By Bernie Cahiles-Magkilat
The Philippine Economic Zone Authority (PEZA) has blamed the Tax Reform for Acceleration and Inclusion (TRAIN ) 1 and 2 as the main reason that investments in the ecozones have registered substantial decline in the first two months of the year.
“The drop in PEZA approved investment projects is not caused by closure or pulling out of investors, but no new investments (because) they fear TRAIN 1 and 2,” said PEZA Director-General Charito B. Plaza.
According to Plaza, the government knew that foreign business chambers and foreign embassies have submitted their petitions to the Department of Foreign Affairs, Congress and Philippine embassies abroad of their opposition to the higher taxes under TRAIN 1 and the proposed removal of tax incentives in TRAIN 2.
“The 22 percent drop in investments is not about PEZA performance,” Plaza said stressing that PEZA has been fighting for the retention of incentives.
She explained that PEZA’s performance is not comparable to the Board of Investments, which small and medium domestic-oriented enterprises generate lesser jobs.
“PEZA projects are large industries and are export-oriented,” Plaza further explained.
BOI-PEZA approved investments in January-February 2018 amounted to P152.60 billion, which is 187.9% higher than the P53.01 billion approved investments during the same period last year.
Of the total amount, the BOI accounted for the bulk 86.2 percent or P131.60 billion of total while the export-oriented PEZA contributed 13.8 percent or P20.99 billion of total.
Data showed that PEZA investment approvals in the January-February period this year steeply declined by 21.7 percent to P20.99 billion as against P26.81 billion in the first two months.
Investments committed to BOI, however, rose a dramatic 402.4 billion to P131.61 billion from only P26.20 billion in the same period last year.
The approved investments from both agencies are expected to create 22,015 new jobs but this was 14.8 percent lower than the committed 25,849 jobs from the approved projects in the same period in 2017. The BOI approved projects showed a dramatic reduction of 39.9 percent jobs generation of only 8,052 in the same January-February period from 13, 404 in the same period last year.
The electricity, gas, steam & airconditioning supply sector was the biggest investment destination garnering P87.71 billion (or 57.5%) of total approved. This is higher by 4,178.5% compared to its level last year. Real estate activities came in second with P20.73 billion (or 13.6%), followed by manufacturing with P19.08 billion (or 12.5%), water supply, sewerage, waste management with P13.87 billion (or 9.1%), and transportation and storage with P6.98 billion (or 4.6%).
Japan was the biggest country source of the BOI-PEZA approved foreign investments, with P3.79 billion (or 43.5%), which is 531.7% higher than its P0.60 billion investment commitment during the same period last year. United Kingdom came in next with P1.50 billion, followed by The Netherlands with P0.63 billion, USA with P0.43 billion, and Singapore with P0.41 billion.