Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City, Metro Mar

_ Sixteenth Congress
First Regular Session

2688

HOUSE BILL NO.

Introduced by Hon. Frederick F, Abueg

EXPLANATORY NOTE

This bill seeks the realization of the province of Palawan’s full economic, industrial
and tourism potential by establishing a special economic zone in its southern portion and
creating a body that will steer the same. This bill’s objective holds such great importance that
it has been brought to the House of Representatives and the Senate countless times over the
past decade and a hall,

Former Rep. Alfredo Amor E. Abueg, Jr. introduced House Bill (HB) No, 6414, “An
Act Creating a Special Economic Zone and Free Port in Southern Palawan, Creating For This
Purpose The Southern Palawan Special Economic Zone Authority, Appropriating Funds
‘Therefor, And For Other Purposes,” which was referred to the Committee on Economic
Affairs chaired by Rep. Felicito Payumo. The House of Representatives approved the bill and
transmitted to the Senate, which referred it to its Committee on Economic Affairs headed by
Sen, Edgardo Angara.

‘The bill was again filed by Rep. Abueg as HIB No. 9738, co-authored by four (4) other
congressmen. After the Lower House’s approval, HB 9738 was transmitted to the Senate
where it was heard by the Committee on Economic Affairs headed by Sen. Loren Legarda. It
is regrettable that Congress ended without the bill having been approved. Nevertheless, Sen.
Legarda herself authored a Senate version of the bill having the same purpose, which
unfortunately likewise did not reach final approval.

This bill is now a reiteration in ‘oto of Senate Bill (SB) No, 2606, otherwise known as
“An Act Establishing the Southern Palawan Special Economic Zone in the Province of
Palawan, Creating for the Purpose the Southern Palawan Special Economic Zone Authority,
Appropriating Funds Therefor and For Other Purposes.” SB No. 2606 was prepared by the
Committees on Economic Affairs, Local Government, Ways and Means, and Finance, with
Senate Minority Floor Leader Juan Ponce Enrile, then Senators Manuel Roxas and Alfredo
Lim, and Senate President Franklin Drilon as authors thereof, in 2007, during the Thirteenth
(13") Congress. SB No. 2606 was in substitution of Senate Bill No, 2217 authored by
Senator Enrile, taking into consideration House Bill No. 5262 introduced by then Rep.
‘Abraham Kahlil Mitra,

In its Explanatory Note, Senator Enrile stated:



“The province of Palawan occupies a strategic location in the Southern Tagalog
Region. It has a total land area of 1.4 million hectares, a population of 755,412 (Census
2000), and boasts of bountiful forest, marine and mineral resources.

As such, the province presents vast potential for economic growth through
infrastructure, industrial, agricultural and tourism development. However, while economic
activities are concentrated in Puerto Princesa, its capital, and in other municipalities wherein
tourism-related activities thrive such as the Calauit Island, EI Nido, and Taytay, other towns
abundant in natural resources and large labor force remain untapped.

Hence, the proposal to establish the Souther Palawan Economic Zone and Free Port
ig the municipalities of Bataraza, Brooke's Point and Balabac. In accordance with the
mandate of Republic Act No. 7916, otherwise known as “The Special Economic Zone Act of
1995”, this measure encourages the development of the countryside into agro-industrial,
commercial, tourist, banking, investment and financial center.

In order to administer the operations of the ecozone, the bill proposes to create the
Southern Palawan Economic Zone and Free Port Authority. It likewise offers a package of
fiscal and non-fiscal incentives to attract prospective foreign and lo
fully maximize the development poss

XXX XXX XXX,

Further, Palawan is in a strategic position in the Southeast Asian region, being a
choke point that sits astride a major sea trade route serving the region and linking it to major
global economies. The Balabac Strait is 47 kilometers offshore where international ships
pass, bringing oil and other important cargo to Japan, China, the Philippines, and other
countries. The municipality of Balabac, location of the proposed principal office the
‘onomic zone, has sufficient land area for the economic zone and free port, deep waters
where international ships can navigate and dock, and is the location of the Melville
international lighthouse.

Palawan is already producing natural gas, and there is vast potential for greater
production of this energy resource with the identification of additional reserves off its waters.
Keen investor interest in Palawan, both local and foreign, is already quite apparent. There are
specific plans in tourism, agro-industry, real estate, fisheries, mining, communication,
transportation, education and manufacturing. The government has also prioritized the
infrastructure development of the province, in terms of roads and bridges, ports, and airports,
to name a few. President Benigno Aquino III, in his State of the Nation Address during the
opening of the Sixteenth (16") Congress, even cited the establishment of a cold storage plant
in the municipality of Bataraza, as well as the improvement of the international airport in the
province.

