Taguig City – “The Philippine Economic Zone Authority (PEZA) continues to actively invite and attract foreign direct investors to the country and to promote the benefits of investing in the Philippines parallel to the continued support of PEZA to the enhancement of the proposed Corporate Income Tax and Incentives Rationalization Act (CITIRA) bill,” Director General Charito B. Plaza said as she came from her recent trip to Canada.
Plaza noted that the foreign direct investments (FDI) this year has plunged due to the uncertainties brought by issues present in the country, like the proposed CITIRA bill. According to the latest data released by the Banko Sentral ng Pilipinas (BSP), the net FDI inflows reached $556 million in September which is 2.9% lower than the same time last year. Nevertheless, PEZA continues to strive and encourage export industries to invest in the Philippines.
According to Plaza, “PEZA is known worldwide as one having the best practices among all economic zones as well as its incentives package and GIE regime which provide ease of doing business and non-exposure to corruption.”
PEZA is a self-reliant, self-sustaining and resource-generating agency. It is the largest export investment promotion agency in the country which contributes 63% of commodity exports and 16.28% contribution to the Philippine GDP. PEZA also has the biggest 1.5 million directly employed 7.5 million indirectly employed and one of the top contributors of dividends to the national government among all IPAs.
“This is the reason why the management is appealing for a careful and wise judgement by the Senate and the Bicameral Committee on the final CITIRA version that will respect the grandfather rule and the 10 to 15-year transition period for export industries,” explained Plaza.
BSP Governor Benjamin Diokno had expressed that foreign investors adopted a wait-and-see attitude pending the passage of the CITIRA bill, formerly called the TRABAHO bill. PEZA Chief agreed that investors maintained such “wait-and-see” behavior, specifically the exporters and PEZA-registered companies since 2018.
“The sooner the Congress pass the CITIRA bill, the better. But it should contain a good compromise as a win-win solution that will end the uncertainties in our tax regime for corporate taxation,” said Plaza.
Since the pending change of tax incentives by Congress gained traction in 2018 and dragged on till the present, current investors in the country halted their plans to expand in the country and some companies have expressed their potential exits to transfer the production quota to their other branches in the world. Labor groups like TUCP already expressed their concern about the need to prevent job losses from the exits of investors.
Canada’s investors interested to go to the Philippines
During their official investment promotion trip to Canada, Plaza along with her team visited facilities of potential investors to the Philippines such as EnEco, the Silver Valley Farms (SVF), and the Tetratech Holdings. These companies, whose pioneering technologies or products are now being marketed worldwide, have decided to set up by early next year their export-oriented facilities in the PEZA ecozones and to make the Philippines their regional hub.
EnEco, through its partnership with ACS based in Bellingham, Washington, will invest a total of $80 million for the Thermal Oxidation Process System or TOPS gasifier with acid evaporator, which is a waste treatment/disposal facility to be established in Mactan, Cavite & Batangas ecozones. Meanwhile, SVF will engage in cacao production for export where they will apply for a 50-hectare ecozone with a project cost of $5 million per site (excluding ecozone developer investment). SVF plans to put up three production sites for cacao in the country and has explored the viability of growing blueberries in Baguio and Bukidnon.
In addition to this, Plaza noted that Vancouver Airport Authority (VAA) and the Bombardier Aviation have also “expressed openness to manufacturing their automation equipment and supplying their equipment to the Philippines and other countries in Asia.” VAA President and CEO Craig Richmond has also promised to link up PEZA with its affiliate company Vantage, which is involved with airport design, construction & development.
PEZA Chief pushes for CITIRA enhancements
Plaza has been firm to include the agency’s proposed enhancements to the CITIRA bill for it to become a win-win situation for all affected parties. “Once we pass CITIRA in its current version, which is not acceptable to stakeholders, it’s not easy to win back the trust and confidence of our investors again,” she stated.
The Director General also suggested that “for a sure start, CITIRA is best to implement to domestic enterprises who deserve to enjoy a rationalized incentives package.” She added that the implementation will “maximize the Filipino people’s production, manufacturing, export capability, and develop home-grown technology thereby eradicating the country’s import dependence.”
Plaza said that CITIRA shall best focus on developing homegrown technology, utilization of the millions of hectares of idle lands, restoration of major and basic industries such as agriculture, forestry, mineral processing including the new types of economic zones like the defense industrial complex, the Knowledge Innovation Science and Technology (KIST) parks, and aquamarine economic zones and others.
PEZA has already passed its proposed enhancements to the PEZA Board Chairman DTI Secretary Ramon Lopez and the Senators for their review and consideration. The agency awaits for the updated version of the bill by the Senate which consolidates inputs or insights from various stakeholders including PEZA which is the largest investment promotion agency in the country operating nationwide. #