Republic of the Philippines

House of Representatives
Quezon City, Metro Manila

EIGHTEENTH CONGRESS
First Regular Session

HOUSE BILL NO. asom

Introduced by:

Representatives FRANCISCO JOSE F. MATUGAS II, PROSPERO A.
PICHAY, JR., JOHNNY T. PIMENTEL, ROBERT ACE S. BARBERS,
ADOLFO EDWARD G. PLAZA, LAWRENCE “LAW” H. FORTUN, MA.
ANGELICA M, AMANTE-MATBA, ALFELITO “ALFEL” M. BASCUG and
ALAN 1B. ECLEO

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 contribute to the economic
development in the countryside. The economic zones that were proclaimed all
over the country 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 P3.755 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 said law in order to maximize the investments in the economic
zones and obtain 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. 7916 in order to strengthen the
PEZA by providing the following: (1) additional powers and functions of the
authority so that it can 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 Series of 2019 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's efforts toward an
earthquake and natural disaster-resilient Philippines.

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

Francisco Jose “Byfgo” F. Matugas II Prospero A. Pichay, Jr.
1st District, Sirigao del Norte IstDistrict, Surigao del Sur
(Siargao Island)


pS. Barbers

2ndDistriet, Sukigao de Shrigao del Norte

Adolfo Edward G. PLaza Lawrence\H\ F frtyin
2nd District, Agusan del Sur 1* Disy, Agufar] del Norte
Ma. Angelica M. Amante-Matba , ito M. ek
2nd District, Agusan del Norte 1st District, Agusan del Sur

Alan 1B. Ecleo
Lone Dist., Dinagat Island


Nowe

Republic of the Philippines

House of Representatives
‘Quezon City, Metro Manila

EIGHTEENTH CONGRESS
First Regular Session

HOUSE BILL NO. 3897

Introduced by:
Representatives FRANCISCO JOSE F. MATUGAS II, PROSPERO A.
PICHAY, JR., JOHNNY T. PIMENTEL, ROBERT ACE S. BARBERS, ADOLFO
EDWARD G. PLAZA, LAWRENCE “LAW” H. FORTUN, MA. ANGELICA M.
AMANTE-MATBA, ALFELITO “ALFEL” M. BASCUG and ALAN 1B. ECLEO

AN ACT

STRENGTHENING 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, AS
AMENDED BY REPUBLIC ACT NO. 8748, OTHERWISE KNOWN AS “THE
SPECIAL ECONOMIC ZONE ACT OF 1995”

Be it 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


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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

@XXX

@xX XX

@XXX

@®X XX

(g) 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, THEREBY MAKING THE LGUS SELF-RELIANT,
SELF-SUSTAINING, AND RESOURCE-GENERATING;

(i) 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 GAPS, ENHANCE THE
INFORMATION TECHNOLOGY (IT) INFRASTRUCTURE,
RESEARCH AND DEVELOPMENT (R & D) AND KNOWLEDGE
PROCESS INFRASTRUCTURE, AND PROMOTE
AFFORDABLE, HIGH QUALITY, COMPETITIVE UTILITIES


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AND RENEWABLE SOURCES OF ENERGY, IN PARTNERSHIP
WITH OTHER GOVERNMENT AGENCIES AND PRIVATE AND
INTERNATIONAL INSTITUTIONS;
@) 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 CREATE MORE THAN 5,000
JOBS, OR TRANSFER PIONEER TECHNOLOGY AND
DEVELOP AT LEAST 50 HECTARES OF LAND IN THE
COUNTRYSIDE; AND
(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.”
SEC. 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
INDUSTRIAL, COMMERCIAL, MEDICAL/HEALTH,
EDUCATIONAL, RECREATIONAL AND RESIDENTIAL
COMPONENTS. AN ECOZONE MAY BE CLASSIFIED INTO


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DIFFERENT TYPES DEPENDING ON ITS LAND/MARINE

POTENTIALS AND RESOURCES, SUCH AS:

i) | AGRO-FORESTRY;

ii) AGRO-INDUSTRIAL;

(ii) AQUAMARINE;

(iv) AVIATION AND AEROSPACE PARKS;

(v) CREATIVE INDUSTRIES;

(vi). DEFENSE AND INDUSTRIAL COMPLEX;

DOMESTIC ECOZONES;

(viii) ECO-INDUSTRIAL PARKS;

(ix) EXPORT PROCESSING ZONES (EPZs);

(x) FREE TRADE ZONES;

(xi) HALAL AND FOOD PRODUCTION HUBS;

(xi), INFORMATION AND TECHNOLOGY (IT) PARKS AND/OR
CENTERS;

(xiii) ISLAND CITIES;

(xiv) KNOWLEDGE, INNOVATION, AND SCIENCE AND
TECHNOLOGY PARKS;

(xv) LOGISTICS HUB;

(xvi) MINERAL PROCESSING ECOZONES;

(xvii) RENEWABLE ENERGY ECOZONES;

RETIREMENT, TOURISM AND MEDICAL TOURISM

ECOZONES; AND

(xix) OTHER TYPES AS MAY BE DETERMINED BY PEZA.

