THE Philippine Economic Zone Authority (PEZA) is targeting to grow investments by 5-10% this year, amid lingering investor concern over the government’s plan to rationalize incentives.
“There are many pending applications for expansions of existing locators and new investments that are waiting for the kind of CITIRA (Corporate Income Tax and Incentives Rationalization Act) that will be passed,” PEZA Director General Charito B. Plaza told reporters in a mobile message on Saturday.
“We’re expecting a 5-10% target this year and would be higher if an investor-friendly CITIRA is passed.”
Ms. Plaza said that big-ticket investments for 2020 are in the works, including from Panhua Integrated Steel Company and North Star Valley Food Company of Canada.
In a press briefing on Friday, the PEZA chief said approved investment pledges for the past year declined as investors are taking a “wait-and-see” approach on the details and passage of the CITIRA.
The proposed CITIRA bill calls for the lowering of corporate income tax to 20% from 30% over 10 years, while removing redundant fiscal incentives.
PEZA is pushing for the implementation of a grandfather rule that retains the perks existing locators enjoy, and a longer transition period of 10-15 years.
The House of Representatives passed the CITIRA bill and transmitted it to the Senate last September. The measure is now pending at the Senate.
Finance Secretary Carlos G. Dominguez III expects the law to be passed by March 2020.
Data provided by PEZA showed that approved investments in 2019 dropped 16.19% to P117.54 billion, from P140.24 billion in 2018. The 2018 figure represented a 41% decline in investment pledges from the previous year.
The investments refer to projects at PEZA’s economic zones throughout the country.
Approved investments in manufacturing slipped by 5.01% to P30.35 billion, weighed down by a decline in shipbuilding and chemicals investments.
On the other hand, investments in automotive and auto parts manufacturing increased significantly to P2.36 billion last year, almost nine times the P266 million in investments in 2018. Aerospace parts investments doubled to P2.17 billion.
Investments in the transportation and storage sector almost tripled to P429.93 million, while those in electricity, gas, steam, and air-conditioning supply doubled to P2.18 billion.
However, approved investments declined among high-value sectors, including a 15.14% drop to P66.48 billion in real estate activities and a 17.93% fall to P15.51 billion in administrative and support services investments.
PEZA also saw investments decline in priority sectors such as construction (12.51%) and information technology and business process management (14.53%). — Jenina P. Ibañez