THE PHILIPPINE Economic Zone Authority (PEZA) is still hopeful it could approve at least P200 billion worth of investments this year, despite the steep drop seen in the first half.
The statement comes after the investment promotion agency (IPA) reported a 43.6% decline in approved investments to P45.48 billion in the first half, from the P80.59 billion approved a year ago.
Despite the decline, PEZA Director-General Tereso O. Panga said he is still optimistic the board could approve around P200 billion to P250 billion worth of investments this year, if Congress passes the bill amending the Corporate Recovery and Tax Incentives for Enterprises (CREATE) law.
The CREATE MORE (Maximize Opportunities for Reinvigorating the Economy) bill seeks to cut the corporate income tax to 20% from 25%. The House of Representatives approved the bill on final reading in March. At the Senate, the bill is pending before the Ways and Means Committee.
“The early passage of CREATE MORE, despite the uncertainties arising from the upcoming US presidential elections, should stimulate, particularly big-ticket investors and expanding locators, to register their projects with PEZA in preparation for the upturn in the economy with the expected recovery of the global electronics industry by next year,” Mr. Panga said.
“As such, we remain hopeful that we will achieve this year our (target of) P200-250 billion in annual investments as we facilitate the big-ticket projects of our prospective investors, both local and foreign,” he added.
The CREATE MORE bill is considered a top priority by the Legislative-Executive Development Advisory Council (LEDAC) and is expected to be passed before the end of the 19th Congress in June 2025.
If signed into law, CREATE MORE will also return to IPAs the power to approve and deny tax incentives. Currently, the mandate to grant appropriate tax incentives to registered business enterprises is under the Fiscal Incentives Review Board.
CREATE MORE will also expand the grant of value-added tax (VAT) exemption on imports and VAT zero-rating on local purchases to existing export enterprises accredited by the Export Marketing Bureau.
Meanwhile, Mr. Panga said he is also banking on the inclusion of the Philippines as a beneficiary of the US CHIPS and Science Act to drive more investments.
“We anticipate more trade and investments coming in given the recent trilateral agreement among the US, Japan and the Philippines and prospects from the US CHIPS and Science Act that count the Philippines as a primary beneficiary of these commitments,” he said.
The US, through the CHIPS Act, is seeking to incentivize chipmakers to relocate from China back to the country or to other friendly nations.
“The Philippines is also benefiting from its accession to the Regional Comprehensive Economic Partnership and the forthcoming free trade agreement with South Korea, expanding our sources of trade and investments,” he added.
Meanwhile, Mr. Panga said they expect to attract new pharma-related investments after the Victoria Industrial Park was proclaimed a special economic zone by President Ferdinand R. Marcos, Jr. on July 4.
Previously, PEZA said it was eyeing the economic zone (ecozone) in Tarlac to be the pioneer pharmaceutical ecozone in the Philippines.
“The overarching objective is to complete the supply chain to allow for local manufacturing of essential medicines and medical devices, including healthcare services, making them more affordable and accessible to ordinary Filipinos,” he said.
In particular, PEZA said that it will be prioritizing investments in research and development (R&D) and in manufacturing.
“In addition to this, PEZA-registered First Bulacan Business Park (FBBP), which was proclaimed in 2021, is also seen to host medical R&D for the manufacturing of innovative, over-the-counter and generic drug products, medical instruments, and pharma cold chain,” the agency said.
FBBP is adjacent to the First Bulacan Industrial City, dubbed the Pharma City of the North, which is home to eight pharma firms such as Lloyd Laboratories, Pascual Laboratories, Lumar Pharmaceutical, Cargill Phils., and Cosmetique Asia.
As of December, there are 27 pharma and medical device manufacturing companies in PEZA zones, which account for P25.53 billion in investments and over 19,000 jobs. — Justine Irish D. Tabile