PEZA: Securing investments for the Philippines’ future
Through competitive fiscal and non-fiscal incentives, the agency has had great success in attracting FDI.
At the heart of the country’s strategy to attract foreign direct investment (FDI) into the Philippines is the Philippine Economic Zone Authority (PEZA), which not only registers service export-oriented and export manufacturing companies but also provides aftercare services throughout the lifespan of these companies while they are in the Philippines.
Having been appointed as Director General in March 2023, Mr. Tereso O. Panga has already shown the ability of PEZA to attract and enhance investments by diversifying the quality of exports, in line with President Marcos’ aggressive thrust towards promoting productivity-enhancing investments to the country. “We are the prime investment promotion agency in the country”, explains Mr. Panga, “and we are now looking at the whole of North America as potential areas of interest in securing more investment for the country”.
Much of the agency’s strategy relies on focusing on seven priority sectors, which include electronics/semiconductors, IT services, fabricated metal products, advanced manufacturing, smart technologies, big data, and blue industries. “In terms of ICT we want to go deeper into frontier technologies, like AI, blockchain, and financial technology”, adds Mr. Panga; “we aim to promote science- and innovation-driven industrialization.”
Investors primarily consider two different metrics, ease of doing business and cost of doing business. For the former, the Agency adopted digitalization and automation schemes such as e-payment gateways, which allowed them to keep contactless pathways for transactions during the pandemic. “Now, the aim is to enhance automation of office procedures by going not only cashless but paperless as well”, adds Mr. Panga.
In this way, the Agency has managed to create a business environment that is highly at- tractive to foreign companies, appeased by its regulatory transparency, no red-tape policy, and one-stop shop services for investors. “US companies will look first and foremost for a Seal of Guarantee that they are dealing with the right government agency for their investments, and we are the only Philippine agency recognized by the US State Department for the better business environment within PEZA special economic zones”, explains Mr. Panga with pride.
And the numbers speak for themselves, as the services offered by the Economic Zones are difficult to match, including income tax holidays of four to seven years, a total incentivized period of 14 to 17 years-, tax- and duty-free importation, and a 30% local sales allowance for export-oriented companies. And these are just fiscal incentives, the non-fiscal ones are even more attractive, particularly in terms of ease of doing business and predictability of the regulatory environment. “Yes, we have a skilled, young workforce, a high degree of English proficiency, and countless testimonials of US companies already present here, but at the end of the day what attracts US investors is our shared culture of business and democracy”, adds Mr. Panga. So allow me this opportunity to say we are ready to welcome US companies to the Philippines and become their partners in their business growth in Asia!”, concludes Mr. Panga with a smile.