EIGHTEENTH CONGRESS )
REPUBLIC OF THE PHILIPPINES )
First Regular Session )

HOUSE OF REPRESENTATIVES.

by Representa utus B. Rodriguez _
House Bill No.3 74 7

EXPLANATORY NOTE

This bill seeks to amend Republic Act No. 7916, otherwise known as “The Special
Economic Zone Act of 1995", as amended by Republic Act No. 8748, "An Act Amending
Republic Act No. 7916, otherwise known as The Special Economic Zone Act of 1995".

‘The 1987 Philippine Constitution declares that the State shall develop a self-reliant
and independent national economy. Further, it is the policy of the State to encourage and
Promote the establishment and development of economic areas in the country as a means to
achieve and enjoy a sound and balanced industrial, economic, and social development, so
that territorial and political subdivisions of the State can attain meaningful local autonomy. It
also recognizes the indispensable role of the private sector, encourages private enterprise,
and provides incentives to prioritized investment sectors.

Republic Act No. 7916 or The Special Economic Zone Act of 1995 was enacted on
February 21, 1995. Since its enactment, the Philippine Economic Zone Authority (PEZA) has
become one of the leading Investments Promotions Agencies (IPAs) in the Philippines and
its registered economic zones have been the preferred destination of foreign investors that
intend to locate in the country. The PEZA is one of the government agencies that contributes
to the economic development in the countryside due to a number of economic zones that
were proclaimed in the entire country that are now bustling provinces and metropolis.

As of 2018, the PEZA has a total of 4,341 operating enterprises located in 395
economic zones including Information Technology (IT) Parks/Centers. PEZA has brought in
a total of 3.755 Trillion approved investments, generated US$760.479 billion exports and
created 1,400,000 employment opportunities for our countrymen. PEZA exports contribute
63% of the country's total commodity export and 80% of total Philippines service export and
account for 16% of GDP. However, although economic gains have been achieved with RA
7916, there is a need to update such law in order to maximize the investments in the
economic zones and result in more significant gains for the Filipinos and the country at large
especially the less developed areas in the countryside.

This bill seeks to amend Republic Act No. 7816 in order to strengthen the PEZA by
Providing the following: (1) additional powers and functions of the authority to be more pro-
active and responsive to the demands of the local and international business markets, (2)
establishment of a globally competitive and conducive investment climate and facility: (3)
competitive and appropriate incentives package in order to attract more investors to the
countryside (4) creation of opportunities for more investment portfolios; (5) increased
financial capability of the designated authority; (6) reduced import dependence by
empowering, capacitating and incentivizing domestic enterprises, farmers, fishermen and
every Filipino to participate in completing the supply chain, maximizing production of quality
Products and export manufacturing capability and (7) more empowered and capable LGUs
that are self-reliant, self-sustaining and resource-generating to enjoy social progress, peace
and prosperity as experienced by model-LGU hosts of existing economic zones


The amendment of Republic Act No. 7916 is also mandated by Administrative Order
No. 18 which directed the PEZA to accelerate rural progress through robust development of
special economic zones in the countryside. This was also prompted by the recommendation
of the Cabinet Cluster on environment and disaster management to enhance the incentives
and the dispersion of economic activities outside Metro Manila to reduce its population
density in support of the government efforts toward an earthquake and natural disaster-

resilient Philippines

In view of the foregoing, immediate approval of this measure is earnestly requested

RU) Llig |

ROD}



EIGHTEENTH CONGRESS )
REPUBLIC OF THE PHILIPPINES )
First Regular Session )

HOUSE OF REPRESENTATIVES

___Introduced by Representative Rufus B. Rodriguez TEN
3747

House Bill No.

AN ACT
STRENGTHENING THE ROLES AND FUNCTIONS OF THE PHILIPPINE ECONOMIC
ZONE AUTHORITY (PEZA) TO ACCELERATE COUNTRYSIDE DEVELOPMENT
THROUGH ROBUST CREATION OF SPECIAL ECONOMIC ZONES IN RURAL AND NEW
GROWTH AREAS, ENHANCING THE INCENTIVES THEREOF AND AMENDING FOR
THIS PURPOSE, REPUBLIC ACT NO. 7916, OTHERWISE KNOWN AS “THE SPECIAL
ECONOMIC ZONE ACT OF 1995, AS AMENDED BY RA 8748”

Be iit enacted by the Senate and the House of Representatives of the Philippines in
Congress assembled,

SECTION 1. Section 3 of Republic Act No. 7916 is hereby amended to read as follows
“SEC. 3. Purposes, Intents and Objectives. — It is the purpose, intent and objective of this
Act:

