SIPP to focus on innovation-driven investments

Published May 29, 2021, 4:00 PM

by Bernie Cahiles-Magkilat

The Strategic Industries Priorities Plan (SIPP), the new list of priority economic activities entitled to new tax incentive packages under the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act, will focus on investments that are innovation-driven.

Trade and Industry Secretary Ramon M. Lopez said at the Annual General Membership Meeting of the Semiconductors and Electronics Industries of the Philippines Inc. (SEIPI) that the SIPP will be crafted in such a way to encourage strategic innovative investments.

Trade and Industry Secretary Ramon M. Lopez (Bloomberg file photo)

“In the SIPP, being crafted by our Board of Investments (BOI) under CREATE, we are rationalizing our incentive system to be more innovation-driven,” said Lopez in a speech before investors in the electronics and semiconductor sector.

Under the SIPP, he said, “We will focus on developing industries with existing and future comparative advantage, as well as integrating production system, deepening global value chain (GVC) participation, and embracing Industry 4.0 and digital transformation.”

The SIPP will also be a tool to push our industries to innovate and enter new emerging product markets. 

For example, through the Electric Vehicle Incentive Strategy (EVIS), the DTI is positioning the Philippines as a major production hub for strategic parts of electric vehicles such as automotive electronics, charging systems, batteries energy storage systems utilizing local nickel and cobalt minerals, among others.

The SIPP is expected to be completed at the latest, January 2022. It will replace the existing Investment Priorities Plan.

 Economic activities listed in the SIPP will not only enjoy lower corporate income tax (CIT), income tax holiday incentives, and special CIT, but also enhanced tax deductions for expenses on training, and research and development, among others.

As businesses adjust to the “New Normal”, Lopez cited the innovation of the electronics sector and exemplary performance of the electronics sector in the midst of a crisis, is the ability, resilience, and agility that need to cascade to other industries, especially as the country rides the wave of digital transformation. 

“This digital transformation will fundamentally change the way we live, work, and do business. It is now transforming how goods and services are produced through the application of advanced manufacturing techniques, such as artificial intelligence, robotics, data analytics, Internet of Things, and 3D Printing, to boost productivity. However, apart from transforming how goods and services are produced, it will also define, more importantly, what type of goods and services will be produced in an increasingly digital and connected world,” he said.

To take advantage of this transformation, Lopez urged companies to adopt Industry 4.0 technologies to boost productivity, and penetrate the high-value and high-growth global markets for Internet of Things. 

Electronic products have comprised 54 percent, on the average, of the country’s annual total exports in the past ten years. In 2020, the sector further increased its share in the export basket to 62 percent or $39.67 billion, becoming the third largest contributor to our manufacturing gva and accounting for 10.8 percent of the total manufacturing GVA. 

For the first quarter of 2021, the sector recorded a total of $10.7 billion of exports, or 8.8 percent higher compared to that of the same period last year.