Peza vows faster implementation of ecozone transformation road map

THE Philippine Economic Zone Authority (Peza) has vowed to fast track the implementation of the ecozone transformation roadmap, which it said expands the different types of special economic zones that could be registered under Peza.

Under the Philippine Development Plan 2023-2028, Peza said it is tasked to expedite the implementation of the said roadmap. This, Peza noted, includes the new “frontiers” for ecozone development, which the investment promotion agency has been advocating as a “catalyst” for growth and development.

According to the PDP, the roadmap expands the different types of Special Economic Zone “registrable” under Peza to include new models incorporating townships, such as the Agro-forestry Ecozone; Aquamarine Park; Defense Industrial Complex; halal Hub; Island City Ecozone; and the Knowledge, Innovation, Science and Technology Park (KIST Park), among others.

“The creation of ecozones will be within the existing investment promotion agencies to maximize investments and promote industrial dispersion especially outside metropolitan areas,” the PDP stated.

Further, the PDP said “ecozones will be integrated into the local economy by relaxing the requirements, facilitating the free flow of parts, components, and other inputs, and increasing open trade between zone locators and firms outside the zones.”

A paper, titled “FDI Spillover Effects: Evidence from the Philippines,” authored by Rafaelita M. Aldaba, undersecretary for Competitiveness and Innovation Group of the Philippine Department of Trade and Industry (DTI), endorsed “flexible” government regulations to link and integrate ecozone activities with the domestic economy.

On relaxing the requirements, the paper proposed to relax the rules on the taxation of products bought from and sold to the domestic market.

“These should be liberalized given the country’s free trade agreements that already eliminated or substantially reduced tariffs on most products,” the paper noted.

To further open trade, the study also recommended reviewing the rules on production requirements.

“The ecozone rules requiring locators to export 70 percent of their production and limit domestic market sales to only 30 percent of total production should be reviewed towards the creation and expansion of linkages and more open trade between zone locators and domestic firms outside the zones,” the paper stated.

The paper also “allow[s] manufacturers of intermediate parts and components that supply to zone locators to import their raw materials, supplies, and capital equipment and, at the same time, treat the sales of their products to zone locators like imports that are allowed to enter the ecozones tax and duty free.”

Tereso O. Panga, Peza Officerin-charge, said the investment promotion agency is preparing more initiatives and “synergy” with other government agencies to strengthen the country’s economic zones in line with the PDP of the current administration in the next five years.

The Peza interim chief highlighted that the authority has lobbied through the National Economic and Development Authority (Neda) to include economic zones in the PDP. He stressed, “Strengthening our ecozone development initiatives is a must as this will serve as a catalyst for growth in the country.”

“Ecozones can be shields to soften the landing of the headwinds, the external constraints, and all these global disruptions happening, especially during this time. The other side to this is that ecozones can be economic drivers to accelerate economic recovery and growth,” Panga added.

In 2022, Peza said it has approved 29 ecozone development projects amounting to P96.21 billion. The agency said 11 of these were registered during the first six months of the Marcos administration, amounting to P90.65 billion.

The largest chunk in the investment pie is a “mixed-used” special economic zone for manufacturing and tourism that will be located in Pangasinan, which Peza said has a project cost of about P81.65 billion.

As to the breakdown of the ecozone projects in terms of sectors, the investment promotion agency said 13 are Information Technology (IT) parks and centers; 12 are manufacturing ecozones; two in tourism; one in agro-industrial and one in mixed-use for manufacturing and tourism ecozone.

Moreover, Peza said majority of the projects registered in 2022 would be located in Calabarzon with eight ecozone development projects.