) xxx

Oxx x

@xxx

(e) BASIC INDUSTRIES - ARE INDUSTRIES THAT: (A) CATER

TO THE BASIC NEEDS OF THE FILIPINOS SUCH AS, BUT NOT

LIMITED TO FOOD, AGRICULTURE, STEEL, WOOD AND

(xvi


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OTHER HOUSING AND CONSTRUCTION MATERIALS; (B)
UTILITIES SUCH AS POWER, WATER AND SOURCES OF
RENEWABLE ENERGY; (C) INDUSTRIES THAT ARE INTO
CLOTHING, GARMENTS AND TEXTILE; (D) INDUSTRIES
THAT ARE INTO AUTOMOBILE, RAILWAYS, AVIATION AND
OTHER AIR, WATER, AND LAND VEHICLES; (E) HEALTH AND
MEDICAL INDUSTRIES; AND (F) COMMUNICATIONS AND
TECHNOLOGY INDUSTRIES;

(f) STRATEGIC INDUSTRIES - REFER TO INDUSTRIES THAT
USE PIONEERING TECHNOLOGIES AND THOSE PRIORITY
ACTIVITIES AND INDUSTRIES THAT ARE _ BEING
DEVELOPED TO MODERNIZE AND INDUSTRIALIZE THE
COUNTRY, ATTRACT MORE INVESTMENTS, GENERATE
EMPLOYMENT, UPGRADE THE COUNTRY’S POSITION IN
THE GLOBAL VALUE CHAIN, AND SUSTAIN
MANUFACTURING RESURGENCE TOWARDS ECONOMIC
TRANSFORMATION. THESE INDUSTRIES INCLUDE, BUT
ARE 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, RESEARCH & DEVELOPMENT ACTIVITIES,
INVESTMENTS IN ENVIRONMENTAL PROTECTION
SYSTEMS AND REGIONAL OPERATING HEADQUARTERS,
AND OTHERS THAT WILL MAKE THE PHILIPPINES A
REGIONAL HUB;

(g) BIG-TICKET INDUSTRIES - REFER TO LOCATOR
INDUSTRIES THAT WILL INVEST AT LEAST ONE BILLION


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DOLLAR CAPITALIZATION, OR CREATE MORE THAN 5,000
JOBS, OR ENGAGE IN PIONEER TECHNOLOGY. IT SHALL
ALSO REFER 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 CITIES IN METRO MANILA
AND HIGHLY URBANIZED GROWTH CENTERS; AND

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

SEC. 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) xxx

xxx
(mm) xxx

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
BY THE PEZA BOARD OF DIRECTORS AND UPON


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THE RECOMMENDATION OF THE HOST LOCAL
GOVERNMENT UNITS, in coordination with the municipal and / or
city council, National Land Use Coordinating Committee and / or the
Regional Land Use Committee.”
SEC. 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 Plan or by the Regional
Development Council;
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;
(© The availability of water source and electric power supply for use
of the ECOZONE, AND IN THE CASE OF IT PARKS/CENTERS,
THE AVAILABILITY OF 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;
(d) The extent of vacant lands available for industrial and commercial

development and future expansion of the ECOZONE as well as of


2

lands adjacent to the ECOZONE available for development of
residential areas for the ECOZONE workers;

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

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

(g) 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 government: Provided, further, That the area can be easily
secured to curtail smuggling activities: Provided, finally, That after five
(©) years the area must have attained a substantial degree of
development, the indicators of which shall be formulated by the PEZA.”
SEC. 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 a separate ADMINISTRATIVE AND customs territory.

xx x”
SEC. 6. Section 11 of Republic Act No. 7916, as amended, is hereby amended

to read as follows:


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“SEC. 11. The Philippine Economic Zone Authority (PEZA)
Board. — There is hereby created a body corporate to be known as the
Philippine Economie 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 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: (A) policy, planning AND PROGRAMS; (B)
FINANCE AND administration; (C) ENTERPRISE operations AND
INCENTIVES MANAGEMENT; AND (D) SPECIAL ECONOMIC
ZONE DESIGNING, RESEARCH AND MARKETING, who shall 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


