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Republic of the Philippines

HOUSE OF REPRESENTATIVES /? RECEIVED a
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Quezon City

Nineteenth Congress ‘,
First Regular Session

HOUSE BILL No./ 580

INTRODUCED BY REPRESENTATIVE ADRIAN MICHAEL A. AMATONG

EXPLANATORY NOTE

This bill seeks to create a special economic zone in the Municipality of Liloy,
Province of Zamboanga del Norte, to be known as the Zamboanga del Norte Special
Economic Zone (Zamboanga del Norte Ecozone), which shall be managed and
operated by the Zamboanga del Norte Special Economic Zone Authority.

Special economic zones are drivers for economic recovery and growth, as they
aim to improve areas which have the potential to be developed into agro-industrial,
tourist/recreational, commercial, banking, investment and financial centers.

One of the areas that is ripe for economic development is Zamboanga del Norte,
as it has vast lands suitable for commercial agricultural production and it is rich in
marine resources, being bordered by the Sulu Sea. While Zamboanga del Norte has
been widely known for its bottled sardines, the province also produces and exports
other agricultural products, such as coconuts, cacao and rubber. Another emerging
industry in the province is the smoked fish industry, which will expand the country's
halal food production and export, specially to the nearby countries of Malaysia,
Indonesia, and Brunei.

Establishing the special economic zone in the Municipality of Liloy is also
strategic, as the municipality is the geographical center of the Province of Zamboanga
del Norte. The municipality has many idle public lands where offices, factories, and
facilities of investors can be constructed. It also has an existing airport and seaport
and has a good road network even to the nearby Provinces of Zamboanga Sibugay and
Zamboanga del Sur, which allow for convenient transportation of goods and
passengers. With its pristine beaches and remarkable coastlines, tourism in the
municipality is also continuously growing.

This measure will in turn uphold the policy of the State, as provided under R.A.
No. 7916, as amended, to “actively encourage, promote, induce, and accelerate a
sound and balanced industrial, economic and social development of the country in
order to provide jobs to the people specially those in the rural areas, increase their
productivity and their individual and family income, and thereby improve the level
and quality of their living condition through the establishment, among others, of
special economic zones in suitable and strategic locations in the country.”

In view of the foregoing, the approval of this bill is earnestly sought.

ADI A. AMATONG


Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City
Nineteenth Congress + 3

First Regular Session

HOUSE BILL No! 580

INTRODUCED BY REPRESENTATIVE ADRIAN MICHAEL A. AMATONG

AN ACT ESTABLISHING A SPECIAL ECONOMIC ZONE IN THE
MUNICIPALITY OF LILOY, PROVINCE OF ZAMBOANGA DEL NORTE,
CREATING FOR THE PURPOSE THE
ZAMBOANGA DEL NORTE SPECIAL ECONOMIC ZONE AUTHORITY,
AND APPROPRIATING FUNDS THEREFOR

Be it enacted by the Senate and the House of Representatives of the Philippines in
Congress assembled:

CHAPTER I
GENERAL PROVISIONS

SECTION 1. Short Title. - This Act shall be known as the “Zamboanga del
Norte Special Economic Zone Act.”

SEC. 2. Declaration of Policy. - It is declared the policy of the State to
encourage, promote, and accelerate the sound and balanced industrial,
economic, and social development of the country. The establishment of special
economic zones shall attract legitimate and productive foreign investments in
strategic locations in the country. It shall generate employment, enhance
productivity, and increase individual and family incomes, thereby enhancing
the quality of life of the Filipino people.

CHAPTER II
CREATION OF THE ECONOMIC ZONE

SEC. 3. Creation of the Zamboanga del Norte Special Economic Zone. - In
accordance with the foregoing declared policy and subject to the concurrence
of the concerned local government units (LGUs) of the Province of Zamboanga
del Norte, there is hereby established a special economic zone, hereinafter
referred to as the Zamboanga del Norte Special Economic Zone or Zamboanga
del Norte Ecozone. The Zamboanga del Norte Ecozone shall cover a particular
area located in the Municipality of Liloy, Province of Zamboanga del Norte. The
specific metes and bounds of the Zamboanga del Norte Ecozone shall be more
particularly defined in a presidential proclamation that shall be issued for this
purpose: Provided, That the lands embraced therein shall be contiguous to one
another.


