News & Update

After reaching the doors of the Philippine Senate, and the strong pressure from the domestic hog and poultry raisers, the Board of Investment (BOI) is now considering reducing the tax incentives earlier approved and granted to Thai-owned Charoen Pokphand Foods Philippines Corporation (CPFPC) from six years to four years.

This was disclosed by outgoing DTI Undersecretary Cristino L. Panlilio, to reporters saying the BOI might reclassify the company from pioneer to non-pioneer in order to reduce the tax incentives. Per DTI and BOI standards, a pioneer project is entitled to an income tax holiday of up to 6 years while a non-pioneer is only granted 4 years of income tax holiday. DTI classified CPFPC as pioneer project because of the investment volume which amounts to more than $200 million. According to Panlilio, that kind of investment volume qualifies the Thai company as a pioneer project and be entitled to 6 years of income tax holiday. Panlilio added that such policy is “not carved in stone”.

According to Panlilio, CPFPC expressed amenable response to the proposed reclassification of their investment from pioneer to non-pioneer, and in the end, reducing the tax incentives. Citing that CPFPC understood the situation as they know it can also happen in Thailand where the Thai business people will also do everything they can to prevent foreign investment from coming in, let alone dominate the local market, Panlilio said that the huge investment of the Thai firm will be difficult to fill.

The DTI Undersecretary said that the entry of CPFPC into the country was intended to take advantage of Thai’s cheaper labor force and the good economies of scale given the huge domestic market for pork and chicken.

This turn of events spurred from last year’s protest of the National Federation of Hog Farmers and Bounty Fresh on the BOI decision to grant the Thai firm P2.3 billion swine and aqua feeds project the six-year income tax holiday. Local producers were against the grant of huge tax incentives to a foreign-owned company that wants to operate in an already crowded industry sector. Local producers claimed that local production is more than enough to serve domestic needs and if the Thai company was approved for exports and not the local market, there shouldn’t be any complaint from them.

The BOI stands firm in its decision explaining that it is consistent with national rules and policy under the Agriculture and Fisheries Modernization Act and the Investment Priorities Plan. The earlier approved P2.326 billion broiler project includes parent stock farms in Tarlac and Bulacan as well as a hatchery in Nueva Ecija, and broiler farms in Bulacan. Said farms are expected to yield a production of 21,847 metric tons every year and will have started operations last month (February). CPFPC is a unit of Thailand’s Charoen Pokphand Foods Public Co. Ltd.

Both CPFPC’s swine and aqua feeds project were governed by the BOI’s 2011 Investment Priorities Plan (IPP). The project is granted pioneer status but with non-pioneer incentives. On the other hand, the broiler project is granted pioneer status and pioneer status pursuant to the 2012 IPP.