1 
NINETEENTH CONGRESS  
) 
REPUBLIC OF THE PHILIPPINES ) 
First Regular Session  
 
) 
HOUSE OF REPRESENTATIVES 
Introduced by Representative Rufus B. Rodriguez 
House Bill No.  _____ 
EXPLANATORY NOTE 
This bill seeks to amend Republic Act No. 7916, otherwise known as “The Special 
Economic Zone Act of 1995”, as amended by Republic Act No. 8748, “An Act Amending 
Republic Act No. 7916, otherwise known as The Special Economic Zone Act of 1995”. 
The 1987 Philippine Constitution declares that the State shall develop a self-reliant 
and independent national economy. Further, it is the policy of the State to encourage and 
promote the establishment and development of economic areas in the country as a means to 
achieve and enjoy a sound and balanced industrial, economic, and social development, so 
that territorial and political subdivisions of the State can attain meaningful local autonomy. It 
also recognizes the indispensable role of the private sector, encourages private enterprise, 
and provides incentives to prioritized investment sectors. 
Republic Act No. 7916 or The Special Economic Zone Act of 1995 was enacted on 
February 21, 1995. Since its enactment, the Philippine Economic Zone Authority (PEZA) has 
become one of the leading Investments Promotions Agencies (IPAs) in the Philippines and its 
registered economic zones have been the preferred destination of foreign investors that intend 
to locate in the country. The PEZA is one of the government agencies that contributes to the 
economic development in the countryside due to a number of economic zones that were 
proclaimed in the entire country that are now bustling provinces and metropolis.  
As of 2018, the PEZA has a total of 4,341 operating enterprises located in 395 
economic zones including Information Technology (IT) Parks/Centers. PEZA has brought in a 
total of ₱3.755 Trillion approved investments, generated US$760.479 billion exports and 
created 1,400,000 employment opportunities for our countrymen. PEZA exports contribute 
63% of the country’s total commodity export and 80% of total Philippines service export and 
account for 16% of GDP. However, although economic gains have been achieved with RA 
7916, there is a need to update such law in order to maximize the investments in the economic 
zones and result in more significant gains for the Filipinos and the country at large, especially 
the less developed areas in the countryside.  
This bill seeks to amend Republic Act No. 7916 in order to strengthen the PEZA by 
providing the following: (1) additional powers and functions of the authority to be more pro-
active and responsive to the demands of the local and international business markets; (2) 
establishment of a globally competitive and conducive investment climate and facility; (3) 
competitive and appropriate incentives package in order to attract more investors to the 
countryside (4) creation of opportunities for more investment portfolios; (5) increased financial 
capability of the designated authority; (6) reduced import dependence by empowering, 
capacitating and incentivizing domestic enterprises, farmers, fishermen and every Filipino to 
participate in completing the supply chain, maximizing production of quality products and 
export manufacturing capability and (7) more empowered and capable LGUs that are self-
reliant, self-sustaining and resource-generating to enjoy social progress, peace and prosperity 
as experienced by model-LGU hosts of existing economic zones. 
December 13, 2022
1:32PM
6636


2 
The amendment of Republic Act No. 7916 is also mandated by Administrative Order 
No. 18 which directed the PEZA to accelerate rural progress through robust development of 
special economic zones in the countryside. This was also prompted by the recommendation 
of the Cabinet Cluster on environment and disaster management to enhance the incentives 
and the dispersion of economic activities outside Metro Manila to reduce its population density 
in support of the government efforts toward an earthquake and natural disaster-resilient 
Philippines. 
In view of the foregoing, immediate approval of this measure is earnestly requested. 
RUFUS B. RODRIGUEZ 


