PEZA-approved investments up 8% in January-August

MANILA, Philippines — Investments approved by the Philippine Economic Zone Authority (PEZA) went up by eight percent in the first eight months from a year ago, driven by funds poured in for ecozone development, even as concerns remain on the proposed changes in the country’s incentives system. 

Data from the PEZA showed the agency approved P83.52 billion worth of investments for projects in economic zones as of end-August, higher than the P77.41 billion in pledges for the same period last year. 

Projects registered with the PEZA rose by nearly seven percent to 374 in the eight-month period from 351 in the previous year. 

These projects approved by the PEZA as of end-August are expected to employ 58,032 individuals, down 9.68 percent from 64,253 workers in the same period a year ago. 

PEZA director general Charito Plaza said in a telephone interview the increase in approved investment pledges was driven by projects for real estate activities or economic zone development. 

Investments for real estate activities covering ecozone development, construction and lease of information technology (IT) and factory buildings, in particular, grew by nearly 18 percent to P49.10 billion in the January to August period from P41.62 billion last year. 

 “It’s more in economic zone development because of PEZA’s aggressive invite to private and public land owners and administrators including the IP’s (indigenous peoples) ancestral domain lands and supported by President Duterte’s AO (Administrative Order) 18 to spread the countryside special economic zones,” Plaza said. 

AO 18 issued last June imposed a ban on development of economic zones in Metro Manila. 

Apart from real estate activities, investments in the transport and logistics sector also posted growth, surging by 266 percent to P402.96 million in the January to August period from the previous year’s P110.15 million. 

Other priority sectors like manufacturing and IT, meanwhile, registered a decline in investments. 

Investments for manufacturing dipped by four percent to P23.19 billion as of end-August from P24.14 billion a year ago, while investments for IT projects dropped by 20 percent to P9.15 billion in the eight-month period from last year’s P11.38 billion.

Plaza said existing locators in the country have been holding off plans to expand operations due to concerns on the proposed Corporate Income Tax and Incentives Reform Act (CITIRA), formerly Tax Reform for Attracting Better and High Quality Opportunities (TRABAHO) bill which intends to reduce the country’s corporate income tax (CIT) rate gradually to 20 percent from 30 percent, as well as rationalize incentives including removing the five percent on gross income earned (GIE) being paid by PEZA registered firms in lieu of all taxes after income tax holidays expire.

While the CITIRA was approved on third and final reading at the House of Representatives last Friday, she said the PEZA would continue to push for its position to exempt the agency and its registered locators from the coverage of the bill at the Senate. 

PEZA is of the view changes to the incentives regime would make the country less attractive to investments given lack of supply chain, infrastructure, as well as transportation facilities. 

Plaza said firms opt to locate in economic zones in the country due to incentives and ease of doing business in the PEZA.

“We are now lobbying in the Senate…We hope for good discussion and consideration of our concerns and industries,” she said. 

Palza is also hopeful President Duterte would consider PEZA and the locators’ stand.  

PEZA is encouraged by Duterte’s comments on his preference of shifting to using gross earnings or the amount of sales before any deductions, as base for income tax of businesses or corporations.

Duterte said earlier there would be no cheating in such system and it would be advantageous for government.