The Board of Investments (BoI) has scrapped the one-day approval procedure for the registration of projects for the availment of income tax holiday (ITH) following the implementation of a policy wherein all applications for registration have to be consulted with the Department of Finance.

In effect, the policy has put back another layer of bureaucratic red tape that the BoI wanted abolished to facilitate the inflow of investments and reduce the cost of doing business in the country.

The scrapping of the simplified registration procedure was a result of the agreement of Finance Secretary Margarito B. Teves and Trade and Industry Secretary Peter B. Favila, who is also BoI chairman.

The agreement, which calls for the BoI to consult the DoF before granting incentives to applicant, was confirmed by Teves to Favila in a letter dated May 26, 2006.

"This is to confirm our agreement based on our telephone conversation last week that the Department of Finance will be consulted before final approvals by the BoI of registration for investment incentives under Executive Order No., as amended, will be issued," Teves said in the letter.Following the agreement, the project assessment group of the BoI issued a memorandum seeking guidance and direction on how to proceed with the implementation of Favila’s instruction to strictly comply with DoF’s consultation before final approval by the BoI of registration for investment incentives.

One of three issues the BoI’s project assessment group wanted clarified was on Favila’s own instruction. The project assessment group is a division of the BoI that initially evaluates whether an applicant can be granted incentives or not.

The project assessment group said that since Favila has instructed to consult DoF on all applications for BoI registration, this mean that applications are to be decided on a case to case basis and therefore, the shortened processing/approval procedure is no long applicable.

The project assessment group also noted there was no need to come up with the proposed policy/guidelines on ITH availment, which was proposed during a meeting with the DoF on May 30, 2006, since the letter of Teves to Favila dated May 26, 2006 rendered it moot and academic.

"If we implement the May 26 letter the comments of DoF on the proposed guidelines is no longer necessary," the memorandum said.

The group also sought direction on what to do if the concern of the DoF is on the magnitude of ITH given to a project.

Favila’s directive to consult the DoF on all applications for registration with the BoI for incentives availment was a result of criticisms that BoI has gone overboard in the granting of incentives even to non-deserving projects.

Initially, however, the DoF has agreed to give full incentives to projects of micro and small enterprises, export-oriented, and agribusiness projects.

It could be recalled that the Simplified Registration Procedure has trimmed down the project evaluation procedure to one day and speed up registration time under its Simplified Registration Procedure to facilitate investments inflow and cut down the cost of doing business in the country.

Under the Simplified Registration Procedure, project applications involving straight forward investment activities that conform with the Board’s existing policies, rules and guidelines would be approved in a day although the certificate of registration would be released within three working days while discretionary projects or those that need BoI board action would be acted within ten working days.

This simplified procedure was a marked improvement from the

previous lengthy procedure wherein the evaluation and approval of applications took 20 working days while the issuance of Certificate of Registration eat up an

additional 30 to 90 days depending on how soon the pre-registration legal documents are submitted by applicant firms.

The BoI has been undertaking procedures to eliminate bureaucratic redtapes.

In 2002, the Board already slashed project evaluation time by 50 percent, to 10 working days.

The supposedly simplified registration procedure allows flexibility for a fast, efficient and businessfriendly solutions sought by local and foreign investors, particularly the small and medium enterprises in the country.

Indeed, the simplified procedure has facilitated the approval of projects last year especially those in their regional offices, which were also empowered to approve the socalled ministerial projects.(BCM)