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Gov’t to freeze rents, add perks for ecozone firms

Vol. XXII, No. 140 [ BusinessWorld Online }

Tuesday, February 17, 2009 | MANILA, PHILIPPINES

BY J. A. D. HERMOSA, Reporter

THE GOVERNMENT will provide concessions to locators at state-run economic zones to help them cope with the global downturn, and is also planning to set up more locations to lure investors.

The Philippine Economic Zone Authority (PEZA) will defer the annual 5% hike in rent and may slash processing fees for the import of equipment and raw materials by as much as half, agency public relations head Elmer H. San Pascual said.

The PEZA also expects to create "more than 10" economic zones this year, he added, particularly to accommodate new investments in the medical tourism, agriculture and information technology (IT) sectors.

Foreign and local business groups lauded the plans, saying it will help ailing firms and improve the Philippines’ competitiveness amid reports that foreign investments to developing countries could contract this year.

"We’ve frozen the 5% annual increase on rent. We won’t increase this until such time that the situation is back to normal," Mr. San Pascual said in a telephone interview.

"We are trying to find out also if we can lower processing fees for [the movement of] certain equipment and raw materials ... by 25%-50%," he added.

This will be on top of an earlier plan to extend income tax holidays for companies that are incurring losses at the moment due to the economic crisis.

Firms inside special economic zones, export processing zones, free trade zones and industrial estates registered with the PEZA enjoy tax perks, lower power rates, and relaxed rules on the movement of materials and professionals.

Mr. San Pascual declined to elaborate on mounting reports of plant closures and retrenchments, but claimed that laid-off workers were being referred to other companies within the zone for possible rehiring.

The PEZA, he said, is confident of recording P170 billion worth of investment pledges this year, up by 9.8% from 2008.

"[Ecozones for] medical tourism, agro-industry, and IT and business process outsourcing will give us the numbers we are targeting for 2009," Mr. San Pascual said.

Four ecozone applications — three IT zones in Rizal and the cities of Makati and Urdaneta, and a special economic zone in Bacolod City — have been approved by the agency and are waiting for the President’s proclamation, PEZA data show.

Asked to comment, European Chamber of Commerce of the Philippines Executive Vice-President Henry J. Schumacher said: "These are certainly good moves. The first improvements are obviously intended to assist existing ailing investors. The last one could attract new investors depending on location and surrounding infrastructure."

American Chamber of Commerce of the Philippines, Inc. Executive Director Robert M. Sears said that while helpful, the PEZA moves may not have an immediate effect.

"But it seems like a good idea. Let’s position ourselves when the turnaround comes."

The government, Federation of Philippine Industries President Jesus L. Arranza said, should also consider extending incentives and lower power rates to companies outside the ecozones.


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