No tightening of ecozone approvals

THE PHILIPPINE Economic Zone Authority (PEZA), bucking other state agencies’ moves to approve fewer incentives, plans to keep green-lighting new tax-free sites for investors at its usual pace.

The country otherwise won’t be able to attract investments and grow the economy, PEZA Director-General Lilia B. de Lima last week said in a chance interview.

While the actual number of new economic zones to be established this year will “depend on developers,” the PEZA “does not really” plan to impose stricter criteria for their approval, Ms. De Lima said.

This could mean that another fifty pledges for new economic zones could be approved in 2011, similar to the average recorded over the past two years.

Under Republic Act 7916, the executive branch is authorized apart from Congress to establish economic zones where locators can enjoy duty-free importation of raw materials and equipment, income tax holidays and a lower 5% tax on gross revenue.

Interested developers are required to prove that the planned sites comply with zoning laws, have the necessary environmental clearances and the infrastructure needed by investors.

A total 239 economic zones were operating in the country as of end-2010.

Asked why the PEZA was taking the stance despite moves to reduce foregone state revenues, Ms. De Lima replied: “If the investors didn’t come in the first place, what would government earn?”

“We are encouraging economic zone [developments], especially agro-industrial zones,” she added.

The PEZA last year approved seven agro-industrial zone applications, down from the nine recorded in 2009. A large part of the 2010 approvals were for information technology parks, at 30 from 26 the previous year. One manufacturing zone and five tourism economic zones also received the agency’s nod.

The PEZA is targeting P224.833 billion worth of pledges this year, a 10% increase from 2010. It is also seeking an identical 10% hike in export sales to $44.52 billion and employment of 809,239 workers.

The Board of Investments has been planning to trim the list of business activities eligible for incentives this year and also wants to peg the grant of tax breaks to a project’s economic contribution. — Jessica Anne D. Hermosa, Businessworld