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

HOUSE OF REPRESENTATIVES

HB. No._3703

Introduced by Representative Ralph G. Recto

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

Explanatory Note

Article II, Section 7 of the 1987 Constitution provides that the State shall
pursue an independent foreign policy. In its relations with other countries, the
paramount consideration shall be national sovereignty, territorial integrity, national
interest, and the right to self-determination. Further, the State recognizes the
indispensable role of the private sector, encourages the participation of private
enterprise, and provides incentives to needed investments. To this end, the State
shall promote the preferential use of Filipino labor, domestic materials and locally

produced goods and adopt measures to help make them become more competitive.

The objective of this measure is to enhance investment opportunities inside
the economic zone, while strengthening the country’s defense capabilities. This Bill
creates a special economic zone which shall cover the 370 hectares of government
arsenal industrial estate inside Camp General Antonio Luna in Limay, Bataan and all
other areas which may be declared as part of SpeDEZ in compliance with this
proposed law, including the Government Arsenal (GA), for investments in defense,


military, law enforcement, and defense-related advanced technologies, information
and communications technology, research and development and their support

industries.

The SpeDEZ shall be accessible for inclusive business prospects and progress
in firearm module and technical competency of the Government Arsenal that are
vital to support the objectives of the Armed Forces of the Philippines (AFP),
Philippine National Police (PNP) and other law-enforcement agencies.

If passed into lav, this bill would grant fiscal incentives, including the grant of
an investor's visa to any foreigner who invests US$200,000 either in cash and/or

equipment in a registered enterprise.

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



16

NINETEENTH CONGRESS OF THE )
REPUBLIC OF THE PHILIPPINES )
First Regular Session |

HOUSE OF REPRESENTATIVES
H.B.No._ 3703 _

Introduced by Representative Ralph G. Recto

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. ~ It 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. To this end, the State shall promote the preferentiat use of Filipino
labor, domestic materials and locally produced goods and adopt measures to make
them more competitive. Further, the State actively encourages, promotes and
accelerates the sound and balanced industrial, economic and social development of
the country through the establishment, among others, 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 with the objectives of providing
jos especially to those in the rural areas, increasing productivity and individual
family income, and thereby improving the level and quality of living conditions of the

people.


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) operates,
the portions allocated for the expansion of the GA, 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).

Except as may be necessary in the pursuance of their respective mandates,
the operations of the GA shall remain independent of the management of the
SpeDEZ. The 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. Republic Act No. 7898 otherwise known as the “AFP
Modernization Act” states that the GA is utilized in the production of weapons,
ammunitions, and other munitions for the use of the Armed Forces of the Philippines
(AFP) and the Philippine National Police (PNP), and for the sale and export of
products in excess of AFP/PNP requirements: Provided, further, That the GA and
SpeDEZ shall not be expanded nor operated to the prejudice of each other. The GA
and the SpeDEZA shall maintain coordination to ensure smooth and seamless
operations on matters of mutual concern: Provided, finally, That investors who
intend to do business in the GA area shall secure a written consent from the GA prior

to registration with the SpeDEZA.

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

2


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 for the Armed Forces of the
Philippines Modernization Program and 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 decentralized, self-reliant and self-sustaining
industrial, commercial, trading, research, development, engineering,
information and communications technology and financial investment
center 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
Jocal 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


20

d)

e)

assistance nor 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 requite 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 alt 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 and
products; and capital within, into and out of its territory: Provided, That


woe

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

and ensure compliance with customs laws and regulations;

