Various firms engaged in information technology and artificial intelligence will be putting up shops in the country’s economic zones this year and beyond, the Philippine Economic Zone Authority reported.

PEZA director general Tereso Panga said although they haven’t logged yet companies in PEZA that are engaged in emerging technologies such as FinTech, Blockchain, AI, and new agriculture, he said what is certain to be registering at PEZA this year is a Japanese fintech firm, and two Singaporean firms engaged in digital assistance and waste recycling.

“The Japanese company that is about to register with us is into fintech and blockchain. It will produce fintech cards in the Philippines which can be used for financial transactions, door access and control, and for ID (identification) biometrics information,” Panga said during his guest appearance in the Daily Tribune’s digital show Straight Talk last Tuesday.

Further, he said the Singaporean company will apply with PEZA for its digital assistant project, which employs AI-based solutions.

“One Korean company that is into deep learning for digital human clones has also expressed its interest in setting up a facility in the ecozone. Likewise, an Australian firm wants to introduce peer-to-peer trading for solar energy supply in the ecozone using blockchain applications. In regenerative agriculture, a Singaporean company will set up in Lima Technology Park in Batangas a waste recycling facility that will produce organic fertilizers. Also, an American company wants to apply for a greenhouse facility for hydroponics to promote a new food system,” Panga said.

Enticing incentives

The PEZA chief said locating shops in PEZA is backed by various incentives, offered by monumental reforms, including the Corporate Recovery and Tax Incentives for Enterprises Act or the CREATE Law, making the Philippines more viable for foreign investors compared to the country’s neighboring counterparts.

“We are in a way competitive across ASEAN, we grant income tax holidays; the running incentives include income tax holidays or ITH plus some special corporate income tax, and is applicable over a longer period compared to other ASEAN countries,” he said.

“If an investor is putting in big-ticket investments, like $1 billion investments, the President is even authorized to grant a longer ITH period for as long as 40 years. In Vietnam, the longest was just 30 years for Samsung,” informed Panga.

Before the CREATE law, PEZA and other investment promotion agencies such as the Board of Investment and the Subic Bay Metropolitan Authority, had greater autonomy in creating and granting incentives to qualified enterprises.

And now under CREATE, tax incentives are centralized through the Title of the Tax Code provision, which makes tax incentives uniform regardless of the IPA. The existing PEZA rules (RA7196) and IRR make a distinction between pioneer enterprises, non-pioneer enterprises, and expanding firms in determining the duration or sunset period of their income tax holiday incentives.

Also, under the CREATE law, the duration of tax holidays is from four to seven years and is determined by the tier on which the registered business enterprise falls.

Among other things, the tiers are determined by the enterprise’s location, with priority given to activities conducted outside of the National Capital Region.

2023 target

As the BoI elevates its P1.5 trillion target investments, Panga said PEZA’s target this year is to double the investment pledges  made in 2022.

“It is a smaller target compared to BoI because they are into massive infrastructure development. PEZA essentially catered to export-oriented industries. Our achievement in 2022 was P140 billion in investment pledges. So, we have just started getting a 10 percent increase,” he said.

“So, that should add up to an additional P14 billion for a total of P154 billion, but that is on the low side. In 2022, we did not expect it, we were targeting a smaller percentage increase in investments, but we were able to achieve a 103 percent increase. So, the high side, considering, let us say we will just double whatever we have achieved in 2022. Thus,  we are looking at P300 billion as our high side, the high target for 2023,” Panga added.