BOI: ITH for P2.5M/unit Low Cost Housing

BoI readies P2.5 M per unit compromise

For low-cost mass housing incentives

MANILA, Philippines – Following strong opposition from mass housing developers, the Board of Investments is willing to compromise for a P2.5 million price per unit ceiling for low-cost mass housing projects to be granted income tax holiday incentives.

This is an improvement from the BoI’s earlier proposal to reduce the cap to P2 million from the current ceiling of P3 million.

An official source said this BoI compromise is shaping up as three associations of mass housing developers have submitted their position papers asking to maintain current cap at P3 million per unit.

Trade and Industry Secretary Gregory L. Domingo has assured the housing sector that he will study their position, but the source said that the secretary is mostly to go for a compromise of P2.5 million.

The official said that P2.5 million price per unit is the most reasonable ceiling because the exemption from value added tax payments is pegged up to P2.5 million also.

“If we really want to help the buyers, this is the reasonable level,” the source added.

Also the BoI plan to limit the grant of ITH to low cost mass housing projects located in key cities may not be included in the 2011 Investment Priorities Plan following the strong clamor from the sector for the retention of incentives.

Under the 2010 IPP, the BoI grants three year ITH to low cost mass housing developers with projects located in the National Capital Region and four years for those outside the NCR. Housing is still listed in the planned 2011 IPP.

In opposing the BoI plan to lower the ceiling price per unit, low cost mass housing developers led by the Subdivision, Housing Developers Association Inc. (SHDA) and the Chamber of Real Estate and Builders’ Associations Inc. (CREBA) said the move is counter productive.

Bansan Choa, chairman of SHEDA, even cited Republic Act 7279, which has set the low cost mass housing price per unit at P2.5 million.

CREBA chairman and CEO Charlie A.V. Gorayeb said the BoI move is a disincentive and goes against the government’s very own battlecry for job creation.

“By reducing the ceiling, we are also reducing the workers and the number of Filipinos who would like to buy houses. There is a big market for P3 million per unit segment,” Gorayeb said.

BoI managing head Cristino L. Panlilio, however, countered that, “If there is a big market then all the more that you don’t need the incentives.”

“If you really want to serve the low and middle income in Metro Manila then the P1 million to P2 million price range per unit is the right figure and this is the range that is even available for financing. That figure is the workable and livable concession with other agencies,” Panlilio said.

In the past two years, the BoI had been flooded with applications for low cost mass housing projects. This sector would account for the most number of projects approved by the BoI with incentives.