3 
NINETEENTH CONGRESS  
) 
REPUBLIC OF THE PHILIPPINES ) 
First Regular Session  
 
) 
HOUSE OF REPRESENTATIVES 
Introduced by Representative Rufus B. Rodriguez 
House Bill No.  _____ 
AN ACT 
STRENGTHENING THE ROLES AND FUNCTIONS OF THE PHILIPPINE ECONOMIC 
ZONE AUTHORITY (PEZA) TO ACCELERATE COUNTRYSIDE DEVELOPMENT 
THROUGH ROBUST CREATION OF SPECIAL ECONOMIC ZONES IN RURAL AND NEW 
GROWTH AREAS, ENHANCING THE INCENTIVES THEREOF AND AMENDING FOR 
THIS PURPOSE, REPUBLIC ACT NO. 7916, OTHERWISE KNOWN AS “THE SPECIAL 
ECONOMIC ZONE ACT OF 1995, AS AMENDED BY RA 8748” 
Be it enacted by the Senate and the House of Representatives of the Philippines in Congress 
assembled: 
SECTION 1. Section 3 of Republic Act No. 7916 is hereby amended to read as follows: 
"SEC. 3. Purposes, Intents and Objectives. – It is the purpose, intent and objective of this 
Act: 
(a) To establish the legal framework and mechanisms for the integration, coordination,
planning and monitoring of special economic zones, industrial estates / parks, export
processing zones and other economic zones IN ORDER TO FULLY
INDUSTRIALIZE AND DEVELOP THE PHILIPPINES INTO A GREEN, CLIMATE-
RESILIENT AND REGIONAL ECONOMY THAT WILL ATTRACT EXPORT-
ORIENTED INDUSTRIES, AS WELL AS STRATEGIC DOMESTIC-ORIENTED
INDUSTRIES;
(b) x  x  x
(c) x  x  x
(d) x  x  x
(e) x  x  x
(f) x  x  x
(G)
TO 
MINIMIZE 
IMPORT 
DEPENDENCE, 
MAXIMIZE 
EXPORTATION,
PRODUCTION, 
AND 
MANUFACTURING 
CAPABILITY 
OF 
FILIPINOS 
AND
COMPLETE THE SUPPLY CHAIN;
(H)
TO EMPOWER AND CAPACITATE THE PEOPLE AND THE LOCAL
GOVERNMENT UNITS (LGUs) THROUGH THE ESTABLISHMENT OF SPECIAL
ECONOMIC ZONES AS ECONOMIC DRIVERS TO GROW SMART TOWNS, DIGITAL
CITIES AND NEW METROPOLITAN AREAS IN EVERY REGION, MAKING THE LGUs
SELF-RELIANT, SELF-SUSTAINING AND RESOURCE-GENERATING;
(I)
TO FACILITATE THE CONSTRUCTION OF MORE LOGISTICS HUBS,
INTERNATIONAL AIRPORTS AND SEAPORTS AND PROVIDE MULTIMODAL
MEANS OF TRANSPORTATION IN EVERY REGION, ADDRESS THE PUBLIC
WORKS INFRASTRUCTURE, ENHANCE THE INFORMATION TECHNOLOGY (IT)
INFRASTRUCTURE, RESEARCH AND DEVELOPMENT (R & D) AND KNOWLEDGE
PROCESS INFRASTRUCTURE AND PROMOTE AFFORDABLE, HIGH QUALITY,
COMPETITIVE UTILITIES AND RENEWABLE SOURCES OF ENERGY, IN
PARTNERSHIP 
WITH 
OTHER 
GOVERNMENT 
AGENCIES, 
PRIVATE 
AND
INTERNATIONAL INSTITUTIONS;
6636


4 
 
(J) TO UTILIZE THE VAST AND IDLE PUBLIC LANDS, RESTORE THE BASIC 
INDUSTRIES TO ENSURE FOOD SECURITY AND SUSTAINABILITY, ATTRACT 
STRATEGIC INDUSTRIES THAT ARE BADLY NEEDED TO FULLY INDUSTRIALIZE 
THE COUNTRY, AND ENCOURAGE BIG-TICKET INDUSTRIES THAT PROVIDE AT 
LEAST A BILLION DOLLAR CAPITALIZATION, OR MORE THAN 5,000 JOBS 
CREATED, OR TRANSFER OF PIONEER TECHNOLOGY AND DEVELOP AT LEAST 
50 HECTARES OF LAND IN THE COUNTRYSIDE. 
 
(K) TO MATCH THE PROFESSIONAL, VOCATIONAL AND TECHNICAL SKILLS 
TRAINING PROGRAM IN HIGHER EDUCATION AND TRAINING CENTERS IN EVERY 
REGION, TRANSFORMING THE FILIPINOS AS MULTI-KNOWLEDGE AND SKILLED 
WORKERS, A RICH HUMAN CAPITAL AND AS WORLD-CLASS WORKERS; 
 
SECTION 2. Section 4 of Republic Act No. 7916 is hereby amended to read as follows: 
“SEC. 4. Definition of Terms. – For purposes of this Act, the following definitions shall apply 
to the following terms: 
 
(a) "Special Economic Zones (SEZ)" – hereinafter referred to as the ECOZONES, are selected 
areas with highly developed or which have the potential to be developed into TOWNSHIPS 
INTEGRATING THE INDUSTRIAL, COMMERCIAL, MEDICAL/HEALTH, EUCATIONAL, 
RECREATIONAL AND RESIDENTIAL COMPONENTS. AN ECOZONE MAY BE 
CLASSIFIED 
INTO 
DIFFERENT 
TYPES 
DEPENDING 
ON 
ITS 
LAND/MARINE 
POTENTIALS AND RESOURCESON IT SUCH AS: 
  
