NINETEENTH CONGRESS OF THE 
REPUBLIC OF THE PHILIPPINES 
First Regular Session
SENATE
s. 6»i4o. y 6 4
f;.;, ;
'%X' 
of U‘f t ■■
*22 JUL19 P6 35
RK£!LhDBy,
Introduced by SENATOR SONNY ANGARA
AN ACT
ESTABLISHING A SPECIAL DEFENSE ECONOMIC ZONE (SpeDEZ) INSIDE 
THE GOVERNMENT ARSENAL DEFENSE INDUSTRIAL ESTATE LOCATED IN 
CAMP GEN. ANTONIO LUNA, LAMAO, MUNICIPALITY OF LI MAY, PROVINCE 
OF BATAAN, CREATING FOR THIS PURPOSE THE SPECIAL DEFENSE 
ECONOMIC ZONE AUTHORITY (SpeDEZA) AND APPROPRIATING FUNDS 
THEREFOR
EXPLANATORY NOTE
The Constitution recognizes, among others, the right of the State: to pursue an 
independent foreign policy where its paramount consideration shall be national 
sovereignty, territorial integrity, national interest, and the right to self-determination1; 
to develop a self-reliant and independent national economy effectively controlled by 
Filipinos2; and, the indispensable role of the private sector, thereby encouraging the 
participation of private enterprise, and providing incentives to needed investments.3
Among the tools used by the State to promote growth and encourage 
investment is the creation of economic zones throughout the country. The United 
Nations Industrial Development Office4 has observed that economic zones are 
promoted by local, regional, and national governments as strategies to foster 
economic growth and to improve a location's competitiveness. Economic zones provide 
non-monetary and/or monetary advantages to companies located within its area, and 
whose goal is to foster the economic competitive development of a country, a region, 
or an urban area.
1 Sec. 7, Article II
2 Sec. 19, Article II
3 Sec. 20, Article II
4 https://www.unido.org/sites/default/files/2015-08/UCO_Viet_Nam_Study_FINAL_0.pdf
1


The objective of this measure is to enhance investment opportunities inside the 
proposed economic zone, while at the same time strengthening the country's defense 
capabilities. This bill creates a special defense economic zone (SpeDEZ) which shall 
cover the 370 hectares of government arsenal industrial estate inside Camp General 
Antonio Luna in Limay, Bataan and all other areas which may be declared as part of 
SpeDEZ - including the Government Arsenal - for investments in defense, military, 
law enforcement, and defense-related advanced technologies, information and 
communications technology, research and development and their support industries.
The SpeDEZ shall be accessible for inclusive business prospects and progress 
in firearm module and technical competency of the Government Arsenal that are vital 
to support the objectives of the Armed Forces of the Philippines, Philippine National 
Police and other law-enforcement agencies.
If passed into law, in addition to creating new opportunities in the defense 
industry, it will likewise support the AFP Modernization Program by providing locally 
sourced products and supplies that are competitive in the international market which 
they can acquire at more economical prices.
In light of the foregoing, the approval of this measure is earnestly sought.
SONNY ANGARA


NINETEENTH CONGRESS OF THE 
REPUBLIC OF THE PHILIPPINES 
First Regular Session
SENATE
S.&Me. 764
of {!)!' 5?-- :•
•22 JUL 19 P6 35
RHCtlySD OV
'ntroduced by SENATOR SONNY ANGARA
AN ACT
ESTABLISHING A SPECIAL DEFENSE ECONOMIC ZONE (SpeDEZ) INSIDE 
THE GOVERNMENT ARSENAL DEFENSE INDUSTRIAL ESTATE LOCATED IN 
CAMP GEN. ANTONIO LUNA; LAMAO, MUNICIPALITY OF LIMAY, PROVINCE 
OF BATAAN, CREATING FOR THIS PURPOSE THE SPECIAL DEFENSE 
ECONOMIC ZONE AUTHORITY (SpeDEZA) AND APPROPRIATING FUNDS 
THEREFOR
Be it enacted by the Senate and House of Representatives of the Philippines in 
Congress assembled:
1 
SECTION 1. Short Title. - This Act shall be known as the ''Special Defense
2 
Economic Zone (SpeDEZ) Act."
3 
SEC. 2. Declaration of Policy. - It is hereby declared the policy of the State to
4 
develop a self-reliant and independent national economy effectively controlled by
5 
Filipinos. The State recognizes the indispensable role of the private sector, encourages
6 
the participation of private enterprise, and provides incentives to needed Investments.
7 
To this end, the State shall promote the preferential use of Filipino labor, domestic
8 
materials and locally produced goods and adopt measures to help make them more
9 
competitive. Further, the State actively encourages, promotes and accelerates the
10 
sound and balanced industrial, economic and social development of the country
11 
through the establishment, among others, of special economic zones in suitable and
12 
strategic locations in the country. In so doing, the State is able to attract legitimate
13 
and productive foreign investments with the objectives of providing jobs especially to
14 
those in the rural areas, increasing productivity and individual family income, and
15 
thereby improving the level and quality of living conditions of the people.
16 
SEC. 3. Creation of the Special Defense Economic Zone. - There is hereby
17 
created a special economic zone in Camp General Antonio Luna, Lamao, Municipality
1


