MANILA, Philippines — Investments approved by the Philippine Economic Zone Authority (PEZA) dropped 43.98 percent in 11 months this year compared to last year as all sectors, except information technology (IT), recorded declines.
Data obtained by The STAR from PEZA showed investments approved by the agency amounted to P122.98 billion as of end-November, lower than the P219.51 billion in the same period last year.
The number of projects also declined to 493 from the previous year’s 511.
Investments in the manufacturing sector slid 33.88 percent to P31.01 billion in the 11-month period from P46.90 billion a year ago.
Approved investments in ecozone development also fell 54.88 percent to P63.85 billion from January to November this year versus last year’s P141.51 billion.
Investment commitments for other sectors also decreased 43.16 percent to P9.36 billion as of end-November from P16.47 billion the previous year.
While investment pledges for all sectors declined, those for projects in the IT sector grew 28.23 percent to P18.75 billion this year from P14.62 billion a year ago.
However, the number of individuals employed in projects registered with PEZA climbed eight percent to 733,479 as of end-November from 678,799 in the same period last year.
Exports from PEZA’s economic zones as of end-October also rose 9.33 percent to $9.82 billion from the previous year’s $8.98 billion.
PEZA director general Charito Plaza said in a telephone interview that new investment pledges remained on the decline due to continued concerns on the government’s plan to rationalize fiscal incentives under the tax reform program.
“It is still because of uncertainties on what will be the final TRAIN (Tax Reform for Acceleration and Inclusion) 2,” she said.
TRAIN 2 or the Tax Reform for Attracting Better and Higher Quality Opportunities (TRABAHO) bill approved on third and final reading at the House of Representatives seeks to gradually reduce the corporate income tax rate to 20 percent from 30 percent at present, and rationalize fiscal incentives including removing the five percent tax on gross income earned (GIE) incentive enjoyed by PEZA locators.
The five percent on GIE paid in lieu of all taxes enjoyed after using the income tax holidays has been considered a crucial incentive for investors which opt to start operations and register with the PEZA.
Apart from uncertainties on what would be the final form of the TRABAHO bill, Plaza said firms also have a wait-and-see attitude on concerns there may be changes in other policies with elections of new members of Congress to be held next year.
While new investment pledges are on the decline, she said none of the PEZA-registered firms have left the country.
“We continue to motivate them to go ahead with expansion. We never discourage them but continuously motivate them,” she said.
With one more month left in the year, she said approved PEZA investments this year are expected to be lower than last year.