Peza cheers inclusion of ecozone logistics enterprises in SIPP

The Philippine Economic Zone Authority (Peza) on Tuesday cheered the inclusion of economic zone logistics services enterprises (ELSEs) in the new Strategic Investment Priorities Plan (SIPP), a list of government-preferred investment activities.

This qualifies the P11-billion support industry for incentives  under the Corporate and Tax Incentives for Enterprises (CREATE) Act.

Peza said the Board of Investments (BOI) has released Memorandum Circular (MC) No. 2023-001 dated Jan 31, 2023, where the agency and the Bureau of Internal Revenue clarified the inclusion of logistics services  in the SIPP.

“While the BOI has adopted our recommendation for the inclusion of support to export activities in the SIPP, we encountered a problem with the BIR revenue memorandum circulars that limited the grant of incentives to only those registered business enterprises whose activities are covered by their definition for export enterprise,” said Peza Officer-in-Charge and Director General Tereso Panga.

“This limitation has effectively barred both existing (prior to CREATE) and new locator investors (under CREATE) providing support to export activities from enjoying their incentives,” he added.

The Peza official said further that with the clarification issued by the BOI and BIR, ELSEs which are registered under them can now avail themselves of  available incentives, including the zero value-added tax (VAT) rating on qualified local purchases.

Peza defines ELSEs as traders supplying production-related raw materials and equipment that cater exclusively to requirements of ecozone locators.

The investment promotion agency added that these enterprises provide critical support, particularly to export manufacturing companies with their requirements for logistics support to facilitate their import and export shipments, sourcing of raw materials, inventory management, just in time deliveries, localization and process customization.

“Together with the ELSEs and other locators that provide support to export enterprises, Peza ecozones have long been a participant in the global value chain by attracting global manufacturing and ICT industry leaders to set up their facilities in the ecozones, thus generating the much-needed jobs, investments, and export revenues for the country,” Panga said.

To date, Peza said there were 340 ELSEs registered with them, with total investments of P11.15 billion.

Of these investments, the majority are from Japanese firms, accounting for nearly 31 percent or P3.49 billion.

Some of the leading Japanese ELSEs which are registered with PEZA include Nagase Philippines International Services Corp, Inabata Philippines Inc., Lima Logistics Corporation, Tokai Electronics Philippines Inc., and NX Logistics Philippines Inc.