1 
of Limay in the Province of Bataan, hereinafter referred to as the Special Defense
2 
Economic Zone (SpeDEZ), for investments in defense, military, law enforcement, and
3 
defense-related advanced technologies, information and communications technology,
4 
research and development and their support industries.
5 
The SpeDEZ shall cover the Government Arsenal Industrial Estate inside Camp
6 
General Antonio Luna located in the Municipality of Limay, Province of Bataan
7 
measuring approximately three hundred seventy (370) hectares. Including the
8 
seventy (70) hectares of land within which the Government Arsenal (GA) operates,
9 
the portions allocated for the expansion of the GA, and all other areas which may be
10 
declared as part of the SpeDEZ in compliance with Section 5(h) of this Act: Provided,
11 
That the GA shall remain a line bureau of the Department of National Defense (DND).
12 
Except as may be necessary in the pursuance of their respective mandates, the
13 
operations of the GA shall remain independent of the management of the SpeDEZ,
14 
and the SpeDEZ, as created by this Act, shall not interfere with the activities conducted
15 
in the seventy (70) hectare area on which the GA maintains and operates its buildings
16 
and structures. Republic Act No. 7898 otherwise known as the "AFP Modernization
17 
Act' states that the GA is utilized in the production of weapons, ammunitions, and
18 
other munitions for the use of the Armed Forces of the Philippines (AFP) and the
19 
Philippine National Police (PNP), and for the sale and export of products in excess of
20 
AFP/PNP requirements: Provided, further. That the GA and SpeDEZ shall not be
21 
expanded nor operated to the prejudice of each other. The GA and the SpeDEZA shall
22 
maintain coordination to ensure smooth and seamless operations on matters of mutual
23 
concern: Provided, finaiiy. That investors who intend to do business in the GA area
24 
shall secure a written consent from tlie GA prior to registration with the SpeDEZA.
25 
SEC. 4. Creation of the Speciai Defense Economic Zone Authority. - There is
26 
hereby created a specialized and independent body corporate to be known as the
27 
Speciai Defense Economic Zone Authority (SpeDEZA) which shall manage and operate
28 
the SpeDEZ in accordance with the provisions of this Act. The SpeDEZA shall be
29 
considered a government instrumentality vested with corporate powers.
30 
Notwithstanding Section 3 of Republic Act No. 7656, otherwise known as "An 
:31 Act Requiring Government-Owned or Controlled Corporations to Declare Dividends 
32 under Certain Conditions to the National Government, and for other Purposes", all
2


1 
dividends remitted by the SpeDEZA shall exclusively be for the Armed Forces of the
2 
Philippines Modernization Program and in no case, shall dividends remitted by the
3 
SpeDEZA be used otherwise.
4 
SEC. 5. Governing Principles. - The SpeDEZ shall be managed and operated
5 
under the following principles:
6 
a) Within the framework and limitations of the Constitution, Republic Act No.
7 
1884, Republic Act No. 7898, as amended by Republic Act No. 10349,
8 
Republic Act No. 10697, otherwise known as the "Strategic Trade
9 
Management Act", Executive Order No. 303, Series of 2004, and applicable
10 
provisions of the Local Government Code, the SpeDEZ shall be developed
11 
into and operated as a decentralized, self-reliant and self-sustaining
12 
industrial, commercial, trading, research, development, engineering,
13 
information and communications technology and financial investment
14 
center exclusive for defense, military and law enforcement commercial
15 
activities and investments, with provision for suitable residential,
16 
educational, recreational, and commercial areas;
17 
b) Notwithstanding the autonomy provided in Section 5(a) of this Act, the
18 
SpeDEZ may continue to be provided by the national government and local
19 
governments with transportation, telecommunications and other facilities
20 
needed to attract legitimate and productive investments, generate linkage
21 
with industries and employment opportunities for the people of the Province
22 
of Bataan and its neighboring towns and cities: Provided, That the
23 
autonomy and self-reliance of the SpeDEZ shall not be a hindrance to
24 
assistance nor partnerships with other units and instrumentalities of the
25 
government: Provided, further. That no assistance or partnership be
26 
construed as a waiver of the autonomy of the SpeDEZA;
27 
c) The SpeDEZA may establish mutually beneficial economic defense relations
28 
with other investment pron lotion agencies, entities or enterprises within the
29 
country or with foreign entities or enterprises: Provided, That the SpeDEZA
30 
shall seek clearance from the DND and administrative guidance from the
31 
Department of Foreign Affairs (DFA) as to relations with foreign entities or
32 
enterprises;
3


