Ecozone investments plunge by 68% in Q1

MANILA, Philippines — Investments approved by the Philippine Economic Zone Authority (PEZA) fell 68 percent in the first quarter from a year ago with investor sentiment still affected by the ongoing pandemic, as well as the upcoming change in leadership.

In a press conference, PEZA director general Charito Plaza said the agency approved P8.14 billion worth of investments from January to March, down from P25.38 billion in the same period last year.

The approved investments for the first quarter this year are for 29 new and expansion projects.

Plaza said the drop in investments in the first quarter was expected.

“This is anticipated because the pandemic is still there. Then, we have the Ukraine war. And then the election. Usually during election period, the investors would wait for what is going to be the result of the election because they already anticipated there will be new policies, laws and rules that will be adopted by the next administration,” Plaza said.

She said PEZA expects investments in ecozones to pick up after the elections.

The approved investments in the first quarter are projected to have annual export sales of $232.45 million and generate 3,168 direct jobs.

Majority of the approved investments in the first quarter came from Australia, Austria, British Virgin Islands, China, Israel, Italy, Liechtenstein, New Zealand, Singapore, Spain, Switzerland, Taiwan and Thailand.

Exports from ecozones amounted to $10.575 billion in the first quarter, 10.93 percent higher than the $9.53 billion in the same period last year.

Last year, investments approved by the PEZA reached P69.3 billion.

With a new administration set to come in after the May 9 elections, Plaza said the PEZA would want the new set of government leaders to make it a priority to institutionalize the work-from-home (WFH) arrangement for firms operating in ecozones, particularly information technology - business processing outsourcing (IT-BPO) companies.

“We hope the next administration can address this immediately so we can put a stop to the worries, frustration (of registered business enterprises),” she said.

She said the PEZA law has to be amended for this.

Trade Secretary Ramon Lopez earlier said  enterprises wishing to do hybrid work or adopt both on-site and WFH may register with the Board of Investments (BOI)  to continue enjoying incentives.

“If BOI is open to that idea, why can’t we simply allow locators to avail of WFH without having to move out and be on-site and avail of WFH because anyway this is being extended to BOI-registered companies? All we are asking is equal protection and this is provided also in the CREATE (Corporate Recovery and Tax Incentives for Enterprises) rules,” Plaza said.

IT-BPO firms have been pushing for  hybrid work in the long term to remain competitive.

At present, IT-BPM firms operating in ecozones are only allowed to implement the 70-30 hybrid work arrangement, with 70 percent of the workforce on-site and 30 percent on WFH to be able to continue to enjoy incentives.