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

SIXTEENTH (16™) CONGRESS
Second Regular Session

House Bill No. 5345

Introduced by: Honorable Reynaldo V. Umali

EXPLANATORY NOTE

This bill seeks to establish the Special Economic and Freeport Zone in the
Municipality of Mansalay, Oriental Mindoro.

Oriental Mindoro is not only an agricultural haven but an emerging choice area for
investors. Dubbed as the “Gateway to the South,” thousands of goods and people
travels through and from the Visayas and Mindanao thru the province and thus a
creation of a Special Economic and Freeport Zone is not only ideal but more
importantly evident. It is also gifted with diverse natural resources, progressive
infrastructures in transportation, power and an abundant supply of highly
technical and skilled manpower and thus continues to be one of the preferred
alternatives to the Metro for investments.

Anchoring on the main objective of promoting the countryside as alternative areas
for investments which was the vision in the early 90s when most of the Special
Economic Zones were created, the bill envisions to create an Ecozone that will
alleviate and improve the economic condition of Oriental Mindoro and the nearby
provinces. The residents will be assured of local employment opportunities which
will hasten the economic growth not only in the area but in the nearby provinces as
well. It was to spur the development, through industrialization of the far flung
areas in the provinces. It was to uplift the welfare of the rural folks and the same
time decongest and arrest the cramming of the people to the cities.

‘The Economic and Freeport Zone is conceptualized as a self-sustaining industrial,
commercial and investment center that will encourage economic growth and
accelerate employment generation in the province. It envisions such Economic zone
to be operated as a separate customs territory that will provide incentives to ensure
free flow and movement of goods and commodities within the area and their



exportation there from. Likewise, it shall provide tax-based incentives for business
operating within its premises. In addition, it shall also provide for non-tax benefits
like exchange policies and grant of permanent resident status to investors.

‘The establishment of a special economic and freeport zone is in line with the
government’s policy to encourage, promote, induce and accelerate a sound and
balanced industrial, economic and social development of the country, the
establishment of Oriental Mindoro Special Economic and Freeport Zone in the
Municipality of Mansalay is earnestly recommended.

For In view thereof, early consideration and approval of this bill is
earnestly sought.

EYNALDO V. UMAL]
Representative
Second District, Province of Oriental Mindoro



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

SIXTEENTH (16™) CONGRESS
Second Regular Session

5345

House Bill No. __*

Introduced by: Honorable Reynaldo V. Umali

AN ACT
ESTABLISHING A SPECIAL ECONOMIC ZONE AND FREE PORT
IN THE MUNICIPALITY OF MANSALAY PROVIDING FUNDS THEREFOR, AND
FOR OTHER PURPOSES

Be it enacted by the 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 ‘Oriental Mindoro
Special Economic Zone Act of 2015."

SEC. 2. Declaration of Policy. - It is hereby declared the policy of the government
to 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 and free ports in suitable and strategic locations in the country and through
measures that shall effectively attract legitimate and productive foreign
investments.

SEC. 3, The Oriental Mindoro Special Economic Zone and Free Port. ~ In
accordance with the foregoing declared policy, there is hereby established a special
economic zone and free port, to be known as the Oriental Mindoro Special
Economic Zone, hereinafter known as the Zone, which shall cover the entire area
embraced by the Municipality of Mansalay.

SEC. 4, Governing Principles. - The Oriental Mindoro Special Economic Zone
shall be managed and operated under the following principles:


(a)

(b)

(c)

(a)

Under the framework and limitations of the Constitution
and the applicable provisions of the Local Government
Code, the Zone shall be developed into and operated as a
self-sustaining industrial, commercial, _ financial,
investment, and tourism/recreational center and free port
with suitable retirement/residential arcas, in order to
create employment opportunities in and around the Zone,
and to effectively encourage and attract legitimate and
productive foreign investments therein;

Business establishments operating within the Zone shall be
entitled to the existing fiscal incentives as provided for
under Presidential Decree No. 66, the law creating the
Export Processing Zone Authority (EPZA), or those provided
under Book VI of Executive Order No. 226, otherwise
known as the Omnibus Investments Code of 1987;

Any provision of existing law, rules or regulations tothe
contrary notwithstanding, no taxes, local and national,
shall be imposed on business establishments operating
within the Zone. In lieu of paying taxes, said business
establishments shall pay and remit to the national
government five per centum (5%) of their gross income, to
be divided as follows:

(1) Two per centum (2%) shall accrue to the general fund of
the national government;

(2) One per centum (1%) to the Province of Oriental
Mindoro;

(3) One-half per centum (1/2%) to be shared by the
municipalities affected by the declaration of the Zone in proportion
to their income from business activities within the Zone; and

(4) One and one-half per centum (1 1/2%) to the Oriental
Mindoro Special Economic Zone Authority which shall be created
under this Act;

Existing banking laws and Bangko Sentral ng Pilipinas
(BSP) rules and regulations shall apply on foreign exchange
and other current 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;



(e) Any foreign investor who establishes a business
enterprise within the Zone and who maintains capital
investment of not less than one hundred fifty thousand
United States dollars (US$300,000) shall be granted,
along with his or her spouse, dependents, and
unmarried children below twenty-one (21) years of age, a
permanent resident status within the Zone. The
responsibility and authority to grant such permanent
resident status is hereby delegated to the Oriental
Mindoro Special Economic Zone Authority referred to in
Section 5 of this Act.

