MANILA, Philippines — Investment pledges in the country’s economic zones continued to post a steep drop in the first five months on persisting concerns over the government’s second tax reform package.

An informed source from the Philippine Economic Zone Authority (PEZA) told The STAR the agency’s investment approvals fell by another double digit for the January to May period, putting the investment promotion agency on a fourth straight month of decline.

“Our existing companies are very much affected by the continuing uncertainties brought about by TRAIN 2 on their planned expansion projects in PEZA,” the source said.

“Those new companies wanting to invest in PEZA are even more reluctant to invest in PEZA as they have been reading a lot about the pending TRAIN 2 bill which will totally and drastically change our existing competitive incentives,” the source said.

Because of uncertainties brought about by the proposed TRAIN 2, PEZA director general Charito Plaza earlier said it has become “the sword of Damocles hanging over the heads of PEZA, the industries, and investors.”

“That is our problem since the TRAIN bill came into force – that while TRAIN 2 now is still being deliberated, the negative effects are already taking their toll on us,” the source said.

PEZA’s investment pledges, which have been consistently growing in the past, posted their last growth numbers in January, in which pledges rose 27.20 percent year-on-year.

Since then, registered investment commitments have been on the decline.

With last year’s discussions on TRAIN 1, PEZA recorded its worst year for new IT and manufacturing investments.

Despite closing 2017 with an 8.89 percent growth in total investment approvals, total IT investments of P15.56 billion and manufacturing investments of P48.36 billion in 2017 were the lowest for both sectors in PEZA’s history.