The Philippine Economic Zone Authority (Peza) saw an 8-percent increase in investment pledges it had registered as of August, reaching P83.5 billion despite the drop in commitments from IT-BPM and manufacturing companies.
Based on the data provided by the Peza, the growth in the first eight months of the year could be attributed to economic zone development projects, which accounted for 59 percent of the pledges, or P49.1 billion.
Pledges to develop more economic zones had grown 18 percent from P41.62 billion in the same 8-month period last year.
Manufacturing dropped 4-percent to P23.19 billion from January to August as compared to the level in the same period last year.
Investment pledges for Information Technology and Business Process Management (IT-BPM) dropped 20 percent to P9.15 billion.
While there are other sectors in the list, manufacturing and IT-BPM were the next biggest recipients of the investment commitments, after economic zone development.
The drop in these sectors was attributed to the uncertainty over the tax perks that were currently offered to companies in economic zones, according to Peza Director General Charito Plaza.
This develops as the Duterte administration pushes for the rationalization of tax incentives and the lowering of corporate income taxes. The measure, formerly called the “Trabaho” bill, failed to pass last year but it has since been refiled under a different name.
The tax package, now called the Comprehensive Income Tax and Incentive Rationalization Act (Citira), was passed by the House of Representatives last week.
The current and past versions of the bill “discouraged existing industries [from] expanding and new investors [from] proceeding [to invest] in the Philippines,” she said in a text message.
It remains to be seen how the pending discussions on the Citira bill in the Senate would affect Peza’s chances of being exempted from the tax package.
Plaza earlier said the bill should not be applied to Peza-registered firms. This was backed by the Joint Foreign Chamber of the Philippines, which represents firms that have invested more than $30 billion in the country.
Stakeholders will also keep watch of how aggressive the Department of Trade and Industry (DTI) will be in pushing for revisions in the Citira bill that would give existing companies “a soft landing” instead of an abrupt change in policies.
The Peza, an agency attached to the DTI, had been at odds with other agencies over the Citira bill, given the differences on their position. The Peza wants an exemption, while the DTI wants a longer transition period, among other appeals.