{a) To establish the legal framework and mechanisms for the integration, coordination,
Planning and monitoring of special economic zones, industrial estates / parks
export processing zones and other economic zones IN ORDER TO FULLY
INDUSTRIALIZE AND DEVELOP THE PHILIPPINES INTO A GREEN, CLIMATE-
RESILIENT AND REGIONAL ECONOMY THAT WILL ATTRACT EXPORT-
ORIENTED INDUSTRIES, AS WELL AS STRATEGIC DOMESTIC-ORIENTED
INDUSTRIES;

(b) x x x

() x x x

(a) x x x

(e)x x x

(f) x x x
(CG) TO MINIMIZE IMPORT DEPENDENCE, MAXIMIZE EXPORTATION,

PRODUCTION, AND MANUFACTURING CAPABILITY OF FILIPINOS AND
COMPLETE THE SUPPLY CHAIN;

(H) TO EMPOWER AND CAPACITATE THE PEOPLE AND THE LOCAL
GOVERNMENT UNITS (LGUs) THROUGH THE ESTABLISHMENT OF SPECIAL
ECONOMIC ZONES AS ECONOMIC DRIVERS TO GROW SMART TOWNS, DIGITAL
CITIES AND NEW METROPOLITAN AREAS IN EVERY REGION, MAKING THE
LGUs SELF-RELIANT, SELF-SUSTAINING AND RESOURCE-GENERATING;

() TO FACILITATE THE CONSTRUCTION OF MORE LOGISTICS HUBS,
INTERNATIONAL AIRPORTS AND SEAPORTS AND PROVIDE MULTIMODAL.
MEANS OF TRANSPORTATION IN EVERY REGION, ADDRESS THE PUBLIC
WORKS INFRASTRUCTURE, ENHANCE THE INFORMATION TECHNOLOGY (IT)
INFRASTRUCTURE, RESEARCH AND DEVELOPMENT (R & D) AND KNOWLEDGE
PROCESS INFRASTRUCTURE AND PROMOTE AFFORDABLE, HIGH QUALITY,
COMPETITIVE UTILITIES AND RENEWABLE SOURCES OF ENERGY, IN
PARTNERSHIP WITH OTHER GOVERNMENT AGENCIES, PRIVATE AND
INTERNATIONAL INSTITUTIONS;


(J) TO UTILIZE THE VAST AND IDLE PUBLIC LANDS, RESTORE THE BASIC
INDUSTRIES TO ENSURE FOOD SECURITY AND SUSTAINABILITY, ATTRACT
STRATEGIC INDUSTRIES THAT ARE BADLY NEEDED TO FULLY INDUSTRIALIZE
THE COUNTRY, AND ENCOURAGE BIG-TICKET INDUSTRIES THAT PROVIDE AT
LEAST A BILLION DOLLAR CAPITALIZATION, OR MORE THAN 5,000 JOBS
CREATED, OR TRANSFER OF PIONEER TECHNOLOGY AND DEVELOP AT LEAST
50 HECTARES OF LAND IN THE COUNTRYSIDE.

(K) TO MATCH THE PROFESSIONAL, VOCATIONAL AND TECHNICAL SKILLS
TRAINING PROGRAM IN HIGHER EDUCATION AND TRAINING CENTERS IN
EVERY REGION, TRANSFORMING THE FILIPINOS AS MULTI-KNOWLEDGE AND
SKILLED WORKERS, A RICH HUMAN CAPITAL AND AS WORLD-CLASS
WORKERS;

SECTION 2. Section 4 of Republic Act No. 7916 is hereby amended to read as follows:
“SEC. 4. Definition of Terms. ~ For purposes of this Act, the following definitions shall apply
to the following terms

(a) “Special Economic Zones (SEZ)" — hereinafter referred to as the ECOZONES, are
Selected areas with highly developed or which have the potential to be developed into
TOWNSHIPS INTEGRATING THE INDUSTRIAL, COMMERCIAL, MEDICAL/HEALTH,
EUCATIONAL, RECREATIONAL AND RESIDENTIAL COMPONENTS. AN ECOZONE
MAY BE CLASSIFIED INTO DIFFERENT TYPES DEPENDING ON ITS LAND/MARINE
POTENTIALS AND RESOURCESON IT SUCH AS:

AGRO-FORESTRY;
AGRO-INDUSTRIAL;

AQUAMARINE;

AVIATION AND AEROSPACE PARKS;

CREATIVE INDUSTRIES;

DEFENSE AND INDUSTRISL COMPLEX;

DOMESTIC ECOZONES;

ECO-INDUSTRIAL PARKS;

EXPORT PROCESSING ZONES (EPZs);

FREE TRADE ZONES;

HALAL AND FOOD PRODUCTION HUBS;

INFORMATION AND TECHNOLOGY (IT) PARKS AND/OR CENTERS;
ISLAND CITIES;

KNOWLEDGE, INNOVATION, AND SCIENCE AND TECHNOLOGY
PARKS;

LOGISTICS HUB;