1 of Interior and Local Government, the Department of Environment and
2 Natural Resources, the Department of Agriculture, the Department of
3 Public Works and Highways, the Department of Science and
4 Technology, the Department of Energy, THE DEPARTMENT OF
5 TRADE AND INDUSTRY, THE DEPARTMENT OF TOURISM,
6 THE DEPARTMENT OF TRANSPORTATION, THE
7 DEPARTMENT OF INFORMATION AND COMMUNICATIONS
8 TECHNOLOGY, THE DEPARTMENT OF NATIONAL DEFENSE,
9 the Deputy Director General of the National Economic and Development
10 Authority, THE DEPUTY DIRECTOR GENERAL OF TECHNICAL
1 EDUCATION AND SKILLS DEVELOPMENT AUTHORITY, THE
12 VICE CHAIRPERSON OF THE COMMISSION OF HIGHER
13 EDUCATION, one (1) representative from the investors / business
14 sector in the ECOZONE, ONE (1) REPRESENTATIVE FROM THE
15 LABOR SECTOR IN THE ECOZONE, AND ONE (1)
16 REPRESENTATIVE FROM THE UNION OF LOCAL
7 AUTHORITIES OF THE PHILIPPINES (ULAP).
18 The existing Export Processing Zone Authority (EPZA) created
19 under Presidential Decree No. 66 shall evolve into the PEZA in
20 accordance with the guidelines and regulations set forth in an executive
21 order issued for this purpose.
22 ONLY NON-EX OFFICIO members of the Board shall receive a
23 per diem of not less than the amount equivalent to the representation
24 and transportation allowances of the members of the Board and / or as
25 may be determined by the Department of Budget and Management:
26 Provided, however, That per diems collected per month does not exceed
7 the equivalent of four (4) meetings.
28 SEC. 7. Section 12 of Republic Act No. 7916 is hereby amended to read as
29 follows:

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“SEC. 12. Functions and Powers of PEZA Board. — The
Philippine Economic Zone Authority (PEZA) Board shall have the
following functions and powers:

(a) 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 DESIGNATE the
establishment of 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;

(© 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, reasonable and competitive rates, charges and fees
therefore. FOR THIS PURPOSE, THE PEZA BOARD SHALL BE
THE EXCLUSIVE REGULATOR OF UTILITIES INSIDE THE
ECOZONES AND SHALL HAVE THE AUTHORITY TO ISSUE
FRANCHISES OVER POWER, WATER, COMMUNICATION AND
OTHER UTILITIES THEREIN;

(d) Approve the annual budget of the PEZA and the ECOZONE
development plans;

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

(3) Exercise its powers and functions as provided for in this Act; and

(g) Render annual reports to the President and the Congress.”

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SEC. 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:

(a) To operate, administer, manage and develop the ECOZONE
according to the principles and provisions set forth in this Act;
(b) To register, regulate, GRANT THE INCENTIVES UNDER
SECTION 10 OF THIS ACT and supervise the enterprises in the
ECOZONE in an_ efficient and decentralized manner;
(©) To coordinate with local government 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;

(@) In coordination with local government units concerned and
appropriate agencies, to construct, 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) 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;

(F) TO ISSUE SPECIAL REGULATIONS FOR THE BENEFIT OF
PARTICULAR INDUSTRIES, DESIGNED TO IMPROVE EASE
OF DOING BUSINESS, DECREASE COST OF DOING

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BUSINESS AND LOWER BUREAUCRATIC BURDENS OF
INVESTING AND DOING BUSINESS WITHIN THE ECOZONES;
PROVIDED THAT, SUCH SPECIAL REGULATIONS SHALL
NOT BE CONTRARY TO EXISTING LAWS;

(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 MADE AND THE NUMBER OF EMPLOYMENT
GENERATED, AND WILL BE PERFORMANCE-BASED,
TARGETED, TRANSPARENT AND TIMEBOUND.

