The study presents the developments on capital equipment incentives under EO 226, otherwise known as the “Omnibus Investments Code of 1987”, their implications, as well as the effectiveness of these incentives in influencing investment decisions. It notes that while capital equipment and other incentives have long been used to attract investments and support the growth of specific sectors, there is mixed evidence as to their effectiveness. It emphasizes the need to evaluate more carefully the plan to revive the capital equipment incentives under EO 226 to prevent unnecessary loss of revenue especially if investments were to take place anyway even without incentives. It also suggests that efforts should be exerted to institutionalize a reporting and monitoring system that can adequately capture/generate data on costs and benefits of incentives and other benchmarks that may be useful for the purpose. Moreover, should the country continue to pursue policies to attract investments where machinery and equipment are necessary requirements of business operations, it recommends that capital equipment incentives be given to select investments/sectors or specific equipment based on a short list drawn by the appropriate agency.