MINERAL PROCESSING ECOZONES

RENEWABLE ENERGY ECOZONES;

RETIREMENT, TOURISM AND MEDICAL TOURISM ECOZONES
OTHER TYPES AS MAY BE DETERMINED BY PEZA

(E) BASIC INDUSTRIES ~ ARE INDUSTRIES THAT CATER TO THE BASIC NEEDS OF
THE FILIPINOS SUCH AS BUT NOT LIMITED TO FOOD, AGRICULTURE, STEEL,
WOOD AND OTHER HOUSING AND CONSTRUCTION MATERIALS, UTILITIES SUCH
AS POWER, WATER AND SOURCES OF RENEWABLE ENERGY, INDUSTRIES INTO
CLOTHING, GARMENTS AND TEXTILE, AUTOMOBILE, RAILWAYS AVIATION AND

4


OTHER AIR, WATER, AND LAND VEHICLES; HEALTH AND MEDICAL; AND
COMMUNICATIONS AND TECHNOLOGY;

(F) STRATEGIC INDUSTRIES ~ REFERS TO PIONEERING TECHNOLOGIES AND
THOSE PRIORITY ACTIVITIES AND INDUSTRIES THAT ARE BEING DEVELOPED TO
MODERNIZE AND INDUSTRIALIZE, ATTRACT MORE INVESTMENTS, GENERATE
EMPLOYMENT, UPGRADE POSITION IN THE GLOBAL VALUE CHAIN AND SUSTAIN
MANUFACTURING RESURGENCE TOWARDS ECONOMIC TRANSFORMATION.
THESE INDUSTRIES INCLUDE BUT NOT LIMITED TO THE FOLLOWING:
MANUFACTURING, SEMICONDUCTORS, ELECTRONICS, INFORMATION
TECHNOLOGY-BUSINESS PROCESS MANAGEMENT (IT-BPM), ASSEMBLY,
REFINERY, PROCESSING, PETRO-CHEMICAL, TOURISM AND MEDICAL TOURISM,
DEFENSE, LOGISTICS, SOURCES OF RENEWABLE ENERGY, INNOVATION, R & D
ACTIVITY, INVESTMENTS IN ENVIRONMENTAL PROTECTION SYSTEMS AND ROHQs,
AND OTHERS THAT WILL MAKE THE PHILIPPINES AS A REGIONAL HUB.

(G) BIG-TICKET INDUSTRIES ~ REFER TO LOCATOR INDUSTRIES THAT WILL
INVEST AT LEAST ONE BILLION DOLLAR CAPITALIZATION OR CREATE MORE
THAN 5,000 JOBS OR ENGAGE IN PIONEER TECHNOLOGY, AND TO ECOZONE
DEVELOPERS THAT WILL ESTABLISH ECOZONES IN THE COUNTRYSIDE WITH AN
AREA OF AT LEAST 50 HECTARES.

(H) COUNTRYSIDE ~ REFERS TO RURAL AND LESS DEVELOPED AREAS OUTSIDE
METRO MANILA-CITIES AND HIGHLY URBANIZED GROWTH CENTERS.”

() INDIRECT-EXPORTERS/DOMESTIC ENTERPRISES-REFER TO SUPPLIERS OF
EXPORTERS WHICH ARE LOCATED INSIDE THE ECONOMIC ZONES

SECTION 3. Section 5 of Republic Act No. 7916 is hereby amended to read as follows
"SEC. 5. Establishment of ECOZONES. ~ To ensure the viability and geographical dispersal
of ECOZONES through a system of prioritization, the following areas are initially identified as
ECOZONES, subject to the criteria specified in Section 6

(a)x xx

xxx

(mm) x xx
These areas shall be developed through any of the following schemes.
i. Private initiative
ii, Local government initiative with the assistance of the national government; and
iii, National government initiative
The metes and bounds of each ECOZONE are to be delineated and more particularly
described in a DESIGNATION TO BE ISSUED UPON APPROVAL OF THE PEZA BOARD
OF DIRECTORS, upon the recommendation of the HOST LGUs, which shall be established

under this Act, in coordination with the municipal and / or city council, National Land Use
Coordinating Committee and / or the Regional Land Use Committee.”


