The Philippine Economic Zone Authority (PEZA) has approved PHP 131.76 billion worth of investments as of the first week of October, putting the investment promotion agency (IPA) on track to meet its PHP 154-billion full-year target.
At the same time, PEZA Director-General Tereso O. Panga said the agency will continue to push for amendments to the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act to attract more foreign and local investments, particularly in the information technology (IT) sector.
The PEZA Board of Directors on Oct. 6 greenlit 25 new projects worth a combined PHP 20.55 billion. This brought the total number of PEZA Board-approved projects to 169, 14% higher than the 148 projects worth PHP 39.63 billion approved a year ago.
“This is a tangible demonstration of our dedication to positioning our country as an attractive investment destination, thereby encouraging greater local and foreign investments in the Philippines,” Mr. Panga told reporters on Thursday.
Of the 25 newly approved projects, 13 are in the export sector, six are in the information technology sector and three are in logistics. Two projects involve the construction of facilities, while one is still in development.
These new projects are expected to have an export value of USD 643.32 million and generate 5,500 jobs.
Mr. Panga said the PEZA Board approved two big-ticket projects, one by Japan’s Murata Manufacturing Co., Ltd. and another by American company Analog Devices, Inc. Big-ticket projects are those with investments of PHP 1 billion and above.
Asked whether the agency will be able to surpass its PHP 154-billion approval target for this year, Mr. Panga said that PEZA has a “fearless target” of approving new investments worth as much as PHP 300 billion.
“Once the investment from Texas Instruments, Inc. enters, although that has been previously announced, that is already worth a billion dollars, and then we are also expecting more big projects that I am not at liberty to disclose,” he said.
In 2022, the PEZA approved PHP 140.7 billion worth of new investments.
Mr. Panga said the strong investment figures reflect investor confidence in the Philippine economy and its growing domestic market.
Economic managers are targeting 6-7% gross domestic product (GDP) growth this year.
The PEZA also expects four more economic zones, with a total investment of PHP 773.96 million, to be proclaimed before the end of the year.
To date, the PEZA hosts 422 economic zones and 4,352 locator companies and projects.
Meanwhile, Mr. Panga said the agency is working with several business groups on the proposed amendments to the CREATE law.
At the IT & Business Process Association of the Philippines (IBPAP) Infrastructure Series at LIMA Estate, he said that PEZA is still seeking to have work-from-home (WFH) eligibility for its locators.
“We need to do something about the WFH… We are asking for PEZA locators to be given the chance to do WFH,” said Mr. Panga. “But also, to support the IT developers putting up costly IT centers, our business model is 70% on-site and 30% WFH for our locators to be able to enjoy the incentives.”
Under Section 9 of the CREATE law, a qualified registered project or activity under an IPA administering an economic zone shall be exclusively operated within the geographical boundaries of the zone. Any project or activity conducted outside the geographical boundaries of the zone shall not be entitled to the incentives.
Mr. Panga said that there is a need to update the CREATE law in order for PEZA to be given an “equal footing” as the Board of Investments (BoI) can provide incentives for IT and business process management firms with up to 100% WFH scheme.
From January to October, PEZA-approved locator investments under the IT sector reached PHP 7.13 billion which comprised 36 projects and 1.05 million direct employment. It also approved 13 developer projects under the IT sector with total investments worth PHP 36.07 billion.
Mr. Panga said PEZA is consulting the IBPAP, Semiconductor and Electronics Industries in the Philippines Foundation, Inc., and Philippine Ecozones Associations on the proposed CREATE amendments that will be given to Congress.
He said the proposed changes to the law would include a longer sunset period, separate Customs territory status, removal of the cap for tax- and duty-free importation and investment threshold of IPAs, and longer fiscal incentives period.
“The 10-year sunset period is so short for existing locators, even the 17 years for existing registered business enterprises,” Mr. Panga said.
“Imagine if that time comes, it will be graduated to the regular corporate income tax (CIT) rate and we are up against ASEAN (Association of Southeast Asian Nations) economies offering a much lower CIT rate. That would surely signal exodus of our existing locators,” he added.
On the investment threshold for IPAs, he said that PEZA has been approving projects with investments far bigger than the current cap.
“It is delaying the process, it takes longer to approve big-ticket projects, so these have to be addressed by the government,” he added. — Justine Irish D. Tabile