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

EIGHTEENTH CONGRESS
FIRST REGULAR SESSION

House Bill No. 5440

INTRODUCED BY Rep. GREG G. GASATAYA

EXPLANATORY NOTE

One of the functions of the Philippine legislative’ body is to provide for the indispensable
role of the private sector and aid in improving local competitiveness through the promotion of the
use of local labor, materials, and goods. Thus, legislation has been made to translate such functions
into reality such as the Special Economic Zone Act of 1995 which provides for the legal framework
and mechanisms for the creation, operation, and administration, and coordination of Special
Economic Zones in the Philippines. The establishment of special economic zones aims to empower
strategic locations such as those with highly developed or which have the potential to be developed
into agro-industrial, industrial, tourist/recreational, commercial, banking, investment and financial
centers to encourage, promote, and hasten a stable industrial, economic and social development of
the country.

Bacolod City is a Ist class city that is the 3rd fastest growing economy in the Philippines
with regard to Information Technology and Business Process Outsourcing accomplishments, It is
the second most populous city in the Visayas next to Cebu City and the most populous city in the
‘Negros Island Region with a population of 561,875 (as of 2015 census) and a total land area of
16,267 hectares including a 124-hectare reclaimed area. Aside from being the capital city of one
of the largest producers of sugar in the country, Bacolod City, as a highly urbanized city, is also
part of the Bacolod Metropolitan Area which is the 8° most populous and 6" in terms of density
ut of the 12 metropolitan areas in the country

The city was declared a “center for excellence” by the Department of Science and
Technology for Information Technology-business process management operations — putting it at
Par with Metro Manila, Metro Cebu, and Metro Clark. The Asian Institute of Management’s
Philippine Cities Competitiveness Ranking Project 2005 also recognized Bacolod as one of the top
five most competitive mid-size cities and as on top of the list in terms of infrastructure and quality
of life. With the vast economic growth it has accumulated over the years and brilliantly executed
urban development plans that resulted in strategically placed access points such as the Bacolod-
Silay International Airport, Banago Wharf, and BREDCO Port and congestion-free routes such as
the Lacson Street to the north and Araneta Street to the south, Bacolod City at present has the



amenities to accommodate both local and foreign investments and further economic growth with
little to no congestion issues in comparison to other metropolitan areas.

Section 6 of Republic Act No. 7916, otherwise known as the Special Economic Zone Act
of 1995 as amended,clearly qualifies Bacolod City to be a viable location for the establishment of
an economic zone. The establishment of an economic zone in Bacolod City for the betterment and
dispersal of its economic growth not only collaterally benefits its neighboring Local Government
Units as such provides jobs, increases productivity, increases family income, and therefore also
improves the living conditions of its constituency and its peripheries, but also complements our
Current export policies, consequently enhancing the state of our foreign exchange,

—s

REP. GREG G. GASATAYA
Lone District of Bacolod City

As such, the approval of this Bill is earnestly sought.


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

EIGHTEENTH CONGRESS
FIRST REGULAR SESSION

5
House Bill No. aag

INTRODUCED BY Rep. GREG G. GASATAYA

AN ACT
PROVIDING FOR THE LEGAL FRAMEWORK AND MECHANISMS FOR THE
CREATION, OPERATON, ADMINISTRATION, AND COORDINATION OF SPECIAL
ECONOMIC ZONES IN THE CITY OF BACOLOD, PROVINCE OF NEGROS
OCCIDENTAL CREATING FOR THIS PURPOSE, THE BACOLOD ECONOMIC
ZONE AUTHORITY (BEZA), AND FOR OTHER PURPOSES.

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

PURPOSES AND OBJECTIVES: ESTABLISHMENT
AND NATURE OF SPECIAL ECONOMIC ZONES;
COORDINATION WITH OTHER SIMILAR SCHEMES

SEC. 1. Title. — This act shall be known and cited as "The Bacolod Special Economic Zone Act of
2020."

SEC. 2. Declaration of Policy. — It is the declared policy of the government to translate into
practical realities the following State policies and mandates in the 1987 Constitution, namely:
(a) "The State recognizes the indispensable role of the private sector, encourages private
enterprise, and provides incentives to needed investments." (Sec. 20, Art II)

(b) "The State shall promote the preferential use of Filipino labor, domestic materials and
locally produced goods and adopt measures that help make them competitive." (Sec. 12,
Art XII)

In pursuance of these policies, the government shall actively encourage, promote, induce
and accelerate a sound and balanced industrial, economic and social development of the
country in order to provide jobs to the people especially those in the rural areas, increase
their productivity and their individual and family income, and thereby improve the level


and quality of their living condition through the establishment, among others, of special
economic zones in suitable and strategic locations in the country and through measures that
shall effectively attract legitimate and productive foreign investments.