SECTION 4. Section 6 of Republic Act No. 7916 is hereby amended to read as follows.
“SEC. 6. Criteria for the Establishment of Other ECOZONES. — In addition to the
ECOZONES identified in Section 5 of this Act, other areas may be established as
ECOZONES in a DESIGNATION TO BE ISSUED BY THE PEZA BOARD OF DIRECTORS
Subject to the evaluation and recommendation of the PEZA, based on a detailed feasibility
and engineering study which must conform to the following criteria

(a) The proposed area must be identified as a regional growth center in the Medium-
Term Philippine Development Pian or by the Regional Development Council:

(b) The existence of required infrastructure in the proposed ECOZONE, such as
roads, railways, telephones, ports, airports, etc., and the suitability and capacity of
the proposed site to absorb such improvements:

(C) The availability of water source and electric power supply for use of the
ECOZONE AND HIGH SPEED FIBER-OPTIC TELECOMMUNICATION
BACKBONE AND HIGH-SPEED INTERNATIONAL GATEWAY FACILITY OR
WIDE AREA NETWORK (WAN) OR ANY HIGH SPEED DATA
TELECOMMUNICATION SYSTEM THAT MAY BE AVAILABLE IN THE FUTURE,
FOR IT PARKS/CENTERS,

(d) The extent of vacant lands available for industrial and commercial development
and future expansion of the ECOZONE as well as of lands adjacent to the
ECOZONE available for development of residential areas for the ECOZONE workers;

(e) The availability of skilled, semi-skilled and non-skilled trainable labor force in and
around the ECOZONE;

(f) The area must have a significant incremental advantage over the existing
economic zones and its potential profitability can be established:

(9) The area must be strategically located AND ESTABLISHED IN HAZARD AND
DISASTER RESILIENT AREAS; and

(h) The area must be situated where controls can easily be established to curtail
smuggling activities

Other areas which do not meet the foregoing criteria may be established as
ECOZONES: Provided, That the said area shall be developed only through local
government and/or private sector initiative under any of the schemes allowed in
Republic Act No. 6957 (the build-operate-transfer law), and without any financial
exposure on the part of the national goverment: Provided, further, That the area can
be easily secured to curtail smuggling activities: Provided, finally, That after five (6)
years the area must have attained a substantial degree of development, the
indicators of which shall be formulated by the PEZA.”

SECTION 5. Section 8 of Republic Act No. 7916 is hereby amended to read as follows
(SEC, 8 ECOZONE to be Operated and Managed as Separate Customs Territory. — The
ECOZONE shall be managed and operated by the PEZA as separate ADMINISTRATIVE
AND customs territory

xx x"

SECTION 6. Section 11 of Republic Act No. 7916 is hereby amended to read as follows,


“SEC. 11. The Philippine Economic Zone Authority (PEZA) Board. — There is hereby created
a body corporate to be known as the Philippine Economic Zone Authority (PEZA) UNDER
THE OFFICE OF THE PRESIDENT. The Board shall have a director general with the rank of
department SECRETARY who shall be appointed by the President AND SHALL HAVE A
TERM OF SIX (6) YEARS, UNLESS RENEWED, OR REMOVED FOR A CAUSE. The
director general shall be at least forty (40) years of age, of proven probity and integrity, and a
degree holder in any of the following fields: economics, business, public administration, law,
management or their equivalent, and with at least ten (10) years relevant working experience
Preferably in the field of management or public administration.

“The director general shall be assisted by FOUR (4) deputy director generals each for policy
planning AND PROGRAMS; FINANCE AND administration; ENTERPRISE operations AND
INCENTIVES MANAGEMENT. AND SPECIAL ECONOMIC ZONE DESIGNING,
RESEARCH AND MARKETING who shail be appointed by the PEZA Board, upon the
recommendation of the director general. The deputy directors general shall be at least thirty-
five (35) years old, with proven probity and integrity, and a degree holder in any of the
following fields: economics, business, public administration, law, management or their
equivalent. THE DIRECTOR GENERAL SHALL ALSO SIT AS MEMBER OF THE BOARD
OF DIRECTORS OF THE NATIONAL ECONOMIC DEVELOPMENT AUTHORITY (NEDA)
AND THE TECHNICAL EDUCATION AND SKILLS DEVELOPMENT AUTHORITY.

“The Board shall be composed of TWENTY (20) members as follows: the Director General
of the Philippine Economic Zone Authority as CHAIRMAN, the undersecretaries of the
Department of Finance, the Department of Labor and Employment, the Department of
Interior and Local Government, the Department of Environment and Natural Resources, the
Department of Agriculture, the Department of Public Works and Highways, the Department
of Science and Technology, the Department of Energy, THE DEPARTMENT OF TRADE
AND INDUSTRY, THE DEPARTMENT OF TOURISM, THE DEPARTMENT OF
TRANSPORTATION, THE DEPARTMENT OF INFORMATION AND COMMUNICATIONS
TECHNOLOGY, THE DEPARTMENT OF NATIONAL DEFENSE, the Deputy Director
General of the National Economic and Development Authority, THE DEPUTY DIRECTOR
GENERAL OF TECHNICAL EDUCATION AND SKILLS DEVELOPMENT AUTHORITY.
THE VICE CHAIRPERSON OF THE COMMISSION OF HIGHER EDUCATION, one (1)
Tepresentative from the investors / business sector in the ECOZONE, ONE (1)
REPRESENTATIVE FROM THE LABOR SECTOR IN THE ECOZONE AND ONE (1)
REPRESENTATIVE FROM THE UNION OF LOCAL AUTHORITIES OF THE PHILIPPINES
(ULAP

The existing Export Processing Zone Authority (EPZA) created under Presidential Decree
No. 66 shall evolve into the PEZA in accordance with the guidelines and regulations set forth
in an executive order issued for this purpose.

