TRAIN 2 fears stall manufacturing growth

MANILA, Philippines — Fears emanating from the second tax reform package continued to drag new investments into the local information technology (IT) and manufacturing sectors.

Philippine Economic Zone Authority (PEZA) director general Charito Plaza said registration of new IT and manufacturing investments in PEZA-administered zones remained minimal, resulting in a decline of  more than a fifth in the agency’s total approvals in the first two months.

“No one is closing or stopping but no new investments in manufacturing and IT until investors know the TRAIN 2 result,” Plaza said.

“Foreign chambers and industry locators/organizations are submitting their position paper on TRAIN 2 appealing not to change the incentives because they have seen continuing investments,” she added.

Plaza did not disclose figures for IT and manufacturing investments for the two-month period. In January alone, IT investments plunged 73.23 percent while manufacturing investments plunged declined by 46 percent.

Total approved pledges dipped 22 percent to P21 billion.

 “Government knows why (there is a drop) because business chambers, foreign embassies, and industry locators sent their petitions to the DOF and Congress about their opposition to TRAIN 2. Industries are fighting for retention of PEZA incentives,” Plaza said.

In 2017, PEZA recorded its worst year for new IT and manufacturing investments.

 Despite ending the year with an 8.89 percent growth in total investment approvals, PEZA registered total IT investments of P15.56 billion and manufacturing investments of P48.36 billion, the lowest for both sectors in PEZA’s history.

 “Manufacturing firms don’t want to invest if there is uncertainty because in manufacturing, it requires huge investment in equipment and machine,” PEZA manager for promotion and public relations Elmer San Pascual  earlier said.