Will a tax incentive boost inclusive tourism in the Philippines?

On the side­lines of the ASEAN Inclus­ive Busi­ness Sum­mit in Manila yes­ter­day, Ayala Corp Man­aging Dir­ect­or Paolo Bor­romeo told Busi­ness Mir­ror that his com­pany would look into inclus­ive tour­ism via its sub­si­di­ary Ayala Land, which has a wide port­fo­lio of tour­ism developments.

The incent­ive Ayala may be tar­get­ting is a five-year income tax hol­i­day. Under the Phil­ip­pines’ Invest­ment Pri­or­it­ies Plan (IPP) 2017 – 2019, inclus­ive busi­ness mod­els may qual­i­fy for “Pion­eer Status”, which includes that tax entitlement.

To qual­i­fy as an inclus­ive busi­ness in the IPP, at least 25% of a company’s total cost of goods/services sold should be sourced from micro and small enter­prises. And at least 25 dir­ect reg­u­lar jobs should be gen­er­ated; 30% or more of which should be for women.

Accord­ing to the Phil­ip­pines Board of Invest­ments (BOI), the IPP is a “cent­ral policy doc­u­ment that enu­mer­ates crit­ic­al activ­it­ies and sec­tors for invest­ment pro­mo­tion in the Philippines”.

The IPP 2017 – 2019 “aligns with the Administration’s 10-point agenda and endeav­ours to scale up small enter­prises and dis­perse eco­nom­ic oppor­tun­it­ies to under­served regions”.

Inclus­ive busi­ness was included in the pre­vi­ous IPP, 2014 – 2016, but only in prin­ciple. The strategy was not eli­gible for any incent­ives or rewards.

Trade and Industry Sec­ret­ary Ramon Lopez reck­ons the inclu­sion of inclus­ive busi­ness in the new IPP “augurs well with the government’s thrust to reduce poverty, gen­er­ate more jobs, and sus­tain inclus­ive growth”.

The half-day ASEAN Inclus­ive Busi­ness Sum­mit, “Pion­eer­ing Change in the Way We Do Busi­ness”, took place Septem­ber 6 along­side the ASEAN Eco­nom­ic Min­is­ters meetings.

Accord­ing to the BOI, the Summit’s object­ive was to build the case for inclus­ive busi­ness in ASEAN through “exem­plary mod­els, instru­ment­al gov­ern­ment inter­ven­tions, and region­al sup­port initiatives”.

The dis­cus­sions by ASEAN min­is­ters, seni­or offi­cials, “busi­ness cham­pi­ons”, and “IB ena­blers” would serve as “inputs on the way for­ward for IB in the ASEAN”.

Accord­ing to the Asi­an Devel­op­ment Bank (ADB), “inclus­ive busi­ness dif­fers from social enter­prises and cor­por­ate social respons­ib­il­ity activ­it­ies in its high­er real­ised profit mak­ing motive”. 

“Inclus­ive busi­nesses are often made up of lar­ger com­pan­ies with min­im­um annu­al turnovers of $5 mil­lion. In terms of social impact, the scale and depth of their sys­tem­at­ic con­tri­bu­tion to poverty reduc­tion are broader.”

When referred to by The “Good Tour­ism” Blog, “inclus­ive tour­ism” means the same as OECD’s defin­i­tion of “inclus­ive growth” as it per­tains to tour­ism sec­tor growth and devel­op­ment. Else­where it often used inter­change­ably with “access­ible tour­ism”, which is con­fus­ing. See “GT” Gloss­ary.

Sources: Busi­ness Mir­ror; BOI; ADB.

Fea­tured image: Artist’s impres­sion of Ayala Land’s LiO, a mas­ter-planned resort com­munity in El Nido, Palawan.