ONLY NON-EX OFFICIO members of the Board shall receive a per diem of not less than the
amount equivalent to the representation and transportation allowances of the members of
the Board and / or as may be determined by the Department of Budget and Management
Provided, however, That per diems collected per month does not exceed the equivalent of
four (4) meetings,

SECTION 7. Section 12 of Republic Act No. 7916 is hereby amended to read as follows:
"SEC. 12. Functions and Powers of PEZA Board. — The Philippine Economic Zone Authority
(PEZA) Board shall have the following functions and powers.

(2) Set the general policies on the establishment and operations of the ECOZONES,
industrial estates, export Processing zones, free trade zones, and the like:

(b) Review proposals for the establishment of SPECIAL ECONOMIC ZONES AS DEFINED


UNDER SECTION 2 OF THIS ACT, AND based on the set criteria under Section 6 and
DESIGNATE the establishment of the ECOZONES, industrial estates, export processing
zones, IT PARKS AND/OR CENTERS, free trade zones and the like. Thereafter, it shall
facilitate and assist in the organization of said entities;

(c) Regulate and undertake the establishment, operation and maintenance of Utilities, other
services and infrastructure in the ECOZONE, such as heat, light and power, water supply.
telecommunication, transport, toll roads and bridges, port services, etc., and to fix just,
feasonable and competitive rates, charges and fees therefore. FOR THIS PURPOSE, THE
PEZA BOARD SHALL EXERCISE EXCLUSIVE JURISDICTION AS THE REGULATOR
OF UTILITIES INSIDE THE ECOZONES AND SHALL HAVE THE AUTHORITY TO ISSUE
FRANCHISE OVER POWER, WATER, COMMUNICATION AND OTHER UTILITIES IN
THE ECOZONES;

(4) Approve the annual budget of the PEZA and the ECOZONE development plans:

(6) Issue rules and regulations to implement the provisions of this Act in so far as its power
and functions are concemed;

(f) Exercise its powers and functions as provided for in this Act and
(9) Render annual reports to the President and the Congress.”

SECTION 8. Section 13 of Republic Act No. 7916 is hereby amended to read as follows
‘SEC. 13. General Powers and Functions of the Authority. ~ The PEZA shall have the

following powers and functions.
(2) To operate, administer, manage and develop the ECOZONE according to the principles

and provisions set forth in this Act:

(®) To register, requiate, GRANT INCENTIVES UNDER SECTION 10 OF THIS ACT and
Supervise the enterprises in the ECOZONE in an efficient and decentralized manner:

(¢) To coordinate with local govemment units and exercise general supervision over the
development, plans, activities and operations of the ECOZONES, industrial estates, export
Processing zones, free trade zones, and the like:

{G) In coordination with local government units concemed and appropriate agencies, to
fonstruct, acquire, own, lease, operate and maintain on its own or through contract,
franchise, license, bulk purchase from the private sector and build-operate-transfer scheme
or Joint venture, adequate facilities and infrastructure, such as light and power systems,
Water supply and distribution systems, telecommunication and transportation, buildings
structures, warehouses, roads, bridges, ports and other facilities for the operation and
development of the ECOZONE;

{(e)] (E) TO EXCLUSIVELY ENFORCE AND ADMINISTER THE PROVISIONS OF THE
NATIONAL BUILDING CODE OF THE PHILIPPINES AND THE FIRE CODE OF THE
PHILIPPINES WITHIN THE TERRITORIAL JURISDICTION OF THE ECOZONES;


(G) TO SUPPORT THE OPERATIONS OF REGISTERED ENTERPRISES BY
SUBSIDIZING THE COST OF POWER, WATER AND OTHER UTILITIES INCLUDING
THE FREE USE OF LAND IN THE PUBLIC ECOZONES, SUBJECT TO A CRITERIA TO
BE APPROVED BY THE PEZA BOARD OF DIRECTORS AND THE APPROVAL OF THE
PRESIDENT OF THE PHILIPPINES. THE CRITERIA FOR THE GRANT OF SUBSIDY
WILL INCLUDE AMONG OTHERS THE AMOUNT OF INVESTMENTS AND
EMPLOYMENT GENERATION AND WILL BE PERFORMANCE-BASED, TARGETED,
TRANSPARENT AND TIMEBOUND.