SEC. 3. Purposes, Intents and Objectives. — It is the purpose, intent and objective of this Act:
(a) To establish the legal framework and mechanisms for the establishment of special
economic zones, industrial estates / parks, export processing zones and other economic
zones in Bacolod City;

(b) To transform selected areas in Bacolod City into highly developed agro-industrial,
industrial, commercial, tourist, banking, investment, and financial centers, where highly
trained workers and efficient services will be available to commercial enterprises;

(c) To promote the flow of investors, both foreign and local, into Bacolod City which would
generate employment opportunities and establish backward and forward linkages among
industries in and around Bacolod City;

(d) To stimulate the repatriation of Filipino capital by providing attractive climate and
incentives for business activity;

(e) To promote financial and industrial cooperation between the Bacolod City and
industrialized countries through technology-intensive industries that will modernize the
country’s industrial sector and improve productivity levels by utilizing new technological
and managerial know-how; and

(f) To vest the special economic zones on certain areas in Bacolod City thereof with the
status of a separate customs territory within the framework of the Constitution and the
national sovereignty and territorial integrity of the Philippines.

SEC. 4. Definition of Terms, — For purposes of this Act, the following definitions shall apply to
the following terms:

(a) "Special Economic Zones (SEZ)" — hereinafter referred to as the ECOZONES, are
selected areas with highly developed or which have the potential to be developed into agro-
industrial, industrial tourisvrecreational, commercial, banking, investment and financial
centers. An ECOZONE may contain any or all of the following: Industrial Estates (TEs),
Export Processing Zones (EPZs), Free Trade Zones, and TouristRecreational Centers.

(b) "Industrial Estate (IE)" — refers to a tract of land subdivided and developed according
to a comprehensive plan under a unified continuous management and with provisions for
basic infrastructure and utilities, with or without pre-built standard factory buildings and
community facilities for the use of the community of industries.

(c) "Export Processing Zone (EPZ)" ~ a specialized industrial estate located physically


and/or administratively outside customs territory, predominantly oriented to export
production. Enterprises located in export processing zones are allowed to import capital
equipment and raw materials free from duties, taxes and other import restrictions.

(d)"Free Trade Zone" - an isolated policed area adjacent to a port of entry (as a seaport)
and/or airport where imported goods may be unloaded for immediate transshipment or
stored, repacked, sorted, mixed, or otherwise manipulated without being subject to import
duties. However, movement of these imported goods from the free-trade area to a non-free-
trade area in the country shall be subject to import duties.

Enterprises within the zone are granted preferential tax treatment and immigration laws are more
lenient, in exchange for value added such as technology transfer, employment, revenue creation
for local suppliers, foreign exchange generation, etc.

SEC. 5. Establishment of ECOZONES. — To ensure the viability and geographical dispersal of
ECOZONES through a system of prioritization, the following areas are initially identified as
ECOZONES, subject to the criteria specified in Section 6:

(a) All existing export processing zones and government-owned industrial estates within Bacolod
City; and

(b) Any private industrial estate which shall voluntarily apply for conversion into an ECOZONE.
‘These areas shall be developed through any of the following schemes:

i. Private initiative;

ii, Local government initiative with the assistance of the national government; and

iii, National government initiative.

The metes and bounds of each ECOZONE are to be delineated and more particularly described in
a proclamation to be issued by the President of the Philippines, upon the recommendation of the
Bacolod Economic Zone Authority (BEZA), which shall be established under this Act, in
coordination with the city council, National Land Use Coordinating Committee andor the Regional
Land Use Committee

SEC. 6. Criteria for the Establishment of Other ECOZONES. — in addition to the ECOZONES
identified in Section 5 of this Act, other areas may be established as ECOZONES in a proclamation
to be issued by the President of the Philippines subject to the evaluation and recommendation of
the BEZA, based on a detailed feasibility and engineering study which must conform to the
following criteria

(a) The proposed area must be identified as a regional growth center in the Medium-Term
Philippine Development Plan or by the Bacolod City Development Council and Regional
Development Council;


(b) The existence of required infrastructure in the proposed ECOZONE, such as roads,
railways, telephones, ports, airports, etc., and the suitability and capacity of the proposed
site to absorb such improvements;

(c) The availability of water source and electric power supply for use of the ECOZONE;

(d) The extent of vacant lands available for industrial and commercial development and
future expansion of the ECOZONE as well as of lands adjacent to the ECOZONE available
for development of residential areas for the ECOZONE workers;

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

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

(g) The area must be strategically located; and

(h) The area must be situated where controls can easily be established to curtail smuggling
activities.

Other areas which do not meet the foregoing criteria may be established as ECOZONES: Provided,
That the said area shall be developed only through local government and/or private sector initiative
under any of the schemes allowed in Republic Act No. 6957 (the build-operate-transfer law), and
without any financial exposure on the part of the national government: Provided further, That the
area can be easily secured to curtail smuggling activities: Provided finally, That after five (5) years
the area must have attained a substantial degree of development, the indicators of which shall be
formulated by the BEZA.

