THE Philippine Economic Zone Authority (Peza) on Monday conceded it will miss its investment target this year due to uncertainties brought about by the impending rationalization of tax incentives.
However, Peza looks to minimize the damage with the resurgence of investment pledges in the information technology and business-process management (IT-BPM) industry. In spite of uncertainties, commitments to the industry from January to September expanded 8.82 percent to P12.39 billion, from P11.38 billion during the same period last year.
Data from Peza also showed that investments in manufacturing plunged 46.17 percent to P24.26 billion, from P45.08 billion last year. Investment pledges in economic zone development went down 65.31 percent to P42.91 billion, from P123.71 billion in the previous year.
Other industries also suffered a nosedive in registrations, resulting in a 55.28-percent contraction in commitments to the Peza. January-to-September investments now stand at P87.84 billion from P196.457 billion during the same period last year.
Registrations, in turn, slowed 17.69 percent to 362 projects, from 438 projects last year. Direct employment generated as of August was at 1.45 million, up by 6.79 percent from the 1.36 million jobs created during the same stretch in 2017.
Further, exports by Peza-registered firms improved 6.43 percent to $35.79 billion in export receipts, from $33.62 billion last year.
Growth conceded
In an interview with reporters, Peza Director General Charito B. Plaza said the agency has already conceded its 10-percent growth in investments goal for this year. However, she is banking on the IT-BPM industry to somewhat reduce the decline in total Peza pledges.
“[Investment increase in IT-BPM is] market-driven. These are compelled by their clients, forced to expand because their demands are increasing,” Plaza said.
The Peza is targeting to grow investment pledges to a modest 10 percent this year from P237.57 billion recorded last year. The agency has been hit by the government’s plan to rationalize tax incentives under the Tax Reform for Attracting Better and High-quality Opportunities (Trabaho).
This is why Plaza is urging government economists and lawmakers not to tinker with incentives granted to firms registered with the Peza. She said doing so could lead to firms moving out of the country, which could lead to job losses.
The controversial Trabaho bill is the second package of the Duterte administration’s tax-reform program.
It seeks to gradually reduce corporate income tax down to 20 percent by 2029 from 30 percent. The measure will also overhaul the incentive regime provided to locators in economic zones.