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Tourism investors to get perks soon; agencies face revamp

Vol. XXII, No. 141 [ BusinessWorld Online ]

Wednesday, February 18, 2009 | MANILA, PHILIPPINES

BY JHOANNA FRANCES S. VALDEZ, Reporter


A BILL granting tax perks to tourism and related businesses and revamping state tourism agencies is close to becoming law, a development which proponents say will attract investments and create more jobs.

Bohol Rep. Edgardo M. Chatto, head of the House of Representatives’ tourism committee, said the House and the Senate expect to ratify the reconciled version of House Bill No. 5229 and Senate Bill No. 2213 — the Tourism Act of 2008 — by next week, so that President Gloria Macapagal-Arroyo can sign it into law by March.

The bill was approved in a bicameral conference committee meeting last Thursday.

"This bill will help make the tourism campaign more aggressive. An example of this is the ‘History Town’ and the ‘Best of the Regions’ campaign in Intramuros, where investments, tourists, and jobs have [increased]," Mr. Chatto said in a telephone interview.

Tourism Secretary Joseph H. Durano said the bill will overhaul his department to make it more "market-driven" and "market-aggressive."

"With the assurance of stable investments coming in, the Tourism department can ensure effectivity in fulfilling its mandate of bringing in more tourists and investments to the country," he said in a telephone interview.

Under the bill, attached agencies under the Department of Tourism will be reorganized.

The Philippine Tourism Authority will be renamed the Tourism Infrastructure and Enterprise Zone Authority (TIEZA), a corporation that will designate, regulate and supervise tourism enterprise zones (TEZs) as well as develop and manage tourism projects in the country.

Duty Free Philippines will be reorganized to become Duty Free Philippines Corp., tasked to handle tax-free merchandising.

The Philippine Convention and Visitors Corp. will become Tourism Philippines, responsible for promotional activities.

The Philippine Retirement Authority, now under the Office of the President, will be transferred to the Tourism department, along with the Intramuros Administration, the National Parks and Development Committee, and the Nayong Pilipino.

The measure also provides for the creation of TEZs, where investors will get incentives like those in economic zones.

TEZ locators will pay a final tax of only 5% of gross income instead of the 30% corporate income tax, provided that income from local sales do not exceed 30% of income from all sources, Mr. Durano said.

"Private developers who apply for their properties to become TEZs will also be able to avail themselves of duty-free importation of capital goods and income tax holidays," he added.

The bill grants P500 million in state funding to the TIEZA. The agency will draw funds from tourism development fees, 50% of travel tax collections, project revenues, and subsidies and grants.

"This provides us with other sources of funds outside the annual [budget] for us to be able to do our work," Mr. Durano said.

Among those who have applied to become TEZs are the Marriott Hotel in Cebu City and the Shangri-la hotel in Boracay.

Meanwhile, six tourism-related small businesses in Eastern Visayas will receive funding support under the Grassroots Entrepreneurship for Eco-Tourism (GREET) program of the Department of Tourism this year.

The six beneficiaries requested funding support of P730,000, said Tourism regional director Karina Rosa Tiopes.

GREET, launched in the region in 2007, provides grants of P50,000 to P100,000 to groups or individuals with feasible business proposals for the country’s eco-tourism sites. Ms. Tiopes said the total budget for the project nationwide is P10 million. — with Sarwell Q. Meniano

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