October 28, 2014

MEMORANDUM ORDER NO. 74

APPROVING THE 2014 INVESTMENT PRIORITIES PLAN

Pursuant to Article 29 of the

Further to the provision of said Article, upon effectivity of the IPP, all government agencies and entities are enjoined to issue the necessary regulations to ensure the implementation of this IPP in a synchronized and integrated manner. No government body shall adopt any policy or take any course of action contrary to, or inconsistent with, this plan.

The Chairman of the Board of Investments shall render an annual report to the President on the accomplishments and implementation of this Plan.

This Order shall take effect fifteen (15) days after its publication in a newspaper of general circulation as required under Article 31 of the

DONE in the City of Manila, this 28th day of October, in the year of Our Lord, Two Thousand and Fourteen. aSTAHD

ATTACHMENT

Message

The past four years have seen the Filipino people come closer to the fulfillment of our great potential. After decades of being regarded as the Sick Man of Asia, our country, by following the straight and righteous path, has transformed itself into one of the fastest growing economies in the world, expanding at an average rate of 6.3 percent annually from the period of 2010-2013. Achieving this dramatic turnaround, while overcoming a long list of challenges and enduring a series of disasters and calamities, lends credence to the resiliency and strength of our people.

This performance has prompted the three major credit ratings agencies, Fitch, Moody's, and Standard & Poor's, to grant the Philippines investment grade status, a category that proves our capacity to meet our financial obligations, and would allow us the wherewithal to further pursue our initiatives towards inclusive growth. This year, Standard & Poor's even gave us another ratings upgrade, from BBB- to BBB with a stable outlook, believing that, in their own words, "ongoing reforms to address shortcomings in structural, administrative, institutional, and governance areas will endure beyond the current administration."

In the latest round of international surveys, the World Bank's Doing Business Survey reports that the Philippines jumped 30 places to 108th out of 189 economies. The World Economic Forum has also improved its outlook on the Philippines: Since 2010, we have moved up 26 notches in the global competitive rankings, from 85th to 59th, which puts us squarely on the top third of economies around the globe. The country has also improved considerably in the Heritage Foundation's Index of Economic Freedom, jumping 20 places since 2010.

All these manifest the basic truth that now is the best time to invest in the Philippines. I invite everyone to join the many companies who are now enjoying the dividends of their confidence in the country. My administration is bent on making the Philippines even more attractive to investors, which is why we remain committed to fast-tracking reforms, initiatives, and legislation that will facilitate the entry of new capital, improve business procedures, and enhance investor confidence in the country.

Beyond a mere guide for prospective investors, this Investment Priorities Plan (IPP) is an expression of our vision to create a more dynamic and progressive Philippines. Centered on the theme "Industry Development for Inclusive Growth," this IPP aims to raise investments in infrastructure, agriculture, education, and health. It likewise aims to create jobs higher up the value chain, enhance the competitiveness of local industries, and expand our industries' capacity to generate opportunities. It also identifies supply gaps in our economy and the geographical needs of the country to serve as the basis in granting incentives or other forms of support, so we may bring about growth that is equitable, comprehensive, and inclusive.

This plan is crucial in sustaining the pace of our growth in the coming years, especially as we prepare our industries and our people for our country's impending integration into the ASEAN Economic Community by the year 2015. Through this IPP, we will usher in a policy of participatory development towards the attainment of our shared goals and the collective aspirations of the Filipino people.

The impressive results that we see today are the results of our push towards good governance. Imagine the heights that we can rise to if, together, we can give the Filipino people the means to maximize their abilities and demonstrate their limitless potential. Join us in reaping the fruits of our resurgence in the coming years, as we continue our journey on the straight and righteous path towards the fulfillment of our dreams and the realization of a truly just and prosperous society.

(SGD.) BENIGNO S. AQUINO III

MANILA

October 2014

The 2014 Investment Priorities Plan

Industry Development for Inclusive Growth

IV. Preferred Activities of Investments

Using the evaluation process discussed in the preceding section, the BOI reviewed all available national and sectoral development plans, industry roadmaps, sectoral studies and researches (see Appendix 4); and evaluated the comments and inputs from the various consultations, including a peer review with a core group of economists. Appendix 1 contains the sectoral analyses made by the BOI.

