Republic of the Philippines
House of Representatives
Quezon City

NINETEENTH CONGRESS

First Regular Session

353

House Bill No.

Introduced by Representative Maria Angela S. Garcia

EXPLANATORY NOTE

The Special Defense Economic Zone (SpeDEZ) is a necessary and timely
undertaking that synergizes the private sector's and government's efforts to have a
globally competitive arms industry. With rapidly changing economic and security
conditions in the region, the need to find ways to strengthen the country’s domestic
defense industry is imperative. The SpeDEZ aims to help realize this goal.

A first in the country and in South East Asia, the SpeDEZ will serve as an
independent authority geared towards the research, development, production, and
distribution of products for military and defense.

it will not only bolster our country’s innate capability in the field of arms research,
development, and manufacturing, but also significantly contribute to the country’s
economic productivity.

Support for this bill is earnestly requested from my colleagues.

MARIA Al ‘LA S. GARCIA
Third Pistrict, Bataan


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Republic of the Philippines
House of Representatives
Quezon City
NINETEENTH CONGRESS
First Regular Session

House Bill No. 353

AN ACT
ESTABLISHING A SPECIAL DEFENSE ECONOMIC ZONE (SpeDEZ) INSIDE THE
GOVERNMENT ARSENAL DEFENSE INDUSTRIAL ESTATE LOCATED IN CAMP
GEN. ANTONIO LUNA, LAMAO, MUNICIPALITY OF LIMAY, PROVINCE OF
BATAAN, CREATING FOR THIS PURPOSE THE SPECIAL DEFENSE ECONOMIC
ZONE AUTHORITY (SpeDEZA) AND APPROPRIATING FUNDS THEREFOR

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

SECTION 1. Short Title. - This Act shall be known as the "SPECIAL DEFENSE
ECONOMIC ZONE (SpeDEZ) ACT”.

SEC. 2. Declaration of Policy. — \t is hereby declared the policy of the State to
develop a self-reliant and independent national economy effectively controlled by
Filipinos. The State recognizes the indispensable role of the private sector, encourages
the participation of private enterprise, and provides incentives to needed investments.
Further, the State actively encourages, promotes and accelerates the sound and
balanced industrial, economic and social development of the country through the
establishment, of special economic zones in suitable and strategic locations in the
country. In so doing, the State is able to attract legitimate and productive foreign
investments that provide jobs especially to those in the rural areas, improve productivity
and family incomes, and thereby improving the level and quality of living conditions of
the people.


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SEC. 3. Creation of the Special Defense Economic Zone — There is hereby
created a special economic zone in Camp General Antonio Luna, Lamao, Municipality
of Limay in the Province of Bataan, hereinafter referred to as the Special Defense
Economic Zone (SpeDEZ), for investments in defense, military, law enforcement, and
defense-related advanced technologies, information and communications technology,
research and development and their support industries. The SpeDEZ shall cover the
Government Arsenal Industrial Estate inside Camp General Antonio Luna located in the
Municipality of Limay, Province of Bataan measuring approximately three hundred
seventy (370) hectares, including the seventy (70) hectares of land within which the
Government Arsenal (GA), as created by Republic Act 1884, otherwise known as “An
Act to Establish A Government Arsenal, Provide for its Operation and for Other
Purposes” operates, the portions allocated for the expansion of the GA, areas where
existing manufacturing facilities for defense materiel and equipment are located, subject
to compliance with Section 5(k) of this Act, and all other areas which may be declared
as part of the SpeDEZ in compliance with Section 5(h) of this Act: Provided, That the
GA shall remain a line bureau of the Department of National Defense (DND) in
accordance with Republic Act 1884, Executive Order No. 292, Series of 1987, otherwise
known as the “Administrative Code of the Philippines”, Republic Act No. 7898, as
amended by Republic Act No. 10349, otherwise known as the “AFP Modernization Act’,
Executive Order No. 303 series of 2004, and other prevailing laws and executive
issuances. Except for necessary coordination on matters of mutual and higher security
concerns emanating from the very nature of their respective mandates, the operations
of the GA shall remain independent of the management of the SpeDEZ, and the Special
Defense Economic Zone Authority (SpeDEZ), as created by this Act, shall not interfere
with the activities conducted in the seventy (70) hectare area on which the GA maintains
and operates its buildings and structures: Provided, further, That the SpeDEZ shall not
be expanded nor operated to the prejudice of the GA and the GA shall not be expanded
nor operated to the prejudice of the SpeDEZ. The GA and the SpeDEZA shall
continuously coordinate to ensure smooth and seamless operations involving the
SpeDEZ and the GA: Provided finally, That investors who intend to do business in the
GA area may do so only upon written consent of the GA prior to registration with the
SpeDEZA.


