Peza to pursue lifting of ban on NCR ecozones

The Philippine Economic Zone Authority (Peza) will recommend that the next administration lift the ban on new economic zones in the National Capital Region (NCR) to help attract badly needed investments.

Peza Director General Charito Plaza said her office had repeatedly sought the lifting of Administration Order No. 18 that had banned since 2019 the setting up of new ecozones in the capital.

President Duterte, however, has not acted on the agency’s request. With his administration about to end, Plaza said Peza would just recommend the policy change to the next administration.

“Yes, we’re still waiting for the lifting of the ban, though we’ve been writing [to the Office of the President] and the FIRB (Fiscal Incentives Review Board) many times. Definitely, if not acted [upon], we’ll ask the next administration again,” she said.

Malacañang issued AO No. 18 in June 2019, framing it as a way to encourage investment in the countryside, although critics had warned that a ban in Metro Manila would not automatically translate to more regional investments and could even discourage foreign investors from coming to the country.

Most locators in economic zones in Metro Manila are information technology and business process outsourcing (IT-BPO) firms, whose revenues play a huge role in the domestic economy even during the pandemic.

These IT-BPO firms set up shop in the country in part due to these tax breaks that lower their cost of doing business, thus Peza’s request to allow new Metro Manila economic zones, where locators can enjoy the fiscal incentives.

“We have to accept the reality that while we want investors to go to the countryside, investors prefer areas [like Metro Manila],” she added.

The FIRB, led by the Department of Finance, has been in charge of approving the tax breaks for big-ticket projects that cost more than P1 billion, a responsibility provided to it by the newly enacted Corporate Recovery and Tax Incentives for Enterprises Law.

Benedict Hernandez, chair of Contact Center Association of the Philippines, had stressed the importance of first setting shop in Metro Manila before anywhere else, especially for Fortune 1000 companies that want to offshore their operations.

“Typically, if they want to invest in the Philippines for the first time, they will first think about going to Manila,” he said.

“There is rarely any new investor who jumps to the province. Their first safety comfort is to see how this works [when they establish] Metro Manila as a location,” he added.