SEC. 7. ECOZONE to be a Decentralized Agro-Industrial, Industrial, Commercial/Trading,
Tourist, Investment and Financial Community. — Within the framework of the Constitution, the
interest of national sovereignty and territorial integrity of the Republic, ECOZONE shall be
developed, as much as possible, into a decentralized, self-reliant and self-sustaining industrial-
commercial/trading, agro-industrial, tourist, banking, financial and investment center with
minimum government intervention. Each ECOZONE shall be provided with transportation,
telecommunications, and other facilities needed to generate linkage with industries and
employment opportunities for its own inhabitants and those of nearby towns and cities. The
ECOZONE shall administer itself on economic, financial, industrial, tourism development and
such other matters within the exclusive competence of the national government.

The ECOZONE may establish mutually beneficial economic relations with other entities within
the country, or, subject to the administrative guidance of the Department of Foreign Affairs and/or
the Department of Trade and Industry, with foreign entities or enterprises

Foreign citizens and companies owned by non-Filipinos in whatever proportion may set up
enterprises in the ECOZONE, either by themselves or in joint venture with Filipinos in any sector


of industry, international trade and commerce within the ECOZONE. Their assets, profits and
other legitimate interests shall be protected: Provided, That the ECOZONE through the BEZA
may require a minimum investment for any ECOZONE enterprises in freely convertible
currencies: Provided further, That the new investment shall fall under the priorities, thrusts and
limits provided for in the Act.

SEC. 8 ECOZONE to be Operated and Managed as Separate Customs Territory. — The
ECOZONE shall be managed and operated by the BEZA as separate customs territory.

The BEZA is hereby vested with the authority to issue certificate of origin for products
manufactured or processed in each ECOZONE in accordance with the prevailing rules or origin,
and the pertinent regulations of the Department of Trade and Industry and/or the Department of
Finance.

SEC. 9, Defense and Security. ~ The defense of the ECOZONE and the security of its perimeter
fence shall be the responsibility of the national government in coordination with the BEZA.
Military forces sent by the national government for the purpose of defense shall not interfere in
the internal affairs of any of the ECOZONE and expenditure for these military forces shall be
borne by the national government. The BEZA may provide and establish the ECOZONES’ internal
security and firefighting forces.

SEC. 10, Immigration. — Any investor within the ECOZONE whose initial investment shall not
be less than One Hundred Fifty Thousand Dollars ($150,000.00), his/her spouse and dependent
children under twenty-one (21) years of age shall be granted permanent resident status within the
ECOZONE. They shall have freedom of ingress and egress to and from the ECOZONE without
any need of special authorization from the Bureau of Immigration.

The BEZA shall issue working visas renewable every two (2) years to foreign executives and other
aliens, processing highly-technical skills which no Filipino within the ECOZONE possesses, as
certified by the Department of Labor and Employment. The names of aliens granted permanent
resident status and working visas by the BEZA shall be reported to the Bureau of Immigration
within thirty (30) days after issuance thereof.

CHAPTER IL
GOVERNING STRUCTURES

SEC. 11. The Bacolod Economic Zone Authority (BEZA) Board. ~ There is hereby created a
body corporate to be known as the Bacolod Economic Zone Authority (BEZA) attached to the
Department of Trade and Industry. The Board shall have a director general with the rank of
department undersecretary who shall be appointed by the President. The director general shall be
at least forty (40) years of age, of proven probity and integrity, and a degree holder in any of the
following fields: economics, business, public administration, law, management or their equivalent,


and with at least ten (10) years relevant working experience preferably in the field of management
or public administration.

The director general shall be assisted by three (3) deputy directors each for policy and planning,
administration and operation, who shall be appointed by the BEZA Board, upon the
recommendation of the director general. The deputy directors general shall be at least thirty-five
(35) years old, with proven probity and integrity, and a degree holder in any of the following fields:
economics, business, public administration, law, management or their equivalent.

The Board shall be composed of thirteen (13) members as follows: the Secretary of the Department
of Trade and Industry as Chairman, the Director General of the Bacolod Economic Zone Authority
as Vice-Chairman, the undersecretaries of the Department of Finance, the Department of Labor
and Employment, the Department of Interior and Local Government, the Department of
Environment and Natural Resources, the Department of Agriculture, the Department of Public
Works and Highways, the Department of Science and Technology, the Department of Energy, the
Deputy Director General of the National Economic and Development Authority, one (1)
representative from the investors / business sector in the ECOZONE. In case of the unavailability
of the Secretary of the Department of Trade and Industry to attend a particular board meeting, the
Director General of BEZA shall act as Chairman,

The existing ecozones in the city of Bacolod regardless of the administering agency shall be
absorbed into the BEZA in accordance with the guidelines and regulations set forth in an executive
order issued for this purpose

Members of the Board shall receive a per diem of not less than the amount equivalent to the
representation and transportation allowances of members of the Board and/or as may be
determined by the Department of Budget and Management: Provided however, That per diems
collected per month does not exceed the equivalent of four (4) meetings.

