Investing in the Tourism Industry of  the Philippines


Investing in the Tourism Industry of  the Philippines
By Secretary Gemma Cruz Araneta
Department of Tourism
( Meeting with the U.S. and Investment Mission to the Philippines, 11 November 1999, Shangri-la Hotel , Makati City)


Ladies and gentlemen, good afternoon.

Let me begin by extending to all the mission members a very warm welcome: Mabuhay!  I hope your stay has been enjoyable so far,I am sure it will continue to get even better in the days to come. We Filipinos are a very hospitable people. Allow me to congratulate the Foreign Commercial Service of the Embassy of the United States of America and the CAN SHINNERER  for organizing this event in pursuit of our common goal of increasing trade, tourism and investments between our two countries.

This gathering is very timely, indeed, because the Philippine Department of Tourism is in the midst of an intensive campaign to lure  investors to our anchor destinations and entrepreneurs and property  developers to be our active long-term and  partners in tourism development. That is my principal task this afternoon,  to tell you about certain investment opportunities available  in the “Rediscovery” Tourism Program of the Estrada administration.

We are all aware that  tourism has become the  world’s biggest industry.   In the 21th century, tourism  will definitely be the powerful engine of  growth of service  economieslike the Philippines. Highly- developed countries in Europe, Asia  and the Americas,  as well as  developing ones in Africa, the Pacific and other regions will rely on tourism receipts.  In the Philippines, we are aware of the potentials of an expanding tourism industry and its  positive impact on  the socio-economic and cultural development  of the country. That is why we are looking for reliable partners.

Under the aegis of the Estrada administration,  the Department of Tourism has three goals:( 1) To make tourism a major vehicle for economic progress,( 2)  To use tourism as an effective tool to restore confidence in the Philippines, and ( 3) To make tourism the top dollar-earner, so it  will have an impact on poverty alleviation and social equity.

At this point, allow me to tell you a little about the performance of our tourism industry in recent years.

In general, our tourism industry performed quite  well over the last five years, despite the  usual odds. Between 1994 and 1998, visitor arrivals grew  steadily at an average rate of 8.35 per cent per annum.  However, in 1998, due to the economic turmoil that affected the Asian region, our tourist traffic decreased by 3 per cent compared to  that of 1997; we had only  2.15  million visitors. In the first eight months of this year, 1999, 1.4 million tourists have already come and gone, representing a modest  increase of 2.02 percent over the same period last year.

Those numbers may seem insignificant in comparison to our Asian neighbors, that is why I believe that there should be  other indicators, like  tourism receipts. Tourism is not just counting the number of  warm bodies; the real bottom line are the tourism receipts. During the first eight months of 1999, the grand total of visitor receipts amounted to US $1.74 billion dollars which is 14.44 per cent higher than the 1998 total of the same period.I am sure that by the end of the year, we will have earned more than US$ 2 billion.

Do we have a master plan? Yes, there is a Tourism Master Plan.  In 1991, the Department of Tourism crafted a  20-year master plan with the assistance of the United Nations Development Programme (UNDP); it was a blueprint for sustainable tourism. However, due to the rapid succession  of tourism secretaries—there have been 10 since 1973, 5 before my time—all master plans, no matter how excellent, have been shoved aside and  left to gather dust.  Filipinos in government service are afraid of continuity. Well, I am not. So, I looked for that 1991 plan. It is  a comprehensive sustainable  which  includes blue prints  for tourism development in  each of our 13 regions,  as well as forthe 3 autonomous regions. “Rediscovery”, the tourism program of the Estrada administration stems from that DOT-UNDP Tourism Master Plan.

By the way, the United States of America is our primary tourism market, you have been our mainstream client for the past ten years. I think it is about time for the Department to  lure you to be our main investors in tourism projects,  such as tourism estates, hotels, transport systems, rehabilitation of existing facilities and the restoration of historical and cultural sites and properties.

