Export companies in the Philippines lost over P100 billion worth of revenues in the past three months, or since the government enforced the Luzon lockdown in mid-March.
The Philippine Economic Zone Authority said these companies were still expecting to incur P34 billion in losses every month until the economy stabilized.
“While health and safety is a top government priority, the economy is as important. Businesses especially manufacturing and logistics need to operate while health measures of the workers are in place. Our projected global decline in production, labor export and import transactions is estimated at P34 billion per month, more or less $700 million,” said PEZA director-general Charito Plaza.
She said that following the easing of the lockdown, about 35.5 percent of the export companies had not yet resumed operations while 55.7 percent of the economic zone workforce still had to return to work.
Data showed that of the 2,634 locators in ecozones, only 55 were fully operational, 804 companies were operating on skeletal force on site with work from home component, 532 were on skeletal force and 310 companies were operating purely on work-from-home mode.
PEZA said that in the last three months, only 661,245 of the 1,491,957 workers were actively on work mode. Before the outbreak, employment in ecozones reached 1,565,588 in January 2020, or 6 percent higher than the previous year’s 1,476,969.
The agency said that with some potential investors rethinking their investments in the Philippines, carry-over investments from February 2020 to early March fell 27.98 percent to P16.5 billion while the number of projects dropped 32 percent to 87.
It said despite the weak investments, export revenue rose 8.2 percent in the first quarter of 2020 compared to the same period in 2019.
PEZA and the academe earlier asked Congress to keep the status quo on PEZA’s tax incentives for export companies and enhance them through the Philippine Economic Stimulus Act.
“Due to the COVID-19 pandemic and world recession, export companies are now infusing and consolidating their operations and investments, transferring their production quota to more investor-friendly countries that offer lower cost of doing business and a generous incentive package. Definitely, the Philippines has been branded as a country with high cost of doing business and unstable economic and trade policies. That has always been the complaint of our investors who despite these uncertainties still brought their investments to the Philippines because the efficiency of PEZA and its globally-competitive incentive package compensated for the high cost of doing business in the country,” Plaza said.
“This is why we are appealing for the status quo on the tried and tested incentives of PEZA, instead of entering into a new incentive regime under CREATE, as well as provide economic stimulus to improve the efficiency factors such as public works infrastructure, IT infrastructure, logistics and transportation hubs, low cost of utilities, a highly-skilled workforce, a vibrant and complete supply chain, and stable investment and trade policies,” she said.