|} HOUSE REPRESENTATIVES
|

Republic of the Philippines RECEIVED
HOUSE OF REPRESENTATIVES al 9 AUG 2016

Quezon City, Metro Manil
ive oe en
Seventeenth Congress we

First Regular Session ae eee
HOUSE BILL No, 2745] siLLs AND INDEX SERVICE

Introduced by HONORABLE PEDRO B. ACHARON, JR.

EXPLANATORY NOTE.

This bill seeks to establish a special economic zone and free port in General
Santos City and providing for the creation of General Santos Economic Zone and Free
Port Authority to manage and operate the economic zone and free port.

General Santos City, a largely Christian port city, with a population of Five
hundred twenty nine thousand five hundred forty two (529,542) is located at the
Southern part of the Philippines. It is surrounded by the municipalities of Polomolok on
the north, Maasim and Celebes Sea on the South, Alabel on the east, and T’boli on the
west. Because of its proximity to some of the most productive fishing grounds in the
country, General Santos City boast of vast fishing resources- Moro Gulf, Davao Gulf and
Sulu Sea and the fishing grounds frequented by local fishermen for tuna and tuna-like
species. Besides being the fishing center of the South, General Santos City is also an
important producer of livestock, particularly cattle and hog. In terms of mineral
resources, the City has abundant mineral deposits of uncertain quantities of limestones,
magnetite iron stand, sulfur, copper nitrate luminate, rutile and guano. Aside from these,
sand and gravel are also abundant in the city.

With the present government thrust of industrial dispersal, the region has
identified General Santos City as one of the sites for the Regional Industrial Center. This
port is gearing up in the hopes of becoming Asia’s next boomtown. Nearby, a Japanese-
funded fishing port is in place and a major wharf, is being expanded. General Santos City
is also home to a modem and sprawling airport that can accommodate second-generation
aircraft. Communication and telecommunication systems are also being developed and
widened in scope.


General Santos is laying the groundwork for its emergence as the hub of the East
ASEAN Growth Area (EAGA). Businessmen and investors from Japan, Taiwan, Korea
and ASEAN member countries have indicated their keen interest to invest in the area, The
establishment of a special economic zone and freeport in General Santos City is ideal and
very timely for it corresponds with the national government’s development efforts to
develop the area to become the prime industrial and trading center of EAGA.

As visualized in the proposed measure, the General Santos City Special
Economic Zone and Free Port will be developed as a self-sustaining industrial,
commercial, financial and investment center and free port for three (3) primary reasons:
(1) to explore, develop and utilize the natural resources of the area; (2) to create more
employment opportunities, especially in and around the zone; and (3) to attract and
encourage legitimate and productive foreign investments in one of the most promising
parts of the country. The area shall be free from customs duty or tariff fee. Furthermore,
certain tax regulations will be relaxed and other forms of incentives will be made
available to enterprises located therein. The General Santos City Special Economic Zone
and Free Port shall be administered, managed and operated by a public corporation to be
known as the General Santos Economic Zone Authority (GSEZA) whose board shall be
composed of the chairman who shall serve as administrator, one (1) vice chairman, and
six (6) members: one (1) representing the domestic investors, one (1) representing the
foreign investors, two (2), representing the workers in General Santos City and the mayor
of General Santos City and the congressional representative of the District as ox-offleto
members.

It is believed that with the establishment of the ECOZONE, tremendous economic
progress would be realized not only for the island of Mindanao but equally and perhaps
more so, for the entire country

In view of the foregoing considerations, approval of this bill is eamestly sought
and recommended.



Republic of the Philippines
HOUSE OF REPRESENTATIVES

Quezon City
Seventeenth Congress

First Regular Session

2745

House Bill No.

