Export-oriented investments slump in last 2 years

Investment commitments, mostly by foreign investors for the exports market, registered by the Philippine Economic Zone Authority (PEZA) showed a dramatic 36.4 percent decline on the second year of the Duterte administration, according to official data.

From July 1, 2017 to June 30, 2018, investments registered by PEZA reached only R170.417 billion from R268.364 billion committed investments on the first year of the Duterte government or from July 1, 2016 to June 30, 2017. Combined, there were a total of R438.781-billion investments approved by PEZA in the first two years of this current administration.

The sharp decline in investment approvals by PEZA was largely due a correspondingly decline in the inflow of projects. There were only 564 projects registered on the second year of this administration or just half of the 1,076 approved in the previous year.

The slump in investments had also made a dent on the employment generation of PEZA to only 81,842 in the second year or 31.2 percent lower than the 119,031 jobs created in the first year of this administration. Exports also slowed down to $48.11billion from $50.685 billion the previous year.

On the first year of the Duterte administration, PEZA was complaining of several approved special economic zones that were awaiting Malacañang proclamation. PEZA blamed the inaction over these projects as one of the reasons for the slowing down of investments.

PEZA also cited the uncertainty among American IT and BPO firms to invest here because of the antiglobalization policy of the Trump administration.

In the first half of this year, investment pledges registered PEZA plunged 55.86 percent from R120.220 billion to R53.067 billion in the same period in 2017. The number of project registration also decreased by 14 percent to 258 from 300 in the same first semester of 2017.

PEZA Director-General Charito B. Plaza said investors held off their expansion and new projects in the country due to the dark cloud of uncertainty brought about by the proposed second package of the government’s comprehensive tax reform program (CTRP) that seeks to remove incentives and emasculate the exportgenerating agency.

“Because of uncertainties brought by the second package or TRAIN 2 although the objectives are meaningful, but the bill sends different interpretations and investors are also worried because their interpretation is that PEZA will be demolished because present authorities will remove the incentives and PEZA will be replaced by the Fiscal Incentives Regulatory Board (FIRB),” noted Plaza.

Plaza said that some PEZA locators with plans to expand their operations in the country have already raised the possibility of “pulling out” and been given signals or authority by their principal offices to start considering looking at possible countries to transfer their operations if the current bill is passed into law.

To arrest this downhill in investments inflow, Plaza appealed to the government particularly the Department of Finance, the Lower House and Senate to address this apprehension immediately because the impression really is that “there is no stability of laws and policies in the Philippines.”

“They (investors) are happy with the PEZA but why are they changing the rules of the game. The performance of PEZA has proven that our incentives are working,” she said.