1,800 Bataan ecozone workers face layoff

MARIVELES, Bataan -- Some 1,800 factory workers of SS Ventures at the Bataan Export Processing Zone here are facing a bleak Christmas with the possible closure of the company this year.

Workers Labor Management Council president Danilo de Guzman said the Adidas Group, a German sportswear company which have a contract with their company, is ending their supply deal by the end of this month.

De Guzman said since March, the supply order of Adidas which is supposedly160,000 pairs of shoes every month, have gone down to only 20,000 pairs lately.

He said many of their workers have been retrenched and only some 800 worked eight days a month when they used to work 25 days.

The workers said one of the reasons for the slowdown of supply order is the anti-Filipino mentality of Adidas sourcing manager Horst Staff, a German.

They also said Horst Staff, whose wife is a Chinese sealed a deal with Evervan shoe factory in China and pulled out orders from SS Ventures.

The workers have appealed to Adidas board chairman Glenn Bennet to give them at least one year extension while the management of SS Ventures look for buyers. This is similar to what they did in Thailand when the company extended the contract for one year and even provided them raw materials.

They are also asking the help of “Pambansang Kamao” Manny Pacquiao, who endorses NIKE shoes, to help them get orders from their company. By Mamer Bañez and Zeny Soriano - People's Journal

Subic CEO urge govt to put up funds for ecozones

Government urged to put up P2-billion fund to develop ecozones

The government must put up a P2-billion fund to encourage more investments in the country through the development of economic zones, a ranking official said yesterday.

Subic Bay Metropolitan Authority (SBMA) administrator Armand Arreza said that the government must put up more economic zones around Subic Bay Freeport and Clark Freeport.

The suggestion was made during a meeting with the Senate committee on government corporations and public enterprises, chaired by Sen. Richard Gordon, and representatives of the Clark Development Corp. (CDC) and the Bases Conversion and Development Authority (BCDA).

Gordon, who has filed Senate Bill 0143, or the “3-3-1 Luzon Global Corridor Act of 2009”, has earlier proposed to develop other special economic zones in Luzon to optimize the three airports in Manila, Subic, and Clark, the three seaports in Manila, Subic and Mariveles, and the highway and railway connecting these major ports.”

The bill also seeks to strengthen the power of the SBMA and CDC, giving them the mandate to develop nearby areas into new economic zones. To speed up the process, Arreza then proposed the creation of a fund to develop new zones.

“If we wanted for Subic and Clark to reach the level of Singapore, we will need investments the equivalent of either seven Texas Instruments or four Hanjins a year. But to start all these, we need to build roads first,” Arreza said.

Arreza recalled that when SBMA and CDC were formed, the primary intention was to create jobs for those affected by the eruption of Mt. Pinatubo in 1991 and the pullout of the US military from Subic and Clark in 1992.

However, he pointed out that the business model that supports the growth of Subic and Clark “to a certain level, is very limited, as they rely primarily on leases or income from land, which is a finite resource.”

Arreza noted that to carry out their new mandate of developing nearby communities, Subic and Clark would require a tremendous amount of annual investments in the next 10 years to fund various public infrastructures, such as roads, water and sewerage systems, as well as technical schools that would help reduce skills mismatch.

He also stressed that an eco-metric study made by the SBMA showed that Vietnam and China invested anywhere between seven and eight percent of their annual gross domestic product in infrastructure to boost their edge as investment sites.

In contrast, the Philippines spends only three percent of its GDP for the same purpose, Arreza added. By Ma. Elisa P. Osorio (The Philippine Star)

BIR cuts tax exemptions of ecozone investors

THE Bureau of Internal Revenue (BIR) has tightened the rules on tax exemptions enjoyed by enterprises operating in economic zones.

In a memorandum, Commissioner Lilian B. Hefti said income realized by an enterprise that is unrelated to its registered activities shall be subject to the regular internal revenue taxes.

The directive is aimed at clarifying the tax treatment of income earned from unregistered activities by enterprises registered under the Bases Conversion and Development Act of 1992 and the Philippine Economic Zone Act of 1995 or Republic Act 7916.

