By Bernie Cahiles-Magkilat

At least 700,000 workers at the various economic zones in the country administered by the Philippine Economic Zone Authority (PEZA) are expected to lose their jobs once the Tax Reform for Attracting Better and High-quality Opportunities (TRABAHO) Bill is passed into law.

PEZA Director-General Charito B. Plaza said almost all of the PEZA registered enterprises are from the IT BPO and manufacturing sectors, which will bear the brunt of the TRABAHO Bill, which seeks to remove some of the tax incentives currently enjoyed by ecozone locators.

“Almost all are affected. The biggest jobs are from IT BPOs and Manufacturing who can easily transfer from their other branches in other countries,” said Plaza.

PEZA-registered enterprises directly employ over 1.490 million jobs times, but every job created at the ecozone would translate in the creation of 8 more indirect jobs from services providers such as logistics, maintenance workers, drivers, vendors, among others.

In addition, these companies also create new sectors in their industries resulting in additional job creation.

“The current TRABAHO Bill in its current form will eliminate more than 50 percent of the 1.49 million direct jobs we have,” Plaza pointed out.

“Our locators can easily move out their IT-business process management operations and even manufacturing can start transferring to their other branches in other countries if they are left with no choice.”

PEZA administers tax incentives to 74 manufacturing economic zone, 262 information technology parks/centers, 22 agro-industrial economic zone, 19 tourism ecozones, and 2 medical tourism parks/centers. PEZA enterprises account for 70 percent of the country’s merchandise exports and 80 percent of the total services exports.

What will happen to PEZA would be empty ecozones and IT park buildings as they lose their clients, she said.

Not only that, Plaza pointed out, industry clients, the logistics services providers, truckers, brokers and the domestic suppliers, facility and utility enterprises serving the exporters including farmers, and local suppliers are going to lose their businesses.

Already, investment pledges in PEZA across industries declined in the first semester this year. Approved projects for manufacturing activities decreased by 9.3 percent to P19.55 billion this year from P21.54 billion last year; information technology (IT) investment pledges likewise declined by 13.7 percent to P6.98 billion from P8.07 billion; planned investments for economic zone development also dropped 65.2 percent to P26.3 billion from P75.46 billion; and pledges in other sectors plunged by 98.4 percent to P234.5 million from P15.12 billion.

PEZA attributed the decline to a prevailing “panic mode” among its registered enterprises, which deferred their investments in 2017 because of the TRAIN [Package] 1, hoping that everything will be stabilized in 2018, only to be welcomed by TRAIN Package 2.

Under the Trabaho Bill or the Package 2, PEZA-registered enterprises, which are export oriented, are expected to lose some of their perks like shorted income tax holiday and reduced years in their 5 percent tax on gross income earned instead of its perpetual application.

Senator Sonny Angara earlier warned that the Senate committee on ways and means, which he chairs, would not proceed with its deliberation of the Trabaho Bill unless the government can present definitive data on the impact on jobs.