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SEC. 4. Creation of the Special Defense Economic Zone Authority. - There
is hereby created a specialized and independent body corporate to be known as the
Special Defense Economic Zone Authority (SpeDEZA) which shall manage and operate
the SpeDEZ in accordance with the provisions of this Act. The SpeDEZA shall be
considered a government instrumentality vested with corporate powers.

Notwithstanding Section 3 of Republic Act No. 7656, otherwise known as “An
Act Requiring Government-Owned or Controlled Corporations to Declare Dividends
under Certain Conditions to the National Government, and for other Purposes”, all
dividends remitted by the SpeDEZA shall be exclusively utilized for the Armed Forces
of the Philippines Modernization Program and the self-reliant defense posture programs
of the national government. In no case shall dividends remitted by the SpeDEZA be
used otherwise.

SEC. 5. Governing Principles. - The SpeDEZ shall be managed and operated
under the following principles:

a) Within the framework and limitations of the Constitution, Republic Act No.
1884, Republic Act No. 7898, as amended by Republic Act No. 10349,
Republic Act No. 10697, otherwise known as the “Strategic Trade
Management Act”, Executive Order No. 303, Series of 2004, and applicable
provisions of the Local Government Code, the SpeDEZ shall be developed
into and operated as a hub for decentralized, self-reliant and self-sustaining
industrial, commercial, trading, research, development, engineering,
information and communications technology and financial investment
exclusive for defense, military and law enforcement commercial activities and
investments, with provision for suitable residential, educational, recreational,
and commercial areas;

b)

Notwithstanding the autonomy provided in Section 5(a) of this Act, the
SpeDEZ may continue to be provided by the national government and local
governments with transportation, telecommunications and other facilities
needed to attract legitimate and productive investments, generate linkage
with industries and employment opportunities for the people of the Province
of Bataan and its neighboring towns and cities: Provided, That the autonomy
and self-reliance of the SpeDEZ shall not be a hindrance to assistance nor

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Partnerships with other units and instrumentalities of the government:
Provided further, That no assistance or partnership be construed as a waiver
of the autonomy of the SpeDEZA;

The SpeDEZA may establish mutually beneficial economic defense relations
with other investment promotion agencies, entities or enterprises within the
country or with foreign entities or enterprises: Provided, That the SpeDEZA
shall seek clearance from the DND and administrative guidance from the
Department of Foreign Affairs (DFA) as to relations with foreign entities or
enterprises;

Foreign citizens and companies owned by non-Filipinos may set up
enterprises in the SpeDEZ with foreign ownership of up to the percentage
allowed by law, subject to the approval of SpeDEZA, either by themselves or
in joint venture with Filipinos or the GA in the defense and security industry
within the territorial jurisdiction of the SpeDEZ: Provided, That the SpeDEZA
may require individual locators to be subject to the provisions and limitations
provided for by the Strategic Trade Management Act, Foreign Investment Act
and the Regular Foreign Investment Negative List issued by the President:
Provided further, That the SpeDEZA may require a minimum investment in
freely convertible currencies from any enterprise seeking registration as a
locator of the SpeDEZ. All investments in the SpeDEZA shall fall under the
priorities, thrusts and limits provided for in this Act: Provided finally, That all
investments that do not directly or indirectly further defense, military and law
enforcement investments shall be prohibited from doing business within the
SpeDEZ except for businesses that cater to or support the locators, their
employees, and the residents of the SpeDEZ.

