Workers make toys at a factory in Angeles City, Pampanga province, Philippines, March 10, 2023. — REUTERS

By Kyle Aristophere T. Atienza, Reporter

INVESTMENTS approved by the Philippine Economic Zone Authority (PEZA) this year would likely reach over P170 billion, its top official said.

The PEZA Board is set to hold its final meeting on Tuesday, with several investments up for approval.

“As of Dec. 7, we have approved a total of P160.44-billion (investments). We expect to approve an additional P12 billion during our board meeting (Dec. 19),” PEZA Director-General Tereso O. Panga said in a Viber message, putting the estimated PEZA-approved investments for this year at P172 billion.

To date, PEZA has already exceeded its full-year target of P154.77 billion.

Mr. Panga said locator investments would likely account for 60% of this year’s total, adding that most of these are in the export manufacturing industry.

“That’s been our mix of our investment: 60% for locator investments, and 40% for developer investments.”

Mr. Panga said 37% of the investments this year have come from the electronics sector, while around 15% come from the information technology-business process outsourcing (IT-BPO) sector.

“We are also getting investments in areas outside the metropolis,” he said.

Most PEZA-approved investments are located in some areas in the Calabarzon Region, particularly Cavite, Laguna and Batangas, he added.

Samar and Cebu provinces in central Philippines as well as some areas in Central Luzon also bagged significant investments, he added.

PEZA attributed the strong investments to the Philippines’ “sound macroeconomic fundamentals” as well as the country’s participation in free trade agreements. 

Mr. Panga said PEZA has recorded a significant increase in investments from China and Australia, both members of the Regional Comprehensive Economic Partnership (RCEP) that was ratified by the Philippine Senate in February.

“There’s also a big increase in investment coming from the EU (European Union),” he added.

He said PEZA expects more investments from South Korea next year, citing the signing of a free trade agreement (FTA) between Seoul and Manila last month. The country’s FTA with South Korea is expected to be ratified by the Philippine Senate in January.

PEZA said it is bracing itself for global supply chain disruptions and other external headwinds that may affect new investments.

“In the electronics sector, they are forecasting a flat growth for 2024. Electronics, being the predominant source of investments, we will be affected by that,” the PEZA chief said.

The Semiconductor and Electronics Industries in the Philippines Foundation, Inc. (SEIPI) last month said electronic exports could decline 10-12% this year, against the 5% growth previously forecast for 2023, amid global recession, high interest rates, and geopolitical uncertainties.

“On the other hand, we see a bullish forecast for IT-BPO. The sector has been at 10-15% growth for several years now. We remain bullish with the growth of IT-BPO,” he said.

The IT and Business Process Association of the Philippines (IBPAP) earlier said it is targeting at least 7% revenue growth for 2024. The IBPAP is expecting the industry’s revenues to grow by 8.8% to $35.4 billion this year.

Mr. Panga said PEZA also anticipates an increase in investments involving metal fabrication or skilled manufacturing, especially in the electronic vehicle (EV) sector.

“These will drive the growth of PEZA and new ecozone development in new areas.”

He said EV players from China, the United States, Indonesia, South Korea, and Japan are expected to put up production sites in the country next year.

Mr. Panga, meanwhile, said PEZA hopes to benefit from the decision of major foreign companies, especially those in the technology sector, to diversify their production away from China.

“It’s not just multinational companies that are relocating from China, but also mainland Chinese manufacturing businesses to be able to avail of GSP+ privileges for their exports,” he said.

The European Parliament and Council have agreed to extend the existing Generalized Scheme of Preferences Plus (GSP+) arrangements for another four years as an interim measure while they negotiate proposed reforms to the trade scheme.

Under the scheme, the Philippines enjoys zero duties on 6,274 locally made products. The current arrangement was originally set to expire by end-2023. With the four-year extension, the Philippine participation in the GSP+ will run through 2027.

On Friday, Presidential Adviser on Investment and Economic Affairs Frederick D. Go said Manila is working to get a “respectable” market share of firms moving out of China, particularly in the semiconductors industry, citing a “catch-up plan” that seeks to realize the country’s “untapped” export potential of $49 billion.

Mr. Go, who is also president and chief executive officer of Robinsons Land Corp., said he wants to ensure the Philippines “gets a respectable market share of this pivot away from China, especially in the semiconductors sector.”

“There is a pivot now away from China by a lot of the Western as well as the Asian countries and a lot of the attention is now going to our neighboring countries such as Thailand, Indonesia, and Vietnam,” he said at the general meeting of the Philippine Exporters Confederation, Inc., based on a press release.

Michael L. Ricafort, chief economist at Rizal Commercial Banking Corp., said the Philippines has been a “lower cost alternative” for developed countries.

“The diversification of global supply chains and ecosystems for electronics, electric vehicles, renewable power/energy would also be one of the major sources of foreign investments/locators in the country,” he said in a Facebook Messenger chat.

Mr. Ricafort said investors are also likely interested in the resurgence of mining activities in the Philippines, “especially minerals used in the global supply chain for batteries, electric vehicles, and renewable energy.”

Meanwhile, Leonardo A. Lanzona, who teaches economics at the Ateneo de Manila University, welcomed the higher investments approved by PEZA but noted it does not “guarantee immediate implementation.”

“The actual investment may occur over time as the approved projects progress and are implemented. Also, it is also important to determine how many workers are being employed into these investments. A significant portion of these skilled manufacturing, involving digital gadgets and even robotics,” he said via Messenger chat. 

“PEZA needs to be more transparent about how this capital formation will impact the local economy, particularly the labor markets.”