Palawan’s emergence as a growth area has been strengthened by its inclusion as a key
component of the Brunei Darassalam Indonesia Malaysia Philippines-Fast Asia Growth Area
(BIMP-EAGA) regional growth concept. This inclusion recognizes the vast natural resources
the province is endowed with and its strategic location in the sea trade route that links
Southeast Asia to the rich economies to the north. In fact, R.A. No. 7916 identified Palawan
as one of the possible areas for the establishment of an economic zone.



Clearly, the institution of the Southern Palawan Special Economic Zone comprising
the municipalities of Balabac, Bataraza, and Brooke’s Point, will advance the government’
long-term plan of strengthening the socio-economic, institutional and environmental
development of the country. The creation of this special economic zone, clothed with its own
charter, should be supported by all sectors involved in hastening the leap of the Philippines to
full membership in the league of developed nations in Asia

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

ERICK F. ABUEG
Representative, 2™ District of Palawan


Cer Anewn

Nl
12
13
14
15
16

Republic of the Philippines
HOUSE OF REPRESENTATIVES,
Quezon City, Metro Manila

Sixteenth Congress
First Regular Session

House BLL No, 2688

Introduced by Hon. Frederick F. Abueg

AN ACT .
ESTABLISHING THE SOUTHERN PALAWAN SPECIAL ECONOMIC ZONE IN
THE PROVINCE OF PALAWAN, CREATING FOR THE PURPOSE THE
SOUTHERN PALAWAN SPECIAL ECONOMIC ZONE AUTHORITY,
APPROPRIATING FUNDS THEREFOR AND FOR OTHER PURPO

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 “Southern Palawan Special

Economic Zone Act of 2014.”
See. 2. Declaration of Policy. - Itis hereby declared the policy of the State to actively
encourage, promote, induce, and accelerate the sound and balanced industrial, economic and
social development of the country in order to provide jobs to the people, especially those in
rural areas, increase their productivity and their individual and family income, and thereby
improve the level and quality of their living conditions through the establishment, among
others, of special economic zones in suitable and strategic locations in the country and
through measures that shall effectively attract legitimate and productive foreign investments.
See. 3. Creation of the Southern Palawan Special Economic Zone. - In pursuit of the
foregoing declared policy and subject to the concurrence of the concerned local government
units of Southern Palawan affected by the zone, there is hereby established a Special
Economic Zone, hereinafter referred to as the Southern Palawan Ecozone. The Southern
Palawan Ecozone shall cover the entire area embraced by the Municipalities of Balabac,
Brooke's Point and Bataraza in the Province of Palawan. The specific metes and bounds of

the Southern Palawan Ecozone shall be more particularly defined in a proclamation to be


Socwrxaaueen

int

13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33

issued by the President of the Philippines, upon the recommendation of the Philippine
Economic Zone Authority (PEZA), provided that the lands embraced therein shall be public
lands.

See. 4. Governing Principles. - The Southern Palawan Special Economic Zone shall
bbe managed and operated by the Southern Palawan Special Economic Zone Authority, herein
referred to as the SPEZA, created under Section 10 of this Act, under the following
principles:

(a) Within the framework and limitations of the Constitution and applicable
provisions of the Local Government Code, the Southern Palawan Ecozone shall be developed

into and operated as a decentrali

d, self-reliant and self-sustaining industrial,
commercial/trading, agro-industrial, tourist, banking, financial and investment center with
suitable residential areas.

(b) The Southern Palawan Ecozone shall be provided with transportation,
telecommunications and other facilities needed to attract legitimate and productive
investments, generate linkage industries and employment opportunities for the people of the
Province of Southern Palawan and its neighboring towns and cities.

(©) The Southem Palawan Ecozone may establish mutually beneficial economic
relations with other entities or enterprises within the country or, subject to the administrative
guidance of the Department of Foreign Affairs (DFA), the Philippine Economic Zone
Authority (PEZA) and/or the Department of Trade and Industry (DT), with foreign entities
or enterprises.

(d) Foreign citizens and companies owned by non-Filipinos in whatever proportion
may set up enterprises in the Souther Palawan Ecozone, either by themselves or in joint
venture with Filipinos in any sector of industry, international trade and commerce within the
Southern Palawan Ecozone.

(c) The areas comprising the Southern Palawan Ecozone may be expanded or reduced
when necessary. For this purpose, the SPEZA, in consultation with the local government
units, shall have the power to acquire either by purchase, negotiation or condemnation
proceedings, any private land within or adjacent to the Southern Palawan Ecozone for the
following purposes: (@) consolidation of lands for Southern Palawan Ecozone development;
@ acquisition of right of way to the Souther Palawan Ecozone; and (3) the protection of
watershed areas and natural assets valuable to the prosperity of the Southern Palawan

Ecozone.