Subject to the limitations in this Act and its implementing rules and
regulations, the SpeDEZ shall be managed and operated as a separate
customs territory ensuring free flow or movement of necessary goods,
products, and capital within, into and out of its territory: Provided, That subject
to Section 14 of this Act, the SpeDEZ and all activities conducted therein shall
be exempt from payment of all national and local taxes: Provided further, That
in accordance with Sections 301 and 817 of Republic Act No. 10863,


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otherwise known as the “Customs Modernization and Tariff Act”, the Bureau
of Customs (BOC) shall continue to exercise border protection and customs.
control authority over the customs territory adjacent to the SpeDEZ and to
this end shall consult, coordinate, cooperate with the SpeDEZA to enhance
its protection and control capacity and ensure compliance with customs laws.
and regulations;

The SpeDEZA shall provide incentives, such as tax and duty-free admissions
of raw materials, capital, and equipment to registered enterprises of the
SpeDEZ: Provided, That exportation or removal of goods from the territory of
the SpeDEZ to the other parts of the Philippine territory shall be subject, as
applicable, to customs duties and taxes under the Customs Modernization
and Tariff Act (CMTA), as amended, and the National Internal Revenue Code
(NIRC) of 1997, as amended: Provided further, that sales of good from the
SpeDEZ to the Armed Forces of the Philippines (AFP), Philippine National
Police (PNP) and local government units (LGUs) for defense and security
purposes shall be exempt from all customs duties, national and local taxes:
Provided, finally, that subject to coordination with the BOC, customs transit
to and from the SpeDEZ, through the Port of Lamao or other ports, shall also
be considered tax and duty-free;

As far as practicable, enterprises located within the SpeDEZ shalll acquire a
certain percentage of their raw material requirements locally produced within
the Philippines as determined by the SpeDEZA;

The areas comprising the SpeDEZ may be expanded or reduced when
necessary to improve its investment promotion capacity, ensure public order
and safety, consolidate lands for SpeDEZ development, acquire right of way
or access necessary and appropriate to the SpeDEZ, protect and safeguard
watershed areas or maintain and improve water yield for the benefit of the
SpeDEZ and LGUs, manage solid and water waste in compliance with
existing national laws and local ordinances, and promote the public good. For
this purpose, the SpeDEZA, with the concurrence of the appropriate and
affected LGUs in the Province of Bataan, in accordance and in compliance
with existing national laws and local ordinances, shall have the power to


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acquire, procure, increase, or otherwise expand, either by purchase,
negotiation or condemnation proceedings, any private or public lands and
their respective water territories within the Province of Bataan: Provided, That
when applicable, the municipal waters of up to fifteen (15) kilometers from
the low water mark area of the edge of the SpeDEZ shall be deemed included
in the territorial jurisdiction of the SpeDEZ: Provided further, That the
SpeDEZA and the relevant LGUs shall utilize immediate and responsive
mechanisms, best management practices and suitable environmental
protection programs for land and coastal zone management to address any
abuse and/or exploitation of the natural environment within the territorial
jurisdiction of the SpeDEZ;

Products and goods researched and developed, engineered or manufactured
by registered enterprises may be made available in the domestic market,
subject to the limitations in this Act and its implementing rules and
regulations, payment of corresponding duties, customs and taxes on raw
materials as provided by the NIRC of 1997, as amended, and the CMTA, as
amended, approval by the DND or the PNP in accordance with Republic Act
No. 10697 and the Regular Foreign Investment Negative List issued by the
President, other regulations that may be formulated by the SpeDEZA, and
other applicable regulations and limitations imposed in accordance with law
by the DND, AFP, PNP, Bangko Sentral ng Pilipinas (BSP), Department of
Finance (DOF), BOC and Department of Trade and Industry (DTI): Provided,
That in cooperation with the SpeDEZA, the DND and PNP shall provide and
implement measures to improve ease and cost of doing business within the
SpeDEZ and enhance the investment promotion capacity of the SpeDEZA:
Provided further, That in order to protect domestic industries, a negative list
of industries shall be drawn up and regularly updated by the SpeDEZA:
Provided finally, That enterprises engaged in industries included in such
negative list shall not be allowed to sell their products locally, notwithstanding
the registration of such enterprises in the SpeDEZ; and

