‘NCR ban could dent ecozone investments’

Elijah Felice E. Rosales | BusinessMirror | June 24, 2019

Last updated on June 24th, 2019 at 01:53 am

Developers over the weekend warned that investment inflows to economic zones could further decline in the face of President Duterte’s moratorium on economic zone development in Metro Manila.

Philippine Ecozones Association President Francisco S. Zaldarriaga said the President’s order will prevent business-process outsourcing  expansions, as BPO operations are mostly located in the capital. This could further slow down the development of the information-technology industry, where companies are mostly registered with the Philippine Economic Zone Authority (Peza).

“It may have nominal effects on the BPOs, specifically the Pogo [Philippine offshore gaming operations],” Zaldarriaga told the BusinessMirror.

Industry sources indicated, however, that while the immediate impact may not be deep or extensive, the blow could be felt in the medium and long term as most of the BPOs are headquartered and operate in the National Capital Region.

Investments in the IT industry from January to April declined 7.08 percent to P4.63 billion, from P4.98 billion in the same period last year. This was reflective of the overall slower investment inflows to the Peza that slumped 24.54 percent to P29.49 billion, from P39.08 billion, in the four-month period.

Economic zone developers and firms are apparently holding on to their expansion plans in anticipation of an overhaul in the country’s corporate tax and incentives regime.

Zaldarriaga said investments in the manufacturing industry, however, will remain steady as long as the government does not rationalize tax incentives for economic zone firms. He added the President’s order will most likely benefit developers who poured in capital in putting up economic zones outside of Metro Manila.

Manufacturers, such as semiconductor exporters, locate their assembly plants near but not within Metro Manila, such as in Southern Tagalog provinces Laguna and Cavite.

“For the main line manufacturing investors, however, there should be little effect assuming the existing Peza incentives are not tampered with. It will have positive impact on our local ecozone developers who have invested billions of dollars in an effort to decongest Metro Manila,” he added.

Semiconductor and Electronics Industries in the Philippines Foundation Inc. President Danilo C. Lachica said in a text message there is not much land in the capital at present to accommodate the registration of more economic zones.

“Our members are outside Metro Manila. There may not be big enough land in Metro Manila to accommodate factories of electronic companies,” Lachica said.

The President last Monday issued an administrative order that seeks to spur growth in rural areas through the development of economic zones in the countryside.

In doing so, Duterte instructed the Peza to no longer accept, process or evaluate applications for the establishment of economic zones in Metro Manila. The order, however, does not prevent firms from operating on existing economic zones in the capital.

Source: https://businessmirror.com.ph/2019/06/24/ncr-ban-could-dent-ecozone-investments/