The Department of Finance (DoF) has debunked the Philippine Economic Zone Authority’s (PEZA) claim that it has contributed P10 trillion to the local economy from 2015 to 2017.
In a statement on Monday, Finance Undersecretary Gil Beltran said the investment promotions agency’s calculations “are wrong, and the result is that they’ve bloated their contributions.”
Beltran, who is also the DoF’s chief economist, said PEZA double counted by adding up the total of exports, investment, and capital equipment and raw materials, which are from the expenditure side; and wages and taxes, which are from the income side.
“This is a no-no in basic accounting,” he said, noting that, “like GDP (gross domestic product), benefits can be measured from either the expenditure or income side, but not both.”
Beltran said PEZA should “give the whole truth in making its claims.”
“PEZA says that 70 percent of their supposed contribution, or about P7 trillion, to the economy is because of exports,” she said.
“What they are hiding is that PEZA exports contain about 80-percent imported inputs, which don’t add value to the local economy,” he said.
Beltran said a proper accounting of benefits should subtract imports from total exports to arrive at net exports.
In some sectors, like electronics assembly, almost all the parts are imported and assembled in ecozones, creating very little domestic value-added, he added.
“Assuming their figures are correct in the first place, using the appropriate method to account for exports and remove double-counting wipes out more than half of the P10 trillion they allege to have given back to the economy,” Beltran said.
PEZA’s claim was made after the DoF reported that the government has posted an estimated P1.12 trillion of foregone revenues in tax perks awarded to select companies from 2015 to 2017.
It said that among the investment promotions agencies that granted incentives to registered enterprises, PEZA gave away the lion’s share of tax incentives worth about P879.1 billion, or about 78 percent of the three-year total.