The following activities comprise the recommended list of preferred activities for investments under the 2014 Investment Priorities Plan:

I. Preferred List of Activities

1. Manufacturing

a. Motor vehicle (excluding motorcycles, e-bikes and golfcarts) and motor vehicle parts and components:

Body panel stamping

Engines, transmissions, and transaxle

Large injection moulded parts

Bumpers; instrument panel; door trims; center console; grill; wheel house finisher; lamps; shock absorber; wiper motor/blade; engine mounts; electric power steering; combination meter; instrument cluster; chassis & sub-frame; interior finishing; switches; seat mechanism; retractable seat belts; window regulator; constant velocity joints/transmission; aluminium radiators; plastic fuel tanks; fuel pumps; brake system and components; evaporators and condensers; relays; flame laminated automotive fabric; door & rear view mirrors; automotive glass; engine parts & assembly; and transmission parts & assembly

Controller assembly, motor, and battery (other than lead acid) for electric vehicle

b. Shipbuilding including parts and components

c. Aerospace parts and components

d. Chemicals

Oleo-chemicals

Petrochemicals and derivatives

Chlor-Alkali Plants

e. Virgin paper pulp

f. Copper wires and copper wire rods

g. Basic iron and steel products, steel grinding balls, long steel products (billets and reinforcing steel bars), and flat hot/cold-rolled products

h. Tool and Die

Simple, Compound and Progressive Dies for metal stamping or metal forging

Molds for die casting, for plastic injection or blow molding, glass blow molding, forging, encapsulation molds

Jigs and fixtures for metal cutting and metal forging

2. Agribusiness and Fishery

a. Commercial production

Coconut, corn, cassava, coffee, cocoa, fisheries, poultry and livestock;

High value crops rubber, spices, vegetables and fruits;

Emerging commodities sampaloc, jackfruit, peking duck, native pigs, siling labuyo, peanuts, monggo, and achuete.

b. Commercial processing

Extraction of higher value substances from agricultural and forest-based raw materials through bioprocessing;

Conversion of agricultural and fishery products, their by-products and wastes, to a form ready for further processing or final consumption.

c. Production of animal and aqua feeds excluding those for game animals, fowls and other species for pet/leisure purposes

d. Production of fertilizers and pesticide

e. Modernization of sugar mills

f. Mechanized agriculture support services, e.g., harvesting, plowing, and spraying/dusting

g. Agriculture support infrastructures, e.g., facilities for drying, cold chain storage, blast freezing, bulk handling and storage; packing houses, trading centers, ice plants in Less Developed Areas, AAA slaughterhouse, AAA dressing plant

3. Services

a. Integrated Circuit Design

b. Creative Industries/Knowledge-Based Services:

Animation

Software development

Game development

Health Information Management Systems

c. Ship repair

d. Charging stations for e-vehicles

e. Maintenance, Repair and Overhaul (MRO) of aircraft

f. Industrial waste treatment

4. Economic and Low-cost Housing (horizontal and vertical)

5. Hospitals

6. Energy

a. Exploration and development of energy sources (including energy crops or upstream biofuels)

b. Power generation plants

c. Ancillary services

7. Public Infrastructure and Logistics

a. Airports and seaports (includes RO-RO ports) for cargo and passenger

b. Air, land and water transport (Limited to brand new ships, aircrafts, seaplanes, RO-RO; buses, boats, mass rail limited to capital equipment incentive only)

c. LNG Storage and Regasification Facility

d. Bulk water treatment and supply

8. PPP Projects

II. Export Activities

1. Production and manufacture of export products

2. Services Exports

3. Activities in support of exporters

III. Special Laws

1. Industrial Tree Plantation (

2. Mining (

3. Publication or Printing of Books/Textbooks (

4. Refining, Storage, Marketing and Distribution of Petroleum Products (

5. Rehabilitation, Self-Development and Self Reliance of Persons with Disability (

6. Renewable Energy (

7. Tourism (

IV. ARMM List

The ARMM List covers priority activities that have been identified by the Regional Board of Investments of the ARMM (RBOI-ARMM) in accordance with