Subject to Section 6(n) of this Act, the defense of the SpeDEZ and the
security of its perimeter fence shall be the responsibility of the National


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Government, through the AFP and the GA, in coordination with the
SpeDEZA.

k)

All existing local defense industries located outside the GA Industrial Estate
as defined in Section 3 of this Act shall, subject to their prior registration with
the SpeDEZA, enjoy the same benefits and incentives granted under this Act:
Provided, That the local defense industries concerned shall obtain the
concurrence of the LGUs where their operations are located. Nothing in this
provision shall compel said local defense industries to register with SpeDEZA
or prevent them from availing similar benefits and incentives through other
investment promotion agencies. In no case shall they be allowed to avail
incentives from two or more investment promotion agencies.

SEC. 6. Powers and Functions of the SpeDEZA. - The SpeDEZA shall have

the following functions:

a) To adopt, alter, and use a corporate seal;

b) To contract, lease, buy, sell, acquire, own and dispose properties of whatever
nature: Provided, That real properties that form part of the original Camp
General Antonio Luna shall not be disposed of or encumbered: Provided
further, That expansion areas may be disposed of or encumbered by the
SpeDEZA;

¢)

To sue and be sued in order to carry out its duties, responsibilities, privileges,
powers and functions as granted and provided for in this Act;

d

To exercise the power of eminent domain for public use and public purpose;

e

To operate, administer, manage, AND develop, in accordance with Executive
Order No. 525, as amended, the SpeDEZ according to the principles and
provisions set forth in this Act;

f) To recommend to the President the issuance of a proclamation or any
executive issuance to fix or delimit the metes and bounds of the SpeDEZ;

To register, regulate and supervise the entities and enterprises in the
SpeDEZ in a competent and efficient manner that, as far as practicable,

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balances ease of doing business and sound restriction or regulation of
activities; the SpeDEZA may also register, regulate, and supervise defense-
related enterprises outside of the SpeDEZ territory as defined in Section 3
and Section 5(h) of this Act: Provided, That the SpeDEZA shall submit to the
DND a quarterly report on the profile of locators and other registered
enterprises of the SpeDEZ.

h) To formulate and exercise general and sole supervision over the
implementation of the development plans, activities and operations of the
SpeDEZ: Provided That, the SpeDEZA may coordinate with LGUs when
necessary to promote development in the SpeDEZ;

i) To authorize or undertake, on its own or through others, and regulate the
establishment, construction, operation and maintenance of public utilities,
services, and infrastructure in the SpeDEZ such as shipping, barging,
stevedoring, cargo, handling, hauling, warehousing, storage of cargo, port
services or concessions, piers, wharves, bulkheads, bulk terminals, mooring
areas, storage areas, roads, bridges, reclamation projects, terminals,
conveyors, water supply and storage, sewerage, drainage, airport operations
in coordination with the Philippine Ports Authority (PPA), the Civil Aviation
Authority of the Philippines (CAAP), and the AFP, and such other services or
concessions or infrastructure necessary or incidental to the accomplishment
of the objectives of this Act: Provided, That the registered enterprises of the
SpeDEZ shall be given priority in the awarding of contracts, franchises,
licenses, or permits for the establishment, operation and maintenance of
utilities, services and infrastructure in the SpeDEZ;

j) To issue license, set fees, regulate the establishment, operation, and
maintenance of utilities, educational and medical institutions, infrastructure
related to military, defense and law enforcement investments and other
services in the SpeDEZ such as, heat, light and power, water supply,
telecommunications, mobile, internet and other data facilities, transport, toll
roads and bridges and port services, and to fix just, reasonable and
competitive rates, fares, charges and prices thereof,


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k) To construct, acquire, own, lease, operate and maintain on its own or through
contracts, franchises, licenses, bulk purchase from the private sector and
build-operate-transfer scheme or joint venture with the private sector, any or
all of the public utilities and infrastructure required or needed for the operation
and development of the SpeDEZ, including transportation, access and
connection to, and out of the SpeDEZ, in coordination with appropriate
national and local government authorities and in conformity with applicable
laws;

