06 October 2020 (Tuesday)
Pasay City – While employments and investments are being affected as the global economy suffers from the COVID-19 pandemic, the Philippine Economic Zone Authority Director General Charito “Ching” Plaza urged whole-of-government support to maintaining and enhancing the Philippine competitiveness for exports and ecozone investments saying that there’s tighter competition among neighboring countries to keep investors and attract new ones.
“We need to adapt in this pandemic and remain competitive to attract more investors and keep the ones we already have,” said Plaza. “Specifically, to remain competitive and maintain confidence in PEZA’s brand of ecozone attraction,” Plaza said “Our position is for the retention and enhancement pf the incentives package which is tried, tested, and globally-competitive especially in this time of pandemic.”
“The retention of the tax incentives will keep our 4,587 export companies and 408 economic zones (both vertical and horizontal ecozones) and the directly and indirectly employed Filipinos in various ecozones,” said Plaza.
The PEZA Chief lamented that “While Congress aims to reform corporate taxes, PEZA provides assistance and reprieves to registered locators in ecozones to be able to keep the existing investors and attract new ones that are moving the location of their companies due to the pandemic”
“Changing the rules and system will discourage the export companies who are trying their best to keep their investments and jobs in the Philippines so everybody can survive amidst the pandemic,” she added.
“In an atmosphere of world recession and export companies looking to consolidate their resources and transferring to other profitable countries with better incentives, we must seek to assure our current investors that the Philippines remains the best investment haven hub in Asia because of our one-stop, non-stop shop,” said Plaza.
According to the United Nations article on the World Economic Situation and Prospects as of mid-2020, the world economy is projected to shrink by 3.2 % this year. GDP growth of countries will also be on a decline. In a grim conclusion, the UN states that “the cumulative output for 2020 and 2021 will nearly wipe all the output gains from the past 4 years.
“The effect of the lockdowns and limited international flights and logistics have decreased or slowed down economic activities, trade, and financial performance of countries across the globe, resulting in job loss and an increase in poverty,” said Plaza.
In a study conducted by S&P Global Ratings, they concluded that the economy is predicted to shrink by 9.5% this year because of the effect of the pandemic.
COVID-19 cannot stop PEZA
Leading according to balancing acts during this time of quarantine in the country, PEZA management has been assisting in the coordination with the Inter-Agency Task Force on Emerging Infectious Diseases (IATF-EID) and concerned authorities for the continued operations of locator companies and for keeping jobs of thousands of Filipinos.
Of the 1.6 million directly employed workers in PEZA-registered companies and enterprises, 1.1 million of them are already back to work. PEZA locator companies are already at 85% operational to date.
“PEZA takes strong and smart initiatives as we understand the dire consequences of the prolonged quarantines. Mindful of strict health protocols to protect the health of our workers, there are shuttle services and dormitories were also provided to lessen their exposure to public transportation,” said Plaza.
PEZA also suspended the existing 30% limit on the total revenue on the work-from-home (WFH) arrangement effective March 17, 2020, wherein a 90% limit on the total annual revenue on WFH arrangement shall be allowed until December 31, 2020.
Additionally, under PEZA MC No. 2020-011, the Authority allows PEZA-registered enterprises to establish workspaces in non-PEZA registered sites.
Many countries are in fact dependent on China for manufactured goods. In this time of pandemic, many investors are seeking to branch out to different neighboring countries or return to their home country. In this context, ASEAN countries are competing for investments by calibrating their policies and incentives to attract investors.
Several ASEAN countries have issued incentives to counter the economic impact of the coronavirus (COVID-19) outbreak. These come in the form of fiscal and non-fiscal incentives as well as cash handouts.
The Vietnam government is already preparing to give out incentives in the form of tax breaks, delayed tax payments, and delayed fees in land use for those involved in businesses. Indonesia plans to set up more industrial parks by 2024 and reducing its corporate tax from 25 to 20 in the coming years. Malaysia on its part is coming up with tax exemptions on manufacturers who will be investing a minimum of about $117 million in the country. Thailand on the other hand is looking into extending its tax break for companies who are into the health care industry as the pandemic highlighted the world’s dependence on China for most of its masks and other PPEs. Cambodia has also published regulations that seeks to mitigate the impact of the pandemic by being more lenient in the imports of raw materials, parts, and accessories used for textile and garment production. Additionally, companies heavily affected by the disruption of production will be granted tax holidays for up to one year as well.
As the Philippines compete with other countries PEZA Director General Plaza remains firm on her stand that “In light of the CREATE bill, let us remember that these incentives have been working from the start. It is our appeal that we do not cause fear and uncertainty in the hearts of potential investors and even those who are already here so that we will be able to keep those who are already here and provide confidence in those who are looking into the Philippines that this country is a great place to invest in.”