PEZA hoping expansions will offset expected decline in new project proposals this year
THE Philippine Economic Zone Authority (PEZA) said registered investments for new projects are expected to decline in 2018 but is hoping expansion proposals will help take up the slack.
“We feel that the declines can be tempered,” PEZA Director-General Charito B. Plaza said in a news conference at the agency’s headquarters in Taguig City, when asked for her outlook on new investment pledges.
In the first nine months of the year, investment registrations at PEZA fell 55.28% year-on-year to P87.85 billion.
PEZA was initially targeting to end 2018 with a percentage growth increase in the three digits, but revised the goal downward twice — first to 10% before forecasting a contraction.
Among the factors expected to keep new investment from declining more steeply are expansion by PEZA locators amid a looming overhaul of fiscal incentives under the Tax Reform for Attracting Better and High-quality Opportunities (TRABAHO) bill.
“Existing investors have taken a wait-and-see position, though some are expanding because of increased demand,” Ms. Plaza added.
The expansion trend first emerged in August within the information technology-business process outsourcing (IT-BPO) industry.
In the nine months to September, investment applications in the IT-BPO sector grew 8.8% year on year, making it the only sector to post growth during the period.
Ms. Plaza said in August IT-BPO investment grew 12% month on month, turning around after seven consecutive months of contraction.
She noted the investment applications by Convergys Philippines Services Corp. and Sitel Philippines Corp.
Ms. Plaza said this improvement in the IT-BPO sector appears to end a period of uncertainty for the industry after US President Donald J. Trump declared an America First policy encouraging businesses to transfer global operations back to the US.
She said the White House seems to want manufacturing operations to relocate to the US “but not services.”
US investment accounts for more than two-thirds of the sector, which consists of over 260 IT-BPO firms or nearly 70% of the 390 companies registered with PEZA.
Asked if she sees this trend sustained toward the end of the year, Ms. Plaza said investors are “motivated… to hold on.”
Next year, PEZA expects the elections to dampen prospects of a recovery in investment pledges, as investors again take a wait-and-see attitude pending more clarity on the makeup of the new legislature.
“Because of the forthcoming election… investors are on hold. They will not expand. New investors will take a wait-and-see attitude,” Ms. Plaza said. — Janina C. Lim