 
(i) 
AGRO-FORESTRY; 
(ii) 
AGRO-INDUSTRIAL; 
(iii) 
AQUAMARINE; 
(iv) 
AVIATION AND AEROSPACE PARKS; 
(v) 
CREATIVE INDUSTRIES; 
(vi) 
DEFENSE AND INDUSTRISL COMPLEX; 
(vii) 
DOMESTIC ECOZONES; 
(viii) 
ECO-INDUSTRIAL PARKS; 
(ix) 
EXPORT PROCESSING ZONES (EPZs); 
(x) 
FREE TRADE ZONES; 
(xi) 
HALAL AND FOOD PRODUCTION HUBS; 
(xii) 
INFORMATION AND TECHNOLOGY (IT) PARKS AND/OR CENTERS; 
(xiii) 
ISLAND CITIES; 
(xiv) 
KNOWLEDGE, INNOVATION, AND SCIENCE AND TECHNOLOGY PARKS; 
(xv) 
LOGISTICS HUB; 
(xvi) 
MINERAL PROCESSING ECOZONES 
(xvii) RENEWABLE ENERGY ECOZONES; 
(xviii) RETIREMENT, TOURISM AND MEDICAL TOURISM ECOZONES 
(xix) 
OTHER TYPES AS MAY BE DETERMINED BY PEZA 
 
(b)  x  x  x 
(c)  x  x   x 
(d)  x  x   x 
 
(E) BASIC INDUSTRIES – ARE INDUSTRIES THAT CATER TO THE BASIC NEEDS OF 
THE FILIPINOS SUCH AS BUT NOT LIMITED TO FOOD, AGRICULTURE, STEEL, 
WOOD AND OTHER HOUSING AND CONSTRUCTION MATERIALS, UTILITIES SUCH 
AS POWER, WATER AND SOURCES OF RENEWABLE ENERGY, INDUSTRIES INTO 
CLOTHING, GARMENTS AND TEXTILE, AUTOMOBILE, RAILWAYS AVIATION AND 
OTHER AIR, WATER, AND LAND VEHICLES; HEALTH AND MEDICAL; AND 
COMMUNICATIONS AND TECHNOLOGY;  


5 
 
 
(F) STRATEGIC INDUSTRIES – REFERS TO PIONEERING TECHNOLOGIES AND 
THOSE PRIORITY ACTIVITIES AND INDUSTRIES THAT ARE BEING DEVELOPED TO 
MODERNIZE AND INDUSTRIALIZE, ATTRACT MORE INVESTMENTS, GENERATE 
EMPLOYMENT, UPGRADE POSITION IN THE GLOBAL VALUE CHAIN AND SUSTAIN 
MANUFACTURING RESURGENCE TOWARDS ECONOMIC TRANSFORMATION. 
THESE INDUSTRIES INCLUDE BUT NOT LIMITED TO THE FOLLOWING: 
MANUFACTURING, SEMICONDUCTORS, ELECTRONICS, INFORMATION 
TECHNOLOGY-BUSINESS PROCESS MANAGEMENT (IT-BPM), ASSEMBLY, 
REFINERY, PROCESSING, PETRO-CHEMICAL, TOURISM AND MEDICAL TOURISM, 
DEFENSE, LOGISTICS, SOURCES OF RENEWABLE ENERGY, INNOVATION, R & D 
ACTIVITY, INVESTMENTS IN ENVIRONMENTAL PROTECTION SYSTEMS AND ROHQs, 
AND OTHERS THAT WILL MAKE THE PHILIPPINES AS A REGIONAL HUB.  
 
 
(G) BIG-TICKET INDUSTRIES – REFER TO LOCATOR INDUSTRIES THAT WILL 
INVEST AT LEAST ONE BILLION DOLLAR CAPITALIZATION OR CREATE MORE 
THAN 5,000 JOBS OR ENGAGE IN PIONEER TECHNOLOGY, AND TO ECOZONE 
DEVELOPERS THAT WILL ESTABLISH ECOZONES IN THE COUNTRYSIDE WITH AN 
AREA OF AT LEAST 50 HECTARES. 
 
(H) COUNTRYSIDE – REFERS TO RURAL AND LESS DEVELOPED AREAS OUTSIDE 
METRO MANILA-CITIES AND HIGHLY URBANIZED GROWTH CENTERS.” 
 
(I) INDIRECT-EXPORTERS/DOMESTIC ENTERPRISES-REFER TO SUPPLIERS OF 
EXPORTERS WHICH ARE LOCATED INSIDE THE ECONOMIC ZONES 
 
SECTION 3. Section 5 of Republic Act No. 7916 is hereby amended to read as follows: 
“SEC. 5. Establishment of ECOZONES. – To ensure the viability and geographical dispersal 
of ECOZONES through a system of prioritization, the following areas are initially identified as 
ECOZONES, subject to the criteria specified in Section 6: 
 
(a) x  x  x 
 
       x  x  x 
 
     (mm) x x x 
 
These areas shall be developed through any of the following schemes: 
 
i. Private initiative; 
 
ii. Local government initiative with the assistance of the national government; and 
 
iii. National government initiative. 
 