1
2
3
4
5
6
7
8 
9
10
11
12
13
14
15
16
17
18
19
20 
21 
22
23
24
25
26
27
28
29
30
31
32
d) Foreign citizens and companies owned by non-Filipinos may set up 
enterprises in the SpeDEZ with foreign ownership of up to the percentage 
allowed by law, subject to the approval of SpeDEZA, either by themselves 
or in joint venture with Filipinos or the GA in the defense and security 
industry within the territorial jurisdiction of the SpeDEZ: Provided, That the 
SpeDEZA may require individual locators to be subject to the provisions 
and limitations provided for by the Strategic Trade Management Act, 
Foreign Investment Act and the Regular Foreign Investment Negative List 
Issued by the President: Provided, further, That tf.e SpeDEZA may require 
a minimum investment in freely convertible currencies from any enterprise 
seeking registration as a locator of the SpeDEZ. All investments in the 
SpeDEZA shall fall under the priorities, thrusts and limits provided for in this 
Act: Provided, finaify. That all investments that do not directly or indirectly 
further defense, military and law enforcement investments shall be 
prohibited from doing business within the SpeDEZ except for businesses 
that cater to or support the locators, their employees, and the residents of 
the SpeDEZ;
e) Subject to the limitations in this Act and its implementing rules and 
regulations, the SpeDEZ shall be managed and operated as a separate 
customs territory ensuring free flow or movement of necessary goods and 
products; and capital within, into and out of its territory: Provided, That 
subject to Section 14 of this Act, the SpeDFZ and all activities conducted 
therein shall be exempt from payment of all national and local taxes: 
Provided, further. That in accordance with Sections 301 and 817 of Republic 
Act No. 10863, otherwise known as the "Customs Modernization and Tariff 
Act" (CMTA), the Bureau of Customs (BOC) shall continue to exercise 
border protection and customs control authority over the customs territory 
adjacent to the SpeDEZ and to this end shall consult, coordinate, cooperate 
with the SpeDEZA to enhance its protection and control capacity and ensure 
compliance with customs laws and regulations;


1
2
3
4
5
6
7
8 
9
10
11
12
13
14
15
16
17
18
19
20 
21 
22
23
24
25
26
27
28
29
30
31
32
f) The SpeDEZA shall provide incentives, such as tax and duty-free admissions 
of raw materials, capital and equipment to registered enterprises of the 
SpeDEZ: Provided, That exportation or removal of goods from the territory 
of the SpeDEZ to the other parts of the Philippine territory shall be subject, 
as applicable, to customs duties and taxes under the CMTA, as amended, 
and the National Internal Revenue Code (NIRC) of 1997, as amended: 
Provided, further. That sale of goods from the SpeDEZ to the AFP, PNP and 
local government units (LGUs) for defense and security purposes shall be 
exempt from all customs duties, national and local taxes: Provided, finaiiy, 
That subject to coordination with the BOC, customs transit to and from the 
SpeDEZ, thru the Port of Lamao or other ports, shall also be considered tax 
and duty-free;
g) As far as practicable, enterprises located within the SpeDEZ shall procure a 
certain percentage, as determined by the SpeDEZA, of their raw material 
requirements from local manufacturers within the Philippines;
h) The areas comprising the SpeDEZ may be expanded or reduced when 
necessary to improve its investment promotion capacity, ensure public 
order and safety, consolidate lands for SpeDEZ development, acquire right 
of way or access necessary and appropriate to the SpeDEZ, protect and 
safeguard watershed areas or maintain and improve water yield for the 
benefit of the SpeDEZ and LGUs, manage solid and water waste in 
compliance with existing national laws and local ordinances, and promote 
the public good. For this purpose, the SpeDEZA, with the concurrence of 
the LGUs concerned in the Province of Bataan, and in accordance with 
existing national laws and local ordinances, shall have the power to acquire, 
procure, increase, or otherwise expand, either by purchase, negotiation or 
condemnation proceedings, any private or public lands and their respective 
water territories within the Province of Bataan: Provided, That when 
applicable, the municipal waters of up to fifteen (15) kilometers from the 
low water mark area of the edge of the SpeDEZ shall be deemed included 
in the territorial jurisdiction of the SpeDEZ: Provided, further. That the 
SpeDEZA and the relevant LGUs concerned shall provide for iminediate and
5


1 
responsive mechanisms, best management practices and suitable
2 
environmental protection programs for land and coastal zone management
3 
to address any abuse and/or exploitation of the natural environment within
4 
the territorial jurisdiction of the SpeDEZ; and
5 
i) Products and goods researched and developed, engineered or
6 
manufactured by registered enterprises may be made available in the
7 
domestic market, subject to the limitations in this Act and its implementing
8 
rules and regulations, payment of corresponding duties, customs and taxes
9 
on raw materials as provided by the NIRC of 1997, as amended, and the
10 
CMTA, as amended, approval by the DND or the PNP in accordance with
11 
Republic Act No. 10697 and the Regular Foreign Investment Negative List
12 
issued by the President, other regulations that may be formulated by the
13 
SpeDEZA, and other applicable regulations and limitations imposed in
14 
accordance with law by the DND, AFP, PNP, Bangko Sentral ng Pilipinas
15 
(BSP), Department of Finance (DOF), BOC and Department of Trade and
16 
Industry (DTI): Provided, That in cooperation with the SpeDEZA, the DND
17 
and PNP shall provide and implement measures to improve ease and cost
18 
of doing business within the SpeDEZ and enhance the investment
19 
promotion capacity of the SpeDEZA: Provided, further. That in order to
20 
protect domestic industries, a negative list of industries shall be drawn up
21 
and regularly updated by the SpeDEZA: Provided, finaiiy. That enterprises
22 
engaged in industries included in such negative list shall not be allowed to
23 
sell their products locally, notwithstanding the registration of such
24 
enterprises in the SpeDEZ.
25 
SEC. 6. Powers and Functions of SpeDEZA. - The SpeDEZA shall have the
26 
following functions:
27 
a) To adopt, alter, and use a corporate seal;
28 
b) To contract, lease, buy, sell, acquire, own and dispose properties of
29 
whatever nature: Provided, That real properties that form part of the
30 
original Camp General Antonio Luna shall not be disposed of or
31 
encumbered: Provided, further. That expansion areas may be disposed of
32 
or encumbered by the SpeDEZA;
6