Seocwmradsaueun

ul
12
13
14
15
16
7
18
19
20
21
2
2B
24
25
26
2
28
29
30
31
32
33
34

(f) Goods manufactured by a Southern Palawan Ecozone enterprise shall be made
available for immediate retail sale in the domestic market, subject to the payment of
corresponding taxes on raw materials and other regulations that may be formulated by the
SPEZA, together with the PEZA, the Bureau of Customs and the DTI. However, in order to
protect domestic industries, a Negative List of industries shall be drawn up and regularly
updated by PEZA. Enterprises engaged in industries included in such Negative List shall not
be allowed to sell their products locally.

(g) The national government shall maintain its ability to coordinate with the Southem
Palawan Ecozone and the local government units,

See. 5. Incentives To Registered Enterprises. - The Southem Palawan Special

Economic Zone Authority (SPEZA) may administer the following i

-entives to the registered

enterprises located therein to the extent of the activity/project:

(A) Income Tax Holiday (ITH) - Registered enterprises shall be entitled to an income
tax holiday from the start of their commercial operations to the extent of their activity under
the following categories:

Category A - Registered domestic enterprise located in highly developed areas, as

determined by the Board of Investments (BOI), shall be entitled to a four-year income

tax holiday.

Category B - Registered domestic enterprise on the following shall be entitled to a

six-year income tax holiday:

(1) Located in less developed areas as defined by the BOI; or
(2) Producing/rendering new products/services or having strong backward or
forward linkages

Category C - Registered export enterprise shall be entitled to a six- year income tax

holiday: Provided, however, That if the export enterprise complies with the following:

(1) large capital investments or sizeable employment generation, or (2) use high level

of technology or (3) located outside Metro Manila, it shall be entitled to an eight-year

income tax holiday.

Registered enterprises embarking on new investments that are listed in the current
Investment Priorities Plan (IPP) shall be entitled to incentives provided herein pertaining to
the ne

investments and subject to such terms and conditions as the BOI may determine.
For this purpose, a registered enterprise shall be defined as any person, natural or
juridical, licensed to do business in the Philippines and registered with the Southern Palawan

Special Economic Zone Authority (SPEZA) to transact business within the Southern Palawan


Sewer dH ben

ie

13
14
15
16
7
18
19
20
21
2
23
24
25
26
27
28
29
30
31
32
33

Special Economic Zone. A registered export enterprise shall be defined as any registered
enterprise engaged directly or indirectly in the production, manufacture or trade of products
or services which earns at least seventy percent (70%) of its normal operating revenues from
the sale of its products or services abroad for foreign currency. A registered domestic
enterprise, meanwhile, shall be defined as any registered enterprise not falling under the
definition of a registered export enterprise.

Additional investments in the project shall be entitled to the income tax holidays
corresponding to such investments as may be determined by the BOI. Additional income tax
holiday may be granted for as long as the investment is made on the same project: Provided,
‘That the project is listed in the IPP at the same time the additional investment in the project is
made: Provided, further, That the entitlement period for additional investments shall not
exceed three times the period provided under this subsection: Provided, however, That the
total ITH period for an export enterprise availing of an eight year ITH shall not exceed
twenty (20) years. Any unused incentives shall therefore be deemed forfeited if not used
during the incentive period.

Enterprises registered with SPEZA are required to share in the special development
fund of the BOI for investment promotion projects of the government equivalent to one
percent (1%) of the ITH granted for every application.

‘The Bureau of Internal Revenue (BIR) shall require a registered enterprise availing of
ITH or Net Operating Loss Carryover (NOLCO) to secure a certificate of eligibility from the
SPEZA before submitting its income tax return (ITR) with SPEZA for validation.

Failure to secure certification and/or to file the ITH or NOLCO availment for
validation by the SPEZA within forty-five (45) days from the last day of each statutory filing,
date for ITR shall cause the forfeiture of the availment for the taxable period.

(B) Net Operating Loss Carryover (NOLCO) - Net operating loss of the business or
enterprise during the first three years from start of commercial operations which have not
been previously offset as deduction from gross income shall be carried over as a deduction
From gross income for the next five consecutive years immediately following the year of
such loss: Provided, however, That operating loss resulting from availment of incentives
provided in this Act shall not be entitled to NOLCO.

Registered enterprises availing of the ITH as herein provided shall not be entitled to
avail or the NOLCO.

(©) Imposition of a tax rate of five percent (5%) on Gross Income Earned (GIE) -

Except for real property tax on land, no local and national taxes as prescribed under Republic


Sowius,H kv

i

13
14
15
16
7
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33

Act No, 8424, also known as "

such as income tax, excise tax, and franchise taxes, shall be imposed on registered enterprises

rile National Internal Revenue Code of 1997, as Amended"

operating within the Southern Palawan Ecozone. In lieu thereof, five percent (5%) of the

‘gross income earned shall be paid as follow

(a) Three percent (3%) to the national government;

(b) Two percent (2%) shall be remitted by the business establishments to the

treasurer's office of the municipality or city where the enterprise is located;

All persons and service establishments in the Southern Palawan Ecozone shall be
subject to national and local taxes under the National Internal Revenue Code of 1997, as
amended, and the Local Government Code.