SEC. 12, Functions and Powers of BEZA Board. - The Bacolod Economic Zone Authority
(BEZA) Board shall have the following functions and powers:

(a) Set the general policies on the establishment and operations of the ECOZONES,
industrial estates, export processing zones, free trade zones, and the like;

(b) Review proposals for the establishment of ECOZONES based on the set criteria under
Section 6 and endorse to the President the establishment of the ECOZONES, industrial
estates, export processing zones, free trade zones and the like. Thereafter, it shall facilitate
and assist in the organization of said entities;

(c) Regulate and undertake the establishment, operation and maintenance of utilities, other
services and infrastructure in the ECOZONE, such as heat, light and power, water supply,
telecommunication, transport, toll roads and bridges, port services, etc., and to fix just,


reasonable and competitive rates, charges and fees therefore;
(d) Approve the annual budget of the BEZA and the ECOZONE development plans;

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

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

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

SEC. 13. General Powers and Functions of the Authority. —‘The BEZA shall have the following
powers and functions

(a) To operate, administer, manage and develop the ECOZONE according to the principles
and provisions set forth in this Act;

(b) To register, regulate and supervise the enterprises in the ECOZONE in an efficient
and decentralized manner;

(c) To coordinate with local government units and exercise general supervision over
the development, plans, activities and operations of the ECOZONES, industrial estates,
export processing zones, free trade zones, and the like;

(@) In coordination with local government units concerned and appropriate agencies, to
construct, acquire, own, lease, operate and maintain on its own or through contract,
franchise, license, bulk purchase from the private sector and build-operate-transfer
scheme or joint venture, adequate facilities and infrastructure, such as light and power
systems, water supply and distribution systems, telecommunication and transportation,
buildings, structures, warehouses, roads, bridges, ports and other facilities for the
operation and development of the ECOZONE;

(e) To create, operate and/or contract to operate such agencies and functional units or
offices of the authority as it may deem necessary;

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

(g) To coordinate the formulation and preparation of the development plans of the
different entities mentioned above;

(h) To coordinate with the National Economic Development Authority (NEDA), the
Department of Trade and Industry (DTI), the Department of Science and Technology


(DOST), and the local government units and appropriate government agencies for
policy and program formulation and implementation; and

(i) To monitor and evaluate the development and requirements of entities in subsection
(a) and recommend to the local government units or other appropriate authorities the
location, incentives, basic services, utilities and infrastructure required or to be made
available for said entities.

SEC. 14. Powers and Functions of the Director General. — The director general shall be the
overall coordinator of the policies, plans and programs of the ECOZONES. As such, he shall
provide overall supervision over and general direction to the development and operations of these
ECOZONES. He shall determine the structure and the staffing pattern and personnel complement
of the BEZA and establish regional offices, when necessary, subject to the approval of the BEZA
Board. In addition, he shall have the following specific powers and responsibilities:

(a) To safeguard all the lands, buildings, records, monies, credits and other properties and rights
of the ECOZONES;

(b) To ensure that all revenues of the ECOZONE are collected and applied in accordance with its
budget;

(c) To ensure that the investors/firms and employees of the ECOZONES are properly discharging
their respective duties;

(d) To give such information and recommend such measures to the Board, as he shall deem
advantageous to the ECOZONE;

(c) To submit to the Board, the ongoing and proposed projects, work and financial program, annual
budget of receipts, and expenditures of the ECOZONE;

(f) To represent the ECOZONE in all its business matters and sign on its behalf after approval of
the Board, all its bonds, borrowings, contracts, agreements and obligations made in accordance
with this Act;

(g) To acquire jurisdiction, as he may deem proper, over the protests, complaints, and claims of
the residents and enterprises in the ECOZONE concerning administrative matters,

(h) To recommend to the Board the grant, approval, refusal, amendment or termination of the
ECOZONE franchises, licenses, permits, contracts, and agreements in accordance with the policies
set by the Board;

(i) To require owners of houses, buildings or other structures constructed without the necessary
permit whether constructed on public or private lands, to remove or demolish such houses,
buildings, structures within sixty (60) days after notice and upon failure of such owner to remove
or demolish such house, building our structure within said period, the director general or his
authorized representative may summarily cause its removal or demolition at the expense of the


owner, any existing law, decree, executive order and other issuances or part thereof to the contrary
notwithstanding:

(j) To take such emergency measures as may be necessary to avoid fires, floods and mitigate the
effects of storms and other natural or public calamities;

(k) To prepare and make out plans for the physical and economic development of the ECOZONE,
including zoning and land subdivision, and issue such rules and regulations which shall be
submitted to the Board for its approval; and

(1) To perform such other duties and exercises such powers as may be prescribed by the Board,
and to implement the policies, rules and regulations set by the BEZA

SEC. 15, Administration of Each ECOZONE. ~ Except for privately-owned, managed or
operated ECOZONES, each ECOZONE shall be organized, administered, managed and operated
by the ECOZONE executive committee composed of the following:

(a) The administrator who shall be appointed by the BEZA Board upon recommendation
of the director general; and

(b) One (1) deputy administrator to be appointed by the Board upon recommendation
of the director general.