1
2
3
4
5
6
7
8 
9
10
11
12
13
14
15
16
17
18
19
20 
21 
22
23
24
25
26
27
28
29
30
31
32
c) To sue and be sued in order to carry out its duties, responsibilities, 
privileges, powers and functions as granted and provided for in this Act;
d) To exercise the power of eminent domain for public use and public purpose;
e) To operate, administer, manage, develop, in accordance with Executive 
Order No. 525, as amended, the SpeDEZ according to the principles and 
provisions set forth in this Act;
f) To recommend to the President the issuance of a proclamation or any 
executive issuance to fix or delimit the metes and bounds of the SpeDEZ: 
Provided, That for the avoidance of doubt, such proclamation shall not be 
required to expand the SpeDEZ pursuant to Section 5(h) of this Act;
g) To register, regulate and supervise the entities and enterprises in the 
SpeDEZ in a competent and efficient manner that, as far as practicable, 
balances ease of doing business and sound restriction or regulation of 
activities; the SpeDEZA may also register, regulate, and supervise defense 
related enterprises outside of the SpeDEZ territory as defined in Section 3 
and Section 5(h) of this Act: Provided, That the SpeDEZA shall submit to 
the DND a quarterly report on locators and other registered enterprises of 
the SpeDEZ;
h) To formulate and exercise general and sole supervision over . the 
implementation of the development plans, activities and operations of the 
SpeDEZ: Provided, That the SpeDEZA may coordinate with LGUs when 
necessary to promote development in the SpeDEZ;
i) To authorize or undertake, on its own or through others, and regulate the 
establishment, construction, operation and maintenance of public utilities, 
services, and infrastructure in the SpeDEZ such as shipping, barging, 
stevedoring, cargo, handling, hauling, warehousing, storage of cargo, port 
services or concessions, piers, wharves, bulkheads, bulk terminals, 
mooring areas, storage areas, roads, bridges, reclamation projects, 
terminals, conveyors, water supply and storage, sewerage, drainage, 
airport operations, in coordination with the Philippine Ports Authority (PPA), 
the Civil Aviation Autl iority of the Philippines (CAAP), and the AFP, and such 
other services or concessions or infrastructure necessary or incidental to
7


1
2
3
4
5
6
7
8 
9
10
11
12
13
14
15
16
17
18
19
20 
21 
22
23
24
25
26
27
28
29
30
31
32
the accomplishment of the objectives of this Act: Provided, That the 
registered enterprises of the SpeDEZ shall be given priority in the awarding 
of contracts, franchises, licenses, or permits for the establishment, 
operation and maintenance of utilities, services and infrastructure in the 
SpeDEZ;
j) To issue license, set fees, regulate the establishment, operation, and 
maintenance of utilities, educational and medical institutions, 
infrastructure related to military, defense and law enforcement investments 
and other services in the SpeDEZ such as: heat, light and power, water 
supply, telecommunications, mobile, internet and other data facilities, 
transport, toll roads and bridges and port services, and to fix just, 
reasonable and competitive rates, fares, charges and prices thereof;
k) To construct, acquii'e, own, lease, operate and maintain on its own or 
through contracts, franchises, licenses, bulk purchase from the private 
sector and build-operate-transfer scheme or joint venture with the private 
sector, any or all of the public utilities and infrastructure required or needed 
for the operation and development of the SpeDEZ, ncluding transportation, 
access and connection to, and out of the SpeDEZA, in coordination with 
appropriate national and local government authorities and in conformity 
with applicable laws;
l) To raise or borrow, within the limitation provided by law, and subject to the 
approval or opinion of the Monetary Board of the ESP, as the case may be, 
adequate and necessary funds from local or foreign sources, to finance its 
projects and programs under this Act, and for this purpose, to issue bonds, 
promissory notes, and other forms of securities, and to secure the same by 
a guarantee, pledge, mortgage, deed of trust, or an assignment of all or 
part of Its property or assets subject to Section 6(b) of this Act;
m) To enter into Public-Private Partnership, build-operate-transfer schemes or 
any of its variants, management contract, joint venture, co-production, or 
similar agreements with local or foreign entities for the management and 
operation of the SpeDEZ, u portion thereof, or any enterprise registered 
therein to ensure the viability of the SpeDEZ;
8


