24 June 2020 (Wednesday)
Taguig City – While uncertainties remain on how soon the country can end the pandemic and flatten the curve from the 31,825 cases reached as of June 23, the Philippine Economic Zone Authority (PEZA) Chief has called for the Government to help keep existing investors by maintaining status quo on its incentives as well as the retention of its authority and powers as provided under Republic Act no. 7916 or the Special Economic Zone Act.
“It’s a double whammy that many Filipinos, both OFWs abroad and Filipinos here in the country are losing jobs, at the same time the Philippines is becoming less competitive to ASEAN neighbors in attracting the transferring investors and instead be susceptible to investors leaving the country during this pandemic. In this context, PEZA remains firm in its position to call for a status quo for its tried, tested, proven, and globally competitive incentives package, hence an exemption from the Corporate Recovery and Tax Incentives for Enterprises Act (CREATE) bill, formerly known as the Corporate Income Tax and Incentives Reform Act (CITIRA) bill,” said PEZA Director General Charito “Ching” Plaza.
“With the world recession caused by the COVID-19 pandemic, export companies are expected to consolidate their resources in branches from other countries and close those located in countries without investor-friendly incentives and unstable economic and investment conditions,” Plaza says.
According to Plaza, “The status quo shall also afford stability and confidence among registered enterprises and sustain the reputation of the government that it honors and respects existing contracts and/or agreements.”
The Director General noted that, “PEZA's registered companies should have a status quo of the current gross income tax (GIT) regime. The GIT, in lieu of all national and
local taxes, is one of PEZA’s significant attractions in generating investments. It facilitates the Ease of Doing Business (EODB) in PEZA Ecozones.”
“Likewise, there is a need to provide a minimum 5-year rehabilitation period for the ecozone export-oriented locators affected by the COVID-19 pandemic because they are businesses vulnerable to the effects of the pandemic that impacted global trade, exports, and imports,” noted Plaza.
“Keeping the trust and confidence of our existing investors FDIs and Filipino exporters and domestic enterprises must be our priority in restoring back the economy and investment interests in the country,” quips the PEZA Chief.
She added, “Tax reforms must happen where they are needed and this is for domestic markets, not for export-oriented tax incentives. We should instead enhance it given the global competition for investments. Government leaders and lawmakers need to recognize the fact that the Philippines’ edge for FDIs is our existing tax incentives.”
Addressing efficiency factors
Plaza reiterates the importance of “implementing an enhanced economic stimulus package for our exporters and ecozone operators that will address the country’s lacking efficiency factors for investments like digital and physical infrastructures and lower power rates.”
According to the Director General, “Instead of tinkering with current provisions of the tax incentives, we must help our investors who must be given assistance and reprieves to be able to rehabilitate from the effects of the COVID-19 pandemic.”
PEZA’s inputs to the PESA bill
PEZA has submitted its inputs in the Philippine Economic Stimulus Act (PESA) bill to the Congress. The recommendations include the creation of more economic zones to spread development in the countryside as well as providing more public works infrastructures, cheaper and quality power and utilities, construction of logistics and transportation hubs and food terminals in every region.
“We must develop our millions of hectares of idle lands by creating more economic zones based on what is the natural resource in the area to complete the supply chain and remove our import-dependence. This way, we can attract investors to invest in the countryside and fully industrialize the area by bringing in new jobs and new technology among others,” explained Plaza.
The Director General added, “With 40,000 returning jobless OFWs, they must be facilitated with jobs and livelihood support to encourage them to go back home to their provinces.”
Plaza noted, “Retaining the current fiscal incentives of PEZA will be valuable towards achieving the directives of President Duterte under Administrative Order (AO) No. 18 entitled “Accelerating Rural Progress through Robust Development of Special Economic Zones in the Countryside” and Executive Order (EO) No. 114 known as “Institutionalizing the Balik Probinsiya, Bagong Pag-asa Program as a Pillar of Balanced Regional Development, Creating a Council Therefore, and for Other Purposes”.
“We will leave the decision to the wisdom of our respected senators but we'll continue to call for a much careful study of the CITIRA/CREATE bill in order to keep our 4,542 export companies and its 6.5 million directly and indirectly employed workers,” concluded Plaza.
“We call on our LGUs, the private sector, the farmers, and the MSMEs to take on this opportunity and promote investments in the countryside,” said the Director General.
Since 2016, when Duterte became President and appointed Director General Plaza in PEZA, there are now a total of 73 proclaimed new ecozones in the period of 2016 to current date in 2020 which are comprised of one (1) Agro-Industrial Economic Zone, fifty-two (52) Information Technology Centers, nine (9) Information Technology Parks, ten (10) Manufacturing Economic Zones, and one (1) Medical Tourism Center. ₱ 88.3 Billion is the total amount of investments brought about by the 73 ecozones proclaimed from October 2016 – June 2020.
Now in its 25th year since it was when it was established by Republic Act 7916 on February 21, 1995, a revolutionized PEZA aims to add its present 408 economic zones nationwide, 4,542 locator companies directly and indirectly employing 6.5 million Filipino workers as of May 2020.