[@©](H)To create, operate and/or contract to operate such agencies and
functional units or offices of the authority as it may deem necessary;
[1G)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;

{@(J)To coordinate the formulation and preparation of the
development plans of the different entities mentioned above;
[@)\(K)To coordinate with the National Economic Development
Authority (NEDA), the Department of Trade and Industry (DTI), the
Department of Science and Technology (DOST), and the local
government units and appropriate government agencies for policy and
program formulation and implementation;

[@](L)To monitor and evaluate the development and requirements of

entities in subsection (a) and recommend to the local government units

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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. SAID INSTITUTE SHALL
COORDINATE, CONSOLIDATE, INTEGRATE AND
HARMONIZE THE POLICIES AND PROGRAMS OF
GOVERNMENT AGENCIES AND GOVERNMENT-
RECOGNIZED INDUSTRIES/STAKEHOLDERS ON MATTERS
RELATED TO THE ADVANCEMENT OF THE INVESTMENT
PROMOTION STRATEGY OF THE GOVERNMENT. THE
INSTITUE SHALL ALSO CAPACITATE THE PEZA WITH
RESEARCH, INSTRUCTION AND SOCIO-CULTURAL
DEVELOPMENT SERVICES FOR LOCALLY POSITIONED
COMPETITIVENESS, IN GENERAL, AND PROMOTING
INVESTMENT, EXPORT AND EMPLOYMENT IN EVERY
REGION;

(O) 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

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THE PURPOSES, OBJECTIVES AND POLICIES OF THIS ACT;
AND

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

SEC. 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 pattern 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:

(a) 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;
[(@](B)To give such information and recommend such measures to the
Board, as he shall deem advantageous to the ECOZONE;
[(©](F)To submit to the Board, the ongoing and proposed projects,

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work and financial program, annual budget of receipts, and
expenditures of the ECOZONE;

[()\(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;
{(g)](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)]Q)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, REQUIRING 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;

{G)](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;

{(&)|(L) To prepare and make out plans for the physical and economic
development of the ECOZONE, including zoning and land subdivision,

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and issue such rules and regulations which shall be submitted to the

Board for its approval; and

[@](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.”

SEC. 10. Section 16 of Republic Act No. 7916, as amended, 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 governed 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
responsibilities. 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

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1 possible with the principles under Republic Act No. 6758. PROVIDED,
2 FURTHER THAT, AS A GOVERNMENT INSTRUMENTALITY
3 THAT REMITS DIVIDENDS TO THE NATIONAL
4 GOVERNMENT, THE PEZA SHALL BE UNDER THE
5 GOVERNANCE COMMISSION FOR GOVERNMENT OWNED
6 AND CONTROLLED CORPORATIONS.

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

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

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

1s “SEC. 23. Fiscal Incentives. - REGISTERED ENTERPRISES
16 OPERATING WITHIN THE ECOZONES SHALL BE ENTITLED
7 TO THE FOLLOWING INCENTIVES ON A PER PROJECT BASIS
18 AND SUBJECT TO CONTINUING COMPLIANCE OF THE
19 TERMS AND CONDITIONS OF PEZA:

20 (A) ECOZONE REGISTERED ENTERPRISES INCLUDING
2 INDIRECT-EXPORTERS CLASSIFIED AS BASIC, STRATEGIC
22 AND BIG-TICKET INDUSTRIES SHALL ENJOY THE
23 FOLLOWING INCENTIVES:

24 1 INCOME TAX HOLIDAY (ITH) FOR TEN (10) YEARS
25 FOR PIONEER PROJECTS AND SIX (6) YEARS FOR NON-
26 PIONEER PROJECTS. ENTERPRISES THAT WILL
27 LOCATE AND OPERATE IN THE RURAL AREAS
28 PARTICULARLY THOSE CLASSIFIED UNDER 3, 4th

29 AND 5th CLASS MUNICIPALITIES MAY BE GRANTED BY

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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 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%

ii. STRATEGIC INDUSTRIES -50%

iii. BIG-TICKET INDUSTRIES -70%

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; AND

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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.”

SEC. 12. Section 24 of Republic Act No. 7916, as amended, 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%) TO THE MUNICIPALITY OR CITY
WHERE THE ENTERPRISE IS LOCATED AND WHICH
SHALL BE DIRECTLY REMITTED BY THE REGISTERED
ENTERPRISES TO THE TREASURER’S OFFICE OF SAID
MUNICIPALITY OR CITY;

(C) ONE PERCENT (1%) TO THE PROVINCE OF THE
MUNICIPALITY OR COMPONENT CITY WHERE THE
ENTERPRISE IS LOCATED, EXCEPT THOSE LOCATED

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IN HIGHLY URBANIZED CITIES, WHICH SHALL BE
DIRECTLY REMITTED BY THE REGISTERED
ENTERPRISES TO THE TREASURER’S OFFICE OF SAID
PROVINCE; AND

(D) ONE PERCENT (1%) 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 TAXES FOR

THEIR BUILDINGS, MACHINERY AND EQUIPMENT DURING

THE TIME THAT THEY ARE UNDER THE ITH.”

SEC. 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 remain valid and unimpaired, shall be cured, and shall
be recognized by the Government.

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

SEC. 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.

SEC. 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.

SEC. 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.

Approved,

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