FIRB flags PEZA on investment data

MANILA, Philippines — The government has hit a roadblock in its effort to audit investments that entered the Philippines after finding out that the Philippine Economic Zone Authority (PEZA) has no data on how much locators are bringing in.

The Cabinet-level Fiscal Incentives Review Board (FIRB) yesterday flagged PEZA for reportedly neglecting its duty of keeping records of the investments that entered the country and the market orientation of registered enterprises.

When the FIRB requested for the data, Finance Assistant Secretary and FIRB secretariat head Juvy Danofrata said PEZA failed to produce them and admitted the agency no longer tallies such figures.

For the FIRB, PEZA’s negligence hinders the government from proceeding with its assessment on whether investments made by locators measure to the value of their tax privileges.

The FIRB is mandated by law to monitor the administration and grant of fiscal incentives to investors.

Danofrata said records on 12 of the 196 locators monitored by the PEZA contain no information on how much they invested for their operations in the country. Further, another 11 firms failed to specify the market orientation of their business activities in the Philippines.

The FIRB also flagged the apparent lack of urgency from investment promotion agencies (IPAs) to comply with the requirements of the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act.

According to Danofrata, just four IPAs – the Bases Conversion and Development Authority, John Hay Management Corp., Poro Point Management Corp. and the PHIVIDEC Industrial Authority – have complied with their reportorial obligations under the law.

On the other hand, 10 IPAs have yet to submit the documents on investment capital and market orientation of their locators in spite of getting almost 10 months to do so since the implementing rules and regulations of the CREATE Act was signed.

Initial reports submitted by IPAs showed that locators are engaged in mainly three activities: 129 in real estate, 73 in services and 68 in manufacturing. However, Danofrata said at least 25 firms failed to disclose what industry they are involved in.

As of April 30, IPAs have provided documents for 348 locators. Based on preliminary evaluation, the Board of Investments has recorded the highest amount of capital investments worth P43.12 billion covering 127 domestic firms and nine export manufacturers.

Danofrata said IPAs should share information about their locators because the government uses them for auditing and policymaking purposes.

“These reports are important to enable FIRB to fulfill its monitoring and oversight function over the IPAs and the overall administration and grant of tax incentives,” Danofrata said.