Maintain incentives for locators — PEZA

MANILA, Philippines - The Philippine Economic Zone Authority (PEZA) is calling on the government and lawmakers to maintain the current set of incentives, saying that any change at this point would be a big blow to the administration’s push to attract more foreign investments, its top official said.

PEZA director general Charito Plaza said she intends to petition the Senate for a status quo on the incentives the agency currently provides its locators.

“What we want is a status quo because of the very aggressive invitation of President Duterte to investors all over the world. More investments will mean more jobs that we can give to Filipinos. We will appeal. We will not oppose, but we will appeal for their consideration,” Plaza said.

“We want to support of course the program of Secretary (Carlos) Dominguez and President Duterte but we also would like to appeal that they have to balance. We have been marketing, looking for investors abroad and yet, we don’t continue giving incentives which are the reasons why they came here. We should maintain these incentives,” she said.

For Plaza, any move to alter incentives which PEZA currently hands out to its locators is like changing the rules in the middle of the game.

She said the government should instead put more focus on efficient tax collection.

“We are aware there are many tax evaders so efficient tax collection should be the number one priority and then whatever incentives we give especially to foreign investments should be retained because these are exactly the attractions why they are here. So why should we change the rules when there is nothing wrong in the game?” Plaza said.

Plaza said the removal of the zero value added tax (VAT) exemption currently enjoyed by local suppliers of export-oriented firms or indirect exporters, for one, has been approved last month under House Bill 5636.

Replacing this is a 12 percent VAT on gross sales, which according to the Department of Finance, would be refunded within 90 days.

Plaza, however, warned the imposition of the 12 percent VAT would result in P24 billion worth of annual sales for local suppliers of export oriented firms.

“If we will remove that VAT exemption, impose that 12 percent VAT, our locator industries might just as well import everything because importation is cheaper, instead of buying from local suppliers. This will be a big loss to our local suppliers. They have P24 billion in annual purchases from local suppliers. So P24 billion will be lost if we remove that provision of VAT exemption,” she said.

“What is the assurance that they can be refunded immediately in 90 days? So if they cannot wait, then they better use the incentives of tax and duty free importation,” she added.

PEZA provides incentives to companies that are producing export-oriented products. It currently administers 366 economic zones across the country, 74 of which are manufacturing zones, 250 are IT parks, 21 are agro-industrial zones, 19 are tourism zones and two are medical tourism parks.

“With my program to spread out the development, investments and jobs nationwide, please give us a chance that we will realize this by putting up more economic zones and bringing in more investors to the countryside,” Plaza said.