Athena Nicole Cardenas
Shipbuilding: A Lucrative Opportunity in the Philippines
In a report by the Department of Trade and Industry, it has been observed that the Philippines was able to establish a distinct position in the shipbuilding Global Value Chain as it caters to the demand for smaller vessels within the domestic market as well as exporting large and commercial ships to international markets. Moreover, under the Domestic Shipping Development Act of 2004 or RA 9295, the shipbuilding sector is one of the industries given benefits in the form of incentives such as tax exemptions and income tax holidays.
With the economical crisis brought about by the Covid-19 pandemic, the current administration has considered the shipbuilding industry in the country as one of the strategic sectors for the economic recovery, providing it with incentives to further encourage investment. The Philippines 2020 Investment Priorities Plan (IPP), signed in November 2020, identified shipbuilding as one of the preferred investment activities for the Philippines.
In line with this, the government has included the shipbuilding sector among the industries which will enjoy economic benefits provided under the Corporate Recover and Tax Incentives for Enterprises Act or the CREATE Act. Under this act, shipyard owners are to be exempted from “import duties for capital equipment, raw materials, spare parts, and accessories, including an exemption from paying Value Added Tax (VAT).
With this being said, aside from having a distinct position in the Global Value Chain and enjoying benefits under the RA9295, the current provisions under the CREATE Act give many benefits for the shipbuilding industry to grow and prosper amidst the pandemic as it is being identified as one of the vital components that will aid the Philippine economy, allowing entities belonging to the sector to gain lucrative opportunities.
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