Tourism Investment Promotion Manual The Manual aims to help the offices of the Department of Tourism (DOT) in the regions and overseas contribute to the overall investment promotion (IP) efforts of the Department. The Manual attempts to explain in detail the procedures and provide tips for the effective implementation of IP activities. Teamwork and unity of direction is key to success. Ultimately, this Manual hopes to facilitate common understanding of IP work, terminology, and procedures for better coordination and attainment of tactical targets. As efforts become concerted, the goals of attracting inward investments as well as stimulating domestic capital formation in tourism will be easily realized. TABLE OF CONTENTS Page Introduction 1 IPU Set-Up 2 Functions and Responsibilities 2 Investment Marketing Activities 3 Opportunities Generation 3 Investment Readiness Survey 6 Investment Communications 8 InvestTourism Webpage 8 Tourism Investment Updates bulletin 8 Investment Kit 9 Collaterals 9 Print Advertisements 10 Tourism Investment Missions 11 Inward Tourism Investment Missions 11 Outward Tourism Investment Promotion Missions 12 Investment Assistance and Priming Activities 13 Capability Building 14 Market Intelligence 14 Tourism Investment Fora and Clinics 15 Tourism Investment Presentations 16 TABLE OF CONTENTS Page Annexes Property Information Questionnaire A Joint Venture Form B Real Estate Broker Form C Tourism Investment Folder Outline D Investment Readiness Survey Questionnaire E Tourism Investment Updates Bulletin F “How to Invest in the Philippines” G “Investment Priorities Plan” H Executive Summary of the Tourism Master Plan I Implementing Guidelines for the Availment of Incentives under EO 226 J Application Form for the Endorsement of TourismOriented and Related Projects K Executive Order No. 63 L Application for Special Investor’s Resident Visa M Rules and Regulations to Govern the Accreditation of Hotels, Tourist Inns, Motels, Apartels, Resorts, Pension Houses and other Tourism Establishments N Rules and Regulations to Govern the Accreditation of Travel- and Tour-Related Services O Rules and Regulations to Govern the Accreditation of Tourism-Related Establishments P Primer on Tourism Investments in the Philippines Q Investment Opportunities in Philippine Tourism R Assistance to Inward Tourism Investment Missions S Sample of Business Matching Session Form T Conduct of Outward Tourism Investment Promotion Missions U TABLE OF CONTENTS Page Annexes Sample of Mission Brochure V Inquiry/Request for Assistance Form W Conduct of Tourism Investment Fora/Clinics X Standard Tourism Investment Presentation Y Introduction Tourism is one of the industries receiving tremendous pressure from the practice of globalization. With the ease of travel brought about by modern transportation, states opening up borders, businesses going global, societies becoming more affluent and vacations more affordable, prospects for tourism abound and countries whose prime industry is something else, are now taking cognizance of the importance of tourism as a viable economic activity. In order to survive or better, to compete, one has to be innovative and systems-ready. In order to stimulate investments, policies need to be reviewed, reformulated and enhanced to make investing in the Philippines more competitive with the Asian neighbors. The Department of Tourism is mandated to effect and oversee the proper development and promotion of tourism. It seeks to encourage concerned sectors to carry out various plans and activities with sustainable development as a guiding principle. In the realm of investment promotion, the Board of Investments, pursuant to Executive Order No. 226, acts as the central investment promotion unit (IPU) with various agencies’ IPUs working in harmony to facilitate real investments in the different sectors. The Coordinating Council for Private Sector Participation (CCPSP) , on the other hand, is aimed at coordinating and monitoring projects that are undertaken through private sector participation modes such as build-operate-and-transfer (BOT), joint venture, concession agreement and management contract, among others. The Philippine Economic Zone Authority (PEZA) is responsible for promoting investments in identified special economic zones or ecozones. This is provided for in Republic Act No. 7916. On the local level, the Department of Interior and Local Government (DILG) urges the local government units (LGUs) to work on the adoption of investment-friendly businessrelated policies and procedures. It also conducts capability building seminars aimed at informing the participants of the different funding schemes and tools that the LGUs can access to fund necessary development projects. Investment promotion in tourism is jointly undertaken by the Office of Tourism Coordination (OTC) and the Office of Tourism Standards (OTS) with the cooperation of the regional and overseas offices. In an effort to effect more robust investments in the industry, the OTC launched the InvestTourism program which primarily advocates involvement of the different stakeholders in the proper and sustainable development and management of tourism. The program seeks to be a collaborative exercise which involves