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

4) As far as practicable, enterprises located within the SpeDEZ shall procure
a certain percentage, as determined by the SpeDEZA, of their raw material

requirements from local manufacturers within the Philippines;

h) The areas comprising the SpeDEZ may be expanded or reduced when
necessary to improve its investment promotion capacity, ensure public
order and safety, consolidate lands for SpeDEZ development, acquire right
of way or access necessary and appropriate to the SpeDEZ, protect and
safeguard watershed areas or maintain and improve water yield for the
benefit of the SpeDEZ and LGUs, manage solid and water waste in


woe

compliance with existing national laws and local ordinances, and promote
the public good. For this purpose, the SpeDEZA, with the concurrence of
the LGUs concerned in the Province of Bataan, and in accordance with
existing national laws and local ordinances, shall have the power to
acquire, procure, increase, or otherwise expand, either by purchase,
negotiation or condemnation proceedings, any private or public lands and
their respective water territories within the Province of Bataan: Provided,
That when applicable, the municipal waters of up to fifteen (15) kilometers
from the low water mark area of the edge of the SpeDEZ shall be deemed
included in the territorial jurisdiction of the SpeDEZ: Provided, further,
That the SpeDEZA and the relevant LGUs concerned shall provide for
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; and

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.

Sec. 6. Powers and Functions of 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 shail not be disposed of or
encumbered: Provided, further, That expansion areas may be disposed of
or encumbered by the SpeDEZA;

c) To sue and be sued in order to carry out its duties, responsibilities,

privileges, powers and functions as granted and provided for in this Act;

d) To exercise the power of eminent domain for public use and public

purpose;

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

f) To recommend to the President the issuance of a proclamation or any
executive issuance to fix or delimit the metes and bounds of the SpeDEZ:
Provided, That for the avoidance of doubt, such proclamation shall not be
required to expand the SpeDEZ pursuant to Section 5(h) of this Act;

g) To register, regulate and supervise the entities and enterprises in the

SpeDEZ in a competent and efficient manner that, as far as practicable,
balances ease of doing business and sound restriction or regulation of
activities; the SpeDEZA may also register, regulate, and supervise defense
related enterprises outside of the SpeDEZ territory as defined in Section 3
and Section 5(h) of this Act: Provided, That the SpeDEZA shall submit to

7


h)

the DND a quarterly report on locators and other registered enterprises of
the SpeDEZ;

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;

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;

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;

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

g



16

»
®

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 SpeDEZA, in
coordination with appropriate national and local government authorities

and in conformity with applicable laws;

|) 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 Partnership, bulld-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 provide internal security to the SpeDEZ, in coordination with the
National Government and affected LGUs: Provided, That for this purpose,
the SpeDEZA shall provide and establish its own internal security and
firefighting forces and identify and reserve facilities and areas within the
SpeDEZ for the AFP, which shall be responsible for the perimeter security
of the SpeDEZ, through the GA: Provided, further, That in the event that
assistance is necessary, the AFP or PNP shall not interfere in the internal
affairs of the SpeDEZA, except to provide the necessary security and
defense, or law enforcement assistance, as the case may be: Provided,
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;

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

of the SpeDEZA as it may deem necessary;

q) To issue certificates of origin for products manufactured or processed in
the SpeDEZ;

To issue rules and regulations necessary to implement and accomplish the

purposes, objectives and policies provided herein, in consultation with the
DND, DTI, DOF and other relevant government agencies;

s) To appropriately zone the SpeDEZ and provide for buffer zones when

necessary and reserve areas for housing;

To establish one-stop shops for the issuance of all necessary permits,

clearances, licenses, and other similar certifications to conduct such
activities intended to improve the ease of doing business within the
SpeDEZ, in coordination with government agencies having jurisdiction over
activities in the SpeDEZ not otherwise solely reserved to the SpeDEZA:
Provided, That all government agencies are directed to provide and extend
utmost and full cooperation to the SpeDEZA in the establishment of such
one-stop shops; and

u) To perform such other functions as may be provided by law.

