PEZA pressed for provincial ecozone rules

Published by rudy Date posted on July 24, 2011

CEBU CITY — The Trade department has pressed the Philippine Economic Zone Authority (PEZA) to issue guidelines for the formation of economic zones in the provinces that will also cater to non-exporters, as part of the current administration’s efforts to spur business activity outside Metro Manila, a Cabinet official told journalists here late last week.

Saying he hoped the guidelines would come out as early as next month, Trade Secretary Gregory L. Domingo acknowledged that PEZA still has to convince local government units (LGUs) — which will cede some authority over businesses that will locate in such zones — to allow the establishment of this new type of economic zones.

“PEZA is still trying to determine what benefits LGUs will get so that they will be willing to waive some of their rights,” he said in a press conference after speaking before the Cebu Chamber of Commerce and Industry here.

Some big companies in capital-intensive sectors like energy have complained of perceived arbitrary local government decisions involving property taxation and zoning changes that are costly to their operations.

Local governments already waive their authority over the locators in export-oriented and information technology economic zones under PEZA.

Locating in the planned new “domestic ecozones,” however, will not entitle companies to all the incentives currently offered in PEZA areas.

“Their biggest benefit would be in terms of a stable environment and infrastructure facilities,” Mr. Domingo said.

Currently, companies are able to avail of incentives only when their businesses fall under the government’s annual investment priorities plan.

PEZA zone locators, on the other hand, enjoy income tax holiday in their initial years of operations, as well as tax- and duty-free importation of capital equipment needed to produce export items, among others.

This early, Mr. Domingo said, the plan to establish areas for local enterprises that will not be subject to LGU rules and regulations and will offer incentives similar to those in existing PEZA zones has generated a lot of interest.

“There were already some inquiries as to whether they can qualify as a ‘domestic ecozone’,” he noted.

The plan to establish this new type of economic zone is one of the Trade department’s strategies to improve the investment climate and shield businesses from the unfriendly policies of some local governments.

Mr. Domingo said one of the reasons for the country’s low competitiveness ranking is that “some local governments are not pro-business.”

Another reason is technical — some global competitiveness surveys cover only areas outside PEZA zones, he added. “PEZA is a very big part of our economy. They (locators in PEZA’s economic zones) should also surveyed as well. That should drastically improve our rating,” Mr. Domingo said.

There are currently 243 economic zones under PEZA jurisdiction.

Ongoing initiatives to improve the business climate in areas outside major urban centers include moves to cut down procedures to secure business permits and the establishment of a centralized system where entrepreneurs can access all government offices needed to secure such permits. — Marites S. Villamor, Businessworld

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