1
2
3
4
5
6
7
8 
9
10
11
12
13
14
15
16
17
18
19
20 
21 
22
23
24
25
26
27
28
29
30
31
32
n) To provide internal security to the SpeDEZ, in coordination with the National 
Government and affected LGUs: Provided, That for this purpose, the 
SpeDEZA shall provide and establish its own internal security and 
firefighting forces and identify and reserve facilities and areas within the 
SpeDEZ for the AFP, which shall be responsible for the perimeter security 
of the SpeDEZ, through the GA: Provided, further. That in the event that 
assistance is necessary, the AFP or PNP shall not interfere in the internal 
affairs of the SpeDEZA, except to provide the necessary security and 
defense, or law enforcement assistance, as the case may be: Provided, 
finaiiy, J\\Bt expenses of the AFP or PNP in the SpeDEZ shall be borne by 
the national government;
o) To protect, preserve, maintain and develop the forests, beaches, coral and 
coral reefs, and maintain ecological balance within the SpeDEZ: Provided, 
That notwithstanding the authority of the SpeDEZA to create rules for such 
purpose, the rules and regulations of the Department of Environment and 
Natural Resources (DENR) and other government agencies involved in the 
above functions shall be implemented by the SpeDEZA: Provided, further. 
That the SpeDEZA shall create an Ecology Center for such purpose;
p) To create, operate or contract to operate such functional units or offices of 
the SpeDEZA as it may deem necessary;
q) To issue certificates of origin for products manufactured or processed in 
the SpeDEZ;
r) To issue rules and regulations necessary to implement and accomplish the 
purposes, objectives and policies provided herein, in consultation with the 
DND, DTI, DOF and other relevant government agencies;
s) To appropriately zune the SpeDEZ and provide for buffer zones when 
necessary and reserve areas for housing;
t) To establish one-stop shops for the issuance of all necessary permits, 
clearances, licenses, and other similar certifications to conduct such 
activities intended to improve the ease of doing business within the 
SpeDEZ, in coordination with government agencies having jurisdiction over
activities in the SpeDEZ not otherwise solely reserved to the SpeDEZA:
9


1 
Provided, That all government agencies are directed to provide and extend
2 
utmost and full cooperation to the SpeDEZA in the establishment of such
3 
one-stop shops; and
4 
u) To perform such other functions as may be provided by law.
5 
SEC. 7. Board of Directors of the SpeDEZA. - The powers of the SpeDEZA shall
6 
be vested in and exercised by a Board of Directors, hereinafter referred to as the
7 
Board, which shall be composed of the following:
8 
a) The Secretary of the DND who shall be the ex officio Chairperson;
9 
b) The Administrator of the SpeDEZA as Vice-Chairperson: Provided, That
10 
in the absence of the Chairperson, the Vice-Chairperson shall preside
11 
over the meetings of the Board;
12 
c) Members who shall consist of:
13 
1. The Assistant Secretary for Plans and Programs (ASPP) of the DND;
14 
2. The Assistant Secretary for Acquisition, Installations and 
Logistics
15 
(ASAIL) of the DND;
16 
3. The Director of the GA;
17 
4. Commanding General, Philippine Army (PA);
18 
5. Commanding General, Philippine Air Force (PAF);
19 
6. Flag-Officer-In-Command, Philippine Navy (PN);
20 
7. One (1) representative from the investors within the SpeDEZ;
21 
8. One (1) representative from the workers working in the SpeDEZ;
22 
9. One (1) representative from the province of Bataan;
23 
10. One (1) representative from the municipality of LImay, Bataan;
24 
11. One (1) representative from the legislative district covering the site
25 
of the SpeDEZ; and
26 
12.Two (2) independeni: directors with proven expertise in defense and
27 
security strategies to be recommended by the SpeDEZA Board.
28 
In the event of vacancy in the Office of ASPP, ASAIL or Director of GA,
29 
the designated Acting ASPP, ASAIL or Director of GA shall serve as member of
30 
the Board.
31 
In the event the Chairperson and Vice-Chairperson are unable to attend
32 
the board meeting, the members present constituting a quorum shall elect
10


1 
among themselves the Presiding Officer for that particular meeting. The
2 
Presiding Officer shall not have voting rights except to break a tie. For the
3 
purpose of determining quorum, vacant seats shall not be considered.
4 
Except those coming from the DND, GA, PA, PAF, and PN, the members
5 
of the Board shall be appointed by the President of the Philippines to serve for
6 
a term of six (6) years, unless sooner separated from service due to death,
7 
voluntary resignation or removal for cause. In case of death, resignation or
8 
removal for cause, the replacement shall serve only the unused portion of the
9 
term.
10 
All members of the Board shall be Filipino citizens and no person shall
11 
be appointed by the President of the Philippines as a member of the Board
12 
unless the member is of good moral character and proven probity and integrity.
13 
Except for the representatives of the DND, GA, PA, PAF, PN, and workers,
14 
members of the Board are required to be degree holders in any of the following
15 
fields: economics, business, public administration, law, management, military
16 
science, or their equivalent, and with at least ten (10) years relevant working
17 
experience preferably in the field of management or public administration.
18 
The members of the Board shall each receive per diem at rates to be
19 
determined by the Department of Budget and Management (DBM) in
20 
accordance with existing rules and regulations: Provided, That the total per
21 
diem collected each month shall not exceed the equivalent per diem for four
22 
(4) meetings.
23 
SEC. 8. Administrator of the SpeDEZA. - The SpeDEZA shall have an
24 
Administrator with a rank of Department Undersecretary who shall be appointed by
25 
the President of the Philippines. The Administrator shall be at least Forty (40) years of
26 
age, of proven probity and integrity, and a degree holder in any of the following fields:
27 
economics, business, public administration, law, management or their equivalent, with
28 
at least ten (10) years relevant working experience preferably in the field of business,
29 
management, or public administration.
30 
SEC. 9. Powers and Duties of the Administrator, - The Administrator sha II have
31 
the following powers and duties:
11


