Ecozone investments drop 55% to P88 billion in 9 months

MANILA, Philippines — Investments registered with the Philippine Economic Zone Authority (PEZA) declined 55 percent in the nine months to September this year from a year ago on continued concerns over the government’s plan to rationalize fiscal incentives given to investors. 

PEZA data released yesterday showed investments registered with the agency reached P87.85 billion as of end-September, down from P196.46 billion in the same period last year.

“What went down are new investments in manufacturing but not IT (information technology), though the increase is not as big as last year,” PEZA director general Charito Plaza said yesterday.

A breakdown of investments for the manufacturing and IT sectors was not immediately available.

Plaza said existing locators were not expanding and new investments dropped due to uncertainties on the second package of the government’s tax reform program which seek to rationalize fiscal incentives.

The House of Representatives has approved the Tax Reform for Attracting Better and High Quality Opportunities (TRABAHO) bill on third and final reading.

Under the bill, which is the second package of the tax reform program, the government would bring down the corporate income tax gradually to 20 percent from 30 percent and rationalize current incentives enjoyed by investors.

“Interested industries (who want) to invest are worried and are having a wait and see attitude,” Plaza said.

Apart from the second package of the government’s tax reform program, Plaza said investors are holding off plans to invest due to the effects of the Tax Reform for Acceleration and Inclusion (TRAIN) Law which, among others, imposed higher excise taxes on fuel products.

“Inflation is worrisome to our industries and everybody agreed a big factor is excise tax on oil imposed in TRAIN 1,” she said.

She said PEZA is of the view government should not push through with the second package of the tax reform program.

“PEZA’s incentives attract investors and [would] retain confidence of the existing industries,” she said.

She said the government should not change rules and incentives which are working.

The PEZA was initially targeting a 10 percent growth for approved investments this year.

Plaza said it is difficult to achieve the target and provide a projection for the year given investors’ uncertainties.

Investments with the PEZA reached P237.57 billion last year, up 8.89 percent  from P218.18 billion in 2016.