Policy doubts cut Peza investments by 40%

Credit to Author: ANNA LEAH E. GONZALES| Date: Sun, 13 Jan 2019 16:32:30 +0000

Investment pledges approved by the Philippine Economic Zone Authority (Peza) dropped by 40 percent last year due to concerns over the government’s plan to rationalize fiscal incentives.

Data sent by Peza over the weekend showed investment pledges during the period amounted to P140.24 billion, down by 40.97 percent from P237.57 billion in 2017. They also indicated that total number of projects also went down by 4.51 percent to 529 from 554.

“The drop is for new investments caused by the uncertainties of change of policies and incentives. New investments dropped also because of the forthcoming election where the next Congress might again change the policies. Investors are afraid to invest if there will be changes in the incentives and laws,” Peza Director General Charito Plaza said in a text message.

While investments and number of projects declined, data showed direct employment increased by 7.33 percent to 1.499 million jobs from 1.397 million the prior year. Value of exports likewise rose by 6.58 percent to $45.17 billion compared to the $42.38 billion in 2017.

“Peza’s export income and employment did not drop but continuously increased because [industries] are maximizing their production before Trabaho bill which might change the policies will take effect,” said Plaza.

Plaza said the increase in export income was also due to higher demands in the world market and the United States-China trade war which benefited the Philippines and other countries.

While investments in most sectors went down, those in the Information and Technology (IT) sector grew by 32.20 percent to P20.56 billion from P15.55 billion, he noted. The sector’s number of direct employment went up by 8.05 percent to 733,479 from 678,799 while export income also rose by 9.33 percent to $9.81 billion from $8.97 billion.

“Peza’s existing IT industries are expanding in the last two quarters when the uncertainties were removed by the Senate’s non passage of [current version] of Trabaho bill. IT increased also because they are catching up before new laws and change of policies will take place,” said Plaza.

“IT also can easily pull out and transfer if they’re unhappy of the new policies. They replace their movable equipment every 3 years unlike manufacturing, processing and other heavy industries which are capital intensive so they’re very careful in the choice of country to invest their huge capital and machineries. IT industries are attached to our English speaking and young manpower,” she added.

Plaza however assured that Peza continues to encourage industries to expand and not to fear policy changes because it is doing its best to retain the benefits and incentives that are working and even enhance those existing to make the Philippines very competitive with other countries in attracting investors.

Peza expects investments to increase again after the election and once a “better Train 2 version” is filed in Congress, she added.

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