The metes and bounds of each ECOZONE are to be delineated and more particularly 
described in a DESIGNATION TO BE ISSUED UPON APPROVAL OF THE PEZA BOARD 
OF DIRECTORS, upon the recommendation of the HOST LGUs, which shall be established 
under this Act, in coordination with the municipal and / or city council, National Land Use 
Coordinating Committee and / or the Regional Land Use Committee.” 
 
 
SECTION 4. Section 6 of Republic Act No. 7916 is hereby amended to read as follows: 


6 
 
“SEC. 6. Criteria for the Establishment of Other ECOZONES. – In addition to the 
ECOZONES identified in Section 5 of this Act, other areas may be established as 
ECOZONES in a DESIGNATION TO BE ISSUED BY THE PEZA BOARD OF DIRECTORS 
subject to the evaluation and recommendation of the PEZA, based on a detailed feasibility 
and engineering study which must conform to the following criteria: 
 
(a) The proposed area must be identified as a regional growth center in the Medium-
Term Philippine Development Plan or by the Regional Development Council; 
 
(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 AND HIGH SPEED FIBER-OPTIC TELECOMMUNICATION 
BACKBONE AND HIGH-SPEED INTERNATIONAL GATEWAY FACILITY OR 
WIDE AREA NETWORK (WAN) OR ANY HIGH SPEED DATA 
TELECOMMUNICATION SYSTEM THAT MAY BE AVAILABLE IN THE FUTURE, 
FOR IT PARKS/CENTERS; 
 
 
(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 ESTABLISHED IN HAZARD AND 
DISASTER RESILIENT AREAS; and 
 
(h) The area must be situated where controls can easily be established to curtail 
smuggling activities. 
 
Other areas which do not meet the foregoing criteria may be established as 
ECOZONES: Provided, That the said area shall be developed only through local 
government and/or private sector initiative under any of the schemes allowed in 
Republic Act No. 6957 (the build-operate-transfer law), and without any financial 
exposure on the part of the national government: Provided, further, That the area can 
be easily secured to curtail smuggling activities: Provided, finally, That after five (5) 
years the area must have attained a substantial degree of development, the 
indicators of which shall be formulated by the PEZA.” 
 
SECTION 5. Section 8 of Republic Act No. 7916 is hereby amended to read as follows: 
“SEC. 8. ECOZONE to be Operated and Managed as Separate Customs Territory. – The 
ECOZONE shall be managed and operated by the PEZA as separate ADMINISTRATIVE 
AND customs territory.  
x  x   x” 
 
SECTION 6. Section 11 of Republic Act No. 7916 is hereby amended to read as follows: 
“SEC. 11. The Philippine Economic Zone Authority (PEZA) Board. – There is hereby created 
a body corporate to be known as the Philippine Economic Zone Authority (PEZA) UNDER 


7 
 
THE OFFICE OF THE PRESIDENT. The Board shall have a director general with the rank of 
department SECRETARY who shall be appointed by the President AND SHALL HAVE A 
TERM OF SIX (6) YEARS, UNLESS RENEWED, OR REMOVED FOR A CAUSE. The 
director general shall be at least forty (40) years of age, of proven probity and integrity, and a 
degree holder in any of the following fields: economics, business, public administration, law, 
management or their equivalent, and with at least ten (10) years relevant working experience 
preferably in the field of management or public administration.   
 
"The director general shall be assisted by FOUR (4) deputy director generals each for policy, 
planning AND PROGRAMS; FINANCE AND administration; ENTERPRISE operations AND 
INCENTIVES MANAGEMENT; AND SPECIAL ECONOMIC ZONE DESIGNING, 
RESEARCH AND MARKETING who shall be appointed by the PEZA Board, upon the 
recommendation of the director general. The deputy directors general shall be at least thirty-
five (35) years old, with proven probity and integrity, and a degree holder in any of the 
following fields: economics, business, public administration, law, management or their 
equivalent. THE DIRECTOR GENERAL SHALL ALSO SIT AS MEMBER OF THE BOARD 
OF DIRECTORS OF THE NATIONAL ECONOMIC DEVELOPMENT AUTHORITY (NEDA) 
AND THE TECHNICAL EDUCATION AND SKILLS DEVELOPMENT AUTHORITY. 
 