‘An ECOZONE advisory body shall be created with the following members:

1. The president of the association of investors in the ECOZONE;

2. The governor of the province where the ECOZONE is located;

3. The mayor of the city where the ECOZONE is located;

4. The president of an accredited labor union in the ECOZONE;

5. The representative of the business sector in the periphery of the ECOZONE; and
6. The representative of the BEZA.

‘The ECOZONE advisory body shall have the following functions

i, Advise the ECOZONE management on matters pertaining to policy initiatives; and

ii Assist the ECOZONE management in setting problems arising between labor and
any enterprise in the ECOZONE.


Privately-owned ECOZONES shall retain autonomy and independence but shall be monitored by
the BEZA for the implementation of incentives and operations for adherence to the law.

SEC. 16. Personnel. - The BEZA Board of Directors shall provide for an organization and staff
of officers and employees of the BEZA, and upon recommendation of the director general with
the approval of the Secretary of the Department of Trade and Industry, appoint and fix the
remunerations and other emoluments: Provided, That the Board shall have exclusive and final
authority to promote, transfer, assign and reassign officers of the BEZA, any provision of existing
law to the contrary notwithstanding: Provided, further, That the director general may carry out
removal of such officers and employees.

All positions in the BEZA shall be governed by a compensation, position classification system and
qualification standards approved by the director general with the concurrence of the Board of
Directors based on a comprehensive job analysis and audit of actual duties and responsibilities.
The compensation plan shall be comparable with the prevailing compensation plans in the
Philippine Economic Zone Authority, Subic Bay Metropolitan Authority (SBMA), Clark
Development Corporation (BCDA) and the private sector and shall be subject to the periodic
review by the Board no more than once every two (2) years without prejudice to yearly merit
reviews or increases based on productivity and profitability. The BEZA shall therefore be exempt
from existing laws, rules and regulations on compensation, position classification and qualification
standards. It shall however endeavor to make its systems conform as closely as possible with the
principles under Republic Act No. 6758

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

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

SEC. 17. Investigation and Inquiries. — Upon a written formal complaint made under oath, which
on its face provides reasonable basis to believe that some anomaly or irregularity might have been
committed, the BEZA or the administrator of the ECOZONE concerned, shall have the power to
inquire into the conduct of firms or employees of the ECOZONE and to conduct investigations,
and for that purpose may subpoena witnesses, administer oaths, and compel the production of
books, papers, and other evidences: Provided, That to arrive at the truth, the investigator(s) may
grant immunity from prosecution to any person whose testimony or whose possessions of
documents or other evidence is necessary or convenient to determine the truth in any investigation
conducted by him or under the authority of the BEZA or the administrator of the ECOZONE
concerned.

SEC. 18. Prohibition Against Holding Any Other Office. — The director general, deputy director
general, administrators, officials and staff or assistants of the BEZA shall not hold any other office
or employment within or outside the BEZA during their tenure. They shall not, during their tenure,


directly or indirectly, practice any profession, participate in any business, or be financially
interested in any contract with, or in any franchise, or special privilege granted by the BEZA or
national government, or any subdivision, agency, or instrumentality thereof, including any
government-owned-controlled corporation, or its subsidiary.

SEC. 19, Disbursement of Funds. — No money shall be paid out of the funds of any ECOZONE
except in pursuance of the budget as formulated and approved by the BEZA

SEC. 20, Full Disclosure of Financial and Business Interests. - Every member of the Board of
the BEZA, the director general, the deputy directors general, and their staff shall, upon assumption
of office, make full disclosure of their financial and business Interests.

CHAPTER III

OPERATIONS WITHIN THE ECOZONE

SEC. 21. Development Strategy of the ECOZONE. - The strategy and priority of development of
each ECOZONE established pursuant to this Act shall be formulated by the BEZA, in coordination
with the Department of Trade and Industry and the National Economic and Development
Authority; Provided, That such development strategy is consistent with the priorities of the
national government as outlined in the medium-term Philippine development plan.

It shall be the policy of the government and the BEZA to encourage and provide incentives and
facilitate private sector participation in the construction and operation of public utilities and
infrastructure in the ECOZONE, using any of the schemes allowed in Republic Act No. 6957 (the
build-operate-transfer law).

SEC. 22, Survey of Resources. ~ The BEZA shall, in coordination with appropriate authorities
and neighboring cities and municipalities, immediately conduct a survey of the physical, natural
assets and potentialities of the ECOZONE areas under its jurisdiction

SEC. 23. Fiscal Incentives, — Registered activities of Registered Business establishments
operating within the ECOZONES shall be entitled to the fiscal incentives as provided for under
Republic Act No. 7916, the law creating the Philippine Economic Zone Authority, or those
provided under Book V1 of Executive Order No. 226, otherwise known as the Omnibus Investment
Code of 1987, Republic Act No. 7227 as amended otherwise known as the Bases Conversion
Development Act and Republic Act 7916 as amended otherwise known as the Special Ecozone act
of 1995

Be that as it may, BEZA shall provide income tax holiday to registered activities of the registered
enterprises:


1. Initial Income Tax Holiday - An Initial Income Tax Holiday of 6 (six) years for each registered
activity which shall be converted to 8 (eight) years if the registered activity qualifies as a pioneer
activity within the contemplation of the Investments Priorities Plan issued by the government thru
the Board of Investments (BOI), or by joint evaluation of BEZA, BOI and the Department of
Science and Technology (DOST) that the activity sought to be given pioneer status is a first of its
kind and untried in the Philippines on a commercial scale or in the alternative if the process to
produce the same introduces an intricacy which has not yet been employed at the time of
application for pioneer status.