—_

Introduced by HONORABLE PEDRO B. ACHARON, JR.

a —

AN ACT ESTABLISHING THE GENERAL SANTOS CITY SPECIAL ECONOMIC ZONE
AND FREE PORT IN THE PROVINCE OF SOUTH COTABATO, CREATING FOR THIS
PURPOSE THE GENERAL SANTOS CITY SPECIAL ECONOMIC ZONE AND FREE
PORT AUTHORITY, APPROPRIATING FUNDS THEREFOR AND FOR OTHER
PURPOSES

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 “General Santos City
Special Economic Zone Act of 2017.”

SEC. 2. Declaration of Policy. — It is hereby declared the policy of the State 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 productivity and individual and family income,
and thereby improve the level and quality of living condition through the establishment,
among others, of special economic zones in suitable and strategic locations in the country
and through measures that will attract legitimate and productive foreign investments

SEC. 3. Creation of the General Santos City Special Economic Zone and Free Port. ~
In pursuit of the foregoing declared policy and subject to the concurrence of the concerned
local government unit of General Santos City affected by the zone, there is hereby
established a special economic zone and free port in General Santos City, Province of South
Cotabato to be known as the General Santos City Special Economic Zone and Free Port,


26
27
28
29
30
31
32
33

2

hereinafter referred to as the GenSan ECOZONE. The GenSan ECOZONE shall cover
portions of the following barangays: San Jose, Fatima, Tambler, Bawing, Calumpang,
Sinawal and Apopong in the City of General Santos, The specific metes and bounds of the
GenSan ECOZONE shall be more particularly defined in a presidential proclamation that
shall be issued for this purpose

SEC. 4, Governing Principles. - The GenSan ECOZONE shall be managed and
operated by the General Santos City Special Economic Zone Authority, herein referred to as
GSEZA, to be created under Section 6 of this Act, under the following principles:

(a) Within the framework and limitations of the Constitution and applicable
provisions of the Local Government Code, the GenSan ECOZONE shall be developed into
and operated as a decentralized, self-reliant and self-sustaining industrial,
commercial/trading, agro-industrial, tourist, banking, financial and investment center with
suitable residential areas,

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

(c) The GenSan ECOZONE may establish mutually beneficial economic relations
with other entities or enterprises within the country or, subject to the administrative

guidance of the Department of Foreign Affairs (DFA), the Philippine Economic Zone
Authority (PEZA) and/or the Department of Trade and Industry (DT), with foreign entities
or enterprises.

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

(e) The GenSan ECOZONE shall be managed and operated as a separate customs
territory ensuring free flow or movement of goods and capital within, into and exported out
of the GenSan ECOZONE, as well as provide incentives such as tax and duty-free
importations of raw materials, capital and equipment, However, exportation or removal of
goods from the territory of the GenSan ECOZONE to the other parts of the Philippine
territory shall be subject to customs duties and taxes under the Tariff and Customs Code of

the Philippines, as amended, and the National Internal Revenue Code of 1997, as amended


3

(f) The areas comprising the GenSan ECOZONE may be expanded or reduced when
necessary. For this purpose, the GSEZA, in consultation with the local government units,
shall have the power to acquire either by purchase, negotiation or condemnation
proceedings, any private lands within or adjacent to the GenSan ECOZONE for the
following purposes: (1) consolidation of lands for GenSan ECOZONE development; (2)
acquisition of right of way to the GenSan ECOZONE; and (3) the protection of watershed
areas and natural assets valuable to the prosperity of the GenSan ECOZONE.

(g) Goods manufactured by a GenSan ECOZONE enterprise shall be made available
for immediate retail sale in the domestic market, subject to the payment of corresponding
taxes on raw materials and other regulations that may be formulated by the GSEZA,
together with the PEZA, the Bureau of Customs and the DTI. However, in order to protect
the domestic industry, there shall be a negative list of industries that will be drawn up and
regularly updated by PEZA. Enterprises engaged in industries included in such negative list
shall not be allowed to sell their products locally.

(h) The defense of the GenSan ECOZONE and the security of its perimeter fence shall
be the responsibility of the national government in coordination with the GenSan
ECOZONE and the local government units.

