Investment pledges under the Philippine Economic Zone Authority (Peza) suffered a 40.97-percent drop in 2018, its worst decline in new projects since the year that followed the 9/11 bombing in the United States.
Peza data showed that investment pledges reached only P140.242 billion last year compared with the P237.57 billion in 2017.
This was the steepest drop in Peza investment commitments in nearly two decades. In particular, this was Peza’s worst since 2002, back when pledges fell more than 50 percent, data from the Philippine Statistics Authority (PSA) showed.
PSA data showed that Peza pledges shrank in 2001 by about 40 percent to more than P80 billion from P156.7 billion the previous year. This worsened in 2002 when pledges fell further to P38.74 billion. But while the decline back then was due to external factors, the latest Peza figure suggested that the damage might be self-inflicted.
“The drop in new investments was caused by the uncertainty of having a change in policies,” Peza Director General Charito Plaza said in a text message.
Industries that usually operate in economic zones, such as manufacturing companies, spent most of 2018 not knowing what would happen to the tax incentives that helped bring down the cost of doing business in the Philippines.
The second tax package being pushed by the Duterte administration scared off investors for the most of 2018 even though the bill didn’t get passed into law.
Called the Tax Reform for Attracting Better and High-quality Opportunities bill, it wants to slowly lower corporate income tax while rationalizing tax incentives.