Peza suffers 69% decline in January pledges

The Philippine Economic Zone Authority (Peza) began the year with a 69-percent drop in investment pledges, performing even worse than it did in 2020, when the Taal volcano erupted and disrupted operations in ecozones.

Peza said that it approved P3.5 billion worth of pledges in January, a 69-percent drop from P11.31 billion in 2021 and coming in even below the P4.7 billion recorded in the same month in 2020.

Peza Director General Charito Plaza, however, did not explain the reasons behind the drop in January this year.

Pledges also dropped in 2021, but Plaza said it was “expected.” “This phenomenon of decline in new investments is indeed unfortunate but [it is] expected, as investors are still [coping] and making adjustments caused by the pandemic to the efficiency factors of production,” said Plaza.

Total pledges in 2021 reached P69.3 billion, a 27-percent decline from the level in 2020 when the COVID-19 pandemic was at its worst.

“Everyone is trying to survive and is learning how to live and work under this new normal,” she said.

New jobs

But not all figures were bleak. The investment commitments last year are expected to create 217,700 new jobs, Peza said. Exports made by firms in ecozones also increased last year by 14 percent to $63.06 billion.

This, Plaza said, is because ecozone locators “are not stopping their operations” though times are hard.

Peza recorded the decline in pledges in 2021 despite the passage last year of the CREATE law, or the Corporate Recovery and Tax Incentives for Enterprises Act, which cut corporate taxes across the board and rationalized tax breaks.

The CREATE law was passed last year after more than three years of uncertainty in the business community about the exact nature of tax breaks under the new law. Peza used to oppose the earlier drafts of the CREATE bill but eventually supported it after the measure had gone through several revisions.

Ramon Lopez, chair of Peza and head of the Department of Trade and Industry, had said the CREATE law “is expected to bring in [a] massive inflow of investments that will create more jobs.”

When the then-bill passed the Senate in November 2020, Finance Secretary Carlos Dominguez III also called it “one of the largest economic stimulus measures in the country’s history.”

“As for other internal factors [behind last year’s drop], ecozone investors complained [about] some provisions of the CREATE law on tax incentives, slow proclamation process, moratorium on IT (information technology) center development in National Capital Region, and the late promulgation of the SIPP (Strategic Investment Priorities Plan) which affected their investment plans for last year,” Peza Deputy Director General Tereso Panga said on Thursday.