Ecozone Developers Facing Office Space Oversupply
Developers of economic zones are now facing an oversupply of office spaces as occupiers delay expansion plans amid uncertainties caused by the proposed changes of the tax incentives given to ecozone locators. According to Francisco S. Zaldarriaga, president of the Philippine Ecozones Association (PHILEA), ecozone developers are the most affected by the uncertainty surrounding the CITIRA bill, which aims to scrap the current 5% tax on gross income earned (GIE) offered to ecozone locators and replace it with the corporate income tax (CIT) regime.
Zaldarriaga pointed out that if locators start vacating offices it will be a major blow to the industry, as developers will be left with empty buildings and spaces in which they have invested millions. He added that some PHILEA members have already postponed their expansion projects. Meanwhile, Philippine Economic Zone Authority (PEZA) director general Charito Plaza asked who would fill up available spaces, noting that ecozone developers spend between PHP3bn (USD57.5m) and PHP5bn per project.