SEC. 4. Creation of the Zamboanga del Norte Special Economic Zone
Authority. - There is hereby created a body corporate to be known as the
Zamboanga del Norte Special Economic Zone Authority, hereinafter referred to
as the ZAMNOSEZA, which shall manage and operate the Zamboanga del
Norte Ecozone in accordance with the provisions of this Act. The corporate life
of the ZAMNOSEZA shall expire in fifty (50) years, counted from the first year
after the effectivity of this Act, unless otherwise extended by Congress. It shall
be organized within one hundred eighty (180) days after the effectivity of this
Act.

SEC. 5. Governing Principles. - The ZAMNOSEZA shall manage and operate
the Zamboanga del Norte Ecozone, under the following principles:

a) Within the framework and limitations of the Constitution and applicable
provisions of Republic Act No. 7160 or the Local Government Code, as
amended, the Zamboanga del Norte Ecozone shall be developed into and
operated as a decentralized, self-reliant and self-sustaining industrial,
commercial, trading, agro-industrial, tourist, banking, financial, and
investment center with suitable residential areas;

b) The Zamboanga del Norte Ecozone shall be equipped with
transportation, telecommunications, and other facilities needed to
attract legitimate and productive investments, generate linkage
industries and employment opportunities for the people of the
Municipality of Liloy, Province of Zamboanga del Norte, and those in
neighboring municipalities and cities;

°)

The Zamboanga del Norte Ecozone may establish mutually beneficial
economic relations with other entities or enterprises within the country
or, subject to the administrative guidance of the Department of Foreign
Affairs, the Philippine Economic Zone Authority (PEZA), and the
Department of Trade and Industry (DTI), with foreign entities or
enterprises;

d) Foreign citizens and companies owned by non-Filipinos in whatever
proportion may set up enterprises in the Zamboanga del Norte Ecozone,
either by themselves or in a joint venture with Filipinos in any sector of
industry, international trade and commerce within the Zamboanga del
Norte Ecozone;

¢) The Zamboanga del Norte Ecozone shall be managed and operated as a
separate customs territory thereby ensuring the free flow or movement of
goods and capital within, into and out of its territory, and shall likewise
provide incentives subject to Title XIII of the National Internal Revenue
Code, as amended. However, exportation or removal of goods from the
territory shall be subject to customs duties and taxes under Republic
Act No. 10863, otherwise known as the “Customs Modernization and
Tariff Act” and other relevant tax laws of the Philippines;


f) The areas comprising the Zamboanga del Norte Ecozone may be
expanded or reduced when necessary through a_ presidential
proclamation issued for the said purpose. For this purpose, the
ZAMNOSEZA, in consultation with the LGUs, shall have the power to
acquire either by purchase, negotiation or condemnation proceedings,
any private land within or adjacent to the Zamboanga del Norte Ecozone
for the following purposes: (1) consolidation of lands for zone
development; (2) acquisition of right of way to the Zamboanga del Norte
Ecozone; and (3) the protection of watershed areas and natural assets
valuable to the prosperity of the Zamboanga del Norte Ecozone;

g) Goods manufactured by a Zamboanga del Norte Ecozone enterprise shall
be made available for immediate release in the domestic market, subject
to the payment of corresponding taxes on raw materials and other
regulations that may be formulated by the ZAMNOSEZA together with
the PEZA, the Bureau of Customs, the Bureau of Internal Revenue, and
the DTI. However, in order to protect domestic industries, a Negative List
of industries shall be drawn up and regularly updated by the PEZA.
Enterprises engaged in industries included in such Negative List shall
not be allowed to sell their products locally; and

h)

The defense of the Zamboanga del Norte Ecozone and the security of its
perimeter fence shall be the responsibility of the national government in
coordination with the ZAMNOSEZA and the concerned LGUs.

SEC. 6. Development Goals of the Zamboanga del Norte Ecozone. ~ The
ZAMNOSEZA shall determine the development goals of the Zamboanga del
Norte Ecozone within the framework of national development plans, policies,
and goals. The Chairperson-Administrator shall, upon approval by the Board
of the ZAMNOSEZA, submit the Zamboanga del Norte Ecozone plans,
programs, and projects to the Regional Development Council for inclusion in
the regional development plan.

SEC. 7. Capitalization. - The ZAMNOSEZA shall have an authorized capital
stock of two billion (2,000,000,000) no par shares with a minimum issue of
Ten pesos (Php 10,00) each, the majority shares of which shall be subscribed
and paid for by the national government and the LGUs embracing the
Zamboanga del Norte Ecozone. The Board of Directors of the ZAMNOSEZA
may, with the written concurrence of the Secretary of Finance, sell shares
representing not more than forty per centum (40%) of the capital stock of the
ZAMNOSEZA to the general public under such policy as the Board and the
Secretary of Finance may determine. The national government and the LGUs
shall in no case own less than sixty per centum (60%) of the total issued and
outstanding capital of the ZAMNOSEZA.