1) To raise or borrow, within the limitation provided by law, and subject to the
approval or opinion of the Monetary Board of the 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, subject to Section 6(b) of this Act;

m) To enter into Public-Private Partnerships, build-operate-transfer schemes or
any of its variants, management contract, joint venture, co-production, or
similar agreements with local or foreign entities for the management and
operation of the SpeDEZ, a portion thereof, or any enterprise registered
therein to ensure the viability of the SpeDEZ;

n)

To ensure that the area covered by the SpeDEZ is secure at all times:
Provided, That in the event that the assistance of the AFP or PNP is
necessary, the AFP or PNP shall not interfere in the intemal affairs of the
SpeDEZA, except to provide the necessary security and defense, or law
enforcement assistance, as the case may be: Provided finally, That expenses
of the AFP or PNP in the SpeDEZ shall be borne by the national government;

0)

To protect, preserve, maintain and develop the forests, beaches, coral and
coral reefs, and maintain ecological balance within the SpeDEZ: Provided,
That notwithstanding the authority of the SpeDEZA to create rules for such
purpose, the rules and regulations of the Department of Environment and
Natural Resources (DENR) and other government agencies involved in the
above functions shall be implemented by the SpeDEZA: Provided further,
That the SpeDEZA shall create an Ecology Center for such purpose;


1 p) To create, operate or contract to operate such functional units or offices of

2 the SpeDEZA as it may deem necessary;
3 q) To issue certificates of origin for products manufactured or processed in the
4 SpeDEZ;
5 1) To issue rules and regulations necessary to implement and accomplish the
6 purposes, objectives and policies provided herein, in consultation with DND,
7 DTI, DOF and other relevant government agencies;
8 s) To appropriately zone the SpeDEZ and provide for buffer zones, when
9 necessary, and reserve areas for housing;
10 t) To establish one-stop shops for the issuance of all necessary permits,
nu clearances, licenses, and other similar certifications to conduct such activities
2 intended to improve the ease of doing business within the SpeDEZ, in
13 coordination with government agencies having jurisdiction over activities in
14 the SpeDEZ not otherwise solely reserved to the SpeDEZA: Provided, That
15 all government agencies are directed to provide and extend utmost and full
16 cooperation to the SpeDEZA in the establishment of such one-stop shops;
a7 and,
18 u) To perform such other functions as may be provided by law.
19 SEC. 7. Board of Directors of the SpeDEZA. - The powers of the SpeDEZA

20 _ shall be vested in and exercised by a Board of Directors, hereinafter referred to as the
21 ~~ Board, which shall be composed of the following:

22 a) The Secretary of the DND who shall be the ex officio Chairman;

23 b) The Administrator of the SpeDEZA as Vice-Chairman: Provided, That in the
24 absence of the Chairman, the Vice-Chairman shall preside over the
25 meetings of the Board;

26 c) Members who shall consist of the following:

27 1. Assistant Secretary for Plans and Programs (ASPP) of the DND;

28 2. Assistant Secretary for Acquisition, Installations and Logistics (ASAIL) of

29 the DND;


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Director of the GA;

One (1) representative from the investors within the SpeDEZ;

One (1) representative from the workers working in the SpeDEZ;

One (1) representative from the province of Bataan;

One (1) representative from the municipality of Limay, Bataan;

One (1) representative from the legislative district covering the site of the
SpeDEZ; and

9. Two (2) independent directors with proven expertise in defense and
security strategies to be recommended by the SpeDEZA Board.

@oneaasro

In the event that the position of the ASPP, ASAIL of the DND, or Director of the
GA becomes vacant, the designated Acting ASPP, ASAIL or Director of the GA
shall serve as member of the Board.

In the event the Chairman and Vice-Chairman are unable to attend a meeting,
the members present constituting a quorum shall elect amongst themselves the
Presiding Officer for that particular meeting. The Presiding Officer shall not have
voting rights except to break a tie. For the purpose of determining the presence
of a quorum, vacant seats shall not be considered.

Except those coming from the DND and GA, the members of the Board 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, the
replacement shall serve only the unused portion of the term.