((e)] (H) To create, operate and/or contract to operate such agencies and functional units or
Offices of the authority as it may deem necessary,

{(] (1) To adopt, alter and use a corporate seal; make contracts, lease, own or otherwise
dispose of personal or real property; sue and be sued; and otherwise carry out its duties and
functions as provided for in this Act;

((9)] (J) To coordinate the formulation and preparation of the development plans of the
different entities mentioned above:

{(h)] (KK) To coordinate with the National Economic Development Authority (NEDA), the
Department of Trade and Industry (DT!), the Department of Science and Technology
(DOST), and the local government units and appropriate government agencies for policy and
Program formulation and implementation: and

[0] (L) To monitor and evaluate the development and requirements of entities in subsection
(a) and recommend to the local government units or other appropriate authorities the
location, incentives, basic services, utilities and infrastructure required or to be made
available for said entities

(M) TO INTEGRATE COMMERICAL, RESIDENTIAL AREAS, TRAINING, EDUCATIONAL
AND MEDICAL FACILITIES AND SERVICES TOWARDS TOWNSHIPS IN PUBLIC
ECONOMIC ZONES WHICH CAN BE REPLICATED IN DEVELOPING PRIVATE
ECONOMIC ZONES;

(N) TO CREATE AND ESTABLISH A SPECIAL ECONOMIC ZONE (SEZ) INSITUTE IN
EVERY REGION TO CONSOLIDATE THE TRAINING NEEDS OF INDUSTRIES,
MANPOWER REQUIREMENTS, EDUCATIONAL, TECHNICAL AND PROFESSIONAL
COURSES FOR CLASSROOM, LABORATORY AND OTHER FACILITIES. LIKEWISE,
THE INSTITUTE SHALL SERVE AS COORDINATOR AND COLLABORATOR IN
CONSOLIDATING, INTEGRATING AND HARMONIZING POLICIES AND PROGRAMS
FROM AMONG FELLOW GOVERNMENT AGENCIES AND GOVERNMENT.
RECOGNIZED INDUSTRIES/STAKEHOLDERS ON MATTERS OF FORMULATING AND
PURSUING A DIRECTION TO ADDRESSING KNOWLEDGE, EXPERTISE AND
RELATED INTELLECTUAL CAPABILITIES TO ADVANCE THE INVESTMENT
PROMOTION STRATEGY OF THE GOVERNMENT. THE SEZ INSTITUE SHALL
CAPACITATE THE PEZA WITH RESEARCH, INSTRUCTION AND SOCIO-CULTURAL
DEVELOPMENT SERVICES FOR A LOCALLY POSITIONED, COMPETITIVENESS IN
GENERAL AND PROMOTING INVESTMENT, EXPORT AND EMPLOYMENT IN EVERY
REGION.

(0) TO EXERCISE SUCH POWERS AS MAY BE ESSENTIAL, NECESSARY OR
INCIDENTAL TO THE POWERS GRANTED TO IT HEREUNDER AS WELL AS THOSE
THAT SHALL ENABLE IT TO CARRY OUT, IMPLEMENT AND ACCOMPLISH THE
PURPOSES, OBJECTIVES AND POLICIES OF THIS ACT; AND


(P) TO BE VESTED WITH OTHER POWERS ENJOYED OR EXERCISED BY OTHER
ECONOMIC ZONE AND/OR FREE PORT ZONE AUTHORITIES.”

SECTION 9. Section 14 of Republic Act No. 7916 is hereby amended to read as follows:
“SEC. 14. Powers and Functions of the Director General. — The director general shall be the
overall coordinator of the policies, plans and programs of the ECOZONES. As such, he shall
Provide overall supervision over and general direction to the development and operations of
these ECOZONES. He shall determine the structure and the staffing pattem and personnel
complement of the PEZA and establish regional offices, when necessary, subject to the
approval of the PEZA Board.

In addition, he shall have the following specific powers and responsibilities:

(2) To safeguard all the lands, buildings, records, monies, credits and other properties and
rights of the ECOZONES;

(b) To ensure that all revenues of the ECOZONE are collected and applied in accordance
with its budget,

(C) TO RECOMMEND TO THE PEZA BOARD THE DESIGNATION OF SEZs IN
ACCORDANCE WITH SET POLICIES AND STANDARDS;

[()] (D) To ensure that the investors/firms and employees of the ECOZONES are properly
discharging their respective duties;

{()] (E) To give such information and recommend such measures to the Board, as he shall
deem advantageous to the ECOZONE;

[(e)] (F) To submit to the Board, the ongoing and proposed projects, work and financial
Program, annual budget of receipts, and expenditures of the ECOZONE:

((91(G) To represent the ECOZONE in all its business matters and sign on its behalf after
approval of the Board, all its bonds, borrowings, contracts, agreements and obligations
made in accordance with this Act;

((9)] (H) To acquire jurisdiction, as he may deem proper, over the protests, complaints, and
claims of the residents and enterprises in the ECOZONE concerning administrative matters.

