PEZA-registered investment falls 26% in 2016

INVESTMENT registered by the Philippine Economic Zone Authority (PEZA) fell over 26% in 2016, mainly due to the political uncertainty during the presidential elections and a wait-and-see attitude on Philippine and US economic policy.

PEZA Director- General Charito B. Plaza told reporters yesterday that PEZA had accredited a total of P218 billion in investment in 2016, dropping from the 2015 level of P295 billion.

This was caused by the “usual” uncertainty among investors during the transition phase into a new government, she said, while the anti- Western statements from President Rodrigo R. Duterte and the anti- outsourcing stance of US president-elect Donald J. Trump also giving investors pause.

In spite of this, she said that she is hoping to either “triple or quadruple” investment levels in 2017, following the positive economic indicators generated in the past six months.

“During the election period, there was a halt because the investors were watching who would win,” she said in a media briefing.

“This especially affected the American companies because of the pronouncements of President Duterte and president-elect Trump. They lay low in terms of expanding their operations, particularly in the Business Process Outsourcing industry.

Mr. Duterte announced while on a trip to China his plan to “separate” from the United States — which his economic managers explained was an intent to pursue an independent foreign policy.

Ms. Plaza hopes to make up for the losses with the build-up of 61 new economic zones approved last year, mostly Information Technology (IT) Parks. This comes on top of the existing 358 economic zones.

PEZA approved three manufacturing ecozones, five agroindustrial zones, one medical tourism zone and two tourism economic zones, while the remaining 50 are made up of IT parks. Apart from this, there were also 18 zones that expanded last year.

While investments went downhill, other PEZA economic indicators suggest a positive outcome as 3,780 companies became PEZA accredited locators in 2016.

In the first 10 months of the year, PEZA economic zones directly created 1.32 million jobs, up over 6% from the same period in 2015.

Export sales of PEZA-accredited firms, on the other hand, rose 6.25% to $38.92 billion during the 10 months to October.