Investments approved by the Philippine Economic Zone Authority fell 55.86 percent in the first half to P53 billion from P120.2 billion in the same period last year.
Peza director-general Charito Plaza said the “uncertainties in the Philippine fiscal regime” pushed back all possible expansion and new investments.
“There are incentives that are being removed in the Train 2 [second package of Tax Reform for Acceleration and Inclusion law]. Because of this, there are investors who are manifesting their support for us, conveying their sentiments that they are happy with Peza as it is now,” Plaza said in a news briefing Monday.
All major industries within the economic zones showed the significant reduction in investments in the first semester.
Investments in manufacturing went down 9.29 percent to P19.55 billion from P21.54 billion in 2017 while investments in information technology dropped 13.66 percent to P6.98 billion from P8 billion.
Investments in economic zone development also declined 65.15 percent to P26.29 billion from P75.46 billion.
Combined investments in other industries amounted to P238 million, down 98.44 percent from P15.12 billion a year ago.
The number of projects inside the economic zones also dwindled 14 percent to 258 in January to June this year from 300 a year earlier.
Peza said despite these concerns, employment and exports expanded 5.27 percent and 3.5 percent, respectively.
Exports increased to $21.8 billion in January to May 2018 from $20.7 billion in the same months in 2017, while direct employment totaled 1.47 million, up from 1.39 million a year earlier.
Plaza said many locators threatened to pull out from the Philippines amid concerns over the next package of the Train law which would limit the tax incentives given to investors.
“They were given the authority or signal by their principals to start considering looking for possible countries to transfer their operations. The sooner we can relay these apprehensions to Congress, the president and everybody, the better, so we can restore back investor confidence,” she said.
She said that in the past, locators moved out of the Philippines not because “they are unhappy with Peza” but because they lost their market share.
“We support Train 2, but the law should be able to improve and enhance incentives and not curtail them,” Plaza said.