AROUND P16.07 billion worth of investments for information technology (IT) parks and IT centers in Metro Manila have remained pending this year amid the moratorium on the processing of new economic zones in the capital region.
Broken down, data obtained by the BusinessMirror from the Philippine Economic Zone Authority (Peza) showed 10 applications for IT center amounting to P15.5 billion and one inquiry for a P573.93-million IT park as of April 30.
“Of the 10 IT Centers endorsed by Peza for the required proclamation, 8 IT Centers with a total investment of P11.41 billion as well as the 1 IT Park identified above were returned to Peza with noted deficiencies for rectification,” the regulator of ecozones noted.
Peza Director General Charito B. Plaza, in an interview with the BusinessMirror, said the investment promotion agency has asked President Duterte to lift Administrative Order (AO) 18—which bans new ecozone developments in Metro Manila— in order to allow further job creations amid pandemic.
In a letter to Malacañang dated May 3, Plaza said revoking AO 18—which was in place since June 2019—will allow for the recently enacted Corporate Recovery and Tax Incentives for Enterprises (CREATE) law to fully take effect.
The Peza chief explained the new tax reform measure is already offering incentives that will benefit company locators outside Metro Manila, complementing the current strategies on rural development.
“The passage of CREATE law already sets in motion the policy provided under AO 18 by providing superior incentives to businesses that will locate outside of NCR,” she explained.
“[But] on the other hand, the existing moratorium would only pose a major disincentive to investors targeting the market in Metro Manila, which suffered the most vis-a-vis countryside in terms of economy and human toll because of the pandemic, and right now needed an investment boost,” Plaza added.
While lifting AO 18 can generate more jobs, Plaza explained that it can also be a “relief” for the small and medium enterprises and support industries in Metro Manila.
Plaza noted that the office space vacancy in the capital region was at its “worst since the global financial crisis” following the exit of Philippine offshore gaming operators and shift to work-from-home schemes.
“But the multiplier effects of allowing the establishment of IT Building in Metro Manila provides recovery measures for developers and support industries still reeling from the effects of Covid-19,” she explained.
Currently, 167 IT parks and centers are located in NCR, most of which are in Makati, Quezon City and Pasig.
There are, in all, over 290 IT parks and centers across the country out of 410 ecozones under Peza’s regulation.
“We want more investors, especially in this pandemic so they can create jobs for our people. Hopefully, the President will consider it so that we can already register these pending applications,” Plaza told this newspaper.
Plaza said in the letter that lifting AO 18 will be a “great stimulus” for economic recovery as this will allow more IT investors in Metro Manila.
Big-ticket investment
Meanwhile, Plaza also shared with the BusinessMirror that a P16.5-billion “big-ticket” expansion project by a semiconductor manufacturing firm in Calabarzon is currently pending as well.
She did not disclose the name of the company.
The Peza chief said the deal is eyed to conclude this year. The foreign company, she said, is still deciding whether the facility will be established in the Philippines or in Malaysia.
“If this will push through, it will be a big boost not only to Peza but also to the economy,” she added, noting that the facility will be utilizing 16 to 20 hectares of land.
At the same time, the semiconductor firm is also evaluating the incentives provided under CREATE, she said.“I hope there will be a lot of adjustments that the FIRB [Fiscal Incentives Review Board] will be doing so that we can get this [deal],” she said.
Under CREATE, the corporate income tax rate is reduced to 20 percent from 30 percent for domestic corporations with net taxable income of P5 million and below and have total assets of P100 million and below effective July 1, 2020. All other local firms and resident foreign companies are imposed a 25-percent income tax.
The total investments approved by Peza last year reached P95 billion, which was 19 percent lower than the P117.54 billion it registered in 2019.
Image credits: Bernard Testa