All members of the Board shall be Filipino citizens and no person shall be
appointed by the President of the Philippines as a member of the Board unless
one is of good moral character and proven probity and integrity. Except for the
representatives of the DND, GA and workers, members of the Board are required
to be degree holders in any of the following fields: economics, business, public
administration, law, management, military science, or their equivalent, and with
at least ten (10) years relevant working experience preferably in the field of
management or public administration.


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The members of the Board, except the ex-officio member shall each receive per
diem at rates to be determined by the Department of Budget and Management
(DBM) in accordance with existing rules and regulations: Provided, That the total
per diem collected each month shalll not exceed the equivalent per diem for four
(4) meetings.

SEC. 8. Administrator of the SpeDEZA - The SpeDEZA shall have an

Administrator with a rank of Department Undersecretary who shall be appointed by the
President of the Philippines. The Administrator 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, with
at least ten (10) years relevant working experience preferably in the field of business,
management, or public administration

SEC. 9. Powers and Duties of the Administrator. - The Administrator shall

have the following powers and duties:

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

b) To establish the internal organization of the SpeDEZA under such conditions
that the Board may prescribe;

c) 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;

e) To submit to the Board for its approval policies, systems, procedures, rules
and regulations that are essential to the operation of the SpeDEZA;

f) To create a mechanism for 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 SpeDEZ;

g) To preside at the meetings of the Board of the SpeDEZA in the absence of
the Chairman;


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h) Todirectly administer and supervise the operations and day-to-day business
activities of the SpeDEZA;

i) To execute, on behalf of the SpeDEZA, all contracts, agreements and other
instruments affecting its interests and duly approved by the Board; and

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

SEC. 10. Principal Office of the SpeDEZA. - The SpeDEZA shall maintain its
principal office in Camp Gen. Antonio Luna, Municipality of Limay, Province of Bataan,
but it may establish liaison offices within the Philippines as may be necessary for the
proper conduct of its business.

SEC. 11. Organization and Personnel. — The Board of the SpeDEZA shall
provide for an organizational structure and appoint employees, subject to the Revised
Administrative Code of 1987 on the Civil Service Commission or the Civil Service Law.
Upon the recommendation of the Chairman and Administrator of SpeDEZA and with
the approval of the Secretary of the DBM, the Board shall appoint and fix the
remuneration and other emoluments of its officers and employees in accordance with
rovided, That the Chairman
and Administrator shall exercise administrative supervision over the employees of the
‘SpeDEZA.

existing laws on compensation and position classificatio

The officers and employees of the SpeDEZA, including all members of the
Board, shall not engage directly or indirectly in partisan activities nor take part in any
election, except to vote.

No officer or employee of the SpeDEZA, subject to civil service laws and
regulations, shall be removed or suspended except for cause, as provided by law.

SEC. 12. Special Labor Center. - A Special Labor Center shall be established
within the SpeDEZ. This Center shall endeavor and be responsible to pro-actively play
a vital role in studying and amicably settling professional, labor relations issues and
disputes, interpretation of employment service contracts, and monitoring work, work
place, hygiene and safety standards within the SpeDEZ, particularly of the duly
registered entities and enterprises. The Special Labor Center shall comprise of a labor


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office, an industrial health and safety office, an inspection/investigative and disputes
office, and an enforcement office.

In order to support the economic and employment generation thrusts of the
LGUs, the SpeDEZA shall implement policies and programs that will serve to prioritize
for employment in the SpeDEZ, workers who are residents of stakeholder LGUs.
Registered enterprises shall, as far as practicable, source all its labor needs from the
stakeholder LGUs of the SpeDEZ, subject to existing laws and regulations: Provided,
That LGUs within whose territorial jurisdictions the SpeDEZA is located for the purpose
of this Act shall refer to all local governments which (1) derive a share in the five percent
(5%) final tax imposition within the SpeDEZ, (2) host expansion areas of the SpeDEZ
in accordance with Section 5(g) or Section 6(f) of this Act, or (3) host registered
enterprises of the SpeDEZ pursuant to Section 6(g) of this Act;

The SpeDEZA and, as far as practicable, the locators and registered enterprises
of the SpeDEZ, shall prioritize for employment qualified former personnel of the GA who
have been terminated or removed from the service due to the modernization of the GA.