The amount necessary to subscribe and pay for the shares of the
national government to the capital stock of the ZAMNOSEZA shall be included
in the General Appropriations Act. For the LGUs concerned, the funds shall be
taken from their internal revenue allotment and other local funds.


SEC. 8. Principal Office of the ZAMNOSEZA. - The ZAMNOSEZA shall
maintain its principal office in the Municipality of Liloy, Province of
Zamboanga del Norte, but it may establish liaison offices within the Philippines
as may be necessary for the proper conduct of its business.

SEC. 9. Powers and Functions of the ZAMNOSEZA. - The ZAMNOSEZA
shall have the following powers and functions:

a) To operate, administer, manage, and develop the Zamboanga del Norte
Ecozone according to the principles and provisions set forth in this Act;

b)

To register, regulate, and supervise the enterprises in the Zamboanga
del Norte Ecozone in an efficient and decentralized manner, subject to
existing laws;

c) To coordinate with LGUs and exercise general supervision over the
development plans, activities, and operations of the Zamboanga del
Norte Ecozone;

d

To regulate and undertake the establishment, construction, operation,
and maintenance of public utilities, other services, and infrastructure in
the Zamboanga del Norte Ecozone such as light and power, shipping,
barging, stevedoring, cargo handling, hauling, warehousing, storage of
cargo, port services or concessions, piers, wharves, bulkheads, bulk
terminals, mooring areas, storage areas, roads, telecommunications,
transport, bridges, terminals, conveyors, water supply and storage,
sewerage, drainage, airport operations in coordination with the Civil
Aviation Authority of the Philippines, and such other services or
concessions or infrastructure necessary or incidental to the
accomplishment of the objectives of this Act;

e)

To construct, acquire, own, lease, operate, and maintain on its own or
through contracts, franchise, licenses, bulk purchase from the private
sector or permits under any of the schemes allowed in Republic Act No.
6957, otherwise known as the “Build-Operate-Transfer Law’, as
amended, or joint venture, adequate facilities and infrastructure
required or needed for the operation and development of the Zamboanga
del Norte Ecozone, in coordination with appropriate national and local
government authorities and in conformity with applicable laws thereon;

f) To approve plans, programs, and projects of the Zamboanga del Norte
Ecozone to be submitted to the Regional Development Council for
inclusion in the regional development plan;

g) To operate on its own, either directly or through licenses to others,
tourism-related activities, including games, amusements, recreational
and sports facilities, subject to the approval and supervision of the
Philippine Amusement and Gaming Corporation;


h) To raise or borrow, within the limitation provided by law, and subject to
the approval of the Monetary Board of the Bangko Sentral ng Pilipinas
(BSP), 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;

i) To protect, preserve, maintain, and develop the forests, beaches, corals
and coral reefs, and maintain ecological balance within the Zamboanga
del Norte Ecozone. Notwithstanding the power of the ZAMNOSEZA to
create rules for such purpose, the rules and regulations of the
Department of Environment and Natural Resources and other
government agencies involved in the above functions shall be
implemented by the ZAMNOSEZA;

j) To create, operate or contract to operate such functional units or offices
of the ZAMNOSEZA as it may deem necessary;

k)

To adopt, alter, and use a corporate seal; contract, lease, buy, acquire,
own or otherwise dispose of personal or real property of whatever nature;
sue and be sued; and otherwise carry out its functions and duties as
provided for in this Act;

1) To issue certificates of origin for products manufactured or processed in
the Zamboanga del Norte Ecozone in accordance with the prevailing
rules of origin and the pertinent regulations of the PEZA, the DTI, and
the Department of Finance (DOF);

m)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
Zamboanga del Norte Ecozone, in coordination with government
agencies having jurisdiction over activities therein: Provided, That all
government agencies are directed to provide and extend utmost and full
cooperation to the ZAMNOSEZA in the establishment of such one-stop
shops;

n) To ensure that the area covered by the Zamboanga del Norte Ecozone is
secure at all times: Provided, That the Armed Forces of the Philippines
(AFP) or the Philippine National Police (PNP) shall not interfere in the
internal affairs of the ZAMNOSEZA except to provide the necessary
security and defense, or law enforcement assistance, as the case may be:
Provided, finally, That the expenses of the AFP or the PNP in the
Zamboanga del Norte Ecozone shall be borne by the national
government;

0)

To exercise such powers as may be essential, necessary or incidental to
the powers granted to it by this Act, as well as those that shall enable it
to carry out, implement and accomplish the purposes, objectives, and
policies set forth in this Act; and


p) To issue rules and regulations consistent with the provisions of this Act
as may be necessary to accomplish and implement the purposes,
objectives, and policies provided herein.

