Cultivating diverse grounds for economic growth
The Philippine Economic Zone Authority (PEZA) is a government agency in the country, attached to the Department of Trade and Industry (DTI), that is responsible in promoting investments, extending assistance, and facilitating business operations within export-oriented manufacturing and service sectors.
PEZA was subsequently created under the Special Economic Zone Act of 1995, also known as Republic Act No. 7916, to oversee and administer the Special Economic Zones (SEZs) in the country.
Over the years, PEZA has expanded its reach, overseeing 419 fully operating economic zones in various key locations like Metro Manila, Cebu, Davao, Subic, and Clark.
In 2023, PEZA Director-General Tereso O. Panga said the agency has been experiencing a surge in investment approval, with P140.89 billion.
PEZA’s approved investments as of Nov. 16 were 147% higher than the same period the previous year, reflecting a strong investment climate in the country. According to the director general, the growth is a welcome sign for the Philippine economy after being hit hard by the COVID-19 pandemic.
In addition, the agency has pre-qualified 25 big-ticket projects from July 2022 to November 2023, which are estimated to generate P2.21 billion in investments, $1.5 billion in exports, and 16,414 direct jobs.
Besides, the current administration has approved 11 economic zones last year under PEZA, with a total investment of P3.5 billion. Three ecozones are waiting for Presidential Proclamation, which will bring in a total investment of P654.43 million.
The increase in investment approval is due in part to PEZA’s efforts to streamline processes and make it easier for investors to set up shop in the country. The agency has also been working closely with local government units to identify potential investment areas and provide support for investors.
This year, PEZA aims to acquire a target range of P202 billion to P250 billion for 2024, representing a 15% increase from the previous year’s approved investments. This is in line with the agency’s commitment to a more aggressive approach in attracting investors and creating a conducive business environment that supports growth.
Last January alone, the authority has approved 12 projects, amounting to P2.21 billion in investment. These projects cover various sectors, reflecting a diversified portfolio that contributes to the country’s economic development.
According to PEZA, the diversification of investments across various sectors is also a positive development, as it spreads the benefits of economic growth and development across different industries. This approach can help to create a more resilient and sustainable economy, as it reduces the country’s reliance on a single sector or industry.
In a recent board meeting last March 15, the agency has reported an increase in investment approvals for the first quarter of 2024. According to Mr. Panga, the agency approved 50 new and expansion projects worth P14.95 billion, 19.25% higher than the investments approved during the same period last year. These projects are expected to bring in US$616.59 million in exports and create 11,558 jobs.
Diverse sectors such as export manufacturing, information technology and business process management (IT-BPM), logistics, facilities, and ecozone development are set to benefit from these investments, with an anticipated influx of US$616.59 million in exports and the creation of 11,558 employment opportunities.
The projects are mainly in Quezon, Taguig, and Makati cities, CALABARZON, Bataan, Pampanga, Cebu, Albay, and Cagayan De Oro, with top investments coming from Cayman Islands, Hong Kong, Singapore, the Philippines, and Japan.
“PEZA is more than encouraged to sustain its growth momentum this year and onwards given the very positive investment climate statement recently issued by the US International Trade Administration and Bloomberg International, saying that business environment is notably better particularly within the PEZA special economic zones and that PEZA is a unique factor for the Philippines in terms of FDI attraction,” Mr. Panga said in a statement.
Driving global businesses and partnerships
The agency’s success is attributed to several key factors, including having a good law implemented correctly, partnerships with the private sector, effective leadership, and strong national support.
According to PEZA, these elements contribute to the efficiency in the cost of doing business and the ease of doing business within the special economic zones, ultimately leading to economic growth, such as job creation, livelihood opportunities, and income generation for Filipinos nationwide.
The recently concluded high-level trade mission sent by the United States President Joseph “Joe” R. Biden to the Philippines has marked the start of a reinvigorated relationship between the US and the Philippines. Simultaneously, PEZA is positioning itself as a hub for US investments that will be a bridge between the Association of Southeast Asian Nations (ASEAN) and the Indo-Pacific.
The United States is the second-largest foreign investor in the ecozones, accounting for 355 companies in PEZA. US investments have contributed P404.368 billion of investments, US$10.352 billion exports, and 368,511 direct jobs as of date.
In addition, the agency has been partnering with financial institutions such as the Sumitomo Mitsui Banking Corp. (SMBC) and the Rizal Commercial Banking Corp. (RCBC) to attract more Japanese investments. To date, there are 807 Japanese companies located in PEZA zones, with a total investment of P797.83 billion, making them the top source of foreign investments.
The agency is also focusing on streamlining processes for ease of doing business and fostering global value chains aligned with the ASEAN and global partners.
Looking ahead, PEZA will be conducting a follow-through on the pledges obtained by the Philippines during the President’s official state visits and likewise attract the untapped strategic sectors that will be vital in the country’s economic growth and development. — Mhicole A. Moral
