retirement Authority (PRA).

Subject to the guidelines to be approved by BOI-ARMM in consultation with the PRA, the Department of Health (DOH), the Regional Planning and Development Office and other concerned agencies.

Petrochemical Complex

Industrial Gases (sud1 as oxygen and nitrogen)

Miscellaneous Chemical Products

Biotechnological/Biosynthetic Chemicals

Essential Oils

Fine Chemicals

ENGINEERING INDUSTRIES

Engineering Products

Motor Vehicle parts and components

Automobile parts and assembly

Modern offset printing

Electronics and Telecommunication Products

ARMM PRIORITY AND TOURISM AREAS

Note: Listed below are potential tourist destination which need further exploration and evaluation for intensified promotions, development and marketing.

NUCLEUS

GATEWAY

SATELLITE DESTINATION

AREA I - SULU

JOLO

SULU PROVINCE

AREA II-TAWI-TAWI

BONGAO

TAWI-TAWI PROVINCE

AREA III -LANAO DEL SUR

MARAWI CITY

LANAO DEL SUR PROVINCE

AREA IV- MAGUINDANAO

COTABATO CITY

MAGUINDANAO PROVINCE

AREA V - BASILAN

ISABELA

BASILAN PROVINCE

___________________________________ a The establishment and operation of Centers of Excellence is limited only to Shipbuilding b Industry cluster and modernization activities as well as the establishment and operation of Centers of Excellence are limited only to the fabrication of Machinery and Equipment c Also covers cement manufacturing, which incentives shall be limited to those provided under E.O 226 d Industry Cluster and the establishment and operation of Centers of Excellence are not applicable. e Industry Cluster is not applicable