(D) Accelerated Depreciation - Accelerated depreciation of plant, machinery and
equipment that are reasonably needed and actually used for the production and transport of
‘goods and services may be allowed using a rate not exceeding twice the rate which would
have been used had the annual allowance been computed in accordance with the rules and
regulations prescribed by the Secretary of Finance and the provisions of the National Internal
Revenue Code (NIRC) of 1997, as amended. :

(E) Capital Equipment Incentives - (1) Importations of capital equipment, spare parts,
tools and dye, or those required for pollution abatement and control, cleaner production and
waste reduction including consignment thereof by registered enterprises upon the effectivity
of this law, shall be exempted to the extent of one hundred percent (100%) of the taxes and
customs duties: Provided, That the imported items thereof shall be used exclusively by the
registered enterprise in its registered activity. Provided, further, That the importation of
machinery and equipment and accompanying parts shall comply with the following
conditions:

i They are not manufactured domestically in sufficient quantity, of comparable

quality and at reasonable prices:

ii, They are reasonably needed and will be used exclusively by the registered

enterprise in the manufacture of its products, unless prior approval of the SPEZA is

secured for the part time utilization of said equipment in a non-registered activity to
maximize usage thereof or the proportionate taxes and duties are paid on a specific
equipments and machinery being permanently used for non-registered activities; and

iii, Approval of the SPEZA was obtained by the registered enterprise for the

importation of such machinery, equipment and spare parts.


Seowmiuids,H»kwW

i

13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34

‘Approval of the SPEZA must be secured before any sale, transfer or disposition of the
imported capital equipment, machinery or spare parts is made: Provided, That if such sale,
transfer or disposition is made within the first five years from date of importation, any of the
following conditions must be present:
1) The same is made to another enterprise enjoying tax and duty exemption on
imported capital equipment;
2) The same is made to another enterprise, upon the payment of any taxes and

duties on the net book value of the capital equipment to be sold;

3) The exportation of the capital equipment, machinery, spare parts or source
documents or those required for pollution abatement and control; or

4) Proven technical obsolescence of the said equipment, machinery or spare

parts.

When the aforementioned sale, transfer or disposition is made under any of the
conditions provided for in the foregoing paragraphs other than paragraph (2) herein, the
registered firm shall not pay the taxes and duties waived on such items: Provided, further,
That if the registered enterprises sell, transfer or dispose the aforementioned imported items
without prior approval within five years from the date of importation, the registered
enterprise and the vendee, transferee, or assignee shall be solidarily liable to pay twice the
amount of the tax and duty exemption given it: Provided, finally, That even if the sale,
transfer or disposition of the capital equipment, machinery or spare parts is approved after
five years from date of importation, the registered enterprises are still liable to pay the taxes
and duties based on the net book value of the capital equipment, machinery or spare parts if
any of the registration terms and conditions has been violated. Otherwise, they shall no longer
be subject to the payment of the taxes and duties waived thereon.

(2) The purchase of machinery, capital equipment, raw materials, supplies, parts
and semi:

inished products to be used in the fabrication of machinery and capital equipment
by a registered export-oriented enterprise from a domestic manufacturer shall be subject to
zero percent (0%) value-added tax.

The registered export-oriented enterprise shall be granted a tax credit equivalent to the
amount of duties that would have been waived on the machinery; capital equipment; raw
materials, supplies, parts and semi-finished products used in the fabrication of machinery and
capital equipment, had these items been imported, upon its submission to the DOF of the bill
of materials evidencing the transaction value of such and other pertinent documents, for

verification and proper endorsement.


on

Seowudsyy

12
13
4
1S
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
3
32
33

The availment by a registered export enterprise of the incentive stated under the
immediately preceding two paragraphs shall be subject to the following conditions: (a) That
said capital equipment, machinery and spare parts will be used exclusively by the registered
enterprise in its registered activity; (b) That the capital equipment or machinery where the
raw materials, supplies, parts and semi-finished products were used would have qualified for
lax and duty-free importation; and (c) That the approval of the SPEZA is obtained by the
registered enterprise. If the registered enterprise sells, transfers or disposes of these
machineries, capital equipment and spare parts, the provision in the preceding paragraphs for
such disposition shall apply.

This incentive shall be deemed waived if application for tax credit under this
subsection was not filed within one year from date of delivery

(©) The
‘enterprises shall be eligible for tax and duty free importation.

importation of source documents by information technology registered

(G)__ Raw Materials Incentives - Every registered export-oriented enterprise shall
enjoy a tax credit equivalent to the internal revenue taxes and customs duties paid on the
supplies, raw materials and semi-manufactured products provided the same are not sufficient
in quantity, quality or are not competitively priced in the Philippines and which are used in
the manufacture, processing or production of its export products forming part thereof;
exported directly and indirectly by the registered export-oriented enterprise, based on the
actual taxes and duties paid for such materials/supplies/semi-manufactured products by the
registered enterprise.