To tempt you to invest in any or in all of the above, let me tell you about the wide range of fiscal  and other types of incentives :

  • Special Investor’s Resident VisaWith a minimum investment of US$ 50,000.00 in a tourism project open to foreigners, a foreign investor may be issued a foreign investor’s resident visa (SIRV). The investor, his/her spouse and minor children will be permitted to enter and reside in the Philippines as special investor residents for as long as the investment exists.
  • Guaranteed Remittance of EarningsThe investor will have the right to remit earnings from the investment in the currency in which the investment was originally made, and at the exchange rate prevailing at the time of remittance, provided that the investment is registered with the Central Bank of the Philippines and the Board of Investments.
  • Guaranteed Repatriation of CapitalThe investor shall have the right to repatriate the proceeds of the liquidation of the investment in the currency in which the investment was originally made and at the exchange rate prevailing at the time of repatriation.
  • Right of SuccessionIn case of death, the surviving immediate family shall be entitled to the same privileges.
  • Income Tax HolidayFirms registered with the Board of Investments may be exempted from payment of income tax levied by the national government from four to six years.
  • Employment of Foreign NationalsRegistered tourism enterprises may employ foreign nationals in supervisory, technical and advisory positions.
  • Simplified Customs ProcedureThe Bureau of Customs will simplify customs procedures for the importation of equipment, spare parts, raw materials and supplies.
  • Liberalized Foreign InvestmentForeign nationals my own up to 100 per cent of the investments, provided these are not limited to Filipinos only, in accordance to existing laws and the Constitution.
  • Incentives for Ecozone Developers and LocatorsThese include above-mentioned incentives plus tax and duty exemption for importation of equipment; tax credit for domestic capital equipment and exemption from national and local taxes.
  • Financing, Construction, Operation and Maintenance of Infrastructure Projects by the Private SectorThe private sector is encouraged to finance infrastructure projects of the government under the Build-Operate-Transfer and other variant schemes.
  • Incentives for Necessary and Major Infrastructure and Public UtilitiesTourism enterprises investing in areas  the     Board of Investments finds deficient in infrastructure, public utilities, and other facilities may deduct from their taxable income an    amount equivalent to 100  per cent of  major infrastructure works they had previously  undertaken , with prior approval of said Board.

Allow me to recommend  areas of investment in Region 7.

  • This is the Central Visayan region made up of the provinces of Bohol, Cebu, Negros Oriental and Siquijor which are all multi-faceted tourist destinations. You can enjoy nature by way of pristine beaches  and dive sites, as well as built heritage and history. Accessibility is not a problem because of the Mactan Cebu International Airport, our second largest, and various seaports. There are 34 international flights and 76 domestic ones daily. There are Super Cat ferries from Cebu to other destinations in the Visayan and Mindanao island clusters. There are 63 trips a day to various destinations with 16,768 passengers’ seats available.
  • The Department of Tourism is promoting Bohol, you may have heard of the enigmatic Chocolate Hills and the Silent Forest. We are offering the Panglao Island Tourism Estate which requires an investment of approximately Php 300 million. The island is ideal for beach resorts ( there are already two, Bohol Beach Club and Panglao Nature Resort) , retirement homes, golf courses. The government will provide basic infrastructure including an airport.
  • Pamalican Island Dive Resort
    Also, in Bohol, this island is one of the best diving sites in Asia.  These investment opportunities  are  listed in President Estrada’s Flagship projects. The national  government will provide basic infrastructure like a solid waste management system, a 222-kilometercircumferential  road, irrigation for its agro-industrial sector and restoration of its colonial baroque churches , specially the oldest one in Loboc. A domestic airport is also on the drafting table.

In case you have already earmarked other destinations, let me know how  we can assist you with making use of these incentives. To recap, the tourism performance indicators continue to reflect sustained growth. Tourist arrivals, receipts and investments are expected to further increase as the national government  provides the policy framework ( like the liberalization of  air travel ) essential to making  the tourism sector a financially profitable and sustainable investment.  The Department of Tourism’s “Rediscovery “  program advocates domestic tourism as its bread-and-butter. While promoting local travel, we are inviting you to invest in our multifaceted destination.

Enjoy the rest of the day!