Monday, 2 March 2009

Philippines to aid deserving distressed companies

Business Mirror

PROVIDED they will not cut their work force or work schedules, distressed companies in select industries only need to prove they are losing money this year and they may already qualify for sizable government support in the form of tax deductions.

Trade Undersecretary and Board of Investments (BOI) managing head Elmer Hernandez said this is part of the incentives scheme under the draft 2009 Investment Priorities Plan (IPP) that they will present today in simultaneous public hearings in Makati, Cebu and Davao.

Hernandez said the IPP will be different from the previous yearly listings of priority activities that are eligible for perks. This is because, aside from identifying the sectors that will be the focus of investment promotions this year, the 2009 edition will have a section that outlines the incentives package for companies to dissuade them from laying off workers or implementing reduced work schedules.

“This is an IPP that is different from the usual because we are in unusual times, so we need extraordinary measures and new instruments to sustain economic growth and maintain jobs,” Hernandez told the BusinessMirror.

The draft IPP, to be submitted to Malacañang in mid-March for President Arroyo’s approval, has four categories under the “contingency list,” which is meant to be the job-saving and -creation section.

The four classifications are companies that will maintain investment and retain jobs; those that will retain investment and increase jobs; those that will increase investment and retain jobs; and those that will increase investment and increase jobs.

For companies to qualify in these classifications, Hernandez said they must not be in the services sector, except those listed on the 2009 IPP regular listing, such as IT-BPO, tourism and logistics. Also disqualified are small-scale mining firms as defined under the Small-Scale Mining Act and People’s Mining Act, those activities prohibited under the Foreign Investment Act, and those that are violative of public morals.

Hernandez said the first classification is the most critical because it will cover existing firms that are losing and would most likely cut their labor force to save cost.

Here, Hernandez said a company will probably be made to show its corporate track record and financial report to determine if it is in the red because of poor market conditions and not due to mismanagement.


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