Supreme Court invalidates tax-free privileges of Clark duty-free shops

By Piddo Roxas

DUTY free shops at the Clark Special Economic Zone and the Subic Bay Free Port will no longer enjoy tax-free privileges after the Supreme Court decided on March 29 to affirm with finality its decision on October 23, 2003, to invalidate the tax and duty exemptions granted to economic zones by then President Fidel Ramos.

The decision affects all economic zones in the country after the Court denied the motion for reconsideration that Victor Lim, former Bases Conversion Development Authority president, filed in the complaint of the John Hay People’s Alternative Coalition.

The Ramos administration allowed tax-free privileges to duty-free shops at the Clark zone and other economic zones to attract foreign and local investors into the country.

Romy P.Yusi, regional governor for Central Luzon of the Philippine Chamber of Commerce and Industry Inc., said the Supreme Court decision means that all duty-free shops would be required to pay import duties for the goods they will sell. Their selling prices, of course, will be the same with those being sold in other commercial and grocery stores, including malls outside the economic and free port zones.

Yusi and other business leaders in Pampanga believe that duty-free shops may be forced to close because of the decision.

The decision lays to rest the fears of some businessmen that the SM Mega Mall project near the main gate of Clark Special Economic Zone will enjoy tax-free privileges and compete with other grocery stores, supermarkets and other malls outside the Clark Zone.

The Camp John Hay Management Corp. is taking steps to protect innocent parties in the Camp John Hay deal by preserving the tax and duty exemptions within the John Hay zone. Similar steps are expected to be undertaken at the Clark Special Economic Zone and other zones in the country.

Business observers said the latest Supreme Court decision would cause damage to sublocators, concessionaires, buyers and residents at Camp John Hay and other economic zones.

But big-time investors continued to be bullish on the Clark Special Economic Zone because of the peace and order condition and the availability of skilled workers in and around the zone, according to Sonny Lopez, manager of the Public Relations Division of Clark Development Corp.

As an example, Lopez cited the latest P5.8-billion expansion at the Yokohama Tire Philippines Inc., which its officials decided to undertake after Commissioner Alberto Lina of the Bureau of Customs assured them that the tariff rates on imported raw materials would be lowered.

He added that Lina responded quickly on the application on tariff rates for imported raw materials for all the local sales of Yokohama.

Another locator, Cyber City Teleservices, Ltd. also constructed a $3 million atrium on its expansion program to accommodate additional 1,500 call-center agents, according to Alex Dy Reyes, Cyber City human resources director. Cyber City employs 2,400 call-center agents. It was established in 1999.

Both expansion projects were inspected by President Arroyo on Friday.