By BERNIE CAHILES-MAGKILAT
Committed investments registered and approved by the Philippine Economic Zone Authority (PEZA) in 2019 declined by 16.19 percent on continuing uncertainty caused by the non-passage of the Corporate Income Tax and Incentives Rationalization Act (CITIRA) bill.
Data showed PEZA generated only ₱117.541 billion worth of new investments last year, reflecting a worrisome 16.19 percent decline in committed new projects from ₱140.242 billion registered in 2018.
Notably, foreign investors’ sentiment on the Duterte administration’s move to overhaul the country’s corporate income taxation and incentives regime to investments was manifested in the steep 27.91 percent decline in their 2019 investments to ₱49.255 billion only as against ₱68.286 billion the previous year.
Likewise, Filipino businessmen shared the negative sentiment as they reduced their investments by 5.05 percent to ₱68.286 billion from ₱71.286 billion in 2018.
The only positive major PEZA indicator was on the number of new projects approved which rose by a modest 2.08 percent to 540 from 529 in 2018.
PEZA Director General Charito B. Plaza blamed the pending CITIRA bill as the culprit in the decline in new investment in most sectors.
New committed capital for priority sectors such as manufacturing, construction and services dropped by 12.61 percent to ₱104.667 billion from ₱119.774 billion the previous year.
Plaza cited the manufacturing sector, which declined by 5.01 percent to ₱30.35 billion from ₱31.951 billion in 2018.
“Manufacturing investments decreased because of uncertainties on what is the fate of CITIRA,” said Plaza adding that investors are still on “wait and see” because of CITIRA. This means, she said, that laws and policies affect investors’ decision-making.
Thus, a technical working group has been created by PEZA to include other concerned agencies of the government and private sector groups on CITIRA bill.
PEZA is also still pushing for the grandfather rule to ensure availment of existing tax perks by its locators and their future expansion programs, a prospective application of the approved bill considering the contracts PEZA signed with investors are binding, and longer transition period of 10-15 years before locators will shift to the new taxation regime.
“Hopefully, the senators and the President who will sign the bill will be more considerate of the vulnerability of exporters on world and domestic events,” she said.
“We feel that given the goings on, the events worldwide, the Iran-US war might escalate and the US-China trade war and domestic events and disasters, plus the efficiency factors are still lacking, so we pray for wisdom of our Senators and President Duterte because investors are affected by world and domestic events,” she added.
She was emphasizing the need to eliminate the possibility of massive displacement of workers as companies include the option of moving out of the country as part of their contingency measures once they are not happy with the final version of the CITIRA bill.
Among the manufacturing subsectors that posted declines include EMS and SMS, chemicals and shipbuilding.
Other sectors that also posted lower investments in 2019 were real estate; administrative and support service activities; professional, scientific, and technical activities; arts, entertainment and recreation.
Sectors that received increased investments include electricity, gas steam and airconditioning supply; information and communication; water supply, sewerage, waste management and remediation; automotive and autoparts; aerospace and; furniture, GDH and wearables.