The Philippine Economic Zone Authority (PEZA) is targeting a modest 6 percent improvement in investment pledges this year after experiencing a 27.36 percent decline in 2021.
In a statement, PEZA Director General Charito B. Plaza said that the agency approved a total of P69.301 billion worth of investments from export-oriented enterprises in 2021, reflecting a 27.36 percent decline from P95 billion in 2020.
The approved investment pledges represent the combined project cost the 249 new projects the agency registered in 2021. PEZA also said that the projected annual export sales from the 2021 approved investments are estimated at $2.138 billion with expected direct job generation of 35,245.
PEZA registered enterprises also improved its employment figures by an encouraging 13.908 percent to a total of 1,782,913 million Filipinos from 1.5 million in 2020.
“Our employment increased at 13.908 percent or an estimate of 217,700 new jobs generated last year that makes a total of 1,782,913 million current jobs in PEZA-registered ecozones nationwide,” said Plaza.
For 2022, Deputy Director General Panga said, “PEZA is aiming for a 6.0 percent investment growth.”
Amid the slump in investments, PEZA exports jumped 14.016 percent increase to $63.061 billion from $ 55.309 billion in 2020.
“Amidst the slowdown caused by the pandemic in 2021, there is still good news. Our exports attained a 14.016 percent increase last year from US,” said Plaza.
Plaza explained that “While the COVID-19 pandemic posed more economic challenges to foreign direct investments (FDIs) in 2021 than in 2020, PEZA remains committed and hopeful in attracting more local and foreign investments for the year 2022.”
Plaza attributed the decrease in investments to the effects of the COVID-19 pandemic with its Delta and Omicron variants and the recent impact of Super Typhoon Odette in the Visayas and Mindanao regions last December 2021.
Stating the decline in investments is not only felt in the Philippines but also on a global scale, Deputy Director General for Policy and Planning Tereso O. Panga explained, “As cited by World Bank, the global economic slowdown is projected to last until 2023 due to the continuous challenges and effects of new COVID variants and supply-chain bottlenecks especially in developing countries.”
“On the domestic front, the Philippine Statistics Authority (PSA) reported that the country's GDP shrank at 9.5% in 2020, the first annual contraction since 1998 which is a year after the eruption of Asian financial crisis. As for other internal factors, ecozone investors complained some provisions of the CREATE Law on tax incentives, slow proclamation process, moratorium on I.T. center development in National Capital Region (NCR), and the late promulgation of the SIPP which affected their investment plans for last year,” Panga added.
“Our current 415 ecozones are increasing and the locators are not stopping their operations, hence the increase in export income and employment. Our investors continue to give their trust and confidence to PEZA for providing them business assistance, reliefs and COVID related-expenses which are deductibles to their income taxes,” she said.
She also explained, “This phenomenon of decline in new investments is indeed unfortunate but expected as investors are still coupling and making adjustments caused by the pandemic to the efficiency factors of production such as logistics & transportation costs, global supply chain, health conditions, and lockdowns limiting the production and movement of goods and services.”
“Everyone is trying to survive and is learning how to live and work under this new normal,” the PEZA Chief said.
In terms of 2021 investments, the manufacturing industry generated a total of P25.509 billion while the IT industry contributed P7.322 billion.
Further, PEZA-registered tourism and export enterprises engaged in technical testing and analysis, installation of system for factory automation, technical support, and quality control gained their comeback having P2.058 billion and P545.019 million of investments respectively in 2021. Both enterprises are 100 percent higher from their 2020 performances at the time when the pandemic first entered the country.
Pertaining to foreign stakeholders, PEZA Chief Plaza expressed that Japan remains as the Agency’s top country investor at 21.72 percent. She said, “As of 15 November 2021, we have 961 PEZA-registered Japanese companies. Japan’s investments reached P22.870 billion last year, a 190.20 percent increase from P7.881 billion in 2020. Further, their total approved investments from 1995 to 2021 is P728.337 billion.”
“Aside from Japan, majority of our investments are from South Korea, India, Hong Kong, and China. We also gained investments from western countries such as Germany, Austria, the United States of America, Denmark, France, and Canada,” added the PEZA Chief.
On the other hand, the top-performing region in 2021 where the investments are located is in Region 4 with P25.263 billion investments. Meanwhile, the top-improving regions are: Region 1 (Ilocos Region); Region 7 (Central Visayas); Region 8 (Eastern Visayas); Region 10 (Northern Mindanao), and Bangsamoro Autonomous Region in Muslim Mindanao (BARMM).
For the month of January 2022, the PEZA Board approved 9 new and expansion projects with P3.480 billion of investments. Estimated annual export sales from these investments is $56.090 million with 732 expected direct employment.
“Despite of the pandemic slowing us down for the last two years, PEZA is grateful for the unceasing support of our locators and partner investors. Now that the Philippines is attaining herd immunity and reopening our economy, we in PEZA continue to thrive in attracting more foreign direct investments to the country,” Plaza said.