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The Philippine Economic Zone Authority says it is keeping tabs on investment data of registered business enterprises (RBEs), contrary to the Fiscal Incentives Review Board’s claim
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FIRB said PEZA submitted incomplete information on its locators’ investment capital and market orientation
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FIRB asked for the data to check on PEZA’s compliance with the CREATE Act
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PEZA said most RBES had already submitted their report to the FIRB by June 15, 2022
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PEZA has until July 15 to submit reports
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Only four out of 14 IPAs had complied with FIRB’s reportorial requirement as of April 30
The Philippine Economic Zone Authority (PEZA) has not been remiss in its investment monitoring, contrary to claims by the Fiscal Incentives Review Board (FIRB) that the investment promotions agency (IPA) is not tracking data on actual investments by registered business enterprises (RBE).
“PEZA is confident that benefits of incentives to investments outweigh the forgone taxes; hence, we find the statement by FIRB particularly erroneous, misleading and intends to embarrass PEZA as an Investment Promotion Agency,” PEZA director-general Charito Plaza said in a statement on June 15.
She was responding to a press statement by FIRB on June 15 claiming PEZA has not been tracking the inflow of actual investments by its RBEs since the implementation of Republic Act No. 11534, or the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act, to determine if these are commensurate to the value of fiscal incentives that such economic zone locators enjoy each year.
The FIRB Secretariat, in its report to Finance Secretary and FIRB Chairman Carlos Dominguez III, said PEZA submitted incomplete information on the investment capital and market orientation of its locators when asked to do so by FIRB as part of the IPA’s compliance with the provisions of the CREATE Act.
Finance Assistant Secretary and FIRB Secretariat head Juvy Danofrata said 12 of the 196 PEZA RBEs did not have information on their investment capital, while 11 did not specify their market orientation.
PEZA said prior to the enactment of CREATE Act, PEZA had been submitting its monthly reports on approved foreign investments to the Office of the Secretary of the Department of Trade and Industry (DTI), and to the Philippine Statistics Authority (PSA) every quarter.
The agency said this is the accepted practice for all IPAs, including PEZA, in monitoring the committed investments of their enterprises.
The PSA posts on its website its quarterly reports on approved foreign investments based on the consolidated submissions of the IPAs. When the CREATE Act took effect in April 2021, FIRB was included as a recipient of PEZA’s monthly reports, the IPA said.
PEZA said the reports that must be submitted by its locators under RA10708, or The Tax Incentives Management and Transparency Act of 2015 (TIMTA), do not include a column for actual investments but just sections for the annual tax incentives report on income-based incentives and VAT, excise tax and duty-based incentives.
The requirement to monitor the approved and actual amount of investments of RBEs is a report imposed only under the CREATE Act Section 205, to be submitted with the filing of annual benefits report.
PEZA said most of its RBES have already submitted this report to the FIRB as of June 15, 2022 while it has until July 15, 2022 to submit its own reports.
“In fact, the FIRB just conducted its virtual town hall meetings with the IPAs and the RBEs in May 2022 informing us about the revised TIMTA reports, which now includes annual investments,” PEZA noted.
In addition, from April 2021 to May 2022, PEZA had approved 128 projects/activities under the CREATE Act but only 18, or a mere 14%, of these projects have start their commercial operations.
“Accordingly, for the FIRB to state that PEZA does not monitor the inflow of actual investments is irresponsible and smacks of bad faith,” PEZA said.
Aside from PEZA, nine other IPAs were also not able to substantially comply with the reportorial requirements as of April 30, or almost 10 months after the implementing rules and regulations (IRR) of CREATE Act were signed, FIRB said.
It said only four out of 14 IPAs were able to comply, including the Bases Conversion and Development Authority, John Hay Management Corp., Poro Point Management Corp., and PHIVIDEC Industrial Authority.
Danofrata said the FIRB Secretariat had already sent follow-up letters to the IPAs with incomplete and missing submissions.
Based on what the FIRB Secretariat has gathered so far, the Board of Investments tallied the biggest amount of investment capital totalling P43.12 billion infused by136 RBEs. Of the 136 RBEs, nine are export-oriented firms and 127 are domestic-oriented businesses.
Danofrata said the IPAs, including PEZA, were able to register a total of 348 firms as of April 30, of which 100 are export-oriented and 237 are domestic-oriented enterprises.
“The real estate, services, and manufacturing sectors are the industries with the highest number of registered firms. Of the 348 firms, 25 have no information on their industry classification,” Danofrata said.
Real estate activities accounted for 129 RBEs, followed by the services sector with 73, and manufacturing with 68.
The country’s other IPAs are the Authority of the Freeport Area of Bataan, Aurora Economic Zone and Freeport Authority, Cagayan Economic Zone Authority, Clark Development Corporation, Regional Board of Investments-Bangsamoro Autonomous Region in Muslim Mindanao, Subic Bay Metropolitan Authority (SBMA), Tourism Infrastructure and Enterprise Zone Authority, and Zamboanga City Special Economic Zone Authority.
