DTI opposes PEZA’s planned amendments to charter

by Louella Desiderio (The Philippine Star), Jul 23, 2018

MANILA, Philippines — The Department of Trade and Industry (DTI) opposes the plan of the Philippine Economic Zone Authority (PEZA) to amend the Special Economic Zone Act to become a government owned and controlled corporation (GOCC) directly under the Office of the President and have the power to grant tax perks and recommend subsidies for basic industries.

“My answer is clear. Nope. It can’t be done,” Trade and Industry Secretary Ramon Lopez said when asked about PEZA’s plan to push for amendments to the law enacted in 1995 to create the investment promotion agency.

PEZA is engaged in investment promotion, it would be better if the agency remains under the DTI, Lopez said.

“And the investment promotion is indexed with the kind of industrial development that we want, what kind of industries will we prioritize, what location. We have to be aligned,” he said.

Earlier, PEZA director general Charito Plaza said the agency is pushing for amendments to the law to make PEZA a GOCC under the Office of the President.

She also said the agency wants its board to have the power to grant incentives, as well as recommend subsidies in the form of lowest cost of power or rent of land to investors in basic industries such as steel, subject to the approval of the President.

The amendments are being pushed in response to the proposed second package of the Tax Reform for Acceleration and Inclusion (TRAIN) Law.

She said as a Fiscal Incentives Review Board (FIRB) would be responsible in granting fiscal incentives to enterprises upon the recommendation of investment promotion agencies under the TRAIN 2, PEZA would be reduced to just an agency for registration of investments.

Lopez said he would meet with Plaza to discuss the matter.

He said discussions would also be conducted with industry associations, PEZA-registered firms, and potential investors to find out more about their concerns as investment pledges with the PEZA have been declining.
Investment pledges approved by the PEZA reached P53.07 billion from January to June, 56 percent lower than the P120.22 billion in the same period last year.

Meanwhile, Lopez said investments approved by the Board of Investments (BOI) likely posted close to 28 percent growth in the first half from last year’s P188 billion, based on preliminary data.

“There might be unfounded uncertainties. We’ll have to validate. You will wonder why others are increasing. BOI approvals continue to increase. There could be other factors,” Lopez said.

Apart from uncertainties on the TRAIN 2, he said there may be fear on the part of investors, particularly those who are export-oriented, given the US-China trade war.

“There is that fear…but there might be opportunity for us because they might locate here. They should see that in this light, that there is still opportunity,” he said.