2. Bonus Income Tax Holiday - each registered activity shall be entitled to bonus income holiday
for any of the following situations if criteria are met:

A. If the activity has proven to be a foreign exchange earner for the first three (3) years of
‘operation. Under this criterion, the activity shall have earned an average of USD1,000,000 net
foreign exchange earnings averaged for the first (three) 3 years from start of commercial
‘operations;

B. If the activity has proven to be labor intensive- Under this criterion, the activity shall establish
a ratio of capital equipment to labor of USD5,000 per direct laborer the computation of which shall
be based on the amount of capital equipment and number of laborers of the cut-off immediately
preceding the month of application for bonus year;

C. If the activity utilizes indigenous materials to the extent of 50% of its direct production cost.
The percentage required may be observed in terms of volume of raw materials processed in the
activity if otherwise the percent may not be met in terms of value.

3. Exemption from duties and taxes due on imported goods, raw materials, capital equipment, tools
and devices in furtherance of the registered activities of the registered enterprises, provided the
suppliers of the said imported goods goods, raw materials, capital equipment, tools and devices
establish a permanent establishment inside the ecozone administered by BEZA and register as an
ecozone logistic enterprise with BEZA.

Furthermore, tax credits for exporters using local materials as Inputs shall enjoy the same benefits
provided for in the Export Development Act of 1994.

SEC. 24. Exemption from National and Local Taxes.- Except for real property taxes on land
owned by developers, no taxes, local and national, shall be imposed on business establishments
operating within the ECOZONE. In lieu thereof, five percent (5%) of the gross income earned by
all business enterprises within the ECOZONE shall be paid and remitted as follows:

a. Three percent (3%) to the National Government;

b. Two percent (2%) which shall be directly remitted by the business establishments to the
treasurer's office of the municipality or city where the enterprise is located.

‘The gross income earned shall be computed taking into account the generally accepted accounting
principles in recording gross revenue and direct cost to arrive at the gross income earned as tax
base.


SEC. 25. Applicable National and Local Taxes. — All persons and services establishments in the
ECOZONE , not qualified for fiscal incentives shall be subject to national and local taxes under
the National Internal Revenue Code and the Local Government Code.

SEC. 26. Domestic Sales. - Goods manufactured by an ECOZONE enterprise shall be made
available for Immediate retail sales in the domestic market, subject to payment of corresponding
taxes on the raw materials and other regulations that may be adopted by the Board of the BEZA.
However, in order to protect the domestic industry, there shall be a negative list of Industries that
will be drawn up by the BEZA. Enterprises engaged in the industries included in the negative list
shall not be allowed to sell their products locally. Said negative list shall be regularly updated by
the BEZA.

The BEZA, in coordination with the Department of Trade and Industry and the Bureau of Customs,
shall jointly issue the necessary implementing rules and guidelines for the effective
Implementation of this section.

SEC. 27. Applicability of Banking Laws and Regulations. — Existing banking laws and Bangko
Sentral ng Pilipinas (BSP) rules and regulations shall apply to banks and financial institutions to
be established in the ECOZONE and to other ECOZONE-registered enterprises. Among other
pertinent regulations, these include those governing foreign exchange and other current account
transactions (trade and non-trade) local and foreign borrowings, foreign currency deposit units,
offshore banking units and other financial institutions under the supervision of the BSP.

SEC. 28, After Tax Profits. - Without prior Bangkok Sentral approval, after tax profits and other
earnings of foreign investments in enterprises in the ECOZONE may be remitted outward in the
equivalent foreign exchange through any of the banks licensed by the Bangko Sentral ng Pilipinas
in the ECOZONE: Provided, however, That such foreign investments in said enterprises have been
previously registered with the Bangko Sentral

SEC. 29. Eminent Domain. - The areas comprising an ECOZONE may be expanded or reduced
when necessary. For this purpose, the government shall have the power to acquire, either by
purchase, negotiation or condemnation proceedings, any private lands within or adjacent to the
ECOZONE for:

a. Consolidation of lands for zone development purposes;

b. Acquisition of right of way to the ECOZONE; and

c. The protection of watershed areas and natural assets valuable to the prosperity of the
ECOZONE.

If in the establishment of a publicly-owned ECOZONE, any person or group of persons who has
been occupying a parcel of land within the Zone has to be evicted, the BEZA shall provide the
person or group of persons concerned with proper disturbance compensation: Provided, however,
‘That in the case of displaced agrarian reform beneficiaries, they shall be entitled to the benefits
under the Comprehensive Agrarian Reform Law, including but not limited to Section 36 of


Republic Act No. 3844, in addition to a homelot in the relocation site and preferential employment
in the project being undertaken.