{(h)] (1) To recommend to the Board the grant, approval, refusal, amendment or termination
of the ECOZONE franchises, licenses, permits, contracts, and agreements in accordance
with the policies set by the Board:

(()] (J) To EXERCISE EMINENT DOMAIN AND POLICE POWER, INCLUDING, BUT NOT
LIMITED TO, require owners of houses, buildings or other structures constructed without
the necessary permit whether constructed on public or private lands, to remove or demolish
Such houses, buildings, structures within sixty (60) days after notice and upon failure of such
owner to remove or demolish such house, building our structure within said period, the
director general or his authorized representative may summarily cause its removal or
demolition at the expense of the owner, any existing law, decree, executive order and other
issuances or part thereof to the contrary Notwithstanding;

{@)] (K) To take such emergency measures as may be necessary to avoid fires, floods and
mitigate the effects of storms and other natural or public calamities

[(K)] (L) To prepare and make out plans for the physical and economic development of the

10


ECOZONE, including zoning and land subdivision, and issue such rules and regulations
which shall be submitted to the Board for its approval, and

{(0] (M) To perform such other duties and exercises such powers as may be prescribed by
the Board, and to implement the policies, rules and regulations set by the PEZA.”

SECTION 10. Section 16 of Republic Act No. 7916 is hereby amended to read as follows:
“SEC. 16. Personnel. - The PEZA Board of Directors shall provide for an organization and
staff of officers and employees of the PEZA, and upon recommendation of the director
general with the approval of the PRESIDENT OF THE PHILIPPINES, appoint and fix the
remunerations and other emoluments: Provided, That the Board shall have exclusive and
final authority to promote, transfer, assign and reassign officers of the PEZA. any provision
of existing law to the contrary notwithstanding: Provided, further, That the director general
may carry out removal of such officers and employees.

All positions in the PEZA shall be govemed by a compensation, position classification
system and qualification standards approved by the director general with the concurrence of
the Board of Directors based on a comprehensive job analysis and audit of actual duties and
fesponsibilities. The compensation plan shall be comparable with the prevailing
compensation plans in the Subic Bay Metropolitan Authority (SBMA), Clark Development
Corporation (CDC), Bases Conversion and Development Authority (BCDA) and the private
Sector and shall be subject to the periodic review by the Board no more than once every two
(2) years without prejudice to yearly merit reviews or increases based on productivity and
Profitability. The PEZA shall therefore be exempt from existing laws, rules and regulations on
compensation, position classification and qualification standards. It shall however endeavor
to make its systems conform as closely as possible with the principles under Republic Act
No. 6758. PROVIDED, FURTHER, AS A GOVERNMENT INSTRUMENTALITY THAT
REMITS DIVIDENDS TO THE NATIONAL GOVERNMENT, THE PEZA SHALL BE UNDER
THE GOVERNANCE COMMISSION FOR GOVERNMENT OWNED AND CONTROLLED
CORPORATIONS.

The PEZA officers and employees including all Members of the Board shall not engage
directly or indirectly in partisan activities or take part in any election, except to vote

No officer or employee of the PEZA subject to Civil Service laws and regulations shall be
removed or suspended except for cause, as provided by law.”

SECTION 11. Section 23 of Republic Act No. 7916 is hereby amended to read as follows:

“SEC. 23. Fiscal Incentives. - REGISTERED ENTERPRISES OPERATING WITHIN THE

ECOZONES SHALL BE ENTITLED TO THE FOLLOWING INCENTIVES ON A PER

PROJECT BASIS AND SUBJECT TO CONTINUING COMPLIANCE OF THE TERMS AND

CONDITIONS OF PEZA:

(A) INCENTIVE PACKAGE TO ECOZONE REGISTERED ENTERPRISES INCLUDING
INDIRECT-EXPORTERS CLASSIFIED AS BASIC, STRATEGIC AND BIG-TICKET
INDUSTRIES SHALL ENJOY THE FOLLOWING INCENTIVES:

1. INCOME TAX HOLIDAY FOR TEN (10) YEARS FOR PIONEER PROJECTS
AND SIX (6) YEARS FOR NON-PIONEER PROJECTS. ENTERPRISES THAT
WILL LOCATE AND OPERATE IN THE RURAL AREAS PARTICULARLY
THOSE CLASSIFIED UNDER 3°°, 4" AND 5" CLASS MUNICIPALITIES MAY
BE GRANTED BY THE PEZA BOARD ADDITIONAL INCOME TAX HOLIDAY
FOR BIG-TICKET INDUSTRIES.