SEC. 5. Incentives, — Investors and business enterprises within the GenSan
ECOZONE shall be entitled to the following incentives:

(a) Resident Status and Visa. Any foreign investor who establishes a business
enterprise within the GenSan ECOZONE and who maintains capital investment of not less
than One hundred fifty thousand United States dollars (US$150,000.00) shall be granted,
along with his or her spouse, dependents and unmarried children below twenty-one (21)
years of age, permanent resident status within the GenSan ECOZONE and freedom of
ingress and egress to and from the GenSan ECOZONE without any need of any special
authorization from the Bureau of Immigration. Working visas renewable every two (2)
years shall be issued to foreign executives and foreign technicians with highly specialized
skills, which no Filipino possesses, as certified by the Department of Labor and
Employment.

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.


31
32
33

4

(b) Fiscal Incentives. Business establishments within the GenSan ECOZONE shall be
entitled to the existing fiscal incentives as provided for under Republic Act No. 7916,
otherwise known as the “Special Economic Zone Act of 1995,” as amended by Republic
Act. No. 8748.

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

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

(ii) 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,

All persons and service establishments in the GenSan ECOZONE shall be subject to
national and local taxes under the National Internal Revenue Code, as amended by Republic
Act No, 8424, and the Local Government Code.

(d) Banking Rules and Regulations. Existing banking laws and rules/regulations of the
Bangko Sentral ng Pilipinas (BSP) shall apply to banks and financial institutions to be
established in the GenSan ECOZONE. Among other pertinent regulations, these include
those governing 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,

(c) Profit Remittance. Without prior BSP approval, after tax profits and other earnings

of foreign investments in enterprises in the GenSan ECOZONE may be remitted outward in
the equivalent foreign exchange through any of the banks licensed by the BSP in the GenSan
ECOZONE: Provided, however, That such foreign investments in said enterprises have been
previously registered with the BSP.

SEC. 6. Creation of the General Santos City Special Economic Zone and Free Port
Authority. ~ There is hereby created a body corporate to be known as the General Santos
City Special Economic Zone and Free Port Authority, herein referred to as the GSEZA
which shall manage and operate the GenSan ECOZONE, in accordance with the provisions
of this Act. This corporate franchise shall expire in fifty (50) years counted from the first
year after the effectivity of this Act, unless otherwise extended by Congress. It shall be
organized within one hundred eighty (180) days after the effectivity of this Act


5

SEC. 7, Principal Office. ~ The GSEZA shall maintain its principal office in General
Santos City but it may establish branches within the Philippines and abroad as may be
necessary for the proper conduct of its business.

SEC. 8. Powers and Functions of the Gi

sEZA, — The GSEZA shall have the following
functions:

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

(b) To recommend to the President the issuance of a proclamation to fix and delimit
the site of the GenSan ECOZONE;

(c) To register, regulate and supervise the enterprises in the GenSan ECOZONE in an
efficient and decentralized manner, subject to existing laws;

(a) To coordinate with local government units and exercise general supervision over
the development plans, activities and operations of the GenSan ECOZONE;

(e) To regulate and undertake the establishment, operation and maintenance of
utilities, other services and infrastructure in the GenSan ECOZONE such as but not limited
to heat, light and power, water supply, telecommunications, transport, toll roads and bridges,
port services, etc. and to fix just, reasonable and competitive rates, fares, charges and prices
thereof;

(f) To construct, acquire, own, lease, operate and maintain on its own or through
contracts, franchises, licenses, bulk purchase from the private sector or permits under any of
the schemes allowed in Republic Act No. 6957 (the Build-Operate-Transfer Law, as
amended by Republic Act No. 7718), or joint venture, adequate facilities and infrastructure
required or needed for the operation and development of the GenSan ECOZONE, in
coordination with appropriate national and local government authorities and in conformity
with applicable laws thereon;

(g) To operate on its own, either directly or through a license, tourism-related
activities, including games, amusements, recreational and sports facilities;