SEC. 10. Board of Directors of the ZAMNOSEZA. - The powers of the
ZAMNOSEZA shall be vested in and exercised by a Board of Directors,
hereinafter referred to as the Board, which shall be composed of the following:

a) A Chairperson, who shall at the same time be the administrator of the
ZAMNOSEZA;

b)

A Vice-Chairperson who shall be elected from among the members of the
Board of Directors;

°)

Members consisting of:

1) The Representative of the 3" District of Zamboanga del Norte;

2) One (1) of the mayors of the municipalities covered by the ecozone;

3) One (1) representative from the investors’ group; and

4) One (1) representative from among the workers in the Zamboanga del
Norte Ecozone.

The Representative of the 3"! District of Zamboanga del Norte and the
mayors of the municipalities within the ecozone shall serve as ex officio
members of the Board, whose terms in the Board shall correspond to their
terms as elected officials.

The Chairperson-Administrator and the members of the Board, except
for the representatives of the investors and workers groups and the ex officio
members, shall be appointed by the President of the Philippines to serve for a
term of six (6) years, unless sooner separated from service due to death,
voluntary resignation or removal for cause. In case of death, resignation or
removal for cause, their replacements shall serve only the unexpired portion of
the respective terms. No person shall be appointed as a member of the Board
unless the person is a Filipino citizen, of good moral character, 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 members of the Board, except the ex officio members, shall each
receive per diem allowance at rates to be determined by the Department of
Budget and Management in accordance with existing rules and regulations:
Provided, however, That the total per diem allowance collected each month
shall not exceed the equivalent of four (4) meetings. Unless and until the
President of the Philippines has fixed a higher rate for the per diem allowance
for the members of the Board, such allowance shall not be more than Ten
thousand pesos (Php 10,000.00) for every Board meeting.


SEC. 11. Organization and Personnel. - The Board of Directors of the
ZAMNOSEZA shall provide for its organization and staff. The Board shall
appoint and fix the remuneration and other emoluments of its officers and
employees in accordance with existing laws on compensation and position
classification. The Board shall have exclusive and final authority to promote,
transfer, assign, reassign, or remove officers of the ZAMNOSEZA, any provision
of existing law to the contrary notwithstanding. The Chairperson-
Administrator shall execute the decisions of the Board.

The officers and employees of the ZAMNOSEZA, 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 ZAMNOSEZA shall be removed or
suspended except for cause, as provided by civil service rules or regulations.

SEC. 12. Powers and Duties of the Chairperson-Administrator. ~ The
Chairperson-Administrator shall have the following powers and duties:

a) To direct and manage the affairs of the ZAMNOSEZA in accordance with
the policies of the Board;

Db)

To establish the internal organization of the ZAMNOSEZA under such
conditions that the Board may prescribe;

¢

To submit an annual budget and necessary supplemental budget to the
Board for its approval;

d) To submit within thirty (30) days after the close of each fiscal year an
annual report to the Board and such other reports as may be required;

)

To submit to the Board for its approval, policies, systems, procedures,
rules, and regulations that are essential to the operation of the
Zamboanga del Norte Ecozone;

f) To recommend to the Board the remuneration and other emoluments of
its officers and employees in accordance with existing laws on
compensation and position classification;

g) To create a mechanism in coordination with relevant agencies for the
promotion of industrial peace, the protection of the environment, and
the advancement of the quality of life in the Zamboanga del Norte
Ecozone; and

h) To perform such other duties as may be assigned by the Board or which
are necessary or incidental to the office.

SEC. 13. Legal Counsel. - The ZAMNOSEZA shall have its own internal legal
counsel who shall be under the supervision of the Government Corporate
Counsel. When the exigencies of business and operations demand it, the


ZAMNOSEZA may engage the services of an outside counsel either on a case to
case or on a fixed retainer basis.