This incentive shall be deemed waived if application for tax credit under this
subsection was not filed within one year from date of exportation of the final product,

(H) Incentives on Breeding Stocks and Genetic Materials. - Importation of
breeding stocks and genetic materials within ten (10) years from the date of registration of
commercial operation of the enterprise shall be exempt from all taxes and duties: Provided,
That such breeding stocks and genetic materials are reasonably needed in the registered
activity; and approved by the SPEZA.

The availment of the incentives by the registered enterprise shall be subject to the
following: (a) that said breeding stocks and genetic materials would have been qualified for
tax and duty-free importation under the preceding paragraph; (b) that the breeding stocks and
genetic materials are reasonably needed in the registered activity; (c) that approval of the

SPEZA has been obtained by the registered enterprise; and (d) that the purchase is made


Caer Ane en =

10

12
13
14
1S
16
17
18
19
20
21
22
23
24
25
26
ex)
28
29
30
31
32
33
34

within ten (10) years from the date of registration of commercial operation of the registered
enterprise.

This incentive shall be deemed waived if application for tax credit under this
subsection is not filed within one year from date of delivery.

(Exemption from Wharfage Dues. - -The provisions of law to the contrary
notwithstanding, exports by a registered enterprise shall be exempted from wharfage dues.

() Deferred Imposition or the Minimum Corporate Income Tax. ~ The Minimum
Corporate Income Tax (MCIT) or two percent (2%) of the,gross income as of the end of the
taxable year shall be imposed when the MCIT is greater than the income tax computed under
the NIRC OF 1997, as amended, for the taxable year: Provided, however, That said MCIT
shall be imposed only alter the enterprise’s entitlement period to the income tax-based
incentives has expired

(K) _ Tax Treatment of Merchandise in the Southern Palawan Ecozone.

a Domestic merchandise sent from the Southern Palawan Ecozone to
areas outside the said Ecozone shall, whether or not combined with or
made past of other articles likewise of local origin or manufactured in
the Philippines while in the export processing zone, be subject to
internal revenue laws of the Philippines as domestic goods sold,
transferred or disposed of for local consumption.

b. Merchandise sent from the Southern Palawan Ecozone to areas outside

the said Ecozone shall, whether or not combined with or made part of
other articles while in the zone, be subject to rules and regulations
governing imported merchandise. The duties and taxes shall be based
on the value of said imported materials (except when the final product,
is exempt).

c. Articles produced or manufactured in the Southern Palawan Ecozone
and exported therefrom shall, on subsequent importation into the
customs territory, be subject to the import laws applicable to like
articles manufactured in a foreign country.

d. Unless the contrary is shown, merchandise taken out of the Southern
Palawan Ecozone shall be considered for tax purposes to have been
sent to customs territory.

(L) Tax Treatment of Raw Materials and Capital Equipment in the Southern

Palawan Ecozone. - Importations of raw materials and capital equipment shall be treated as in


Socmrauaeune

vt
12
13
14
1S
16
7
18
19
20
21
22
23
24
25
26
27
28
29
30
ak
32
33

the Omnibus Investments Code. Registered export oriented enterprise shall have access to the
utilization of the bonded warehousing system in accordance with the rules and regulations of
the Bureau of Customs.

(M) Employment of Foreign Nationals. - Subject to the provisions of Section 29 of
Commonwealth Act No. 613, as amended, a registered enterprise may employ foreign
nationals in supervisory or technical positions for a period not exceeding ten (10) years from
its registration: Provided, That when the majority of the capital stock of a registered
enterprise is owned by foreign investors, the positions of the president, treasurer and general
manager or their equivalents may be retained by foreign nationals beyond the period set forth
herein and such officer is the owner or a stockholder owning at least ten percent (10%) of the
outstanding capital stock of the registered enterprise and he remains the owner or maintains
his stockholdings therein.

Foreign nationals under employment contract within the purview of this incentive,
their spouses and unmarried children under twenty-one (21) years of age, who are not
excluded by Section 29 of Commonwealth Act No. 613, as amended, shall be permitted to
enter and reside in the Philippines during the period of employment of such foreign nationals.
They shall be entitled to a multiple entry visa, valid for a period of three years, and shall be
allowed to enter and leave the Philippines without further documentary requirements other
than valid passports or other travel documents in the nature of passports. The validity of the
multiple entry visa shall be extendible yearly.

‘The said foreign nationals admitted under this provision, as well as their respective

spouses and dependents shall be exempt from: (a) obtaining alien certificate of registration
and immigration clearance certificates; and (b) securing the Alien Employment Permit (AEP)
and all types of clearances, permits, licenses or their equivalents required by any government
department or agency.

