City officials discussed the proposal to amend the Baguio City Investments and Incentives Code (BCIIC) during the Baguio City Council’s regular session on July 22, 2024.
The proposed ordinance amending certain provisions of the BCIIC is currently pending before the city council’s Committee on Appropriations and Finance Cluster C.
Vice Mayor Faustino Olowan said the proposed amendments aim to improve the existing Investments and Incentives Code to attract more investors.
City Budget Officer Leticia Clemente said reducing high filing fees and offering clear incentives through the proposed amendatory ordinance will definitely attract investors as it will create a favorable environment for investment in the city.
The proposed amendatory ordinance specifies non-refundable fees that enterprises must pay based on the scale of their projects’ total cost. Enterprises embarking on projects valued between P3 million and P5 million are required to pay P5,000.00. Those with project costs exceeding P5 million up to P10 million must pay P10,000.00. Projects costing more than P10 million up to P40 million are charged to P15,000.00, while those exceeding P40 million up to P100 million face a fee of P25,000.00. Enterprises undertaking projects surpassing P100 million up to P1 billion are subject to a fee of P50,000.00. Enterprises engaged in projects over P1 billion are required to pay a filing fee of P100,000.00.
These fees are structured to correspond with the financial scale of projects, ensuring equitable contributions from enterprises based on the size and scope of their investments.
Aside from fiscal incentives granted by the existing ordinance to registered enterprises such as gradual exemptions from various local taxes and fees over a period of five years, the proposed amendatory ordinance will extend similar incentives to specific projects situated within designated growth centers identified in the Comprehensive Land Use Plan (CLUP).
Projects like multi-level parking structures, transport terminals, smart city infrastructure, and healthcare facilities may qualify for graduated tax exemptions over five years, aligning incentives with strategic urban development goals.
The proposed amendatory ordinance will also introduce incentives aimed at landowners within growth centers who sell their property to the city government. These landowners will receive a 50% discount on local transfer taxes to encourage land transactions that support planned urban growth and infrastructure development.
Furthermore, additional benefits beyond tax exemptions will also be offered to registered enterprises under the proposed amendatory ordinance. These benefits include access to express lanes for faster processing of permits, priority access to the city government’s financial and technical assistance programs, and possible additional privileges authorized by the Board.
The proposed amendments to the Code also represent an overhaul in terms of enhancing transparency, flexibility, and strategic alignment with city development goals.
Under the proposed amendatory ordinance, stringent criteria will govern the inclusion of projects in the Investment Priorities Plan (IPP). This emphasizes economical, technical, and financial viability while promoting business dispersal from the Central Business District (CBD) to new growth centers.
These proposed amendments will allow for the addition of new Priority Investment Areas (PIAs) based on criteria such as employment generation, local industry linkages, and environment impact assessments to ensure sustainable economic growth. By identifying and promoting new PIAs, the city seeks to diversify its economic base, encourage new sustainable growth, and distribute economic activities beyond the traditional CBD, thus promoting balanced urban development.
Furthermore, provisions for the removal of existing PIAs will enable adjustment in response to changing economic conditions to safeguard public interests and environmental standards. The removal of these PIAs is intended to prevent over-commitment of resources, assess economic feasibility, and ensure that incentives are effectively utilized to support viable economic activities that benefit the city as a whole.
During the July 22 council session, Councilor Betty Lourdes Tabanda questioned the alignment of the proposed amendments with the Public-Private Partnership Code of the Philippines which became effective on April 26, 2024, given discrepancies in timing.
Clemente assured that the amendments had been revised to align with the new PPP law.
Tabanda further raised concerns about the alignment of priority investment areas (under Section 10 both of the existing ordinance and the proposed amendatory ordinance) with specific areas listed in the Comprehensive Land Use Plan.
Clemente explained that while they await the approval of the new CLUP, the projects are within the scope of the existing CLUP.
Currently, a City Investment and Incentives Board serves as the secretariat for the Public-Private Partnership (PPP) unit. It also conducts training sessions for Micro, Small, and Medium Enterprises (MSMEs), participates in city investment promotion programs, and collaborates with national government agencies to facilitate these initiatives.
Clemente enumerated the following 13 priority areas identified under the city’s Investment Priorities Plan: green manufacturing, creative industries, tourism-related establishments, pioneering strategic projects, mass housing, water and energy resources, research and development, ecologically sound solid and liquid waste management, mass transportation, sports facilities, PPP projects, and preservation and development of historical and heritage sites.
Clemente also mentioned the following projects categorized under the PPP scheme and those under consideration by the negotiating panel: Asin Hydro Project, Public Market Project, Central Bus Terminal, and Waste-to-Energy Project.
She said there are challenges in implementing these projects such as land constraints for expanding Philippine Economic Zone Authority (PEZA) locations which impact the city’s ability to accommodate certain economic zones. However, she said the city is currently collaborating with national agencies like the Board of Investments (BOI) and PEZA to leverage external support and promote project development.
Councilor Peter Fianza raised several points primarily on the classification of pending unsolicited proposals as priority investments under the proposed amendatory ordinance. He stressed the need for prospective application of laws and expressed concerns about potentially granting incentives to these pendings proposals prematurely.
Clemente clarified that unsolicited proposals are governed by negotiated terms rather than predefined incentives.
Fianza also highlighted the 50% reduction in transfer taxes for lots sold to the City indicated in the proposed amendatory ordinance. He questioned the rationale behind this provision and claimed that transfer taxes are typically borne by the transferee or donor in real estate transactions, making such an incentive unnecessary.
Furthermore, Fianza proposed including exemptions from zoning regulations as part of fiscal incentives to promote business development, particularly in residential areas (R1). He argued that businesses willing to invest in such areas should be encouraged without unnecessary zoning restrictions, pending the approval of the new CLUP.
Fianza also stressed the importance of not restricting business initiatives in residential zones. He said these business initiatives are beneficial for alleviating commercial congestion and supporting local entrepreneurship.
Currently, there is a separate proposed ordinance creating a separate Local Economic Development and Investment Promotions (LEDIP) Office, distinct from the current setup where LEDIP functions are handled by existing personnel of the city government.
Councilor Leandro Yangot Jr., one of the authors of the said proposed ordinance, expressed concern that the effectiveness of the current LEDIP might be limited because its functions are currently handled by offices who have other duties within the city government. This dual role could potentially impact their ability to focus solely on economic development and investment promotions, he said.
Clemente clarified that the LEDIP already exists as an office attached to their department. Recently, they appointed Atty. Julienne Lobchoy as the new LEDIP officer. However, despite having dedicated personnel, the office is not fully staffed yet. They currently have three permanent positions and two casuals. Clemente said they plan to gradually fill the positions as funds become available while ensuring compliance with the Personal Services (PS) limitations.
Councilor Vladimir Cayabas emphasized the LEDIP’s data-driven approach to presenting investment packages and the city’s competitiveness in business costs, especially with recent Real Property Tax adjustments.
Cayabas suggested aligning with Republic Act 11032 or the Ease of Doing Business and Efficient Government Service Delivery Act of 2018 to streamline governmental processes for better business facilitation.
The councilor also suggested Baguio-La Trinidad-Itogon-Sablan-Tuba-Tublay (BLISTT) collaboration to expand land resources and attract investments and diversification of investment activities to prevent sector overcrowding and provide diverse local employment opportunities. **Jordan G. Habbiling