Such foreign investor and his or her spouse,
dependents, and unmarried children below the age of
twenty-one (21) years, shall have the freedom of ingress
and egress to and from the Zone without need of any
special authorization from the Bureau of Immigration.
Likewise, the Oriental Mindoro Special Economic Zone
Authority shall issue working visas renewable every two
(2) years to foreign executives and foreign technicians
with highly specialized skills which no Filipino
possesses, as certified by the Department of Labor and
Employment.

The names of foreigners granted permanent resident
status and working visas by the Oriental Mindoro
Special Economic Zone Authority shall be reported to the
Bureau of Immigration within thirty (30) days from such
grant.

‘The foregoing is without prejudice to a foreigner
acquiring permanent resident status in the Philippines
in accordance with applicable immigration, retirement,
and other related laws; and

0) Except as otherwise provided herein, the local
government units totally or partially embraced within
the Zone shall retain and maintain their basic autonomy
and identity. ‘The Municipality of Mansalay shall operate
and function in accordance with Republic Act No. 7160,
otherwise known as the Local Government Code of 1991,
insofar as the areas within their respective jurisdiction
covered in this Act are concerned.

SEC. 8. Creation of the Oriental Mindoro Special Economic Zone Authority. ~
‘A body corporate to be known as the Oriental Mindoro Economic Zone Authority,
hereinafter referred to as the OMEZA, is hereby created to manage and operate, in


accordance with the provisions of this Act, the Oriental Mindoro Special Economic
Zone and Free Port. This corporate franchise shall expire in fifty (50) years counted

from the

first day of the fifth (5th) calendar year after the effectivity of this Act,

unless otherwise extended by Congress.

SEC. 6. Powers and Functions of the Oriental Mindoro Special Economic Zone
Authority. - The Oriental Mindoro Special Economic Zone Authority shall have the
following powers and functions:

(a)

(b)

(c)

(a)

To adopt, alter, use a corporate seal; to contract, lease, buy, sell, acquire,
own and dispose movable and immovable as well as personal and real
property of whatever nature (including but not limited to shares of stock
or participation in private corporations or in limited partnerships, or in
joint ventures with limited liability), bonds, precious metals in bullions,
ingots, and easily convertible foreign exchange; to sue and be sued in
order to carry out its duties, responsibilities, privileges, powers and
functions as granted and provided for in this Act; and to exercise the
power of eminent domain for public use and public purpose;

Within the limitation provided by law, 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 form 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 approve, accept, accredit and allow any local or foreign business,
enterprise or investment in the Zone subject only to such rules and
regulations as OMSEZA may promulgate from time to time in conformity
with the provisions of this Act and the limitations provided in the
Constitution;

To authorize or undertake, on its own or through others, and regulate
the establishment, operation and maintenance of public utilities,
services, and infrastructure in the Zone such as shipping, barging,
stevedoring, cargo handling, hauling, warchousing, storage of cargo, port
services or concessions, piers, wharves, bulkheads, bulk terminals,
mooring areas, storage areas, roads, bridges, terminals, conveyors, water
supply and storage, sewerage, drainage, airport operations in
coordination with the Civil Aeronautics Board, and such other services or
concessions or infrastructure necessary or incidental to the
accomplishment of the objectives of this Act: Provided, however, That the
private investors in the Zone shall be given priority in the awarding of
contracts, franchises, licenses, or permits for the establishment,
operation and maintenance of utilities, services and infrastructure in the
Zone;


(c) To construct, acquire, own, lease, operate and maintain on its own or
through others by virtue of contracts, franchises, licenses, or permits
under the build-operate-transfer scheme or under a joint venture with
the private sector any or all of the public utilities and infrastructure
required or needed in the Zone, 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 subsidiary entity, or
license to others, tourism-related activities, including games,
amusements, recreational and sports facilities such as horse racing, dog
racing, gambling casinos, golf courses, and others, under priorities and
standards set by the OMSEZA;

(g) To protect, preserve, maintain and develop the virgin forests, beaches,
coral and coral reefs within the Zone. The virgin forest within the Zone
will be proclaimed as a national park and will be covered by a permanent
total log ban, For this purpose, the rules and regulations of the
Department of Environment and Natural Resources and other
government agencies involved in the above functions shall be
implemented by the OMSEZA;

(h) To adopt, implement and enforce reasonable measures and standards to
control pollution within the Zone;

(i) To provide security for the Zone in coordination with the national and
local governments. For this purpose, OMSEZA may establish and
maintain its own security force and firefighting capability or hire others
to provide the same;

(i) To form, establish, organize and maintain subsidiary corporations, as its
business and operations may require, whether under the laws of the
Philippines or not;

(k) To issue rules and regulations consistent with the provisions of this Act
as may be necessary to implement and accomplish the purposes,
objectives and policies herein provided;

and

(l) 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.