See. 6. Incentive to Investors. - Any foreign national covered under Subsection (M)
of Section 5 of this Act, who invests an amount of US $ 150,000.00, either in cash and/or
equipment, in a registered enterprise shall be entitled to an investor’s visa: Provided, That,

(1) Me is at least eighteen (18) years of age;

(2) He has not been convicted of a crime involving moral turpitude;

(3) He is not afflicted with any loathsome, dangerous or contagious disease;

and
(4) He has not been institutionalized for any mental disorder or disability.


v

Card asH aD

10

12
13
14
15
16
7
18
19
20
21
2
23
24
25
26
27
28
29
30
31
32
33

Provided, further, That in securing the investor’s visa, the alien-applicant shall be entitled to
the same privileges provided for under paragraph (M), Section 5 hereof. As a holder of

investor’s visa, an alien shall be entitled to resid

in the Philippines while his investment
subsists. For this purpose, he should submit an annual report, in the form duly prescribed for
the purpose, to prove that he has maintained his investment in the country. Should said alien
withdraw his investments from the Philippines, then the investor’s visa issued to him shall
automatically expire.

Sec. 7. Administration, Implementation and Monitoring of Incentives. - The SPEZA
shall be responsible for the administration and implementation of the incentives granted to its
respective registered enterprises: Provided, That any incentive administration policy adopted
by the BOI for registered enterprises shall be uniformly applied by SPEZA.

The following are the duties and responsibilities of the SPEZA in the administration
of incentives:

(A) To adopt consistent procedures of administering incentives in accordance with

the guidelines established by the BOI;

(B) To adopt and implement systems and procedures affecting trade and customs
policies in accordance with the requirements established by the Department of
Finance (DOF) and the BOI;

(©) To submit information on registered enterprises to the DOF and the BOT as
required by any of these agencies to ascertain consistency of investment
policies and incentives, including their implementation as provided in
paragraph (a) herein, and to ensure proper implementation of systems and
procedures affecting trade and customs policies as provided in paragraph (b)
herein; and

(D) To perform all other duties and responsibilities as may be required by the
President of the Philippines.

For proper monitoring, the BOI shall create a single database of all incentives
provided by all incentives granting agencies, including SPEZA, and all information thereto.
Double entry accounting shall be done by the BO! in recording all incentives granted by the
‘government for transparency purposes.

See. 8. Extension of Period of Availment. - The availment period of the incentives
provided herein may be extended by SPEZA, in the event that the registered enterprise

suffers operational force majeure or any event equivalent thereto, impairing its viability,


Sewmryrdsuneune

i

13
14
15
16
7
18
19
20
21

22
23
24
25
26
27
28
29
30
31

32
33
34

provided that the availment period shall not exceed the duration of the said force majeure or
equivalent event.

See. 9. Duration of Incentives. - Enterprises registered with SPEZA may enjoy ITH
or NOLCO granted by the latter prior lo the availment of the five percent (5%) GIE.

Fiscal incentives under this Act shall be terminated after a cumulative period of
twenty (20) years from date of registration or start of commercial operation, whichever is
applicable, except that it could be extended with regard to industries deemed indispensable to
national development.

‘The industries exempted from this provision shall be recommended by BOI, with the
concurrence of the Secretaries of the Department of Finance and Trade and Industry.

See. 10. Creation of the Southern Palawan Special Economic Zone Authority -
‘There is hereby created a body corporate to be known as the Southern Palawan Special
Economic Zone Authority, hereinafter referred to as the SPEZA, which shall manage and

operate, in accordance with the provisions of this Act, the Southern Palawan Special

Economic Zone. This corporate franchise shall expire in fifty (50) years counted from the
first day of the fifth (5") calendar year after the effectivity of this Act, unless otherwise
extended by Congress. It shall be organized within one hundred eighty (180) days after the
effectivity of this Act.

See. 11. Principal Office of SPEZA. - The Southern Palawan Special Economic Zone
Authority shall maintain its principal office in the Municipality of Balabac, Province of
Palawan, but it may establish branches within the Philippines as may be necessary for the
proper conduct of its business.

