By Elijah Felice Rosales, May 23 2019; Business Mirror

https://businessmirror.com.ph/2019/05/23/ecozones-see-growth-as-trabaho-bill-founders/

Image Credit to Philippine Star

ECONOMIC zone developers are eyeing to expand business in the Philippines over the next months, as they take advantage of the looming non-passage of the Tax Reform for Attracting Better and High-Quality Opportunities (Trabaho) bill.

This could be crucial to the Philippine Economic Zone Authority (Peza) that is trying to rebound from a 41-percent decline in investment approvals last year. Business activities in economic zones endured slowdowns that were blamed on the uncertainties brought about by the Trabaho bill, which the government said would rationalize the existing fiscal incentives to business. Among those seen most affected by such proposed rationalization are investors in economic zones.

However, as the 17th Congress concludes in June and with the measure nowhere near approval in the Senate, members of the Philippine Ecozones Association (Philea) look to take advantage of the retention of the existing corporate tax and incentives regime.

Philea President Francisco S. Zaldarriaga admitted that economic zone developers are in a wait-and-see mode on whether the Trabaho bill will be transmitted to Malacañang under the 17th Congress, which resumed sessions on May 20 and only has nine session days left before adjourning.

He said the measure created uncertainties that made prospective investors hold on to their capital and existing firms shelve expansion plans.

With what they see as the bill’s looming non-passage though, Zaldarriaga said the uncertainties are partly lifted, and economic zone firms are provided with breathing space to expand operations.

“If this indeed happens, the industry will definitely welcome this and will continue to expand and attract more investors. The reason investors have stopped expanding and steering clear from the Philippines is precisely because of the uncertainties looming in our business environment due to the Trabaho bill,” Zaldarriaga told the BusinessMirror.

Zaldarriaga said the group has yet to evaluate investment losses from the uncertainties, but claimed it “definitely” took a toll on capital inflow to the Peza.

Investments registered with the Peza last year slumped 40.97 percent to P140.24 billion, from P237.57 billion in 2017.

A total of 529 fresh projects represented these investment pledges, from the 554 projects applied in 2017.

Peza Director General Charito B. Plaza attributed the double-digit decline to the uncertainties brought about by the Trabaho bill, which is the second package of the government’s tax reform program.

The Trabaho bill will gradually bring down corporate income tax to 20 percent by 2029, from 30 percent. In exchange, it will rationalize tax incentives and lift some of the existing, including the 5 percent tax on gross income paid in lieu of all local and national taxes.

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