SEC. 7. Board of Directors of OMSEZA. - The powers of the Oriental Mindoro
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 fifteen (15)
members, to wit:

(a) The Secretary of Trade and Industry who shall serve as an ex officio
chairman of the Board of Directors and four (4) other representatives of
the national government;

(b) The mayor of the Municipality of Mansalay and the Province of Oriental
Mindoro, as ex officio voting members}

(c) Two (2) representatives of labor from among the workers in the Oriental
Mindoro Special Economic Zone;

(a) Four (4) representatives from the business and investment sectors in the
Zone

(e) ‘Two (2) representatives of the private sector coming from the residents of
the municipalities of Mansalay.

‘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 three (3)
years, unless sooner removed for cause or dies or resigns voluntarily. 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 investment 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 and of recognized
competence in some relevant fields in business, banking, shipping, business or
labor management, port operations, engineering, or law.

Members of the Board shall receive a reasonable per diem which shall not be
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 the total per diem
collected each month shall not exceed the equivalent per diems 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) for every Board meeting.

SEC. 8. Administrative and Chief Executive Officer. - The President of the
Philippines shall appoint a full-time professional and competent administrator and
chief executive officer for the Oriental Mindoro Economic Zone Authority whose
compensation shall be determined by its Board of Directors and shall be in
accordance with the revised compensation and position classification system. The
administrator as chief executive officer of OMSEZA shall be responsible to the


Board and the President of the Philippines for the efficient management and
operation of the Oriental Mindoro Special Economic Zone.

SEC. 9. Capitalization. - The Oriental Mindoro Economic Zone Authority shall
have an authorized capital stock of two billion (2,000,000,000) no par shares with a
minimum issue value of Ten pesos (P10) each. The national government shall
initially subscribe and fully pay three hundred million (300,000,000) shares of
such capital stock. The initial amount necessary to subscribe and pay for the
shares of stock shall be included in the General Appropriations Act of the year
following its enactment into law and thereafter. The Board of Directors of OMSEZA
may, from time to time and with the written concurrence of the Secretary of
Finance, increase the issue value of the shares representing the capital stock of the
Oriental Mindoro Economic Zone Authority. The Board of Directors of OMSEZA,
with the written concurrence of the Secretary of Finance, may sell shares
representing not more than forty per centum (40%) of the capital stock of the
OMSEZA to the general public with such annual dividend policy as the Board and
the Secretary of Finance may determine. The national government shall in no case
own less than sixty per centum (60%) of the total issued and outstanding capital
stock of the OMSEZA.

SEC. 10. Supervision. - The Oriental Mindoro Special Economic Zone shall be
under the direct control and supervision of the Office of the President of the
Philippines for purposes of policy direction and coordination, in the meantime that
the agency tasked with the coordination of special economic zones is not yet in
place.

SEC. 11. Relationship with the Municipality of Mansalay. - In case of any
conflict between the Oriental Mindoro Economic Zone Authority and the
Municipality of Mansalay on matters affecting the Oriental Mindoro Special
Economic Zone other than in defense and security matters, the decision of
OMSEZA shall prevail.

SEC. 12. Legal Counsel. ~ The Oriental Mindoro Economic Zone Authority and the
corporations in which OMSEZA owns a majority of the issued capital stock shall
have its own internal legal counsel under the supervision of the government
corporate counsel. When the exigencies of its businesses and operations demand it,
the OMSEZA may engage the services of an outside counsel either on a case to case
basis or on a fixed retainer.

SEC. 13. Auditor. - The Commission on Audit shall appoint a representative who
shall be a full-time auditor of the Oriental Mindoro Economic Zone Authority and
its subsidiaries, and assign such number of personnel as may be necessary to
assist said representative in the performance of his or her duties. The salaries and
emoluments of the assigned auditor and personnel of the Commission on Audit
shall be in accordance with the revised compensation and position classification
system. The Commission on Audit shall render an annual report to the President of


the Philippines and to Congress on the business activities, transactions and
operations of the Oriental Mindoro Special Economic Zone Authority.

SEC. 14. Separability Clause. - If any provision of this Act shall be held
‘unconstitutional or invalid, the other provisions not otherwise affected shall remain
in full force and effect.

SEC. 15. Repealing Clause. - All laws, executive orders or issuances, or any parts
thereof which are inconsistent herewith are hereby repealed or amended
accordingly.

SEC. 16. Effectivity Clause. - This Act shall take effect upon its publication in at
least one (1) newspaper of general circulation.

Approved,