Sec. 12. Powers and Functions of the Southern Palawan Special Economic Zone
Authority. - The Souther Palawan Special Economic Zone Authority shall have the
following powers and functions:

(a) To operate, administer, manage and develop the Southern Palawan Ecozone

according to the principles and provisions set forth in this Act;
(6) To register, regulate and supervise the enterprises in the Southern Palawan
Ecozone in an efficient and decentralized manner, subject to existing laws;

(©) To coordinate with local government units and exercise general supervision
over the development plans, activities and operations of the Southern Palawan
Ecozone;

(@) To regulate and undertake the establishment, operation and maintenance of

utilities, other services and infrastructure in the Southern Palawan Ecozone


Sewiyxr 4» ko

i

13
4
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33

©

@

(g)

(h)

@

0)

3)

such as but not limited to heat, light and power, water supply,
telecommunications transport, toll roads and bridges, port services, etc. 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, franchise, licenses, bulk purchase from the private sector or permits
under any of the schemes allowed in Republic Act No. 6957 (the Build-
Operate-Transfer Law, as amended by RA 7718), or joint venture, adequate
facilities and infrastructure required or needed for the operation and
development of the Southern Palawan Ecozone, in coordination with
appropriate national and local government authorities and in conformity with
applicable laws thereon;

To operate on its own, either directly or through a license to other tourism-

related activities, including games, amusements, recreational and_ sports
facilities;

Subject to the approval of the President and the Monetary Board of the
Bangko Sentral ng Pilipinas upon the recommendation of the Department of
Finance, to raise or borrow adequate and necessary funds from local or foreign
sources to finance its projects and programs under this Act, and for that
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;

To protect, preserve, maintain and develop the virgin forests, beaches, coral
and coral reefs and maintain ecological balance within the Southern Palawan
Ecozone:

To create, operate and or contract to operate such functional units of offices of
the SPEZA as it may deem necessary;

To adopt, alter and use a corporate seal; make contracts, leases, own, or
otherwise dispose of personal or real properly; sue and be sued; and otherwise
carry out its functions and duties as provided for in this Act;

To issue certificates of ori

for products manufactured or processed in the

Southern Palawan Ecozone in accordance with prevailing rules of origin, and
the pertinent regulations of the PEZA, DTI and/or the Department of Finance

(DOF);


Socwiyi].,4H» Few

13
14
15
16
17
18
19
20
21
2
23
24
25
26
27
28
29
30
31
32
33

(0) To issue working visas renewable every two (2) years to foreign executives
and foreign technicians with highly specialized skills which no Filipinos
possesses, as certified by the Department of Labor and Employment;

(m) To report to the Bureau of Immigration the names of the foreigners who have
been granted permanent resident status and working visas within thirty (30)
days after issuance of such grant;

(n) To exercise such powers as maybe essential, necessary or incidental to the
powers granted to it hereunder as well as those that shall enable it to carry out,
implement and accomplish the purposes, objectives and policies of this Act;
and

(0) To issue rules and regulations consistent with the provisions of this Act as

maybe necessary to accomplish and implement the purposes, objectives and
policies provided herein.

See. 13. Banking Rules and Regulations. - Existing laws and rules/tegulations of the
Bangko Sentral ng Pilipinas (BSP) shall apply to banks and financial institutions to be
established in the Southern Palawan Ecozone, such as those governing foreign exchange and
other concurrent account transactions (trade and non-trade), local and foreign borrowings,
foreign investments, establishment and operation of local and foreign banks, foreign currency
deposit units, offshore banking units and other financial institutions under the supervision of
the BSP.

Sec. 14. Remittance of Earnings.- In the case of foreign investments, a registered
enterprise in the SPEZA 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 Section 74 of Republic Act No. 265, as
amended.

Sec. 15. Board of Directors of the Southern Palawan Special Economic Zone
Authority - The powers of the Southern Palawan Special Economic Zone Authority shall be
vested in and exercised by a Board of Directors, hereinafter referred to as the Board, which
shall be composed of the following:

a) ‘The Chairman who shall, at the same time be the administrator of the SPEZA;

b) A Vice-Chairman who shall come from among the members of the Board;

c) Members consisting of:

(0) The Governor of the Province of Southern Palawan;


Sewryxrd s,4H Fen RH

i

13
14
15
16
7
18
19
20
21
2
23
24
25
26
27
28
29
30
31
32
33
34

(2) The Congressional Representative of the district covering the site of
the Southern Palawan Ecozone;

(3) The mayors of the Municipalities of Balabac, Brooke's Point and
Bataraza, Province of Palawan;

(4) One (1) representative from the domestic investors;

(3) One (1) representative from the foreign investors; and

(6) Two (2) representatives from the workers working in Southern
Palawan Ecozone.

The Governor, the Congressional representative and the mayors of the Province of
Southern Palawan shall serve as ex-officio members of the Board, whose term in the Board
corresponds to their term as elected officials.

‘The Chairman and The members of the Board, except the ex-officio members, shall be
appointed by the President of the Philippines to serve for a term of six (6) years, unless
sooner separated from service due to death, voluntary resignation, or removal for cause, In
case of death, resignation or removal for cause, the replacement shall serve only the
unexpired portion of the term.

Except for the representatives of the business and labor sectors, no person shall be
appointed by the President of the Philippines as a member of the Board unless he is a Filipino

citizen, of good moral character, of proven probity and integrity, and a degree-holder in any

of the following fields: economics, business, public administration, law, management or their
equivalent, and with at least ten (10) years relevant working experience preferably in the field
of management or public administration.