"The Board shall be composed of TWENTY (20) members as follows: the Director General 
of the Philippine Economic Zone Authority as CHAIRMAN, the undersecretaries of the 
Department of Finance, the Department of Labor and Employment, the Department 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 DEPARTMENT OF TRADE 
AND INDUSTRY, THE DEPARTMENT OF TOURISM, THE DEPARTMENT OF 
TRANSPORTATION, THE DEPARTMENT OF INFORMATION AND COMMUNICATIONS 
TECHNOLOGY, THE DEPARTMENT OF NATIONAL DEFENSE, the Deputy Director 
General of the National Economic and Development Authority, THE DEPUTY DIRECTOR 
GENERAL OF TECHNICAL EDUCATION AND SKILLS DEVELOPMENT AUTHORITY, 
THE VICE CHAIRPERSON OF THE COMMISSION OF HIGHER EDUCATION, one (1) 
representative from the investors / business sector in the ECOZONE, ONE (1) 
REPRESENTATIVE FROM THE LABOR SECTOR IN THE ECOZONE AND ONE (1) 
REPRESENTATIVE FROM THE UNION OF LOCAL AUTHORITIES OF THE PHILIPPINES 
(ULAP);" 
 
The existing Export Processing Zone Authority (EPZA) created under Presidential Decree 
No. 66 shall evolve into the PEZA in accordance with the guidelines and regulations set forth 
in an executive order issued for this purpose. 
 
ONLY NON-EX OFFICIO members of the Board shall receive a per diem of not less than the 
amount equivalent to the representation and transportation allowances of the 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. 
 
SECTION 7. Section 12 of Republic Act No. 7916 is hereby amended to read as follows: 
“SEC. 12. Functions and Powers of PEZA Board. – The Philippine Economic Zone Authority 
(PEZA) Board shall have the following functions and powers: 
(a) Set the general policies on the establishment and operations of the ECOZONES, 
industrial estates, export processing zones, free trade zones, and the like; 
 
(b) Review proposals for the establishment of SPECIAL ECONOMIC ZONES AS DEFINED 
UNDER SECTION 2 OF THIS ACT, AND based on  the set criteria under Section 6 and 
DESIGNATE the establishment of the ECOZONES, industrial estates, export processing 


8 
 
zones, IT PARKS AND/OR CENTERS, 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. FOR THIS PURPOSE, THE 
PEZA BOARD SHALL EXERCISE EXCLUSIVE JURISDICTION AS THE REGULATOR 
OF UTILITIES INSIDE THE ECOZONES AND SHALL HAVE THE AUTHORITY TO ISSUE 
FRANCHISE OVER POWER, WATER, COMMUNICATION AND OTHER UTILITIES IN 
THE ECOZONES; 
 
(d) Approve the annual budget of the PEZA and the ECOZONE development plans; 
 
(e) Issue rules and regulations to implement the provisions of this Act in so far as its power 
and functions are concerned; 
 
(f) Exercise its powers and functions as provided for in this Act; and 
 
(g) Render annual reports to the President and the Congress.” 
 
SECTION 8. Section 13 of Republic Act No. 7916 is hereby amended to read as follows: 
“SEC. 13. General Powers and Functions of the Authority. – The PEZA shall have the 
following powers and functions: 
(a) To operate, administer, manage and develop the ECOZONE according to the principles 
and provisions set forth in this Act; 
 
(b) To register, regulate, GRANT INCENTIVES UNDER SECTION 10 OF THIS ACT 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; 
 
(d) 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)] (E) TO EXCLUSIVELY ENFORCE AND ADMINISTER THE PROVISIONS OF THE 
NATIONAL BUILDING CODE OF THE PHILIPPINES AND THE FIRE CODE OF THE 
PHILIPPINES WITHIN THE TERRITORIAL JURISDICTION OF THE ECOZONES; 
 
(F) TO ISSUE SPECIAL REGULATIONS FOR THE BENEFIT OF PARTICULAR 
INDUSTRIES, DESIGNED TO IMPROVE EASE OF DOING BUSINESS, DECREASE 
COST OF DOING BUSINESS AND LOWER BUREAUCRATIC BURDENS OF INVESTING 
AND DOING BUSINESS WITHIN THE ECOZONES; PROVIDED THAT, SUCH SPECIAL 
REGULATIONS SHALL NOT BE CONTRARY TO EXISTING LAWS; 
 
(G) TO SUPPORT THE OPERATIONS OF REGISTERED ENTERPRISES BY 
SUBSIDIZING THE COST OF POWER, WATER AND OTHER UTILITIES INCLUDING 
THE FREE USE OF LAND IN THE PUBLIC ECOZONES, SUBJECT TO A CRITERIA TO 


9 
 
BE APPROVED BY THE PEZA BOARD OF DIRECTORS AND THE APPROVAL OF THE 
PRESIDENT OF THE PHILIPPINES. THE CRITERIA FOR THE GRANT OF SUBSIDY 
WILL INCLUDE AMONG OTHERS THE AMOUNT OF INVESTMENTS AND 
EMPLOYMENT GENERATION AND WILL BE PERFORMANCE-BASED, TARGETED, 
TRANSPARENT AND TIMEBOUND. 
 