institution building, technology, infrastructure and superstructures, improvement of systems and procedures, proper development and maintenance, law enforcement by industry, civil society and government in order to position one’s area as a tourist destination primed up for sustained investments. DOT-IPU Set-Up Background During the administration of then President Fidel V. Ramos, a directive was issued to all government agencies and other entities to create their investment promotion units (IPUs) with the Board of Investments as the central IPU. The Investment Promotion Unit of the DOT was created by virtue of Office Order No. 94-69 signed by then Secretary Vicente J. Carlos on March 14, 1994. It was later amended via Office Order 94-208 signed on August 05, 1994 essentially to expand the scope of work and include the Office of Tourism Standards (OTS). While such offices have been assigned to do IP work, investment promotion largely depends on the inputs of the regional and overseas offices as well as the other staff bureaus. The active participation and support of these offices will strengthen the overall IP work. It is envisioned that the regional and overseas offices would include investment promotion as priority activities and in the end spearhead them. Functions and Responsibilities The mandate of the IPU is to develop, coordinate and promote foreign and local investments in the priority areas identified in the DOT national, regional, provincial and area-specific plans and the priority activities identified in the Investments Priorities Plan (IPP) formulated by the BOI on an annual basis. Additionally, however, it also helps promote other areas requested by proponent local government units or individual entities. IPU functions are classified into two groups, to wit: Investment Marketing: Office of Tourism Coordination 1. Conduct of surveys to generate investment opportunities and assess investment readiness 2. Documentation, packaging of opportunities 3. Production of promotional and informational materials 4. Technical assistance to investment missions 5. Conduct of investment promotion missions together with concerned offices, internal and external 6. Assistance to inquiries and priming of investment interests 7. Conduct of capability building seminars 8. Conduct of market intelligence activities 9. Conduct of investment fora and clinics Investment Services: Office of Tourism Standards 1. 2. 3. 4. 5. 6. 7. Evaluation of project proposals Issuance of endorsement to concerned agencies Preparation of update reports on DOT-endorsed projects Preparation of update reports on development-projects, investments and capacities Together with OTC, preparation of inputs to the Investment Priorities Plan (IPP) Participate in investment missions and the conduct of fora and clinics Maintain close working relationships with BOI, PEZA, CCPSP and other investment promotion agencies (IPAs) Investment Marketing Activities This manual will center on the Investment Marketing activities of the IPU which may be considered as preparatory to the other activities of the OTS. However, the two groups are mutually dependent on each other for information and support. The manual seeks to encourage other critical links in the regions and overseas to help in the pre-investment drive. The following activities are part of the InvestTourism strategy: 1. 2. 3. 4. 5. 6. 7. 8. 9. Opportunities Generation Investment Readiness Survey Investment Communications Investment Missions Investment Assistance and Priming Capability Building Market Intelligence Investment Fora and Clinics Investment Presentations I. Opportunities Generation The IPU maintains a databank of investment opportunities which are sourced through the InvestTourism Drive, walk-in proponents and referrals from the regional offices and real estate brokers. The InvestTourism Drive has the following objectives: to promote awareness in tourism, the DOT and its programs and projects and investment promotion activities to encourage local government units to grant fiscal incentives to determine investment opportunities of government and1 private sector to inspect and document the opportunities to package said opportunities to prepare Area Investment Folders Preparatory activities of the InvestTourism Drive include: 1. Close coordination with the regional offices in identifying areas ready for investments and in securing support for the conduct of the meeting and in providing relevant information for the investment folders; 2. Coordination with other offices to do presentations relevant to their functions 3. Coordination with the local government units for assistance on the following: * identifying areas for investment * inviting participants to the meeting * providing logistical support in the conduct of the InvestTourism Drive * laying the groundwork for the creation of their Investment Promotion Center and the legislation of fiscal incentives The InvestTourism Drive has activities as follows: Activities Sub-Activities Output Investment Meeting with property owners, proponents, LGU executives, businessmen, etc. Presentation of DOT Knowledge imparted; investment promotion participants encouraged to activities, tourism economic join databank facility; LGUs