Gov’t must reconsider ecozone investments

MINERVA BC NEWMAN

CEBU CITY – Senator Imee Marcos lamented on the policy of the country’s economic managers to leave the creation of new economic zones to the private sector.

“Outrageous!” Marcos, who chairs the Senate committee on economic affairs described it that way after the Department of Finance (DoF) policy and research director Juvy Datufrata bared that the agency intends to transfer the fiscal burden of the government to the private sector, during the hearing on taking up bills to establish new ecozones and freeports in Ilocos Norte, Cavite, Surigao del Sur, and Saranggani provinces.

Marcos through a series of questions found out that 84 ecozones created since 2016 were initiated by the private sector, based on testimony of the Philippine Economic Zone Authority (PEZA).

 “So, the score is 84 credits to the private sector, zero to our economic managers? What a pity!” Marcos said.

She lamented that opportunities to generate revenue and create more jobs especially in the country’s far-flung provinces were being missed due to the “knee-jerk opposition” toward local governments seeking to establish ecozones.

The inflow of foreign direct investments (FDIs) to the Philippines has dwindled from $8.7 billion in 2017 to less than $5 billion in 2019, according to the UNCTAD World Investment Report 2020.

“Compare that to the increase in FDIs in other ASEAN nations like Indonesia, Malaysia, Cambodia, and especially Vietnam which raked in $16.1 billion worth,” Marcos said.

She went on that the country’s foreign investment pie is shrinking, but the economic managers’ recipe for recovery has overlooked ecozones at a time the government is in dire need of more revenue.  “We must recover our losses.”

Marcos cited that the Philippine investment growth faces a triple threat due to the COVID-19 pandemic, the US-China trade war, and the uncertainty brought about by the Corporate Recovery and Tax Incentives for Enterprises (CREATE) bill.

She revealed that the CREATE bill, now awaiting President Duterte’s signing it into law will reduce corporate income taxes to as low as 20 percent but has rationalized incentives for local exporters, shortening the period in which they can be availed and subjecting these to regulatory approval.

There is no longer any reason not to approve ecozones when DoF itself chairs the Fiscal Incentives Review Board (FIRB) that decides on what companies will get incentives and what incentives will be applied, Marcos explained.

“The problem is that our economic managers see tax incentives as expenditures rather than investments in Filipino export potential,” Marcos said, after the National Economic Development Authority (NEDA) assistant secretary Greg Pineda said during the hearing that the country lost P441 billion to incentives.

As the CREATE bill awaits the President’s signature, foreign investors have adopted a wait-and-see attitude for their new projects and plans for expansion in Philippine export industries, which make up 60 percent of the total annual investments approved by PEZA, NEDA said.

This has resulted in job losses, with more than 27,000 workers laid off even before the pandemic, Marcos said.

Creating ecozones from Ilocos Norte to Saranggani take advantage of the country’s proximity to foreign investors based in China and Japan, Marcos said, adding that Chinese and Japanese investors have already signified interest in investing $100 billion in Surigao del Sur.

“We must reconsider this draconian regime of no ecozones and constantly rationalizing the already meager incentives,” Marcos stated. (Photos: PEZA/Google files)