The Philippine Economic Zone Authority (PEZA) encourages San Miguel Corp. (SMC) to register with the agency its special economic zone and Freeport project in its $15 billion airport city in Bulacan.
This after President Ferdinand Marcos Jr. on July 1 vetoed a bill proposing the creation of the ecozone and freeport, citing “substantial fiscal risks” and “contrary to the government’s goal of develop a tax system with low rates and a broad base”.
Charito Plaza, chief executive of PEZA, said SMC can register the ecozone under the agency’s aerotropolis model where it can take advantage of generous incentives for big-budget projects.
Plaza said the project can easily qualify under PEZA’s special ecozone design concept which incorporates a logistics and transportation center, warehouses, manufacturing with commercial, residential and industrial zones designed in a township. .
Plaza said that if SMC decides to apply, PEZA may accept the application following the criteria and parameters provided in the Business Recovery and Tax Incentives for Business Law and the Strategic Investment Priorities Plan.
Plaza said that since it is an expensive project, it will need to be approved by the Tax Incentives Review Board and can compete for the most generous incentives if their project reaches the capital investment. minimum of $1 billion. “In our framework, they will first have to apply as an ecozone developer,” Plaza said.
Plaza said ecozones formed by legislation create another bureaucracy or ecozone authority that must have an annual budget allocation, which is a financial burden on the government.
Unlike PEZA, Plaza said the ecozone investor or developer along with the locators will support the development of the entire project.
Plaza said that as an ecozone, the project must go through the presidential proclamation after PEZA gives it the go-ahead.
“PEZA’s special ecozones are for specific products and specialized activities,” Plaza said.
She cited as an example agro-industrial ecozones which are agricultural lands where investors include those engaged in food processing, planting crops, livestock, poultry, agrochemicals, fertilizers, agro -equipment, tools, machinery. Agroforestry ecozones are found on forested lands and may have businesses in wood industries like plywood, veneer, furniture making, and papermaking.
“The advantage of special PEZA ecozones is that they are self-sustaining, self-sufficient and resource-generating where the capital investment is provided by the developers of the ecozone or jointly or separately by the investors. The counterparts of public investments are roads leading to logistics and transport hubs. In fact, large investors invest by building their own seaport and airport, electricity, utilities, and exclusive facilities for corporate use. It will reduce the cost of government and generally reduce the cost of doing business in the country,” Plaza explained.