PEZA firms prepare exit plans

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    Some locators in economic zones are preparing their exit plans due to the unstable investment policies and laws in the country, according to Charito Plaza, director-general of the Philippine Economic Zone Authority (PEZA).

    Plaza said some companies which have been delaying their expansion plans in the Philippines while waiting for the outcome of the tax incentives rationalization plan could no longer wait and are moving to neighboring countries like Vietnam, Singapore and Indonesia.

    Plaza said the uncertainties created by the Tax Reform for Acceleration and Inclusion 2 or the Tax Reform for Attracting Better and High Quality Opportunities which later became the Corporate Income Tax and Incentive Rationalization Act (CITIRA) Bill made them prefer countries that “won’t disrupt their operations.”

    The uncertainties, she said, are caused by major changes of incentives policies that could affect these companies’ production costs.

    “Every day delay caused by these uncertainties is a big loss to these companies so they have to decide immediately,” Plaza said.

    She added: “Industries feel we have an unstable investment policies and laws. They are scared to expand if we keep on changing the rules in the middle of the game. This will destroy our credibility, (we will) lose (investors’) trust and confidence on our incentives and governance.”

    Plaza declined to identify these companies but said these are “watching closely the result of CITIRA and are preparing for their exit plans (while) some of their quota of production are now being transferred to their other branches abroad.”

    Plaza is pushing for the exemption of PEZA-registered companies from CITIRA saying the proposed law is untimely.

    She said theUS-China trade war , the Hong Kong turmoil and the Generalized System of Preferences Plus zero tariff privilege are opening up opportunities for the Philippines to attract new and transferring investments.

    “We are not the only game in town. Philippine economic zones are competing with other countries (with) far more developed and high-tech ecozones,” she said.

    She cited a recent research by the World Bank which said Chinese companies shifting operations due to the trade war with the US had gone to Vietnam, Malaysia, Thailand and Cambodia, but not to the Philippines. – I. Isip