SEC. 13. Investors Visa. - Any foreign national who invests an amount of Two
hundred thousand US dollars (US$200,000.00), either in cash and/or equipment,
registered enterprise shall be entitled to an investor's visa: Provided, That the foreign

a

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 loathsome, dangerous or contagious disease;

d) Must not have been institutionalized for any mental disorder or disability; and

e) Must establish by verifiable and credible evidence one’s financial capability
and capacity.

As a holder of investor's visa, an alien shall be entitled to reside in the Philippines
while the investment subsists. For this purpose, the alien should submit an annual
report, in the form duly prescribed for the purpose, to prove that the investor has
maintained the investment in the country. Should said alien withdraw the investments


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from the Philippines, then the investor's visa issued to said alien shall automatically
expire and /or 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 SpeDEZ and coordinate with
the SpeDEZA for the purpose of improving ease of doing business.

SEC.14. Fiscal Incentives. — Registered enterprises of the special defense
economic zone may be entitled to existing pertinent fiscal incentives granted under
Executive Order No. 226, as amended, otherwise known as the Omnibus Investments
Code of 1987.

SEC. 15. Administration, Implementation and Monitoring of Incentives. -
For the proper administration, implementation and monitoring of tax incentives provided
under this Act, the following are herein mandated:

(a) The SpeDEZA shall be responsible for the administration, management,
enforcement and implementation of the incentives granted to registered
enterprises: Provided, That the SpeDEZA shall adopt and implement systems
and procedures governing defense and military trade and shall comply with
established customs policies: Provided further, That the BOC shall set up and
establish a customs controlled area outside the gate of the SpeDEZ or other
registered enterprises of the SpeDEZ operating outside its territory to facilitate
payment of taxes on goods entering the Philippine customs territory: Provided
finally, That notwithstanding the limitations in this Act, the SpeDEZA and the
BOC may coordinate and jointly implement measures on border protection; and

(b) In the interest of enhancing transparency in the management and accounting
of tax incentives in the SpeDEZ, the SpeDEZA shall comply with the provisions
of Republic Act No. 10708, otherwise known as “The Tax Incentives
Management and Transparency Act (TIMTA)” and the rules and regulations
issued to implement it.


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SEC. 16. Banking Rules and Regulations. — Banks and financial institutions to
be established in the SpeDEZ shall be under the supervision of the BSP and shall be
‘subject to existing banking laws, rules and regulations.

SEC. 17. Remittances. - |n the case of foreign investments, a duly registered
entity or enterprise within the SpeDEZ shall have the right to remit earnings from the
investment in the currency in which the investment was originally made and at the
exchange rate prevailing at the time of remittance, subject to the provisions of Republic
Act No. 7653, otherwise known as “The New Central Bank Act”, as amended.

SEC. 18. Multi-Year Contracts and Other Contractual Arrangements — To
spur the development of SpeDEZ as a self-reliant and self-sustaining defense
investment hub where duly qualified and selected locators are provided with guaranteed
market access, the DND, the Armed Forces of the Philippines (AFP), the Philippine
Coast Guard (PCG), and the Philippine National Police (PNP) are hereby directed to
procure their defense equipment and materiel, whenever available and practicable,
from defense manufacturers and suppliers registered with the SpeDEZA. For this
purpose, the DND, AFP, PCG, and PNP are authorized to enter into multi-year contracts
and other multi-year contractual arrangements with manufacturers or suppliers
registered with the SpeDEZA subject to existing laws, rules, regulations and guidelines.

In implementing this Section, the SpeDEZA, the DND, AFP, PCG, and PNP shail
jointly formulate the mechanics for the selection of manufacturers/suppliers to be
awarded with multi-year contracts: Provided, That registration with the SpeDEZA and
location in the SpeDEZ of the manufacturing or distribution operations of such
manufacturer or supplier of the defense equipment and materiel to be procured in the
SpeDEZ shall be a condition precedent for the award of the multi-year contracts.

