Human Settlements Dev 6- PRIVATE SECTOR PARTICIPATION

Regional development projects require tremendous investments which are clearly beyond the capacity of public resources.  With appropriate incentives, the private sector shall be induced to invest in a number of industries and infrastructure projects including those that seemingly only government could undertake, such as road and bridge construction.

A complementary strategy to induce private investments, aside from incentives already available would be to incorporate the following elements:

1. Corporate income tax schedule oriented towards labor employment;
2. Tax rebates and holidays or other subsidies to industries that will base their operations in the desired areas; and
3. Equity loans to investors, on a 50-50 basis and at a maximum interest rate of six percent per annum for the purchase of stocks preferably of private corporations which are located in the regional center or river basin.

Production ceilings shall be set by the government and incentives shall be increased or reduced depending on whether production lags or exceeds the ceilings.  To safe guard production against severe reverses,  the government shall see to it that the private entrepreneur is able to sustain a profitable enterprise in any case.  This flexible tax-subsidy scheme is a potent tool in correcting under and over production.