SEC. 30, Leases of Lands and Buildings. —Lands and buildings in each ECOZONE may be leased
to foreign investors for a period not exceeding fifty (50) years renewable once for a period of not
more than twenty-five (25) years, as provided for under Republic Act No. 7652, otherwise known
as the Investors’ Lease Act. The leasehold right acquired under long-term contracts may be sold,
transferred or assigned, subject to the conditions set forth under Republic Act No. 7652

SEC. 31. Land Conversion. Agricultural lands may be converted for residential, commercial,
industrial and other non-agricultural purposes, subjects to the conditions set forth under Republic
Act No. 6657 and other existing laws.

SEC. 32. Shipping and Shipping Register. — Private shipping and related business including
private container terminals may operate freely in the ECOZONE, subject only to such minimum
reasonable regulations of local application which the BEZA may prescribe.

The BEZA shall, in coordination with the Department of Transportation and Communications,
maintain a shipping register for each ECOZONE as a business register of convenience for ocean-
going vessels and issue related certification,

Ships of all sizes, descriptions and nationalities shall enjoy access to the ports of the ECOZONE,
subject only to such reasonable requirement as may be prescribed by the BEZA In coordination
with the appropriate agencies of the national government.

SEC. 33. Protection of Environment. - The BEZA, in coordination with the appropriate agencies,
shall take concrete and appropriate steps and enact the proper measure for the protection of the
local environment,

SEC. 34. Termination of Business. - Investors in the ECOZONE who desire to terminate business
or operations shall comply with such requirements and procedures which the BEZA shall set,
particularly those relating to the clearing of debts. The assets of the closed enterprise can be
transferred and the funds con be remitted out of the ECOZONE subject to the rules, guidelines and
procedures prescribed jointly by the Bangko Sentral ng Pilipinas, the Department of Finance and
the BEZA

SEC. 35. Registration of Business Enterprises. - Business enterprises within a designated
ECOZONE shall register with the BEZA to avail of all incentives and benefits provided for in this,
Act.

SEC. 36. One Stop Shop Center. - The BEZA shall establish a one stop shop center for the purpose
of facilitating the registration of new enterprises in the ECOZONE. Thus, all appropriate
government agencies that are Involved In registering, licensing or issuing permits to investors shall
assign their representatives to the ECOZONE to attend to Investor's requirements.


CHAPTER IV

INDUSTRIAL HARMONY IN THE ECOZONES

SEC. 37. Labor and Management Relations. - Except as otherwise provided in this Act, labor and
management relations in the ECOZONE shall be governed by the existing Labor Code of the
Philippines. Employees and personnel in the ECOZONE enterprises shall receive salaries and
benefits and shall enjoy working conditions not less than those provided under the Philippine
Labor Code and other relevant laws, issuances, rules and regulations of the Philippine government
and the Department of Labor and Employment.

SEC. 38. Promotion of Industrial Peace. - In the pursuit of Industrial harmony in the ECOZONE,
a tripartite body composed of one (1) representative each from the Department of Labor and
Employment, labor sector and business and industry sectors shall be created In order to formulate
a mechanism under a social pact for the enhancement and preservation of industrial peace in the
ECOZONE within thirty (30) days after the effectivity of this Act.

SEC. 39. Master Employment Contracts. - The BEZA, in coordination with the Department of
Tabor and Employment, shall prescribe a master employment contract for all ECOZONE
enterprise staff members and workers, the terms of which provide salaries and benefits not less
than those provided under this Act, the Philippine Labor Code, as amended, and other relevant
issuances of the national government.

SEC. 40. Percentage of Foreign Nationals, - Employment of foreign nationals hired by
ECOZONE enterprises in a supervisory, technical or advisory capacity shall not exceed five
percent (5%) of Its workforce without the express authorization of the Secretary of Labor and
Employment.

SEC. 41. Migrant Worker. - The BEZA, in coordination with the Department of Labor and
Employment, shall promulgate appropriate measures and programs leading to the expansion of the
services of the ECOZONE to help the local governments of nearby areas meet the needs of the
migrant workers.

SEC. 42, Incentive Scheme. - An additional deduction equivalent to one- half (1/2) of the value
of training expenses incurred In developing skilled or unskilled labor or for managerial or other
management development programs incurred by enterprises In the ECOZONE can be deducted
from the national government's share of three percent (3%) as provided In Section 24

The BEZA, the Department of Labor and Employment, and the Department of Finance shall jointly
make a review of the incentive scheme provided In this section every two (2) years or when
circumstances so warrant,


CHAPTER V

NATIONAL GOVERNMENT AND OTHER ENTITIES

SEC. 43. Relationship with the Regional Development Council. - The BEZA shall determine the
development goals for the ECOZONE within the framework of national development plans,
policies and goals, and the administrator shall, upon approval by the BEZA Board, submit the
ECOZONE plans, programs and projects to the regional development council for inclusion in and
as inputs to the overall regional development plan.