Sec. 7. Board of Directors of the SpeDEZA. - The powers of the SpeDEZA
shall be vested in and exercised by a Board of Directors, hereinafter referred to as
the Board, which shall be composed of the following:

10


a)

b)

c)

In

The Secretary of the DND who shall be the ex officio Chairperson;

The Administrator of the SpeDEZA as Vice-Chairperson: Provided, That
in the absence of the Chairperson, the Vice-Chairperson shall preside

over the meetings of the Board;

Members who shall consist of:
1, The Assistant Secretary for Plans and Programs (ASPP) of the DND;
2. The Assistant Secretary for Acquisition, Installations and Logistics
(ASAIL) of the DND;
. The Director of the GA;
|. Commanding General, Philippine Army (PA);
. Commanding General, Philippine Air Force (PAF);
. Flag-Officer-In-Command, Philippine Navy (PN);
. One (1) representative from the investors within the SpeDEZ;
. One (1) representative from the workers working in the SpeDEZ;

paenauaw

}. One (1) representative from the province of Bataan;

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

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

12, Two (2) independent directors with proven expertise in defense and

security strategies to be recommended by the SpeDEZA Board

the event of vacancy in the Office of ASPP, ASAIL or Director of GA, the

designated Acting ASPP, ASAIL or Director of GA shall serve as member of the

Board.

In the event the Chairperson and Vice-Chairperson are unable to attend the

board meeting, the members present constituting a quorum shall elect among
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 quorum, vacant seats shail not be considered.



Except those coming from the DND, GA, PA, PAF, and PN, 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 shail be
appointed by the President of the Philippines as a member of the Board
unless the member is of good moral character and proven prabity and
integrity. Except for the representatives of the DND, GA, PA, PAF, PN, 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.

The members of the Board 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 shall not exceed the equivalent per diem for four

(4) meetings.

Sec, 8. Administrator of the SpeDEZA. ~ The SpeDEZA shall have an
Administrator with @ rank of Department Undersecretary who shail 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:



g

a

b)

°)

}

e

g.

h

Sec.

To direct and manage the affairs of the SpeDEZA in accordance with the

policies of the Board;

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

To submit an annual budget and necessary supplemental budget to the

Board for its approval;

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 SpeDEZA;

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;

To preside at the meetings of the Board of the SpeDEZA in the absence
of the Chairperson;

To directly administer and supervise the operations and day-to-day

business activities of the SpeDEZA;

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

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

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 civil service


20

®

law. Upon the recommendation of the Chairperson and Administrator 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 existing laws on compensation and position classification: Provided, That the
Chairperson and Administrator shall exercise administrative supervision of its

employees.

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

election, except to vote.

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

SEC. 12. Special Labor Center. - A Special Labor Center shall be established
within the SpeDEZ. This Center shall pro-actively play a vital role in studying and
amicably settling professional, labor relations issues and disputes, interpreting
employment service contracts, and monitoring work, work place, hygiene and safety
standards within the SpeDEZ, particularly of the duly registered entities and
enterprises. The Special Labor Center shall be comprised of a labor office, an
industrial health and safety office, an inspection/investigative and disputes office,
and an enforcement office.

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


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

modernization of the GA.

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

That the foreign national has the following qualifications:

a
b

Must be at least eighteen (18) years of age;

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

) Must establish by verifiable and credible evidence financial capability and
capacity.

As a holder of an investor's visa, an alien shall be entitled to reside in the
Philippines while the alien’s investment subsists, For this purpose, the alien should
submit an annual report, in the form duly prescribed for the purpose, to prove that
the alien has maintained investment/s in the country. Should the said alien withdraw
investments from the Philippines, then the investor's visa issued to the 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 shalt 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 SpeDEZ may be
entitled to the existing pertinent fiscal incentives as provided for under Title XIII Tax
Incentives of the National Internal Revenue Code of 1997, as amended. Provided,
That in the administration, implementation and monitoring of incentives, the
SpeDEZA may impose conditions not otherwise prohibited by this Act: Provided,
further, That the SpeDEZA shall not be limited to the conditions provided under
Republic Act No. 7916, Republic Act No. 8748 or any other related issuance, rule or

regulation.