A. Export Activities

1. Export Trailer and Service Exporters

2. Support Activities for Exporters

B. Agriculture, Agribusiness/Aquaculture & Fishery

This covers the production of processed foods (production of "Halal" meat and foods), vegetable oils, food crops, integrated coconut processing and plantation, activated carbon, production of beverage crops and plantation, seaweeds production and processing, fruit processing, aquaculture (fish production and processing), young/sweet corn production, potato and sweet potato plantation/processing, cutflower production/processing, abaca plantation/processing, oil palm plantation/processing/refining and germinated oil palm seeds, feeds production, sugarcane plantation/processing and refineries, quality seed and seedlings of fruit trees and other planting materials propagated asexually or by tissue culture, pearl culture/processing, production of livestock and poultry that includes processing, crocodile farming and processing, sericulture, feeds production and production of plantation crops and other pharmaceuticals, medical herbs/essential oil plants, biomass, rubber, carrageenan, mangosteen and moringa.

C. Basic Industries

This covers the production of pharmaceuticals such as antibiotics and medical devices, textile and textile products, inorganic and organic fertilizers using solid wastes materials, exploration and development of natural gas and mineral resources which includes small scale as defined under

D. Consumer Manufactures

This covers processing of rubber products to be integrated with plantation and leather products.

E. Infrastructure and Services

This covers public utilities with developmental route of the five provinces and one city of ARMM and other adjacent cities and provinces such as common carriers, electric transmission/distribution, electric motor vehicle and its parts and components, water supply facilities/waterways and sewerage systems, buses/cargo trucks, other specialized mass transport systems, power generation like hydro power, geothermal and natural gas, and telecommunications with international gateways.

F. Industrial Service Facilities

This covers the following activities: common centers to include testing and quality control laboratories, training and demonstration centers, tool shops and similar facilities, metal casting, metal working, furniture, ceramics and food processing, petrochemical complex and industrial gases.

G. Engineering Industries

This covers engineering products, electronics and telecommunication products, fabrication of construction materials and hydro power plant.

H. Logistics

This covers shipping of cargoes (air, sea and land) and forwarders.

I. BIMP EAGA Trade and Investment Enterprises

This covers enterprises located or have their base of operation in the BIMP EAGA, namely, Brunei; Sabah and Sarawak in Malaysia; Malusu, Sulawesi, Kalimantan and Iringaya in Indonesia; and Mindanao and Palawan in the Philippines, who shall invest and engage in economic activity in the ARMM including SMEs.

J. Tourism

This covers the establishment of tourism estate subject to guidelines developed jointly by RBOI-ARMM and the Department of Tourism ARMM, tourist accommodation facilities, tourist transport facilities and development of retirement villages which shall include health and medical facilities including amenities required by the Philippine Retirement Authority (PRA) and subject to the guidelines to be approved by RBOI-ARMM in consultation with the PRA, the Department of Health (DOH), the Regional Planning and Development Office (RPDO) and other concerned agencies.

K. Health and Education Services and Facilities

The ARMM has the lowest indication in the country regarding health and education as reflected in the Human Development Index. For this purpose, there is a need for incentives to be given to investors in the health and educational sectors such as putting-up of private hospitals, medical clinics, wellness centers, primary education, secondary education, tertiary education (colleges, universities and vocational-technical schools) and ancillary services including any and all health and education-related investments.

L. Halal Industry

The MTPDP 2004-2010 provided that ARMM shall be the production and processing center for the Halal Industry. ARMM being the only Muslim region in the country, has a comparative advantage in the Halal Industry. Any Halal related business enterprises shall be covered. Halal refers to the permissible products and services under Islamic Law.

Note: The Full 2014 IPP document may be accessed at the Board of Investments website at www.boi.gov.ph or a copy thereof may be provided, upon request.

Footnotes

1. Based on Logistics Efficiency Index.

2. Subject to geographical supply considerations. In the case of poultry and livestock production, this is limited to areas in ARMM, Mindoro and Palawan.

3. Covers start-ups of small newly incorporated domestic players/enterprises only.

4. Covers only those with own Intellectual Property that are developed for commercial sale.

5. Based on a price ceiling of Php3.0 million and subject to geographical considerations.

6. Subject to geographical considerations.

7. Subject to capacity installation gap based on DOE's five-year supply-demand forecast or up to 2019, i.e., if forecast is 6000MW, then the first 6000MW capacity receives the incentives, and said installation gap will be divided among areas in Luzon, Visayas and Mindanao.

Note from the Publisher: Copied verbatim from the official copy.