MANILA, MAY 4, 2007 (STAR) (AFP) The Philippine business community Friday welcomed a billion dollar investment by Texas Instruments as a positive move that may signal a rebirth in the country's benign manufacturing sector.

The US-chip maker on Thursday announced it will invest one billion dollars expanding its Philippine operations in what President Gloria Arroyo described as "one of the single biggest investments" in the country's economic history.

The plant, which will be located in the Clark Freeport Zone north of Manila, will effectively double its operations in the country that began 28 years ago in the northern mountain city of Baguio.

Texas Instruments will build a 77,000 square-meter (828,520-square-foot) assembly and test operations facility in a 32-hectare (79-acre) site at the former US Air Force Base.

Regarded as a world leader in digital signal processing and analog technologies, Texas Instruments is a Fortune 500 company with revenues that amounted to 14.3 billion dollars last year.

"Its a good sign," Robert Sears the executive director of the American Chamber of Commerce of the Philippines told AFP.

"It will send a great message to foreign investors and particularly American investors that the Philippines can be considered for large scale investment."

Michael Clancy, CEO of the Philippine Business Leaders Forum, said: "the move is positive for the Philippines and for the manufacturing sector which has been in the doldrums for years."

The deal came just days after Arroyo signed a new executive order granting major tax and economic concessions to promote the Clark Freeport Zone as an "economic haven in the Asia - Pacific region.'

Raffy Galvez, marketing manager for the Clark Development Corporation, told AFP that one of the incentives is a flat tax of five percent on gross income earned as opposed to the normal tax rate of 32 percent.

He said companies will also be able to import capital equipment and raw materials duty free.

"Companies will also be exempted from paying property tax for the duration of their contract," he said.

He would not comment specifically on the Texas Instruments deal but added that companies in the economic zone will also benefit from easy access to working visas for foreigners and a "one-stop" centre for processing import, consignment and export permits.

One of the biggest complaints from foreign businessmen doing business in the Philippines was the time taken tied up with bureaucratic red tape.

A power plant will also be built for the facility's exclusive use, though the main electrical grid will still be tapped.

"The Philippines can be productive and cost effective," Clancy said.

"Incentives to attract foreign investment is not a problem and long overdue. You have to give something away to get the money coming in."

"This will give a major boost to the economy especially to the semi-conductor industry," Lawrence de Leon an analyst with Accord Capital Equities Inc.

"And there is a good chance that we will see a major spillover into the economy as a result."

Although businessmen have complained about the country's neglected infrastructure and obsession with politics, de Leon says the investment shows that Texas Instruments "is looking beyond the regular problems in the Philippines."

"They believe that issues will be addressed. They're looking at the long-term picture," he said.

Last year the Philippines attracted 2.35 billion dollars in foreign investment, much less than its Southeast Asian neighbors.

However, a survey by Hong Kong-based Political and Economic Risk Consultancy recently found the Philippines to be one of the most corrupt countries in Asia to do business in.

According to the Philippine Trade Secretary, Peter Favila, the investment of Texas Instruments could be as much as 1.7 billion dollars over the next 10 years.

Kevin Ritchie, senior vice president for Texas Instruments, told a press conference on Thursday that the quality of the workforce, incentives offered by Philippine government and power supply were crucial in the decision.

Texas Instruments began operating in Baguio in 1979, becoming the first multinational corporation to locate in the Philippines under the Philippine Economic Zone Authority.

Investment in the company's existing facilities and equipment has totalled 711 million dollars and it employs 2,500 people.

Texas Instruments last year exported 3.5 billion dollars worth of products made and assembled in the Baguio facility, accounting for 35-40 percent of the company's revenues worldwide, Ritchie said.

Chief News Editor: Sol Jose Vanzi

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