PEZA firms urged to source raw materials from local sources

Peza Director General Charito Plaza. INQUIRER FILE PHOTO

The Philippine Economic Zone Authority (Peza) wants domestic companies to know which imports could be replaced by local supplies, a move aimed at cutting the dependence of its registered companies that usually source three-fourths of their materials abroad.

To do this, Peza Director General Charito Plaza told reporters in a recent interview that they wanted to hold a trade fair this year, where Peza-registered companies would showcase their imports.

The event, which she called a reverse trade fair, would allow local suppliers to spot which imported materials are locally available. In effect, this would help cut import dependence and improve the local supply chain.

“We will have a reverse trade show to tell the Filipinos these are what the companies in Peza import. We will ask who among them could supply these so that we could minimize importation and maximize  the productivity of [local firms],” she said in Filipino.

Elmer San Pascual, manager of Peza’s promotion and public relations, said thousands of companies registered under the agency only source 20 to 25 of their raw materials in the Philippines. The rest of the materials are sourced abroad.

Even though Peza-registered companies tap only a quarter of their materials from local suppliers, this still amounts to an annual estimate of P250 billion worth of purchases, according to Plaza in an interview.

There is even an incentive to source locally. Under current tax rules, the sale of raw materials or packaging materials to export-oriented companies would be subjected to a zero-percent value added tax (VAT).

However, Plaza said companies still import materials, noting that they could compensate for this through cheap labor in the Philippines as well tax and duty-free importation of raw materials, and capital equipment, among others.

“Another goal is to, of course,  help our local suppliers grow so they become suppliers of our existing [registered companies]. That would be better. It would enhance their capabilities and encourage productivity,” she said.