(h) Subject to the approval of the President and the Monetary Board of the Bangko
Sentral ng Pilipinas upon the recommendation of the Department of Finance, to raise or
borrow adequate and necessary funds from local or foreign sources to finance its projects
and programs under this Act, and for that purpose, to issue bonds, promissory notes, and
other forms of securities, and to secure the same by a guarantee, pledge, mortgage, deed of
trust, or an assignment of all or part of its property or assets;


31
32
33

6

(i) To provide security for the GenSan ECOZONE in coordination with the national
and local governments. Military forces sent by the national government for the purpose of
defense shall not interfere in the internal affairs of the GenSan ECOZONE and expenditures
for these military forces shall be borne by the national government. For this purpose, the
GSEZA may establish and maintain its security forces and firefighting capability or hire
others to provide the same;

() To protect, preserve, maintain and develop the virgin forests, beaches, coral and
coral reefs, and maintain ecological balance within the GenSan ECOZONE;

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

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

(m) To issue certificates of origin for products manufactured or processed in the
GenSan ECOZONE in accordance with prevailing rules of origin, and the pertinent
regulations of the PEZA, DTI and/or the Department of Finance (DoF);

(n) To 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,

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

(p) 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

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

SEC. 9. Exemptions from Taxes, Duties and Other Fees. ~ The GSEZA is hereby
declared exempt from the payment of all taxes, duties, fees, imposts, charges, costs and
service fees in any court or administrative proceedings in which it may be a party.

The foregoing exemptions may, however, be entirely or partially lifted by the President
of the Philippines upon the recommendation of the Secretary of Finance, not earlier than


ip

five (5) years from the effectivity of this Act, if the President shall find the GSBZA to be
self-sustaining and financially capable by then to pay such taxes, customs duties, fees and
other charges after providing for debt service requirements of the GSEZA and of its
projected capital and operating expenditures.

SEC. 10. Board of Directors of the GSEZA. — The powers of the GSEZA shall be
vested in and exercised by a Board of Directors, hereinafter referred to as the Board, which
shall be composed of the following:

(a) The chairman who shall, at the same time be the administrator of the GSEZA;

(b) A vice chairman who shall come from among the members of the Board;

(c) Members consisting of:

(1) The Congressional Representative of the district covering the site of the GenSan
ECOZONE;

(2) The mayor of the City of General Santos;

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

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

(5) Two (2) representatives from the workers working in GenSan ECOZONE.

The Congressional representative and the mayor of the City of General Santos shall
serve as ex officio members of the Board, whose term in the Board corresponds to their
terms as elected officials.

‘The Chairman and the members of the Board, except the ex officio members, shall be
appointed by the President of the Philippines to serve for a term of six (6) years, unless
sooner removed for cause or dies or resigns voluntarily. In case of death, resignation or
removal for cause, the replacement shall serve only the unused portion of the term

Except for the representatives of the business and labor sectors, no person shall be
appointed by the President of the Philippines as a member of the Board unless he is a
Filipino citizen, of good moral character, of proven probity and integrity, and a degree-
holder in any of the following fields: economics, business, public administration, law,
management or their equivalent, and with at least ten (10) years relevant working
experience preferably in the field of management or public administration.

‘The members of the Board shall each receive per diem at rates to be determined by the
Department of Budget and Management in accordance with existing rules and regulations:
Provided, however, That the total per diem collected each month shall not exceed the
equivalent per diem for four (4) meetings. Unless and until the President of the Philippines


10

2
13

4

16
7
18
19
20
a1
2
23

25
26
27
28
29
30
3
32
33

8

has fixed a higher per diem for the members of the board, such per diem shall not be more
than Ten thousand pesos (P10,000.00) for every board meeting.