[(e)] (H) To create, operate and/or contract to operate such agencies and functional units or 
offices of the authority as it may deem necessary; 
 
[(f)] (I) 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)] (J) To coordinate the formulation and preparation of the development plans of the 
different entities mentioned above; 
 
[(h)] (K) To coordinate with the National Economic Development Authority (NEDA), the 
Department of Trade and Industry (DTI), the Department of Science and Technology 
(DOST), and the local government units and appropriate government agencies for policy and 
program formulation and implementation; and 
 
[(i)] (L) 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. 
 
(M) TO INTEGRATE COMMERICAL, RESIDENTIAL AREAS, TRAINING, EDUCATIONAL 
AND MEDICAL FACILITIES AND SERVICES TOWARDS TOWNSHIPS IN PUBLIC 
ECONOMIC ZONES WHICH CAN BE REPLICATED IN DEVELOPING PRIVATE 
ECONOMIC ZONES; 
 
(N) TO CREATE AND ESTABLISH A SPECIAL ECONOMIC ZONE (SEZ) INSITUTE IN 
EVERY REGION TO CONSOLIDATE THE TRAINING NEEDS OF INDUSTRIES, 
MANPOWER REQUIREMENTS, EDUCATIONAL, TECHNICAL AND PROFESSIONAL 
COURSES FOR CLASSROOM, LABORATORY AND OTHER FACILITIES. LIKEWISE, 
THE INSTITUTE SHALL SERVE AS COORDINATOR AND COLLABORATOR IN 
CONSOLIDATING, INTEGRATING AND HARMONIZING POLICIES AND PROGRAMS 
FROM AMONG FELLOW GOVERNMENT AGENCIES AND GOVERNMENT-
RECOGNIZED INDUSTRIES/STAKEHOLDERS ON MATTERS OF FORMULATING AND 
PURSUING A DIRECTION TO ADDRESSING KNOWLEDGE, EXPERTISE AND 
RELATED INTELLECTUAL CAPABILITIES TO ADVANCE THE INVESTMENT 
PROMOTION STRATEGY OF THE GOVERNMENT.THE SEZ INSTITUE SHALL 
CAPACITATE THE PEZA WITH RESEARCH, INSTRUCTION AND SOCIO-CULTURAL 
DEVELOPMENT SERVICES FOR A LOCALLY POSITIONED, COMPETITIVENESS IN 
GENERAL AND PROMOTING INVESTMENT, EXPORT AND EMPLOYMENT IN EVERY 
REGION.   
 
(O) TO EXERCISE SUCH POWERS AS MAY BE ESSENTIAL, NECESSARY OR 
INCIDENTAL TO THE POWERS GRANTED TO IT HEREUNDER AS WELL AS THOSE 
THAT SHALL ENABLE IT TO CARRY OUT, IMPLEMENT AND ACCOMPLISH THE 
PURPOSES, OBJECTIVES AND POLICIES OF THIS ACT; AND 
(P) TO BE VESTED WITH OTHER POWERS ENJOYED OR EXERCISED BY OTHER 
ECONOMIC ZONE AND/OR FREE PORT ZONE AUTHORITIES.” 
 
SECTION 9. Section 14 of Republic Act No. 7916 is hereby amended to read as follows: 


10 
 
“SEC. 14. Powers and Functions of the Director General. – The director general shall be the 
overall coordinator of the policies, plans and programs of the ECOZONES. As such, he shall 
provide overall supervision over and general direction to the development and operations of 
these ECOZONES. He shall determine the structure and the staffing pattern and personnel 
complement of the PEZA and establish regional offices, when necessary, subject to the 
approval of the PEZA Board. 
 
In addition, he shall have the following specific powers and responsibilities: 
 
(a) To safeguard all the lands, buildings, records, monies, credits and other properties and 
rights of the ECOZONES; 
 
(b) To ensure that all revenues of the ECOZONE are collected and applied in accordance 
with its budget; 
 
(C) TO RECOMMEND TO THE PEZA BOARD THE DESIGNATION OF SEZs IN 
ACCORDANCE WITH SET POLICIES AND STANDARDS; 
 
[(c)] (D) To ensure that the investors/firms and employees of the ECOZONES are properly 
discharging their respective duties; 
 
[(d)] (E) To give such information and recommend such measures to the Board, as he shall 
deem advantageous to the ECOZONE; 
 
[(e)] (F) To submit to the Board, the ongoing and proposed projects, work and financial 
program, annual budget of receipts, and expenditures of the ECOZONE; 
 
[(f)] (G) To represent the ECOZONE in all its business matters and sign on its behalf after 
approval of the Board, all its bonds, borrowings, contracts, agreements and obligations 
made in accordance with this Act; 
 