1 
a) To direct and manage the affairs of the SpeDEZA in accordance with the
2 
policies of the Board;
3 
b) To establish the internal organization of the SpeDEZA under such
4 
conditions that the Board may prescribe;
5 
c) To submit an annual budget and necessary supplemental budget to the
6 
Board for its approval;
7 
d) To submit within thirty (30) days after the close of each fiscal year an
8 
annual report to the Board and such other reports as may be required;
9 
e) To submit to the Board for its approval policies, systems, procedures,
10 
rules and regulations that are essential to the operation of the SpeDEZA;
11 
f) To create a mechanism for coordination with relevant agencies for the
12 
promotion of industrial oeace, the protection cf the environment, and
13 
the advancement of the quality of life in the SpeDEZ;
14 
g) To preside at the meetings of the Board of the SpeDEZA in the absence
15 
of the Chairperson;
16 
h) To directly administer and supervise the operations and day-to-day
17 
business activities of the SpeDEZA;
18 
i) To execute, on behalf of the SpeDEZA, all contracts, agreements and
19 
other instruments affecting its interests and duly approved by the Board;
20 
and;
21 
j) To perform such other duties as may be assigned by the Board or which
22 
are necessary or incidental to the office.
23 
SEC. 10. Principal Office of the SpeDEZA. - The SpeDEZA shall maintain Its
24 
principal office in Camp Gen. Antonio Luna, Municipality of Limay, Province of Bataan,
25 
but it may establish liaison offices within the Philippines as may be necessary for the
26 
proper conduct of its business.
27 
SEC. 11. Organization and Personnel. - The Board of the SpeDEZA shall provide
28 
for an organizational structure and appoint employees, subject to the civil service law.
29 
Upon the recommendation of the Chairperson and Administrator and with the approval
30 
of the Secretary of the DBM, the Board shall appoint and fix the remuneration and
31 
other emoluments of its officers and employees in accordance with existing laws on
32 
compensation and position classification: Provided, That the Chairperson and
12


1
2
3
4
5
6
7
8 
9
10
11
12
13
14
15
16
17
18
19
20 
21 
22
23
24
25
26
27
28
29
30
31
32
Administratorshall exercise administrative supervision of its employees. The officers 
and employees of the SpeDEZA, including all members of the Board, shall not engage 
directly or indirectly in partisan activities nor take part in any election, except to vote.
No officer or employee of the SpeDEZA, subject to civil service laws and 
regulations, shall be removed or suspended except for cause, as provided by law.
SEC. 12. Special Labor Center. - A Special Labor Center shall be established 
within the SpeDEZ. This Center shall pro-actively play a vital role in studying and 
amicably settling professional, labor relations issues and disputes, interpreting 
employment service contracts, and monitoring work, work place, hygiene and safety 
standards within the SpeDEZ, particularly of the duly registered entities and 
enterprises. The Special Labor Center shall be comprised of a labor office, an industrial 
health and safety office, an inspection/investigative and disputes office, and an 
enforcement office.
In order to support the economic and employment generation thrusts of the 
LGUs, the SpeDEZA shall implement policies and programs that will serve to prioritize 
employment in the SpeDEZ of workers who are residents of stakeholder LGUs. 
Registered enterprises shall, as far as practicable, source all its labor needs from the 
stakeholder LGUs of the SpeDEZ, subject to existing laws and regulations: Provided,. 
That "stakeholder LGUs" for the purpose of this Act shall refer to all local governments 
which (1) derive a share in the five percent (5%) final tax imposition within the 
SpeDEZ, (2) host expansion areas of the SpeDEZ in accordance with Section S(g) or 
Section 6(f) of this Act, and/or (3) host registered enterprises of the SpeDEZ pursuant 
to Section 6(g) of this Act;
The SpeDEZA and, as far as practicable, the locators and registered enterprises 
of the SpeDEZ, shall prioritize for employment qualified former personnel of the GA 
who have been terminated or removed from the service due to the modernization of 
the GA.
SEC. 13. Investors Visa. - Any foreign national who invests an amount of Two 
Hundred Thousand US dollars (US$200,000.00), either in cash and/or equipment, in 
a registered enterprise shall be entitled to an investor's visa: Provided, That the foreign 
national has the following qualifications:
a) Must be at least eighteen (18) years of age;
13