CHAPTER III
INCENTIVES TO ECOZONE ENTERPRISES AND INVESTORS

SEC. 14. Investor’s Visa. — Any foreign national who invests an amount of
Two hundred thousand US dollars (US$200,000.00) in a registered enterprise,
either in cash or equipment, 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;

b) Must not have been convicted by final judgment of a crime involving
moral turpitude;

c) Must not be afflicted with any dangerous or contagious disease;

d) Must not have been confined in an institution for any mental disorder or
disability; and

e) Must be financially capable as borne out by credible and verifiable
evidence.

With an investor's visa, an alien shall be entitled to reside in the
Philippines while the investment subsists. The alien investor shall submit an
annual report, in the form duly prescribed for the purpose, to prove that the
investment in the country subsists. Should said alien investor withdraw the
investments from the Philippines, then the investor’s visa issued to said alien
shall automatically expire and be withdrawn.

The authority to issue visas and work permits shall remain with the
Bureau of Immigration (BI) and the Department of Labor and Employment
(DOLE), respectively: Provided, That the BI and the DOLE shall implement
measures to expedite the processing of such visas and permits for workers in
the Zamboanga del Norte Ecozone and coordinate closely with the
ZAMNOSEZA to facilitate the conduct of business operations.

SEC. 15. Fiscal Incentives. - Registered enterprises of the Zamboanga del
Norte Ecozone may be entitled to pertinent fiscal incentives granted under Title
XIII (Tax Incentives) of the National Internal Revenue Code, as amended.

SEC. 16. Rules and Regulations Governing Banks and Other Financial
Institutions. - Banks and other BSP-supervised financial institutions to be
established in the Zamboanga del Norte Ecozone shall be under the
supervision of the BSP and 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 Zamboanga del Norte Ecozone shall have the
right to remit earnings to its investors in the currency in which the investment
was originally made and at the exchange rate prevailing at the time of
remittance, subject to the provisions of Republic Act No. 7653, otherwise
known as the “New Central Bank Act” as amended.


CHAPTER IV
NATIONAL GOVERNMENT AND OTHER ENTITIES

SEC. 18. Supervision and Control. - For purposes of policy direction and
coordination, the ZAMNOSEZA shall be under the direct control and
supervision of the Office of the President of the Philippines.

SEC. 19. Relationship with Local Government Units. - Except as herein
provided, the LGUs comprising the Zamboanga del Norte Ecozone shall retain
their basic autonomy and identity. The Municipality of Liloy, Province of
Zamboanga del Norte, shall operate and function in accordance with the
framework of the Constitution, the Local Government Code of 1991, as
amended, and this Act.

In case of any conflict among the ZAMNOSEZA, the LGUs and the
national government on matters affecting the Zamboanga del Norte Ecozone,
other than national defense and security matters, the decision of the
ZAMNOSEZA shall prevail.

SEC, 20. Audit. - The Commission on Audit shall appoint a full-time auditor
for the ZAMNOSEZA and may assign such number of personnel as may be
necessary to assist the auditor in the performance of the auditor’s functions.

CHAPTER V
MISCELLANEOUS

SEC. 21. Interpretation and Construction. - The powers, authorities and
functions that are vested in the ZAMNOSEZA are intended to establish
national self-sufficiency and self-reliance in the advancement of and protection
of the national integrity, enhancement of national security, decentralization of
governmental functions and authority, and promotion of an efficient and
effective working relationship among the ZAMNOSEZA, the national
government, and the LGUs. Any interpretation of this Act shall consider such
intentions. In the event of conflict of interpretation and provided the intentions
cannot be harmonized, the provisions of this Act shall be construed in favor of
an interpretation that shall protect national security.

SEC. 22. Applicability Clause. - Insofar as they 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 Zamboanga del Norte Ecozone.

SEC. 23. Implementing Rules and Regulations. - Within sixty (60) days
from effectivity of this Act, the DTI shall, in coordination with the DOF and the
National Economic and Development Authority, formulate rules and
regulations for the effective implementation of the provisions of this Act.

SEC. 24. Separability Clause. - If any provision of this Act shall be held
unconstitutional or invalid, the other provisions not otherwise affected shall
remain in full force and effect.


SEC. 25. Repealing Clause. - All laws, executive orders, or issuances, or any
part thereof, which are inconsistent herewith, are hereby repealed or amended
accordingly.

SEC. 26. Effectivity. - This Act shall take effect fifteen (15) days after its
publication in the Official Gazette or in a newspaper of general circulation.

Approved,