[(g)] (H) To acquire jurisdiction, as he may deem proper, over the protests, complaints, and 
claims of the residents and enterprises in the ECOZONE concerning administrative matters; 
 
[(h)] (I) 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)] (J) To EXERCISE EMINENT DOMAIN AND POLICE POWER, INCLUDING, BUT NOT 
LIMITED 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)] (K) To take such emergency measures as may be necessary to avoid fires, floods and 
mitigate the effects of storms and other natural or public calamities; 
 
[(k)] (L) 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 
 


11 
 
[(l)] (M) To perform such other duties and exercises such powers as may be prescribed by 
the Board, and to implement the policies, rules and regulations set by the PEZA.” 
 
SECTION 10. Section 16 of Republic Act No. 7916 is hereby amended to read as follows: 
“SEC. 16. Personnel. – The PEZA Board of Directors shall provide for an organization and 
staff of officers and employees of the PEZA, and upon recommendation of the director 
general with the approval of the PRESIDENT OF THE PHILIPPINES, appoint and fix the 
remunerations and other emoluments: Provided, That the Board shall have exclusive and 
final authority to promote, transfer, assign and reassign officers of the PEZA, any provision 
of existing law to the contrary notwithstanding: Provided, further, That the director general 
may carry out removal of such officers and employees. 
All positions in the PEZA shall be governed by a compensation, position classification 
system and qualification standards approved by the director general with the concurrence of 
the Board of Directors based on a comprehensive job analysis and audit of actual duties and 
responsibilities. The compensation plan shall be comparable with the prevailing 
compensation plans in the Subic Bay Metropolitan Authority (SBMA), Clark Development 
Corporation (CDC), Bases Conversion and Development Authority (BCDA) and the private 
sector and shall be subject to the periodic review by the Board no more than once every two 
(2) years without prejudice to yearly merit reviews or increases based on productivity and 
profitability. The PEZA shall therefore be exempt from existing laws, rules and regulations on 
compensation, position classification and qualification standards. It shall however endeavor 
to make its systems conform as closely as possible with the principles under Republic Act 
No. 6758. PROVIDED, FURTHER, AS A GOVERNMENT INSTRUMENTALITY THAT 
REMITS DIVIDENDS TO THE NATIONAL GOVERNMENT, THE PEZA SHALL BE UNDER 
THE GOVERNANCE COMMISSION FOR GOVERNMENT OWNED AND CONTROLLED 
CORPORATIONS. 
 
The PEZA 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 PEZA subject to Civil Service laws and regulations shall be 
removed or suspended except for cause, as provided by law.” 
 
SECTION 11. Section 23 of Republic Act No. 7916 is hereby amended to read as follows: 
“SEC. 23. Fiscal Incentives. – REGISTERED ENTERPRISES OPERATING WITHIN THE 
ECOZONES SHALL BE ENTITLED TO THE FOLLOWING INCENTIVES ON A PER 
PROJECT BASIS AND SUBJECT TO CONTINUING COMPLIANCE OF THE TERMS AND 
CONDITIONS OF PEZA: 
(A) INCENTIVE PACKAGE TO ECOZONE REGISTERED ENTERPRISES INCLUDING 
INDIRECT-EXPORTERS CLASSIFIED AS BASIC, STRATEGIC AND BIG-TICKET 
INDUSTRIES SHALL ENJOY THE FOLLOWING INCENTIVES: 
 
1. INCOME TAX HOLIDAY FOR TEN (10) YEARS FOR PIONEER PROJECTS 
AND SIX (6) YEARS FOR NON-PIONEER PROJECTS. ENTERPRISES THAT 
WILL LOCATE AND OPERATE IN THE RURAL AREAS PARTICULARLY 
THOSE CLASSIFIED UNDER 3RD, 4th AND 5th CLASS MUNICIPALITIES MAY 
BE GRANTED BY THE PEZA BOARD ADDITIONAL INCOME TAX HOLIDAY 
FOR BIG-TICKET INDUSTRIES.   
 
 
2. AFTER THE ENJOYMENT OF THE ITH, ENTERPRISES SHALL BE GRANTED 
A SPECIAL PREFERRED TAX RATE OF  7% GROSS INCOME EARNED (GIE) 
IN LIEU OF ALL NATIONAL AND LOCAL TAXES PROVIDED THAT, 
ENTERPRISES HAVE THE OPTION TO IMMEDIATELY ENJOY THE 7% GIE 
INSTEAD OF THE ITH;  


12 
 
 
3. TAX AND DUTY FREE IMPORTATION OF RAW MATERIALS, CAPITAL 
EQUIPMENT, SPARE PARTS AND OTHER SUPPLIES RELATED TO THE 
REGISTERED ACTIVITY; 
 
