Free Trade Zones

PEZA holds out hope for the Bulacan ecozone

PHILIPPINE Economic Zone Authority (PEZA) chief executive Charito Plaza said she was ready to sit down with the president and CEO of San Miguel Corp. (SMC), Ramon Ang, to “put everything in order” and “move forward” regarding the Bulacan. Airport City Special Economic Zone and Freeport Zone Authority (Bacsefza), a proposal that President Ferdinand “Bongbong” Marcos Jr. recently vetoed.

Bill 7575, which proposed the creation of a special economic zone and a free port in the 750 billion peso airport city developed by SMC in Bulakan, Bulacan, was rejected by Marcos on July 1, which has cited tax risks and provisions incompatible with existing regulations.

It is also too close to the Clark Special Economic Zone in Pampanga.

In a roundtable interview with The Manila Times on Friday, Plaza pointed out that from the outset the measure was “legally and constitutionally flawed.”

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She said there were only two ways to create a special economic zone: through legislation or by registering directly with PEZA.

Public ecozones must be legislated, while privately owned ecozones must be registered with PEZA.

“In the case of Bacsefza, which will be built on private land, they did not register with PEZA. They went directly to lawmakers. That alone is a mistake,” Plaza said.

Because Bacsefza is a private initiative, it should have been registered with PEZA instead of having it legislated to create a new Investment Promotion Agency (IPA). “Through this, the government is spared the responsibility of providing an annual budget to legislated independent economic zones and creating multiple IPAs with overlapping objectives and mandates,” she said.

“The [project] is private, but it enjoys privileges similar to those of a government agency, PEZA in particular, it will be the one giving incentives, and it will not be subject to the rules of the COA (Audit Commission), “said Square.

Since the bill was introduced, PEZA had made it clear that Bacsefza must be registered with the agency, it said.

“Because once you legislate, the government will be obligated to provide funds because it’s a constitutional mandate. Once you use the people’s money, you should be accountable,” Plaza said.

“Here is a bill, a private ecozone to be created as an investment promotion agency with similar powers [as that of] PEZA and other IPAs, then legislated. So where will the government make such an arrangement? It is legally and constitutionally flawed,” she added.

During the development of the measure, Plaza said, PEZA was asked to submit a position paper, which it did. “As usual, they didn’t even bother to read it and they still insisted on their own interpretation,” she said.

Once she meets with Ang, Plaza said she will present two possible solutions so that SMC can avoid “headaches” and the plan becomes a legitimate and viable project.

The first is to follow the procedure and register with PEZA.

“PEZA will be the one to give incentives to SMC as an ecozone developer and to each locator it hosts in that ecozone. This will ensure that the rules are the same for everyone,” she said.

The second is to make the government an authority over the private ecozone.

“If they really insist, through legislation, they should look at how the government can have legal authority over a private ecozone. Perhaps through partnership, especially in the exploitation of the airport. This should be harmonized,” Plaza said.

“There’s really nothing wrong with having an ecozone in Bulacan except the way it was done. That’s the only problem that should be fixed,” she added.

An agency attached to the Department of Trade and Industry, PEZA is responsible for promoting investment, extending assistance, registering, granting incentives and facilitating business operations for investors in manufacturing facilities and export-oriented services in some parts of the country.

It also oversees and administers incentives for developers and operators of world-class, ready-to-occupy, environmentally friendly, secure, and competitively priced Special Economic Zones.