SEC. 15. Administration, Implementation and Monitoring of Incentives. ~ For
the proper administration, implementation and monitoring of tax incentives provided
under this law, 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, among others, adopt and
implement systems and procedures affecting defense/military trade and the
appropriate customs policies: Provided, further, That the BOC shall set up and
establish a customs controlled area outside the gate of the SpeDEZ or other
registered enterprises of the SpeDEZ operating outside its territory to
facilitate payment of taxes on goods entering the Philippine customs territory:
Provided, finally, That notwithstanding the limitations in this Act, the SpeDEZA
and 80C may coordinate and jointly implement measures on border

protection; and

(0) In the interest of enhancing transparency in the management and
accounting of tax incentives in the SpeDEZ, the SpeDEZA shall comply with
the provisions of Republic Act No. 10708, otherwise known as “The Tax
Incentives Management and Transparency Act (TIMTA)” and its implementing

rules and regulations.

l6


Is

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

SEC, 18. Multi-Year Contracts and Other Contractual Arrangements. — In
order to spur the development of SpeDEZ as a self-reliant and self-sustaining
defense investment hub where duly qualified and selected locators are provided with
guaranteed market access, the DND, the AFP, the Philippine Coast Guard (PCG), and
the PNP are hereby directed to procure their defense equipment and materiel,
whenever available and practicable, from defense industries registered with the
SpeDEZA, For this purpose, the DND, AFP, PCG, and PNP are authorized to enter
into multi-year contracts and other multi-year contractual arrangements with
manufacturers/suppliers registered with the SpeDEZA under such terms and
conditions to be provided in the rules and regulations implementing this Act.

In implementing this section, the SpeDEZA, the DND, AFP, PCG, and PNP
shall 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 of operation and manufacture 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.

The selection of manufacturers/suppliers eligible for multi-year contracts with
the government shall be exempt from the provisions of Republic Act No. 9184,
otherwise known as the “Government Procurement Reform Act” and its
implementing rules and regulations. The length of the multi-year contracts shall be
agreed upon by the contracting parties taking into consideration the period within

7


which the manufacturer/supplier may recoup its investment together with a
reasonable rate of return: Provided, that the execution of the multi-year contract
shall not preclude the manufacturer/supplier concerned from accepting and filling in
orders from other clients as long as the fulfillment of its obligations under the multi~
year contract are not adversely affected.

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,
the DTI, and other offices concerned, shall identify or develop a list of

goods/services or industries which may be subject to a countertrade.

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 Chairperson and Administrator shail, 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 1987 Constitution and
Republic Act No. 7898, as amended by Republic Act No. 10349, applicable provisions
of the Local Government Code, and this Act.

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

SEC. 24. Legal Office.- The SpeDEZA shall have and maintain its own
internal legal office, with appropriate number of personnel 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 not require
further approval and concurrence of the Office of the Government Corporate Counsel

or the Office of the Solicitor General.

SEC. 25. Interpretation/Construction. - The powers, authorities and functions
that are vested in the SpeDEZA are intended to establish national self-sufficiency
and self-reliance in the advancement 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 between
the SpeDEZA, the national government and the LGUs. Any interpretation of this Act
shall consider such intentions. In the event of conflict of interpretations, the
provisions of this Act shall be construed in favor of an interpretation that would tend

to protect 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. mplementing Rules and Regulations. - The SpeDEZA, DTI, DOF,
DND, and the LGUs concerned shall formulate the implementing rules and
regulations of 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. Insofar as these are consistent with the
provisions of this Act, the provisions of Sections 30 to 41 of Republic Act No. 7916,
otherwise known as "The Special Economic Zone Act of 1995", as amended, shall

likewise apply to the SpeDEZ.

Sec. 30. Separability Clause. — If any provision of this Act is declared invalid
of unconstitutional, other provisions hereof which are not affected thereby shall

remain in full force and effect.

Sec. 31. Repealing Clause. — All laws, orders, decrees, rules and regulations,
and other parts thereof inconsistent with the provisions of this Act are hereby
repealed, amended or modified accordingly.

Sec, 32. Affectivity Clause. — This Act shall take effect fifteen (15) days after
its publication in the Official Gazette or in at least two (2) national newspapers of
general circulation.

Approved,

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