Global Biz with PEZA: Thinking Global, Acting Local

By Dan Napa

Last January 18, 2022, the Philippine Economic Zone Authority (PEZA) kicked off its year with a webinar entitled “Global Biz with PEZA Featuring the United States of America”. The event marked the start of a series of webinars that aim to highlight the history of PEZA, as well as to possibly attract potential investors into the Philippines. In line with this, the speakers for the morning were the Philippine Ambassador to the United States, His Excellency Manuel Romualdez, and Chargé d’Affaires of the U.S. Embassy to the Philippines, Ms. Heather Variava.

Amb. Romualdez opened the event by addressing the attendees and started his speech by highlighting the 75th anniversary of U.S.-Philippine relations. He mentioned that this event was a good way to engage both parties for more economic partnerships, fostering a more dynamic business community. The business sector must take advantage of this opportunity and put more investments in the ASEAN region, more specifically in the Philippines. The pandemic has shown the resilience of the country and is poised to make a comeback from 2022 onwards. He also highlighted the immense footprint that U.S. companies have in the Philippine economy, having the most number of large, tax-paying companies operating in the country. He ended his speech by urging the attendees to get in touch with PEZA, see the latest developments, and learn how they can start their journey towards entering the Philippine Market.

The next speaker was Chargé d’Affaires Ms. Heather Variava, who also started her talk by highlighting the 75th anniversary of U.S.-Philippine relations. Now, more than ever, the U.S.-Philippine alliance remains strong. The U.S. affirmed its commitment to send more vaccines through the CoVax initiative, especially with the new wave of the pandemic, rise in cases, and the threat of new variants. She then proceeded to talk about the embassy’s continued consultation with the private sector to look for platforms for improving infrastructure, specifically for key sectors/issues of importance — climate, clean energy, digital and cyber cooperation, and quality infrastructure development. She went on to mention that the U.S. is bullish in its expectations for the Philippine economy, expecting major GDP growth next year, back to pre-pandemic levels. She also highlighted that American companies remain to be top investors, tax-payers, and top employers in the Philippines and that the U.S. Government is willing to help match investors to further its cause in promoting the country as a preferred destination for investments in the Asia Pacific Region.

The last speaker for the morning was PEZA Director General Charito Plaza, who spoke briefly about the history and mandate of PEZA. She shared that from January to October of 2021, PEZA accounted for Php 62.7 billion in investments, with exports amounting to USD 46.141 billion. To date, PEZA manages 415 operating ecozones and 4,670 locator companies nationwide, accounting for 1.7 million direct employees. She then highlighted the top American companies operating in the Philippines, with the likes of JP Morgan, American Power Conversion Corporation, C and U Philippines, Inc., Teletech Customer Care Management Philippines, Inc., On Semiconductor Philippines, Alorica Teleservices, Cypress Manufacturing, Moog Controls, and Google Services Philippines, Inc. To date, U.S. companies account for 420 locator companies, with an investment worth Php400 billion, employing 330,906.

She then enumerated the benefits of investing in the Philippines, specifically within PEZA, by virtue of the Special Economic Zone Act of 1995 and the CREATE Act of 2020, which aim to give income tax holidays (ITH) for four to seven years, depending on the location and industry priority of the investing company. There are also special corporate income tax or enhanced deductions that can be availed after the ITH period, which would help companies recoup investments, as well as continue expansion within the country. Apart from tax breaks, Ms. Plaza also mentioned other incentives such as the following:

• tax and duty-free importation of capital equipment, raw materials, spare parts, or accessories
• domestic sales allowance of up to 30% of total sales
• VAT exemption on importation and VAT zero-rating on local purchases for goods directly related to its registered activity, including telecommunications, power, and water bills
• exemption from payment of local government taxes and fees for the period of availment of the 5% SCIT incentive
• employment of foreign nationals and the recently revamped VISA process for PEZA
• special non-immigrant visa for foreign investors and immediate family members
• long-term land lease of up to 75 years

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About the author:

Dan is a Business Management graduate of the Ateneo de Manila University. His interests are shipping, sports, radio, game development, and animation industries. When he’s not working, Dan can be seen spending time on his bike. He loves riding anything with two wheels and often goes on adventures around the city or in the neighboring mountains surrounding Manila. His love for bikes is only surpassed by his love for food; so far, food has been winning.