SEC. 19. Countertrade — Whenever applicable and practicable, any of the
countertrade arrangements defined in Executive Order No. 120 should be explored in
pursuing defense-related acquisitions. The SpeDEZA in consultation with the DND,
Department of Trade and Industry (DTI), and other concerned offices, shall identify or
develop a list of goods and services or industries which may be subject to a
countertrade.


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SEC. 20. Capitalization. - The SpeDEZA shall have an authorized capital stock
of three billion pesos (P3,000,000,000.00) to be subscribed wholly by the national
government.

In addition, all lands embraced and covered by the SpeDEZ, including
permanent improvements and fixtures, upon proper inventory by the GA or AFP, as the
case may be, not otherwise alienated, conveyed or transferred to another government.
agency and all other assets which the President may transfer to the SpeDEZA shall
form part of the equity contribution of the government

The annual subscription of the national government to the capital stock of the
SpeDEZA shall be included in the annual General Appropriations Act.

SEC. 21. Supervision and Control. - For purposes of policy direction and
coordination, the SpeDEZA shall be under the direct control and supervision of the
Office of the President of the Philippines.

SEC. 22. Regional Development Council. - The SpeDEZA shall determine the
development goals for the SpeDEZ within the framework of national development plans,
policies and goals. The Chairman and Administrator of the SpeDEZA shall, upon
approval by the Board, submit the SpeDEZA plans, programs and projects to the
Regional Development Council for inclusion and inputs to the overall regional
development plan.

SEC. 23. Relationship with Local Government Units. - Except as herein
provided, the Municipality of Limay in the Province of Bataan and such other local
government units where registered enterprises of the SpeDEZ conduct business, shall
operate and function in accordance with the framework of the Constitution, Local
Government Code of 1991, Republic Act No. 7898, as amended by Republic Act
No. 10349, and applicable provisions of and this Act.

In case of any conflict between the SpeDEZA, the LGUs and the national
government on matters affecting the SpeDEZA, other than national defense and
security matters, the decision of the SpeDEZA shall prevail.


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SEC. 24. Legal Office. - The SpeDEZA shall have and maintain its own internal
legal office, appropriate in number under the supervision of the Government Corporate
Counsel. When the exigencies of its businesses and operations demand, the SpeDEZA
may engage the services of an outside counsel either on a case to case or a fixed
retainer basis. Such engagement shall require further approval and concurrence of the
Office of the Government Corporate Counsel or the Office of the Solicitor General and
the Commission on Audit.

SEC. 25. Interpretation/Construction. - The powers, authorities and functions
that are vested in the SpeDEZA are intended to enhance national security and promote
self-reliance in the advancement of and protection of the national territorial integrity,
uphold the decentralization of governmental functions and authority, and promote an
efficient and effective working relationship between the SpeDEZA, 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 protects and promotes national security.

SEC. 26. Audit. - The Commission on Audit shall appoint a full-time auditor in
the SpeDEZA or may assign such number of personnel as may be necessary in the
performance of its functions.

SEC. 27. Transitory Provisions. The SpeDEZA shall be responsible for the
operation, administration, management and development of the SpeDEZ. The
SpeDEZA shall effect the transfer herein provided in a manner that will ensure the least
disruption of ongoing programs of the GA.

SEC. 28. Implementing Rules and Regulations. - The SpeDEZA, DTI, DOF,
DND, PNP, PCG, and the LGU shall formulate the implementing rules and regulations
to implement this Act within ninety (90) days after its approval. Such rules and
regulations shall take effect fifteen (15) days after its publication in a newspaper of
general circulation in the Philippines.

SEC. 29. Applicability Clause. - \nsofar as these are consistent with the
provisions of this Act, the provisions of Sections 30 to 41 of Republic Act No. 7916,


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otherwise known as "The Special Economic Zone Act of 1995", as amended, shall
likewise apply to the SpeDEZ

SEC. 30. Separability Clause. - \f 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. 31. Repealing Clause. - All laws, executive orders or issuances or any
part thereof, which are inconsistent herewith, are hereby repealed or amended
accordingly

SEC. 32. Effectivity.- This Act shall take effect fifteen (15) days after its
publication in the Official Gazette or in a newspaper of general circulation.

Approved,