SEC. 44, Relationship with the Local Government Units. - Except as herein provided, the local
government units comprising the ECOZONE shall retain their basic autonomy and identity. The
cities shall be governed by their respective charters and the municipalities shall operate and
function In accordance with Republic Act No. 7160, otherwise known as the Local Government
Code of 1991.

SEC. 45. Relationship of BEZA to Privately-Owned Industrial Estates. — Privately-owned
industrial estates shall retain their autonomy and independence and shall be monitored by the
BEZA for the implementation of incentives

SEC. 46. Transfer of Resources. - The relevant functions of the Board of Investments over
industrial estates and agri-export processing estates shall be transferred to the BEZA. The
resources of government-owned Industrial estates and similar bodies except the Bases Conversion
Development Authority and those areas identified under Republic Act No. 7227, are hereby
transferred to the BEZA as the holding agency. They are hereby detached from their mother
agencies and attached to the BEZA for policy, program and operational supervision.

The Boards of the affected government-owned industrial estates shall be phased out and only the
‘management level and an appropriate number of personnel shall be retained.

Government personnel whose services are not retained by the BEZA or any government office
within the ECOZONE shall be entitled to separation pay and such retirement and other benefits
they are entitled to under the laws then in force at the time of their separation: Provided, That in
no case shall the separation pay be less than one and one-fourth (1 1/4) month of every year of
service.

CHAPTER VI

MISCELLANEOUS PROVISIONS

SEC. 47. Appropriation. - Upon the effectivity of this Act, any sum as may be necessary to


establish and operate BEZA shall be included In the General Appropriations Act to be treated as
an equity of the national government.

Additional funding shall come from the following:

(a) The annual subsidies, appropriations and/or other assets of the industrial estates and other
economic areas that have been absorbed/transferred to the BEZA as mandate in this Act;

(b) The proceeds from the rent of lands, buildings, and other properties of the ECOZONES
concerned;

(c) The proceeds from fees, charges and other revenue-generating Instruments which the BEZA is
authorized to impose and collect under this Act,

(d) The proceeds from bonds which the BEZA authorized to float both domestic and abroad; and

(e) The advance rentals, license fees, and other charges which the BEZA is authorized to impose
under this Act and which an investor is willing to advance payment for.

SEC. 48. Applicability of National Laws. - National laws shall prevail vis-a- vis ECOZONE rules,
regulations and standards, unless there is a clear intent in this Act or other Acts of Congress to vest
the ECOZONE specific power and privileges not otherwise allowed under existing laws.

SEC. 49. Authority of the President to Advance Initial Funding. — Subject to existing laws, the
President of the Philippines is hereby authorized to advance out of the savings of the Office of the
President such funds as may be necessary to effect the organization of an ECOZONE which shall
be reimbursed by the BEZA at reasonable term and condition.

SEC. 50. Non-Applicability on Areas Covered by Other Laws Creating Ecozones. - This Act shall
not be applicable to economic zones and areas already created or to be created under Republic Act
No. 7227 as amended, Republic Act 7916 as amended or other special laws, and governed by
authorities constituted pursuant thereto.

SEC. 51. Ipso-Facto Clause. - All privileges, benefits, advantages or exemptions granted to
special economic zones under Republic Act. No. 7227 as amended, Republic Act 7916 as
amended, and other applicable incentives laws creating economic zones shall ipso-facto be
accorded to special economic zones already created or to be created under this Act.

SEC. 52. Separability Clause. - The provisions of this Act are hereby declared separable, and in
the event one or more of such provisions or part thereof are declared unconstitutional, such
declaration of unconstitutionality shall not affect the validity of the other provisions thereof.

SEC. 53. Interpretation / Construction. - The powers, authorities and functions that are vested In
the Bacolod Economic Zone Authority (BEZA) and the ECOZONES concerned are intended to


establish decentralization of governmental functions and authority as well as an efficient and
effective working relationship between the ECOZONE, the central government and the local
government units.

SEC. 54. Repealing Clause. - All laws, acts, presidential decrees, executive orders, proclamations
and/or administrative regulations which are inconsistent with the provisions of this Act, are hereby
amended, modified, superseded or repealed accordingly.

SEC. 55. Implementing Rules and Regulations, - The Department of Trade and Industry, the
National Economic and Development Authority, the Department of Finance, the Bureau of
‘Customs, the Department of Agrarian Reform, the Department of Interior and local Government,
the Bacolod Economic Zone Authority, and the representatives from the technical staff of the
Committee on Economic Affairs of both Houses of Congress 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 their publication in a newspaper of general
circulation in the Philippines.

SEC. 56. Transitory Provisions. - Prior to the effectivity of the implementing rules and regulations
of this Act, the provisions of Presidential Decree No. 66, as amended, and its implementing rules
and regulations shall remain in force.

SEC. 57. Effectivity. - This Act shall take effect upon its approval

Approved,