Olongapo SubicBay BatangGapo Newscenter

Tuesday, March 28, 2006

Proclamation 1035 restores tax breaks for Clark locators

By Rendy Isip - Manila Standard Today

CLARK FIELD, Pampanga— President Gloria Macapagal Arroyo has signed Proclamation 1035, placing the Clark Special Economic Zone (CSEZ) under the jurisdiction of the Philippine Economic Zone Authority (Peza) and restoring tax and customs privileges to firms located in the 33,765-hectare economic zone.

Proclamation 1035 also reiterated Proclamation 163, signed by former President Fidel Ramos, which designated the former Clark military reservation and contiguous areas, including the area covered by the former Sacobia Development Authority, into a special economic zone.

Proclamation 1035 effectively remedied the effect of a Supreme Court ruling that nullified the tax and duties exemptions enjoyed by foreign companies that have set up manufacturing facilities in the economic zone.

Clark Development Corp. (CDC) president Antonio Ng and Peza director general Lilia de Lima also recently signed an agreement arising from Proclamation 1035, designating Clark’s 33,765 hectares as special economic zone effective March 10.

The signing was witnessed by Trade Secretary Peter Favila and CDC chairman Rizalino Navarro.

Despite the signing of Proclamation 1035, however, thousands of workers, investors and other major stakeholders inside the CSEZ pressed their appeal for Congress to pass measures that would amend the law governing the CSEZ.

Workers are worried that investors may pull out their investments if Congress continues to delay enactment of House Bills 4900 and 5064 (formerly HB 4901). The bills are intended to resolve tax incentive and duty-free privilege issues to four economic zones in the country.

HB 5064 calls for amendments to Republic Act 7227, or the Bases Conversion and Development Act of 1992, particularly Section 12 which provides tax and duty-free privileges to Subic Freeport. HB 4900 calls for the declaration of a one-time tax amnesty on tax and duty liabilities, including fines, penalties and interests incurred by locators inside special economic zones and freeports.

In his sponsorship speech at the House, Tarlac Rep. Jesli Lapus, who chairs the House committee on ways and means, urged his colleagues to correct some of the provisions of RA 7227 that would rationalize the tax incentives and duty-free privileges enjoyed by companies in economic zones.

Lapus said more than 37,000 workers in 370 companies in Clark stand to lose their jobs should investors pull out as a result of congressional inaction.

These investment projects in Clark contribute more than P4.1 billion in annual salaries, which are being plowed back to the local economy, he added.

He added that Clark has also registered 15 percent export growth with P54 billion annual income, including the remittance of taxes of P1.2 billion to the national treasury.

Some P35 billion worth of investments have been poured in Clark since the creation of the economic zone here in 1993. These may all go down the drain if no legislative measures are undertaken to restore tax and duty-free privileges for Clark investors, he stressed.


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