DTI defends BOI grant of tax perks to Thai hog, poultry firm

By Max V. de Leon, BusinessMirror

Posted at Dec 05 2012 08:19 AM | Updated as of Dec 05 2012 04:19 PM

MANILA, Philippines - The government will formally hear the complaints of local hog and poultry raisers on the decision of the Board of Investments (BOI) to grant fiscal incentives to a multibillion-peso integrated farm project of Thai firm Charoen Pokphand Foods Philippines Corp. (CPFPC).

Trade Undersecretary Adrian S. Cristobal said he is calling a meeting with stakeholders from the poultry, hog and feeds industry on December 5 after the National Federation of Hog Farmers and Bounty Fresh raised the issue of the registration of CPFPC.

“We welcome the ongoing discussions among stakeholders of the poultry, hog and feeds industry. The outcomes of these discussions will help us review and study closely the opportunities and gaps in the industry,” Cristobal said.

He, however, defended the BOI’s grant of tax incentives to CPFPC, saying it is consistent with national policy and rules.

“The registration of CPFPC is consistent with the Investments Priorities Plan [IPP], the country’s blueprint for investment promotions, where agriculture or agribusiness is included as one of the preferred investment activities,” he said.

The BOI approved the grant of incentives to CPFPC’s integrated broiler production project as it qualified for pioneer status, allowing the company to receive various perks, including six years of income-tax holiday.

The 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.

The farms are expected to produce up to 21,847 metric tons annually and will begin operations in February 2013. CPFPC is a unit of Thailand’s Charoen Pokphand Foods Public Co. Ltd.

Through incentives, the BOI encourages existing as well as new investors to invest in expansion or modernization projects to be funded by capital coming from internal and/or external sources.

Both the swine and aqua feeds project of CPFPC were governed by the BOI’s 2011 IPP, and granted pioneer status but with non-pioneer incentives. On the other hand, the Broiler Project is governed by the 2012 IPP and granted pioneer status and pioneer incentives.

“The BOI continues to approve, register and grant incentives to qualified agri-projects. These projects include among others, feed, hog and poultry projects, which range from micro- to large-sized projects. From 2004 to September 2012, the OI has registered 45 feed, hog and poultry projects. Of these, three are owned by CPFPC, while the rest are Filipino-owned enterprises,” the BOI said.

Local producers earlier expressed fear that the tax incentives given to CPFPC would give the Thai firm the luxury of pricing its products lower than its competitors, thus, creating an unhealthy competition.