Peza Director General Charito Plaza INQUIRER file photo
Investment pledges under the Philippine Economic Zone Authority dropped by more than half as of June this year, as some companies have switched to panic mode amid an uncertain business climate, top officials said.
Peza Director General Charito Plaza also told reporters yesterday that a number of companies had even been notified by their principal firms “to start to consider looking at possible countries to transfer to.”
This was due to grave concerns over ongoing tax reforms, pointing to the first two packages of the tax reform program, the first of which was the Tax Reform for Acceleration and Inclusion (TRAIN) Act signed by President Duterte last December.
“Our companies are starting to be in panic mode, particularly those who deferred their investments in 2017 because of the TRAIN [law],” said Elmer San Pascual, manager of Peza’s promotion and public relations.
These concerns contributed to the drop in the registered investment pledges in the first half to P53.067 billion, a 55.86-percent plunge from P120.220 billion in the same period in 2017.
“So those kinds of apprehensions, so those kinds of fears, have to be addressed immediately,” Plaza said said.
“We have to stand firm with our investors because we don’t want to lose them,” she added.
Peza data showed on Monday, however, that pledges dropped across all industries, mainly in ecozone development (65.15-percent drop to P26.3 billion), manufacturing (9.29 percent fall to P19.55 billion) and information technology-business process management industry (13.66-percent decline to P6.98 billion).
One major point of contention was the proposal in the earlier forms of the TRAIN law to remove the value added tax exemption on the sale of goods and services to Peza-registered companies.
While the move to retain such perk was vetoed by President Duterte, a source said the perk still stays since the Peza law, which provides for the incentive, has not been amended.
In deferring their investments, San Pascual said companies were hoping the environment would stabilize this year, “only to be welcomed with TRAIN 2.”
The second tax package seeks to rationalize tax incentives offered by the government, putting at risk one of Peza’s main selling points in attracting firms to choose the Philippines.
He said the expansion plans of existing companies are directly affected by the push for tax reform.
He noted that these companies, which he declined to name, would call Plaza to express their expansion plans, but in turn asked for assurance that the perks would remain.
It has been difficult to give the assurance, however, especially now that tax measures are being deliberated in Congress, which had passed the TRAIN law despite Peza’s earlier reservations.