4. ZERO-VAT FOR LOCAL PURCHASES INCLUDING BILLS ON UTILITIES; 
 
5. ECOZONE 
EXPORT 
ORIENTED 
ENTERPRISES 
MUST 
MEET 
THE 
FOLLOWING 
MINIMUM 
EXPORT 
REQUIREMENTS 
TO 
CONTINUE 
ENJOYMENT OF THE AFORESAID INCENTIVES: 
 
i. 
BASIC INDUSTRIES –30%  
ii. 
STRATEGIC INDUSTRIES –50%  
iii. 
BIG-TICKET INDUSTRIES –70%  
 
(B) ALLOWABLE DEDUCTIONS FOR BOTH EXPORTERS AND INDIRECT 
EXPORTERS ENTERPRISES – BOTH THE EXPORTERS AND INDIRECT 
EXPORTERS ENTERPRISES SHALL BE GRANTED THE FOLLOWING 
ALLOWABLE DEDUCTIONS: 
1. UP TO 50% ADDITIONAL DEDUCTION ON LABOR EXPENSES FROM 
INCREASE OF DIRECT LOCAL EMPLOYMENT; 
2. UP TO 100% ADDITIONAL DEDUCTION ON TRAININGS CONDUCTED;  
THE FOREGOING INCENTIVES SHALL BE REVIEWED BY THE PEZA BOARD NO MORE 
THAN EVERY SIX (6) YEARS DEPENDING ON THE ECONOMIC CONDITIONS OF THE 
REGIONS.  
Furthermore, tax credits for exporters using local materials as Inputs shall enjoy the same 
benefits provided for in the Export Development Act of 1994.” 
 
SECTION 12. Section 24 of Republic Act No. 7916 is hereby amended to read as follows: 
“SEC. 24. Exemption from National and Local Taxes AND FEES- Except for real property 
taxes on land owned by developers, no taxes AND FEES, local and national, shall be 
imposed on REGISTERED ENTERPRISES operating within the ECOZONE. LOCAL 
TAXES SHALL INCLUDE THE MAYOR’S PERMIT AND OTHER CHARGES, PERMITS 
AND IMPOSITIONS BY THE LOCAL GOVERNMENT UNITS. In lieu thereof, A SPECIAL 
TAX RATE NOT EXCEEDING SEVEN percent (7%) of the gross income earned by all 
REGISTERED enterprises within the ECOZONE shall be paid and remitted as follows: 
a. Three percent (3%) to the National Government; 
 
b. Two percent (2%) which shall be directly remitted by the REGISTERED ENTERPRISES 
to the treasurer’s office of the municipality or city where the enterprise is located; 
 
(C) ONE PERCENT (1%) WHICH SHALL BE DIRECTLY REMITTED BY THE 
REGISTERED ENTERPRISES TO THE TREASURER’S OFFICE OF THE PROVINCE OF 
THE MUNICIPALITY OR COMPONENT CITY WHERE THE ENTERPRISE IS LOCATED 
EXCEPT THOSE LOCATED IN HIGHLY URBANIZED CITIES; AND 
 
(D) ONE PERCENT (1%) WHICH SHALL BE REMITTED TO PEZA.” 
REGISTERED ENTERPRISES UNDER THE ITH REGIME SHALL ALSO BE EXEMPT 
FROM PAYING LOCAL GOVERNMENT TAXES INCLUDING MAYOR’S PERMIT AND 
OTHER CHARGES, PERMITS AND IMPOSITION BY THE LOCAL GOVERNMENT 
UNITS. HOWEVER, REGISTERED ENTERPRISES SHALL PAY REAL PROPERTY 
TAXES FOR THEIR BUILDINGS, MACHINERY AND EQUIPMENT DURING THE TIME 
THAT THEY ARE UNDER THE ITH. 
 


13 
 
SECTION 13. Non-Impairment of Contract/ Permits/ Licenses. - All existing contracts, 
permits and licenses duly granted by the PEZA before the date of effectivity of this Act, shall 
remain valid, and unimpaired, shall be cured, and shall be recognized by the Government. 
 
SECTION 14. Transitory Clause. – The current officials shall remain in office until 
appointed by the appropriate authority.  
 
SECTION. 15. Repealing Clause. - All laws, decrees, executive orders, rules and 
regulations or parts thereof, inconsistent with the provisions of this Act are hereby repealed 
or modified accordingly. 
 
SECTION 16. Separability Clause. - Any portion or provision of this Act that may be 
declared unconstitutional shall not have the effect of nullifying other portions or provisions 
hereof as such remaining provisions can still subsist and be given effect. 
 
SECTION 17. Effectivity. - This Act shall take effect after fifteen (15) days following its 
complete publication in the Official Gazette or in two (2) newspapers of general circulation 
whichever is earlier. 
 
Approved,