indicators; incentives, laws influenced to extend and regulations; discussion incentives of provincial, regional and area-specific tourism master plans (TMPs) Survey of properties Inspection and Property and project profiles documentation of properties for sale or lease and project sites or existing projects for joint venture, sale or lease Product Intelligence Gathering and validation of data Area Investment Folder The proponents of properties for sale or lease or of projects for joint venture should fill up the Property Information Questionnaire or Joint Venture Form, respectively. For properties and projects referred by real estate brokers, these should be accompanied by an Authority to Negotiate executed by the proponents/property owners. The real estate broker is also required to accomplish the Real Estate Broker Form. (Forms relevant to these activities are shown as Annexes A, B and C.) The appropriate support documents have to be submitted for the properties/projects to be included in the databank. The offerings are packaged and compiled accordingly. Critical to marketing is knowledge or adequate information of the product being sold. The IPU has prepared investment folders for the priority areas identified in the TMPs. Preparation and updating of these materials need the cooperation of the local government units and the regional offices where these priority areas are located in order to generate relevant and timely data which may help influence investment planning and decision making. The folders include socioeconomic profiles, demographics, cost of doing business, tourist attractions, indicative lot prices, infrastructure, basic utilities and services available in the area, fiscal/nonfiscal national and local incentives, location maps and other tourism and related data. (Annex D serves as guide for ROs to help in the preparation of the investment folders.) II. Investment Readiness Survey The “investment-readiness” (IR) concept connotes preparedness, attractiveness and sustaining capability of an area for tourism investments. An area perceived to have a high IR level means that it satisfies most of the criteria as follows: Accessibility Adequacy of quality intermodal transportation infrastructure, facilities and services Distance from point of embarkation to disembarkation to must-see destinations Investment Opportunities Variety of resource endowments Ready list of investment opportunities Tourism master plan priorities Market Opportunities Existing foreign markets Potential foreign markets Strong domestic tourism market base Local Government Support Provision of local incentives Undertaking of local tourism planning High involvement in national and regional tourism planning Marketing support (local brochures, sales blitzes, networking) Funding Issues Private financial institutions Government funding for infrastructure projects Socio-economic profile of the area General Economy Tourism as an important sector in the economy Existing tourism manpower Potential tourism manpower Private Sector Organization Participation Organization Investment in tourism Participation in tourism activities of government Community Involvement Community-based tourism projects General reception for tourism Project Development Availability of construction materials in the area Adequate water facilities and services Adequate communications facilities and services Adequate energy facilities and services Adequate solid waste and sewerage systems Absence of legal impediments such as agrarian reform, ownership, etc. Environmental Concerns Projects in accordance with environmental laws and guidelines Non-government environmental protection groups Government’s concern for carrying capacity Peace and Order Response to requests for assistance Crime and insurgency situation Respect for law and order authorities Tourism Establishments, Support Services and Allied Industries Quality accommodation and food and beverage facilities Tour and transport operators Guiding services Tourist recreational/sports facilities Real estate developers Banks, medical clinics, gas stations The IR survey questionnaire (Annex E) is administered to the local government units and validated by the regional offices. The results of the survey will help determine the actions needed to improve the IR level. III. Investment Communications Investment communications are the channels with which promotion of investments in the Philippines are done. These include the following: InvestTourism webpage Tourism Investment Updates (TIU) bulletin Investment Kit Collaterals Print Advertisements A. InvestTourism webpage Surfers — potential investors, investment consultants, the travel and tourism industry and academe can access investment-related information and help cover most if not all of their information requirements. This would facilitate IPU responding to similar queries, thus, giving appropriate attention to the more serious investors. The InvestTourism webpage is a section of the DOT website at http://www.tourism.gov.ph. It is updated twice a month through the Electronic Data Processing Division of the DOT. Below are the contents of the opening page showing the different sub-sections: How to Invest Investment Laws and Incentives Investment Advantages