In this BPO Corner:
Philippine Economic Zone Authority Banks on New IT Investments
by Maricel E. Estavillo

The Philippine Economic Zone Authority (PEZA) is banking on the information technology (IT) sector for fresh investments amid the sluggish performance of most export groups.

Every year, PEZA maintains a conservative 10% year-on-year investment growth target.

PEZA director-general Lilia B. de Lima told members of industry group Business Processing Association in the Philippines that although IT investments account for only 4% of its total in-flows, it has been the fastest-growing sector since the first PEZA IT zone was declared in 2000.

The semiconductor and electronics sector accounts for 55% of PEZA’s total investments, while the rest is divided among electrical machinery, garments, rubber products, fabricated metals, plastics, transport equipment and industrial chemicals.

From 1995 to 2004, the consolidated investments in PEZA reached P88.5 billion, 36% increase from the P24 billion consolidated investments recorded by its predecessor, the Export Processing Zone Authority (EPZA) from 1985 to 1994.

Republic Act No. 7916, or the Special Economic Zone Act of 1995 changed EPZA to PEZA.

The areas under PEZA account for 81% of the total yearly exports and the balance are produced in Subic Bay Metropolitan Authority, Clark Development Corp. and Board of Investments zones.

Total investments in IT reached P8.07 billion in 2004, a 49% increase from the P5.4 billion recorded in 2003. Of the total, P6.67 billion came from PEZA.

Ms. de Lima said that consolidated IT investments from January to July from 124 companies within the PEZA areas reached P4.228 billion.

But the major export block—semiconductor and electronics—is barely bringing in new investments save for the expansion of existing firms.

Date from industry group Semiconductor and Electronics Industries in the Philippines, Inc. showed declining investments between 2000 to 2003.

Total investments in this sector was valued at P72.22 billion in 2000, decreasing to P31.14 billion in 2001, P23.68 billion in 2002 and P20.63 billion in 2003.

PEZA said 60% to 70% of PEZA investments are being accounted for by expansion activities of existing enterprises.

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Originally printed in BusinessWorld, p. S1-7, August 30, 2005