TOKYO–The Japan Tobacco Inc. (JT) Group has expressed its vigorous support for the “tax collection effectiveness program” of the Department of Finance (DOF) and its efforts to broaden the Philippines’ revenue base in line with the Duterte administration’s agenda for inclusive growth.

In a Letter of Intent (LOI), the JT Group also said it will “continue to support the economic growth of the [Philippines] with contributions to infrastructure and human resource development,” and help create more jobs in the country while fully complying with government regulations and promoting “the welfare of the Filipino people through responsible corporate governance programs.”

Represented by its president and CEO Mitsuomi Koizumi, the JT Group said its P46.8-billion investment (equivalent to nearly $1 billion) underlines its intent to consolidate and expand its presence in one of Asia’s robust economies and enhance its business base in the ASEAN (Association of Southeast Asian Nations), with the Philippines serving as its regional hub.

The LOI was presented to the DOF in signing ceremonies held at Imperial Hotel here to signify the JT Group’s commitment to continue expanding “its affiliates’ presence in the cigarette market in the Philippines” following its acquisition of the tobacco-related assets of Mighty Corporation.

It was signed by Koizumi and Finance Secretary Carlos Dominguez III on behalf of the Philippine government.

“JT Group enthusiastically supports DOF in its tax collection effectiveness program, and enthusiastically supports the realization of DOF goals to enhance the Philippines’ revenue base to bring about inclusive growth,” the LOI read.

The LOI also spelled out the Philippine government’s ongoing efforts to boost its revenue collections “through timely collection of taxes, removal of the incidence of tax evasion and appl[ication of] commensurate penalties against delinquent taxpayers,” with the goal of “improve[ing] health care facilities and enable[ing] the Department of Health (DOH) to procure additional medicines and provide services that will prevent or lower medical risks” and “meet[ing] the unexpected costs of calamities and natural disasters.”

The JT Group’s buyout last month of Mighty Corp., which led to a tax collection windfall of for the Philippine government of over P30 billion, included Mighty’s distribution network, manufacturing equipment, qualifying inventories, and intellectual property rights.

“The reason for the investment is two-fold: The transaction enables the JT Group to consolidate its business foundation through expanded distribution and strengthened brand portfolio by providing JT Group with more than a quarter of market share in a country with robust economic growth and the transaction allows the JT Group to enhance its business base in the ASEAN region with the Philippines serving as its regional hub,” the LOI said.

The JT Group, Japan’s largest cigarette manufacturer, entered the Philippine market in the year 2000 with an initial investment of P10 billion, which increased to P20 billion in 2015 with its construction of a manufacturing plant equipped with state-of-the-art machinery at the Lima Technology Center in Batangas.

Bulacan-based Mighty Corp. opted to sell its vast manufacturing and distribution assets to the JT Group in order to settle its tax liabilities to the government for P25 billion.

Inclusive of the value-added tax and other payments, the settlement amounted to over P30 billion in additional revenues for the government, which Dominguez described as the largest sum of taxes ever collected from a single corporate entity in the country’s history.

Earlier, Dominguez said Japan Tobacco’s move to expand its presence in the Philippines with its multibillion-peso acquisition of Mighty Corp. is testament to the strong vote of confidence of foreign investors in the management of the economy on the Duterte watch.

Besides the JT Group’s investment, Dominguez also pointed to the separate $1.3 billion deal between the Philippines’ Energy Development Corporation (EDC) and a consortium of foreign investors backed by Macquarie Infrastructure and Real Assets (MIRA) and Arran Investment Pte. Ltd., which is an affiliate of Singaporean sovereign wealth fund GIC.

Dominguez said investor confidence has been boosted by such initiatives as the higher public spending on infrastructure and other priority programs, tax reform, and trimming of the Foreign Negative Investment List (FNIL).

A report by the Department of Budget (DBM) and Management also pointed to robust government spending for the month of August, which stood at P201.6 billion, representing growth of 13.9 percent year-on-year and outperforming the 9.5 percent increase recorded for the same month in 2016.

“This pushes the annual growth of disbursements as of end-August this year to 9.8 percent, up from the 9.3 percent growth for the first seven months of the year, to reach P1, 777.6 billion,” the DBM said in a statement.