Investment Areas Investment News * Tourism Master Plan Updates * Transportation Infrastructure Development & Services * DOT-Endorsed Projects * NSCB Statwatch Specific Opportunities * Joint Venture Projects * Land for Sale, Lease * Other Properties Tourism Consultants Real Estate Developers B. Tourism Investment Updates (TIU) Bulletin The bi-monthly publication features, among others, the latest hotel and resort projects, DOT investment promotion activities, DOTendorsed projects, investment opportunities and infrastructure and services. It has reached a regular subscribership of 350 since its maiden issue in October 1994. The distribution list includes potential investors, chambers of commerce and industry, travel and trade associations, cabinet secretaries, DOT offices and attached agencies, tourism councils, Philippine embassies and consulates, foreign diplomatic community, other business groups, consultants and the academe. The medium is also widely distributed during meetings, inward and outward investment promotion missions. (See Annex F for a sample of the bulletin.) C. Investment Kit The investment kit is distributed to the delegation of inbound and outbound missions and other select groups interested in tourism such as chambers of commerce and travel trade associations. Aside from the Primer, the Investment Brochure, issues of the TIU and investment folders (per need basis), other materials such as the “How to Invest in the Philippines” (Annex G), “Investment Priorities Plan” (Annex H), executive summary of the Tourism Master Plan (Annex I), Implementing Guidelines for the Availment of Incentives under EO 226 (Annex J), visitor and hotel statistics, list of opportunities, and copies of the joint venture matching form and property information questionnaire are included. For regional and overseas offices, it is essential to keep stock of the following as supplementary materials should the investor indicate serious interest: Application Form for the Endorsement of Tourism Oriented and Related Projects (Annex K) Executive Order No. 63 (Annex L) Application for Special Investor’s Resident Visa (Annex M) Rules and Regulations to Govern the Accreditation of Hotels, Tourist Inns, Motels, Apartels, Resorts, Pension Houses and other Tourism Accommodation Establishments (Annex N) Rules and Regulations to Govern the Accreditation of Travel- and Tour-Related Services (Annex O) Rules and Regulations to Govern the Accreditation of Tourism-Related Establishments (Annex P) D. Collaterals 1. Primer on Tourism Investment in the Philippines (Annex Q) – the material contains frequently-asked questions and corresponding answers about investments in the Philippines. The tourism-related investment laws and incentives are discussed in brief. Updating occurs together with the yearly revision of the Investment Priorities Plan (IPP) which lists the type of activities and areas extended incentives under Executive Order No. 226, otherwise known as the Omnibus Investment Code. 2. Investment Opportunities in Philippine Tourism (Annex R) – the investment brochure is the expanded version of the Primer. It also includes discussion of the priority areas for development, investment advantages and opportunities. 3. Investment Folders – as discussed earlier, these folders are generated to help facilitate investment decision making of the potential investor. 4. Investment CD-ROM – the CD-ROM project was done in the mid—90s and could still be regarded as a relevant material pertaining to the thrusts and summary of contents of the National Tourism Master Plan (TMP) and the various Regional Tourism Master Plans (RTMPs). E. Print Advertisements Ad placements are utilized to reach out to a larger potential market base overseas. A key feature of such ads is the reply coupon on the lower right hand portion which attempts to open up direct communication lines between potential investor and the DOT. In addition, the mailed-back coupons allow the DOT to gauge how effective the publication is in reaching out to targeted audience. This is done by developing a profile of the respondents, paying particular attention to nationality, nature of business and position, and comparing the profile of the desired investors. The choice of publications participated in by the DOT-IPU depends on several factors. First is the type of the publication which should be oriented towards business, finance and investments. Second is the readership profile which establishes the demographics of the targeted investor. This will include information on salary range, number of cars and equipment owned, number of travels a year, etc. — to indicate the spending capability of prospective investors both at the corporate and individual levels. The third factor is the cost of the advertisement. The ad may contain interviews of key personalities in government and industry or feature the tourist destinations. IV. Tourism Investment Missions A. Technical Assistance to Inward Tourism Investment Missions Inward tourism investment missions are those spearheaded by the DOT or other agencies to bring in potential foreign investors in the country and offering them investment opportunities in the tourism sector. Inward tourism investment missions are considered particularly