2 AFTER THE ENJOYMENT OF THE ITH, ENTERPRISES SHALL BE
GRANTED A SPECIAL PREFERRED TAX RATE OF 7% GROSS INCOME

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EARNED (GIE) IN LIEU OF ALL NATIONAL AND LOCAL TAXES PROVIDED
THAT, ENTERPRISES HAVE THE OPTION TO IMMEDIATELY ENJOY THE
7% GIE INSTEAD OF THE ITH;

3. TAX AND DUTY FREE IMPORTATION OF RAW MATERIALS, CAPITAL
EQUIPMENT, SPARE PARTS AND OTHER SUPPLIES RELATED TO THE
REGISTERED ACTIVITY;

4. ZERO-VAT FOR LOCAL PURCHASES INCLUDING BILLS ON UTILITIES;

5. ECOZONE EXPORT ORIENTED ENTERPRISES MUST MEET THE
FOLLOWING MINIMUM EXPORT REQUIREMENTS TO CONTINUE
ENJOYMENT OF THE AFORESAID INCENTIVES:

i. BASIC INDUSTRIES -30%
STRATEGIC INDUSTRIES -50%
BIG-TICKET INDUSTRIES ~70%

(B) ALLOWABLE DEDUCTIONS FOR BOTH EXPORTERS AND INDIRECT
EXPORTERS ENTERPRISES — BOTH THE EXPORTERS AND INDIRECT
EXPORTERS ENTERPRISES SHALL BE GRANTED THE FOLLOWING
ALLOWABLE DEDUCTIONS:

1. UP TO 50% ADDITIONAL DEDUCTION ON LABOR EXPENSES FROM
INCREASE OF DIRECT LOCAL EMPLOYMENT;

2. UP TO 100% ADDITIONAL DEDUCTION ON TRAININGS CONDUCTED;

THE FOREGOING INCENTIVES SHALL BE REVIEWED BY THE PEZA BOARD NO
MORE THAN EVERY SIX (6) YEARS DEPENDING ON THE ECONOMIC CONDITIONS
OF THE REGIONS.

Furthermore, tax credits for exporters using local materials as Inputs shall enjoy the same
benefits provided for in the Export Development Act of 1994

SECTION 12. Section 24 of Republic Act No. 7916 is hereby amended to read as follows
‘SEC. 24. Exemption from National and Local Taxes AND FEES- Except for real property
taxes on land owned by developers, no taxes AND FEES, local and national, shall be
imposed on REGISTERED ENTERPRISES operating within the ECOZONE. LOCAL
TAXES SHALL INCLUDE THE MAYOR'S PERMIT AND OTHER CHARGES, PERMITS
AND IMPOSITIONS BY THE LOCAL GOVERNMENT UNITS. in lieu thereof. A SPECIAL
TAX RATE NOT EXCEEDING SEVEN percent (7%) of the gross income earned by all
REGISTERED enterprises within the ECOZONE shall be paid and remitted as follows

a. Three percent (3%) to the National Government;

b. Two percent (2%) which shall be directly remitted by the REGISTERED ENTERPRISES
to the treasurer's office of the municipality or city where the enterprise is located.

(C) ONE PERCENT (1%) WHICH SHALL BE DIRECTLY REMITTED BY THE
REGISTERED ENTERPRISES TO THE TREASURER’S OFFICE OF THE PROVINCE OF
THE MUNICIPALITY OR COMPONENT CITY WHERE THE ENTERPRISE IS LOCATED
EXCEPT THOSE LOCATED IN HIGHLY URBANIZED CITIES; AND

(D) ONE PERCENT (1%) WHICH SHALL BE REMITTED TO PEZA.”
REGISTERED ENTERPRISES UNDER THE ITH REGIME SHALL ALSO BE EXEMPT
FROM PAYING LOCAL GOVERNMENT TAXES INCLUDING MAYOR'S PERMIT AND
OTHER CHARGES, PERMITS AND IMPOSITION BY THE LOCAL GOVERNMENT
UNITS. HOWEVER, REGISTERED ENTERPRISES SHALL PAY REAL PROPERTY

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TAXES FOR THEIR BUILDINGS, MACHINERY AND EQUIPMENT DURING THE TIME
THAT THEY ARE UNDER THE ITH.

SECTION 13. Non-Impairment of Contract/ Permits/ Licenses. - All existing contracts,
Permits and licenses duly granted by the PEZA before the date of effectivity of this Act, shall
femain valid, and unimpaired, shall be cured, and shalll be recognized by the Government.

SECTION 14. Transitory Clause. — The current officials shall remain in office until
appointed by the appropriate authority

SECTION. 15. Repealing Clause. - All laws. decrees, executive orders, rules and
regulations or parts thereof, inconsistent with the provisions of this Act are hereby repealed

‘or modified accordingly.
SECTION 16. Separability Clause. - Any portion or provision of this Act that may be
declared unconstitutional shall not have the effect of nullifying other portions or provisions
hereof as such remaining provisions can still subsist and be given effect.

SECTION 17. Effectivity. - This Act shall take effect after fifteen (15) days following its
complete publication in the Official Gazette or in two (2) newspapers of general circulation
whichever is earlier.

Approved,

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