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Mass Housing Developers Assured Income Tax Holidays Next 5 Years

October 14, 2011, 11:08pm [ manila bulletin online ]

MANILA, Philippines — Low cost mass housing projects will continue to be listed under the Investment Priorities Plan in the next five years to ensure continued incentives to developers, the Board of Investments said.

Trade and Industry undersecretary for investment promotions Cristino L. Panlilio announced this at the National Developers Convention organized by the Subdivision and Housing Developers Association Inc. (SHDA) and the Housing and Urban Development Coordinating Council (HUDCC).

“With certainty mass housing will continue to stay there (meaning IPP) for the next five year,” Panlilio said at the conference filled with housing developers.

He said that housing was even part of the central theme of the medium-term Philippine Development Plan (PDP) of the government with motto: “Gaganda ang Buhay Kung May Bahay at Hanapbuhay’.

Vertical and horizontal mass housing projects are entitled to four-year income tax holiday incentives and zero duty on imported capital equipment.

The BoI, however, has put in some conditions for developers to comply with the requirement that they invest 20 percent of their total project cost for socialized mass housing projects. The BoI has already relaxed the compliance of this requirement.

In a talk with reporters, Panlilio justified his pronouncement for the continued listing of the low cost mass housing project in the IPP for the next five years because of the huge housing backlog in the country.

The government has estimated 3.6 million housing units, but Panlilio said the backlog is actually around 6 million units by 2016. Even at 1 million units a year, he said, the government still cannot cope up with the huge backlog.

“This is so because although we have a strong demand, there is also the affordability issue. Filipinos still cannot afford the low cost mass housing units that are currently available,” he said.

To make low cost mass housing affordable, the granting of incentives would still be necessary in the coming years. The BoI, however, has received flak from the continued granting of ITH even to housing developers in the National Capital Region. The criticism points to insinuations that property developers do not really pass on the savings to their buyers. Developers are also seen to be profitable enough even without the ITH. There had been moves to remove the ITH for vertical mass housing projects in the NCR, but to no avail.

Vice-president Jejomar Binay, who is also chairman of the HUDCC, also backed the position of the housing developers for continued incentives because of its huge multiplier effect to the domestic economy.

The BoI, however, was successful in pushing for a P2 million per unit price ceiling as against the position of the housing czar vice-president Jejomar Binay to raise the ceiling to P2.5 million housing unit.

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