effective because they offer the mission members the opportunity to: 1. Actively survey existing and potential investment areas; 2. Secure relevant data, and 3. Meet with potential local partners. Such missions can generally be broken down into three main components – pre-mission, mission proper and post-mission activities. Pre-mission activities basically involve organization work overseas and at headquarters. Overseas, our tourism attachés begin the groundwork for an investment mission by prospecting. By this we mean looking for potential investors in their respective geographic areas of operation. There are no definite rules in prospecting as varying conditions influence the approach adopted domestically or overseas. Among the various approaches that may be considered include tapping the list of top corporations, international hotel and resort chains, and asking for referrals of friends and business associates. Once a group is organized, the DOT overseas office should notify the IPU and provide details such as: Project title Objectives of the mission Composition and profile of the group Proposed itinerary and budget Assistance needed from head office Other relevant information Thereafter, the DOT-IPU starts organization work at the main office. It reviews the project brief, refines the itinerary with the concurrence of the proponent, and secures the approval from the Office of the Secretary with regard to the type of assistance to be extended by DOT. Another important pre-mission activity is identifying potential local partners based on the profile and requirements of the arriving group. This is tied up with the conduct of matching sessions which are invariably part of inward missions. To this end, a suitable venue may be booked for the one-on-one sessions. On the mission proper, a typical program will include the following: Airport reception and assistance Courtesy call on top DOT officials. Briefing on the tourism master plans and investment opportunities Briefing session with the BOI officials and other line agencies, as needed. Matching session between the foreign investors and potential local partners Site inspection of the property or project Debriefing session to assess the outcome of the mission Post-mission activities basically involve monitoring the progress of the negotiations between foreign and local partners concerned. In monitoring developments on the foreign partners side, the DOT-IPU must rely heavily on the concerned DOT Overseas Office to secure periodic updates. (Annex S refers to the procedures undertaken by the IPU in assisting inward investment missions while Annex T is the sample Business Matching Session Form) B. Conduct of Outward Tourism Investment Promotion Missions Overseas tourism investment promotion missions involve trips to countries regarded to have the financial capability to generate outbound investments. The DOT coordinates closely with the Department of Trade and Industry (DTI), Board of Investments (BOI), Center for International Trade Exhibits and Missions (CITEM) and the Philippine Chamber of Commerce and Industry (PCCI) for participation in their outbound missions. The delegation also includes private sector participants. Overseas missions are likewise particularly important as they allow Philippine mission members to personally sit down with potential foreign investors and discuss details of investment opportunities in the country. Missions which have yet to be organized by DOT are largely dependent on the overseas offices to generate critical numbers and interesting mix of potential investors in their area in order to enhance participation from the local private sector. While the overseas offices are working on the list of foreign participants, DOT Manila consequently invites potential local participants until confirmation from both sides are made. As in missions conducted by other agencies, expenses shall be shouldered by the participants themselves. The DOT overseas offices should give importance to the matching of foreign and local participants. The objective of these missions is to have at the end of the activity, successful talks and signing of pertinent documents between the foreign and local participants. The DOT main and overseas offices should be able to closely monitor the progress of these negotiations until full realization of projects. (Annex U contains a guide on how to hold such missions while Annex V refers to a sample of the mission brochure) V. Investment Assistance and Priming Activities A basic function of the IPU is addressing and priming inquiries/requests for assistance. Inquiries are normally done through mail (post and electronic), by phone or by personal appearance at the office. The Inquiry/Request for Assistance Form (Annex W) is used to provide specific information to enable the assisting officer to appropriately address the requirements. The form will be available at the InvestTourism webpage as an on-line service. Priming activities include: Follow-up correspondence on inquiries – a month or two after receipt of an inquiry, follow-up letters should be sent to monitor progress of interest. They are asked if additional materials are necessary to help facilitate investment plans or for clarificatory purposes. Working