1 
b) Must not have been convicted by final judgment of a crime involving
2 
moral turpitude;
3 
c) Must not be afflicted with any loathsome, dangerous or contagious
4 
disease;
5 
d) Must not have been institutionalized for any mental disorder or disability;
6 
and
7 
e) Must establish by verifiable and credible e\ idence financial capability and
8 
capacity.
9 
As a holder of an investor's visa, an alien shall be entitled to reside in the
10 
Philippines while the alien's investment subsists. For this purpose, the alien should
11 
submit an annual report, in the form duly prescribed for the purpose, to prove that
12 
the alien has maintained investments in the country. Should the said alien withdraw
13 
investments from the Philippines, then the investor's visa issued to the said alien shall
14 
automatically expire and /or be withdrawn.
15 
The authority to issue visas and work permits shall remain with the Bureau of
16 
Immigration (BI) and the Department of Labor and Employment (DOLE),
17 
respectively: Provided, That the BI and the DOLE shall implement measures to
18 
expedite the processing of such visas and permits for workers in the SpeDEZ and
19 
coordinate with the SpeDEZA for the purpose of improving ease of doing business.
20 
SEC. 14. Fiscal Incentives. - Registered enterprises of the SpeDEZ may be
21 
entitled to the existing pertinent fiscal incentives as provided for under Title XIII of
22 
the NIRC of 1997, as amended: Provided, That in the administration, implementation
23 
and monitoring of incentives, the SpeDEZA may impose conditions not otherwise
24 
prohibited by this Act: Provided, further. That the SpeDEZA shall not be limited to the
25 
conditions provided under Republic Act No. 7916, Republic Act No. 8748 or any other
26 
related issuance, rule or regulation.
27 
SEC. 15. Administration/ Implementation and Monitoring of Incentives. - For the
28 
proper administration, implementation and monitoring of tax incentives provided
29 
under this law, the following are herein mandated:
30 
a) The SpeDEZA shall be responsible for the administration, management,
31 
enforcement and implementation of the incentives granted to registered
32 
enterprises: Provided, That the SpeDEZA shall, among others, adopt and
14


1
2
3
4
5
6
7
8 
9
10
11
12
13
14
15
16
17
18
19
20 
21 
22
23
24
25
26
27
28
29
30
31
Implement systems and procedures affecting defense/military trade and 
the appropriate customs policies: Provided, further, That the BOC shall 
set up and establish a customs controlled area outside the gate of the 
SpeDEZ or other registered enterprises of the SpeDEZ operating 
outside its territory to facilitate payment of taxes on goods entering 
the Philippine customs territory: Provided, finaiiy. That notwithstanding 
the limitations in this Act, the SpeDEZA and BOC may coordinate and 
jointly implement measures on border protection; and 
b) In the interest of enhancing transparency in the management and 
accounting of tax incentives in the SpeDEZ, the SpeDEZA shall comply 
with the provisions of Republic Act No. 10708, otherwise known as "The 
Tax Incentives Management and Transparency Act (TIMTA)" and its 
implementing rules and regulations.
SEC, 16. Banking Ruies and Reguiations. - Banks and financial institutions to 
be established in the SpeDEZ shall be under the supervision of the BSP and shall be 
subject to existing banking laws, rules and regulations.
SEC. 17. Remittances. - In the case of foreign investments, a duly registered 
entity or enterprise within the SpeDEZ shall have the right to remit earnings from the 
investment in the currency in which the investment was originally made and at the 
exchange rate prevailing at tne time of remittance, subject to the provisions of 
Republic Act No. 7653, otherwise known as "The New Central Bank Act".
SEC. 18. Muiti-Year Contracts and Other ContractuaiArrangements. - In order 
to spur the development of SpeDEZ as a self-reliant and self-sustaining defense 
investment hub where duly qualified and selected locators are provided with 
guaranteed market access, the DND, the AFP, the Philippine Coast Guard (PCG), and 
the PNP are hereby directed to procure their defense equipment and materiel, 
whenever available and practicable, from defense industries registered with the 
SpeDEZA. For this purpose, the DND, AFP, PCG, and PNP are authorized to enter into 
multi-year conttacts and ether multi-year contractual arrangements with 
manufacturers or suppliers registered with the SpeDEZA under such terms and 
conditions to be provided in the rules and regulations implementing this Act.
15


