The Fiscal Incentives Review Board (FIRB) revealed that the Philippine Economic Zone Authority (PEZA) is not tracking the inflow of actual investments made by its registered business enterprises (RBEs).
In a statement, Finance Assistant Secretary and FIRB Secretariat Head Juvy Danofrata said PEZA does not determine if RBEs’ actual investments commensurate to the value of fiscal incentives that economic zone locators enjoy each year.
Even with the implementation of the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act, Danofrata disclosed that PEZA continues to fail in monitoring actual investment inflows of RBEs.
PEZA submitted incomplete information about the investment capital and market orientation of its locators when it was asked to send data to the FIRB as part of the compliance of investment promotion agencies (IPAs) with the provisions of the CREATE Law, Danofrata said.
“PEZA did not give us the data on the actual investment. They said they are not monitoring that,” Danofrata said in her report to Finance Secretary Carlos G. Dominguez III said.
Danofrata said that 12 of the 196 PEZA-registered business enterprises (RBEs) did not contain information on their investment capital, while 11 did not specify their market orientation.
As of April 30 or almost 10 months after the implementing rules and regulations (IRR) of CREATE was signed, only four out of 14 IPAs were able to substantially comply with the reportorial requirements of the FIRB as mandated under CREATE.
The four IPAs are the Bases Conversion and Development Authority (BCDA), John Hay Management Corp. (JHMC), Poro Point Management Corp. (PPMC), and PHIVIDEC Industrial Authority (PIA).
“These reports are important to enable the FIRB to fulfill its monitoring and oversight function over the IPAs and the overall administration and grant of tax incentives,” Danofrata said.
She said these reports from IPAs are also shared with other government agencies, especially the Bureau of Internal Revenue (BIR), for monitoring, audit, and other purposes consistent with the target outcomes of CREATE.
Danofrata said the FIRB Secretariat already sent follow-up letters to the IPAs that have incomplete and missing submissions.
Based on what the FIRB Secretariat has gathered so far, the Board of Investments (BOI) tallied the highest amount of investment capital totaling P43.12 billion with 136 RBEs. Of these 136 RBEs, nine are export-oriented firms and 127 are domestic-oriented businesses.
Danofrata said the IPAs including PEZA were able to register a total of 348 firms as of April 30, of which 100 are export-oriented and 237 are domestic-oriented enterprises.
“The real estate, services, and manufacturing sectors are the industries with the highest number of registered firms. Of the 348 firms, 25 have no information on their industry classification,” Danofrata said.
Real estate activities accounted for 129 RBEs, followed by the services sector with 73, and manufacturing with 68.