Investment pledges approved by the Philippine Economic Zone Authority (PEZA) continued to pour albeit at a slower pace, reaching P72.645 billion only as of October this year or 26.86 percent lower than the P99.322 billion approvals in the same period last year.
PEZA Director General Charito B. Plaza reported at the Q4 General Membership Meeting/CEO’s Forum of the Semiconductor and Electronics Industries in the Philippines Foundation Inc. (SEIPI) that there were only 248 projects that came in as of October or 45.37 percent lower than the 454 projects that registered in the first ten months in 2019. This would result in negative 2.5 growth in PEZA’s employment as of September this over last year.
In terms of exports, Plaza reported a modest growth of 0.63 percent to $40.796 billion as of September this year from $40.541 billion in the same period last year. PEZA accounts for 80 percent of total services exports, particularly IT-business process management, and 60 percent of merchandize exports, mostly electronics.
Plaza attributed this continued inflow amid the pandemic to the attractiveness of the PEZA incentives and its one-stop-shop system that ensures smooth processes for investors.
As of October this year, Plaza said that 87 percent or 2,629 of PEZA-registered enterprises were already operating or 81 percent (1,204,815) of employees are now back to work. The IT-BPM sector is already operating at 84 percent while the manufacturing sector at a higher 89 percent.
Broken down, 2,202 companies out of 2,561 are already operating in Luzon while Visayas has higher rate at 94 percent or 384 firms already fully operational out of 409, and 93 percent in Mindanao or 43 firms operating out of 46.
During this pandemic, PEZA has implemented some policies to help ease the economic impact of companies affected by the long and hard lockdown. These include temporary suspension of the 30 percent work from home limit until September 2021to ensure companies continue their operations; allowing operations offsite or in pop-up sites; inclusion of COVID-19 related expenses in the computation for tax deduction for those availing of the 5 percent tax on gross income earned.
With the continuing challenges due to the global pandemic, Plaza has once again reiterated its position for government to exclude PEZA from the Corporate Recovery and Tax Incentives for Enterprises Act (CREATE) Bill, which seeks to overhaul the current tax incentive regime for PEZA enterprises stressing that other countries are cutting taxes and adding new incentives to attract new investors while the Philippines are pursuing removal of incentives during this period of pandemic.
”We are appealing to senators and the President to maintain the status quo,” said Plaza stressing that when the investors came to PEZA their feasibility studies factored in the incentives they were supposed to enjoy from the government. She warned that removal of these incentives is tantamount to reneging on the government contract with these investors.
Plaza also noted that since the Duterte administration has only a year and five months left, it should respect the upcoming new administration to address the tax incentives regime for exporters.
In the meantime, she said the CREATE Bill should be passed but to pilot it for the domestic-oriented enterprises only so that if there are shortcomings in the law, it can be easily remedied.