MANILA, Philippines — Contraction of US investments in the country’s economic zones persisted in the first quarter behind concerns on the government’s second tax reform package, while investments from China continued to gain steam due to improving ties with the country.

After hitting a 13-year low last year, US investment pledges with the Philippine Economic Zone Authority (PEZA) plunged by 76.8 percent in the first three months to P449.5 million from P1.94 billion in the same period in 2017.

“There is a growing perception that TRAIN 2 will make PEZA incentives less attractive. But it is hard to draw conclusions from just one quarter,” American Chamber of Commerce of the Philippines senior advisor John Forbes told The STAR.

PEZA has been one of the biggest magnets of foreign direct investments to the country with various incentives offered in its export processing zones across the country.

The investment promotion agency administers 380 operating economic zones, 74 of which are manufacturing ecozones, 263 are IT parks and centers, 22 agro-industrial ecozones mostly in Mindanao, 19 tourism ecozones, and two medical tourism parks.

Aside from US investments, pledges from the UK and Singapore have also posted a sharp decline in the first quarter.

PEZA-approved UK investments plunged by 58 percent to P1.54 billion from P3.62 billion in the first quarter of 2017, while Singapore pledges declined by 87 percent to P549.56 million from P4.23 billion.

Combined with projects registered with the Board of Investments, US pledges plummeted by a total of 81.1 percent in the first quarter to P450 million from P2.39 billion in the same period last year, while UK and Singapore pledges nosedived by 57.5 percent and 86.8 percent, respectively.

PEZA manager for promotion and public relations Elmer San Pascual earlier said a number of foreign companies have shelved new investments and expansion plans due to uncertainties brought about by TRAIN 1, and is being created now by TRAIN 2.

Meanwhile, investment pledges from China to the country’s economic zones saw a dramatic 228 percent increase to P239.63 million in the first quarter from P40 million in the same period last year.

Japanese investments also remained strong amounting to P7.8 billion, while Korean investments showed signs of recovery in the first three months after hitting a 14 year-low in 2017.

PEZA approved P239.63 million worth of Korean projects in the first quarter, a 499 percent rise from P40 million recorded in the same period last year.