The Philippine Economic Zone Authority (Peza) is expecting to end the year with a 5-percent growth in investment commitments, slightly lower than its earlier target, a top official said.
Peza had an original 7-percent growth target for 2021. However, it was downgraded sometime during the second quarter after pledges dropped by 25 percent from 2020, according to Peza Deputy Director General Tereso Panga.
“But since we downgraded our target for 2021 to 5 percent, we are looking at [a] 6-percent increase over 2021 investments for 2022,” he said in a recent Viber message, while noting that this was still up for validation.
Peza registered around P95 billion worth of investment pledges in 2020. Although this marked a nearly 20 percent decline from the P117.5 billion commitments in 2019, this was still beyond the agency’s initial expectations since the agency said back then that it was only expecting to get half of what it got in 2019.
Moving forward, Panga said they would grow their pledges next year through more aggressive investment promotions, like overseas business missions for 2022.
Earlier this year, while commenting on the original 7-percent growth target, Panga said they were confident the agency can attract more investments with the passage of CREATE, or the Corporate Recovery and Tax Incentives for Enterprises Act.
CREATE is a tax reform package that cut corporate taxes across the board, offering relief to Philippine-based companies that have long been dealing with one of the highest, if not the highest, corporate income tax rates in the region. It also rationalized tax breaks, offering them to strategic investments.
Peza used to oppose the earlier drafts of the CREATE bill, but eventually supported it after the measure had gone through several revisions. Its earlier opposition was rooted on fears that the bill would make it more expensive to do business in economic zones, especially once a specific tax break would lapse.
This tax break is called the 5-percent gross income earned tax in lieu of local and national taxes.