New investments registered under the Philippine Economic Zone Authority (Peza) nearly doubled in the first five months of the year to P107.75 billion, but more than half of the growth was due to the development of new economic zones.
Peza Director General Charito B. Plaza said that investments were up 98.14 percent from P54.38 billion last year, attributing the heaviest chunk of the boost, or P67 billion, to the development of new economic zones.
The remaining investments were from industry locators, with manufacturing taking the lead with P18.5 billion, followed by energy with P14.9 billion and information technology and business process management (IT-BPM) with P7.1 billion.
No comparative figures from last year were given for each sectoral investment, although Peza previously said that IT-BPM investments fell nearly 35 percent from P10.88 billion in the January-to-May period in 2016.
The latest investment figures from Peza comes after the agency earlier reported a more than 50-percent increase in investments in the first quarter, reaching P51.34 billion from the P34.11 billion worth of pledges in the same period last year.
Even prior to the release of Peza pledges for the first five months, Plaza has already been bullish on the outlook for investments, targeting a yearend increase of 200-300 percent because of the strong first-quarter growth.
Peza ended 2016 with P218.18 billion worth of pledges. With a target of 200 to 300 percent, Peza aims to finish with at least P654.54 billion and even as much as P872.72 billion.
“The Peza incentives are very attractive to foreign investors and are now disseminated nationwide especially abroad. The brand of service Peza provides [is] like its one-stop-shop where all permits are facilitated a.s.a.p. in Peza as the issuing center to ease doing business, with minimal government agencies’ intervention and to decentralize government functions in assisting investors,” she said, citing these as some of the reasons for the latest growth in figures.
Peza’s incentives include an income tax holiday of four to six years as well as the tax- and duty-free importation of raw materials, capital equipment, machinery and spare parts.
Plaza added that Peza would release by October the Philippine Economic Zones Map of all the existing and new economic zones identified by private landowners, local government units and Peza.
The growth in new Peza investments comes amid a looming change in tax perks and fiscal incentives under the Duterte administration. Plaza has been appealing to the national government to spare Peza, insisting to keep the status quo in order to maintain the attractiveness of the Philippines to foreign investors.
The Duterte administration is pushing for a comprehensive tax reform program, comprised of five packages that would include the removal of value-added tax (VAT) exemption on certain sales as well as changing the fiscal incentive regime.
The House of Representatives has already passed House Bill 5636, its version of the tax program’s first package, which would lower personal income tax while offsetting revenue losses by imposing either higher or new taxes on consumption products.
This move, however, also includes the removal of the VAT exemption currently provided to local suppliers of export-oriented companies.
Plaza previously said that Peza-registered companies made P24 billion worth of purchases a year from local suppliers, taking advantage of the VAT exemption granted to domestic suppliers under the current tax code. This, she said, was the same amount that the country stood to lose with the removal of the exemption since locators would prefer to just import.