By Jenina P. Ibañez
THE Philippine Economic Zone Authority (PEZA) reported an almost 30% decline in approved investments in the first quarter mainly due to the lockdown aimed at containing the coronavirus disease 2019 (COVID-19).
In a statement on Wednesday, the investment promotion agency said it had not approved new investments in March after its board failed to meet after the enhanced community quarantine (ECQ) was implemented in Luzon on March 17.
But even before the ECQ, PEZA said total approved investments slid by 5.85% in the first two months of the year.
As a result, approved investments dropped by 27.98% to P16.5 billion in the first quarter from P22.9 billion in the same period last year.
PEZA is the second-biggest contributor to investment pledges after the Board of Investments.
“PEZA’s investments continued to be challenged for the first quarter of 2020. On top of this issue is still the continuing uncertainty posed by the rationalization of incentives under the pending legislative measures,” PEZA Director General Charito B. Plaza said, referring to tax reform proposals to rationalize incentives and reduce corporate income tax.
“Added to this is the current pandemic caused by the COVID-19 virus, which has caused a tremendous and immediate impact on PEZA’s export manufacturers and exporters of IT-enabled services (BPOs),” she said.
Ms. Plaza said PEZA is strictly following quarantine measures before reviewing pending applications, expansion plans, plant construction and investor partnerships.
PEZA projects in the first quarter fell by 32% to 87 from 128 a year ago.
As of January, workers employed directly by PEZA enterprises grew by 6% to 1.57 million from 1.48 million.
The value of exports by PEZA-registered enterprises went up by 8.24% to $4.36 billion as of January, from $4.03 billion a year ago.
PEZA said first-quarter export and employment figures were still being completed.
IT INVESTMENTS DROP
PEZA-reported investments in information technology (IT) plunged by 42.02% to P2.33 billion in the first quarter, from P4.012 billion a year earlier after a 25% decline in the number of projects to 30.
As of January, direct employment in IT firms rose by 12.04% to 825,133, while exports jumped 15.48% to $1.15 billion.
Export-oriented and outsourcing businesses are allowed to remain operational during the lockdown provided they implement work-from-home measures, or provide housing and transportation to its minimal work force.
PEZA data said that out of 1,749 businesses, almost 60% or 1,042 remain operational. Among these, only 38 are fully operating.
There are 303 companies focused on work-from-home operations, while 166 are working with a minimal work force and 535 have a mix of both.
The PEZA-registered businesses that remain operational have a work force of more than 960,000 out of 1.14 million total workers.
“The Philippines has forthcoming opportunities after the pandemic to make the country attractive to more investments that may be transferring from China. The pandemic shows how important it is to make our economy self-reliant, self-sustaining and resource-generating,” Ms. Plaza said.
“There is a silver lining as export companies are looking to expand to other ASEAN nations, and not just simply invest in one country, to ensure business continuity in the event of another global crisis. We are hopeful that this will mean more business opportunities for the country and more job opportunities for the Filipino people.”
Ms. Plaza told BusinessWorld on April 1 they would cut their 2020 investment projections after initially targeting 5-10% growth. Committed investments fell by 16.19% last year.
On Tuesday, the PEZA chief called for a unified plan in addressing the coronavirus pandemic, citing that local government rules that do not comply with national guidelines, and which continue to hamper the mobility of goods and workers.
“Local government units should not separately address the pandemic and create invisible walls. Lockdown policies per island or per region greatly affect or hamper the flow of goods and mobility of workers because of the different executive orders imposed by the LGUs,” Ms. Plaza said.