on leads sent by overseas offices – through referrals made by the overseas offices or other offices with foreign branches, the nature of the query may be transformed into an investment concern by feeding materials which would work to that effect. Networking with mainstream tourism project developers – targeted are the big property developers with experience in tourism projects. As foreign companies may be seeking mergers with local outfits for their planned projects, the big developers would be appropriate business partners with their track record, stable assets and market intelligence as strong antes. Environmental scanning of recent hotel developments worldwide and subsequent correspondence with these groups for possible expansion plans to the Philippines – through business and travel journals, news on current take-overs, expansion plans and new acquisitions serve as leads to tap these groups. Letters are sent these hotel chains to entice them to include the Philippines in their investment plans. Enclosures include the Investment Opportunities brochure, latest visitor statistics and issues of the Tourism Investment Updates bulletin which feature up- to-date hotel developments in the country. VI. Capability Building Tourism Investment Promotion seminars are available to the any employee of the DOT who wishes to contribute to the over-all investment promotion effort. The Foreign Service Institute (FSI) of the Department of Foreign Affairs (DFA) has traditionally invited the DOT-IPU to do a presentation on tourism investment promotion as part of their Pre-Departure Orientation Seminar (PDOS) for to-be-deployed foreign service officers (FSOs). A module on investment promotion is likewise included in the Tourism Capability Building Seminar for Local Government Units. Topics include the following: Investment Laws and Incentives Investment Promotion Activities Financing Tourism Projects Raising Investment-Readiness Levels Creation of an Investment Promotion Center The Need for Local Fiscal and Non-Fiscal Incentives Legal Issues and Aspects of Tourism Investments VII. Market Intelligence It is important to build databases and baseline data on areas of jurisdiction/operation of tourism offices focusing on but not limited to the following: 1. Market size – outbound travel, profiles, preferred areas of destination, type of tourism products 2. Growth potential (trends, projections) 3. Economic Factors – balance of payments, consumer income, purchasing power, employment levels, GNP, demography 4. Socio-political factors 5. Travel patterns (seasonality, etc.) and preferences 6. Host government policies 7. Cultural/religious factors 8. The Philippines’ present market share (visitor arrivals, investments) 9. Current hotel/resort developments in the area and acquisitions offshore 10. Hotel, resort chain operators 11. Tour wholesalers 12. Big companies including non-tourism related outfits 13. Embassies and their trade or business development officers 14. Trade and investment policies in the area 15. Air, sea linkages to RP 16. Competitors’ marketing methods and advantages VIII. Conduct of Investment Fora and Clinics Investment fora, seminars and symposia shall be conducted jointly by the DOT-IPU and the regional offices in selected key cities and destinations in the country. The general idea is to bring together potential local and foreign investors and partners to a forum wherein investment opportunities in the local tourism industry can be presented. The forum will be a combination of project presentations and lectures by acknowledged experts in the industry, and business matching sessions in between. Standard lectures should include the following: Trends in the Philippine Tourism Industry (including statistics on visitor arrivals, visitor receipts and other relevant information) The 20-year Philippine Tourism Master Plan/Regional TMPs/Area-Specific Plans as applicable Investment Opportunities in the Tourism Industry (including incentives on priority activities identified in the IPP) Investment promotions and marketing Financing investment projects Legal issues and aspects of tourism investments Prospects in specific segments of the tourism industry, (eg. theme parks, ecotourism, golf, dive tourism, etc.) Issues and Concerns The business matching sessions, on the other hand, are designed to allow the participants to interact with each other and arrive at a joint venture arrangement or consummated transaction. Targeted participants are the following: - Landowners Hotel and resort owners and operators Professional advisors (lawyers, brokers, accountants, etc.) Investors, financiers and developers Local government executives Other prime movers in the tourism sector (See Annex X as reference on the conduct of tourism investment fora/clinics) IX. Conduct of Tourism Investment Presentations Aside from the presentations made for investment missions, and other forms of fora, the office also receives requests from other groups such as tourism industry associations, tourism schools and other sectors. The standard lectures given before missions and fora are applicable with minor variations as to specific needs of the audience. (See Annex Y for a sample of the standard tourism investment presentation)