1 
In implementing this section, the SpeDEZA, the DND, AFP, PCG, and PNP shall
2 
jointly formulate the mechanics for che selection of manufjcturers/suppliers to be
3 
awarded with multi-year contracts: Provided, That registration with the SpeDEZA and
4 
location of operation and manufacture of the defense equipment and material to be
5 
procured in the SpeDEZ shall be a condition precedent for the award of the multi-year
6 
contracts.
7 
The selection of manufacturers or suppliers eligible for multi-year contracts with
8 
the government shall be exempt from the provisions of Republic Act No. 9184,
9 
otherwise known as the "Government Procurement Reform Act" and its implementing
10 
rules and regulations. The length of the multi-year contracts shall be agreed upon by
11 
the contracting parties taking into consideration the period within which the
12 
manufacturer or supplier may recoup its investment together with a reasonable
13 
rate of return: Provided, that the execution of the multi-year contract shall not
14 
preclude the manufacturer or supplier concerned from accepting and filling in orders
15 
from other clients as long as the fulfillment of its obligations under the multi-year
16 
contract are not adversely affected.
17 
SEC. 19. Countertrade. - Whenever applicable and practicable, any of the
18 
countertrade arrangements defined in Executive Order No. 120 should be explored in
19 
pursuing defense related acquisitions. The SpeDEZA in consultation with the DND, the
20 
DTI, and other offices concerned, shall identify or develop a list of goods or services
21 
or industries which may be subject to a countertrade.
22 
SEC. 20. Capitaiization. - The SpeDEZA shall have an authorized capital stock
23 
of Three Billion Pesos (P3,000,000,000.00) to be subscribed wholly by the national
24 
government.
25 
In addition, all lands embraced and covered by the SpeDEZ, including
26 
permanent improvements and fixtures, upon proper inventory by the GA or AFP, as
27 
the case may be, not otherwise alienated, conveyed or transferred to another
28 
government agency and all other assets which the President may transfer to the
29 
SpeDEZA shall form part of the equity contribution of the government.
30 
The annual subscription of the national government to the capital stock of the
31 
SpeDEZA shall be included in the annual General Appropriations Act.
16


1 
SEC. 21. Supervision and Controi. - For purposes of policy direction and
2 
coordination, the SpeDEZA shall be under the direct controi and supervision of the
3 
Office of the President of the Philippines.
4 
SEC. 22. Regionai Deveiopment Councii. - The SpeDEZA shall determine the
5 
deveiopment goals for the SpeDEZ within the framework of national development
6 
plans, policies and goals. The Chairperson and Administrator shall, upon approval by
7 
the Board, submit the SpeDEZA plans, programs and projects to the Regional
8 
Development Council for inclusion and inputs to the overall regional development plan.
9 
SEC. 23. Reiationship with Locai Government Units. - Except as herein
10 
provided, the Municipality of Limay in the Province of Bataan and such other local
11 
government units where registered enterprises of the SpeDEZ conduct business shall
12 
operate and function in accordance with the framework of the 1987 Constitution and
13 
Republic Act No. 7898, as amended by Republic Act No. 10349, applicable provisions
14 
of the Locai Government Code, and this Act.
15 
In case of any conflicr between the SpeDEZA, the LGUs and any national
16 
government agency on matters affecting the SpeDEZA, other than national defense
17 
and security matters, the decision of the SpeDEZA shall prevail.
18 
SEC. 24. Legai Office. - The SpeDEZA shall have and maintain its own internal
19 
legal office, with appropriate number of personnel under the supervision of the
20 
Government Corporate Counsel. When the exigencies of its businesses and operations
21 
demand, the SpeDEZA may engage the services of an outside counsel either on a case
22 
to case or a fixed retainer basis. Such engagement shall not require further approval
23 
and concurrence of the Office of the Government Corporate Counsel or the Office of
24 
the Solicitor General.
25 
SEC. 25. Construction. - The powers, authorities and functions that are vested
26 
In the SpeDEZA are intended to establish national self-sufficienc and self-reliance in
27 
the advancement and protection of the national integrity, enhancement of national
28 
security, decentralization of governmental functions and authority, and promotion of
29 
an efficient and effective working relationship between the SpeDEZA, the national
30 
government and the LGUs. Any interpretation of this Act shall consider such intentions.
31 
In the event of conflict of interpretations, the provisions of this Act shall be construed
32 
in favor of an interpretation that would tend to protect national security
17


1
2
3
4
5
6
7
8 
9
10
11
12
13
14
15
16
17
18
19
20 
21 
22
23
24
25
SEC. 26. Audit- The Commission on Audit shall appoint a full-time auditor in 
the SpeDEZA or may assign such number of personnel as may be necessary in the 
performance of Its functions.
SEC. 27. Transitory Provisions, - The SpeDEZA shall be responsible for the 
operation, administration, management and development of the SpeDEZ. The 
SpeDEZA shall effect the transfer herein provided in a manner that will ensure the 
least disruption of ongoing programs of the GA.
SEC. 28. Impiementing RuiesandReguiations. - The SpeDEZA, DTI, DOF, DND, 
and the LGUs concerned shall formulate the implementing rules and regulations of 
this Act within ninety f90) days after its approval. Such rules and regulations shall take 
effect fifteen (15; days after its publication in a newspaper of general circulation in 
the Philippines.
SEC. 29. Appiicabiiity Ciause. - Insofar as these are consistent with the 
provisions of this Act, the provisions of Sections 30 to 41 of Republic Act No. 7916, 
otherwise known as "The Special Economic Zone Act of 1995", as amended, shall 
likewise apply to the SpeDEZ.
Sec. 30. Separabiiity Clause. - If any provision of this Act is declared Invalid or 
unconstitutional, other provisions hereof which are not affected thereby shall remain 
in full force and effect.
Sec. 31. Repealing Clause. - All laws, orders, decrees, rules and regulations, 
and other parts thereof inconsistent with the provisions of this Act are hereby 
repealed, amended or modified accordingly.
Sec. 32. Effectivity Clause. - This Act shall take effect fifteen (15) days after its 
publication in the Official Gazette or in at least two (2) national newspapers of general 
circulation.
Approved,
18