The Members of the Board shall each receive per diem at rate to be determined by the
Department of Budget and Management in accordance with existing rules and regulations:
Provided however, That the total per diem collected each month shall not exceed the
equivalent per diem for four (4) meetings. Unless and until the President of the Philippines
has fixed a higher per diem for the members of the board, such per diem shall not be more
than ten thousand pesos (P10,000.00) for every Board meeting.

Sec. 16. Powers and Duties of the Chairman-Administrator, — ‘The Chairman
Administrator shall have the following powers and duties:

a) Todirect and manage the affairs of the SPEZ.

of the Board;

b) _Toesstablish the internal organization of the SPEZA under such conditions that

in accordance with the policies

the Board may prescribe;


Socwmyxaauavuna

12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34

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 fo 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 Souther Palawan
Ecozone;

) To create a mechanism in coordination with relevant agencies for the
promotion or industrial peace, the protection of the environment, and the
advancement of the quality of life in the Southern Palawan Ecozone; and

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

Sec. 17. Organization and Personnel. - The Board of Directors of the SPEZA shall
provide for an organization and staff of its officers and employees. Upon recommendation of
the Chairman-Administrator, 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 Board shall have exclusive and final authority
to promote, transfer, assign or reassign officers of the SPEZA, any provision of existing law
to the contrary notwithstanding: Provided, further, That the Chairman-Administrator may
carry out removal of such officers and employees.

‘The officers and employees of the SPEZA, 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 or the SPEZA, subject to Civil Service laws and regulations,
shall be removed or suspended except for cause, as provided by law.

See. 18. Ipso Facto Clause. - Sections 30-41 of Republic Act 7916, shall ipso facto
apply to the Southern Palawan Special Economic Zone.

See. 19. Capitalization. - The Southern Palawan Special Economic Zone Authority
shall have an authorized capital stock of One Billion (1,000,000,000) no par shares with a
‘minimum issue of Ten Pesos (P10.00) each, the majority shares of which shall be subscribed
and paid for by the National Government and the Local Government Units (LGUs)
embracing the Southem Palawan Special Economic Zone. The Board of Directors of the
SPEZA may, with the written concurrence of the Secretary of Finance, sell shares,

representing not more than forty per centum (40%) of the capital stock of the SPEZA to the


Sa

Seowiu)d)] su

i

13
14
15
16
7
18
19
20
21
2
23
24
25
26
27
28
29
30
31
32
33

general public under such policy as the Board and the Secretary of Finance may determine.
The National Government and the LGUs shall in no case own less than sixty per centum
(60%) of the total issued and outstanding capital of the Southern Palawan Special Economic
Zone and Authority.

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

Sec. 20. Supervision. - The Southern Palawan Special Economic Zone shall be under
the direct control and supervision of the Philippine Economic Zone Authority (PEZA) for
purposes of policy direction and coordination

Sec. 21. Relationship with the Regional Development Council. ~ The Southern
Palawan Special Economic Zone Authority shall determine the development goals for the
Southern Palawan Ecozone within the framework of national development plans, policies and
goals. The Administrator shall, upon approval by the Board, submit the Southern Palawan
Ecozone plans, programs and projects to the Regional Development Council for inclusion
‘and inputs lo the overall regional development plan,

See. 22. Relationship with Local Government Units. - Except as herein provided, the
local government units comprising the Southern Palawan Special Economic Zone shall retain

their basic autonomy and identity. The Municipalities of Balabac, Brooke’s Point and

Bataraza shall operate and function in accordance with the Local Government Code of 1991.
In case of any conflict between the SPEZA and the Province of Southern Palawan on matters
affecting the Southern Palawan Ecozone other than defense and security matters, the decision
of the SPEZA shall prevail.

Sec. 23. Interpretation/Construction. -The powers, authorities and functions that are
vested in the SPEZA are intended to decentralize governmental functions and authority and
promote an efficient and effective working relationship between the Southern Palawan
Ecozone, the NG, and the local government units.

Sec. 24. Auditing. - The Commission on Audit shall appoint a representative who
shall be a full time auditor of the SPEZA and assign such number of personnel as may be
necessary to assist said representative in the performance of his/her duties. The salaries and
emoluments on the assigned auditor and personnel shall be in accordance with pertinent laws,

rules and regulations.


Ser os

Sec. 25. Separability Clause. - If any provisions of this Act shall be held
unconstitutional or invalid, the other provisions not otherwise affected shall remain in full
force and effect.

See. 26. Repealing Clause. - All laws, executive orders and issuances, or any parts
thereof, which are inconsistent herewith are hereby repealed or amended accordingly.

Sec. 27. Effectivity Clause. - This Act shall take effect upon its publication in at least
one (1) newspaper of general circulation.

‘Approved,