The Philippines is considering several measures in order to revive its shipbuilding and ship repair sector.
According to The Manila Times, the Philippines considers the shipbuilding as a strategic sector for the economic recovery and is taking new steps to encourage investment.
To do this, the government has included the shipbuilding sector among industries that should enjoy economic benefits under a newly enacted Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act.
This could lead to significant benefits for a foreign bidder for the assets of the defunct HHIC-Phil shipyard in Subic Bay, the largest shipbuilding facility in the country.
The Philippines 2020 Investment Priorities Plan (IPP), signed by President Rodrigo Duterte in November 2020, after identifying shipbuilding as one of the preferred investment activities for the country.
The new IPP now allows foreign-owned shipbuilding companies to cater to the domestic market. In addition, shipbuilding companies will be entitled to reduced corporate income tax (CIT) rate from 30% to 25% for both foreign and domestic shipyards, retroactively from July 2020.
The president will also be allowed by law to grant further incentives to highly desirable projects with a minimum investment capital of $1 billion or capable of generating 10,000 jobs.
Furthermore, shipyard owners will be exempted from import duties for capital equipment, raw materials, spare parts and accessories, including an exemption from paying Value Added Tax (VAT).
These incentives come as the Philippines is experiencing significant domestic demand for ships due to a decision by the Maritime Industry Authority (MARINA) to phase out wooden-hulled boats.