SEC. 11. Powers and Duties of the Chairman-Administrator. — The chairman-
administrator shall have the following powers and duties

(a) To direct and manage the affairs of the GSEZA in accordance with the policies of
the Board;

(b) To establish the internal organization of the GSEZA under the conditions that the
Board may prescribe;

(c) To submit an annual budget and necessary supplemental budget to the Board for its
approval;

(d) To submit within thirty (30) days after the close of each fiscal year an annual
report to the Board and such other reports as may be required;

(ec) To submit to the Board for its approval policies, systems, procedures, rules and
regulations that are essential to the operation of the GenSan ECOZONE;

(f) To create a mechanism in coordination with relevant agencies for the promotion of
industrial peace, the protection of the environment, and the advancement of the quality of
life in the GenSan ECOZONE; and

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

SEC. 12. Personnel. — The Board of Directors of the GSEZA shall provide for an
organization and staff of its officers and employees. Upon recommendation of the
chairman-administrator and with the approval of the Secretary of the Department of Trade
and Industry, the Board shall appoint and fix the remuneration and other emoluments of its
officers and employees in accordance with existing laws on compensation and position
classification: Provided, That the Board shall have exclusive and final authority to promote,
transfer, assign or reassign officers of the GSEZA, any provision of existing law to the
contrary notwithstanding: Provided, further, That the chairman-administrator may carry out
removal of such officers and employees.

The officers and employees of the GSEZA, including all members of the Board, shall
not engage directly or indirectly in partisan activities, nor take part in any election, except to
vote.

No officer or employee of the GSEZA, subject to Civil Service laws and regulations,

shall be removed or suspended except for cause, as provided by law.


9

SEC. 13. Applicability Clause. ~The provisions of Sections 30-42 of Republic Act No.
7916, as amended, shall apply to the GenSan ECOZONE.

SEC.14,Capitalization. — The GSEZA shall have an authorized capital stock of two
billion (2,000,000,000) no par-shares with a minimum issue of Ten pesos (P10.00) each, the
majority shares of which shall be subscribed and paid for by the national government and
the local government units (LGUs) embracing the GenSan ECOZONE. The Board of
Directors of the GSEZA 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
GSEZA to the general public under such policy as the Board and the Secretary of Finance
may determine, ‘The national government and the LGUs shall in no case own less than sixty
per centum (60%) of the total issued and outstanding capital of the GSEZ.A.

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

SEC. 15. Supervision and Coordination of Development Plans. ~ For purposes of
policy direction and coordination, the GenSan ECOZONE shall be under the direct control
and supervision of the Office of the President.

SEC. 16. Relationship with the Regional Development Council. ~The GSEZA shall
determine the development goals for the GenSan ECOZONE within the framework of
national development plans, policies and goals. The Administrator shall, upon approval by
the Board, submit the GenSan ECOZONE plans, programs and projects to the Regional
Development Council for inclusion and inputs to the overall regional development plan

SEC. 17. Relationship with Local Government Units. ~ Except as herein provided, the
LGUs comprising the GenSan ECOZONE shall retain their basic autonomy and identity,
The City of General Santos shall operate and function in accordance with the Local
Government Code of 1991, In case of any conflict between the GSEZA and the City of
General Santos on matters affecting the GenSan ECOZONE other than defense and security
matters, the decision of the GSEZA shall prevail.

SEC. 18. Jnterpretation/Construction. ~ The powers, authorities and functions that are
vested in the GSEZA are intended to establish decentralization of governmental functions
and authority and promote an efficient and effective working relationship between the
GenSan ECOZONE, the central government and the LGUs.


10

SEC. 19. Auditing. ~ The Commission on Audit shall appoint a representative who
shall be a full time auditor of the GSEZA and assign such number of personnel as may be
necessary to assist said representative in the performance of his/her duties. The salaries and
emoluments of the assigned auditor and personnel shall be in accordance with pertinent
laws, rules and regulations.

SEC. 20. Separability Clause. — If any provisions of this Act shall be held
unconstitutional or invalid, the other provisions not otherwise affected shall remain in full
force and effect.

SEC. 21. Repealing Clause. ~ All laws, executive orders or issuances, or any parts
thereof, which are inconsistent herewith are hereby repealed or amended accordingly.

SEC. 22Hiffectivity Clause. ~ This Act shall take effect upon its publication in at least
one (1) newspaper of general circulation

Approved