As part of its drive to plug tax leakages, the BIR is running after businesses that continue to enjoy tax perks even after their privileges have lapsed.

The tax bureau would zero in on Philippine Economic Zone Authority (PEZA)-registered businesses and manpower services that are enjoying income-tax holidays.

PEZA-registered businesses only pay the government five percent of their gross income earned in lieu of all national and local taxes for a given period. However, the Department of Finance said the government has been remiss in monitoring businesses whose tax holidays already lapsed and a number of these investors still enjoy the perks beyond the mandated period.

Apart from the five percent preferential tax based on gross income earned, an enterprise also has to pay real property tax.

“Except for real property taxes on land owned by developers, no taxes, local and national, shall be imposed on business establishments operating within the ecozone,” the directive read.

Of the tax on gross income earned by an enterprise, three percent will be remitted to the national government and two percent to the municipality or city hosting the ecozone. By Chino S. Leyco, Manila Times

Arroyo creates more economic zones

By Michael Lim Ubac - Inquirer

In line with her goal to develop more economic zones, President Gloria Macapagal-Arroyo has ordered the creation of seven more economic zones in places adjacent to geothermal-energy-producing sites.

The President, in Executive Order No. 661 signed on September 10 but made public only on Wednesday, directed that local government units "in areas near or adjacent to the following geothermal-producing sites shall develop economic zones in coordination with the Philippine Economic Zone Authority (Peza)."

The areas to be developed into economic zones are Tiwi in Albay; Makban, which borders Makiling and Banahaw mountains in Laguna; Tongonan, which borders Ormoc and Kananga in Leyte; Palinpinon in Valencia, Negros Oriental; Bacman, which borders Bacon and Manito in Sorsogon and Albay, respectively; Mt. Apo in the border of Kidapawan in North Cotabato; and Murcia in Negros Occidental.

President Arroyo directed Peza to assist the LGUs concerned in the "creation and development" of the zones in areas which, she said, were "potential sources of power."

"This Executive Order shall take effect immediately," she said.

In issuing EO 661, the President said "the government is adopting measures to give open access to private and publicly owned economic zones in sourcing their power with the end in view of lowering the power cost in the economic zones and to promote competitiveness."

She noted that the country had one of the highest industrial power rates in Southeast Asia, and that majority of the biggest power consumers were industrial locators in economic zones.

"There is a compelling need for more reliable, economical, competitive and efficient power supply to provide quality electricity to power-sensitive industrial locators in the economic zones and to encourage future locators."

The two-page EO made no mention of the potential benefits to the residents of the seven identified areas.

But in a speech in New York, the President provided answers.

She said that due to the creation of these zones, "areas which are usually far from Metro Manila will now have industries."

"Business will relocate there," she said, stressing that business locators would have the "usual incentives" aside from the cheaper power rates since the economic zones would be sourcing their power supply from geothermal plants.

She said the presence of economic zones would give jobs to residents and allow LGUs, which will collect royalties from the use of the geothermal zones, to utilize the added revenues to subsidize electricity rates in their areas.

To curb smuggling, President Arroyo also issued another EO to rationalize tax privileges in the Subic Special Economic Zone.

The President signed EO 660, which covers a new policy on importation by registered enterprises in Subic Bay, on September 13. It takes effect immediately.

The EO will impose taxes on imported goods and equipment "in excess of the requirements of their registered business."

The President noted that under existing law, registered businesses, enterprises and locators within Subic were exempt from national internal revenues and custom duties on their importation of raw materials, capital goods and equipment for their business operations.

"There is a need to ensure that raw materials... are only those required for their business activities and operations," she said, stressing that the "government needs additional revenue to finance the country's economic and development programs and projects."

Arroyo said that imported goods and equipment “in excess of the requirements of their registered business ... shall be deemed brought into or sold within the customs territory, and, therefore, subject to the payment of taxes and custom duties in accordance with existing customs and tax laws.”

She directed the Bureau of Customs and the Bureau of Internal Revenue, in coordination with the Subic Bay Metropolitan Authority, to issue appropriate circulars to "clarify and or simplify" the documentation, procedures, tax treatment and payment of taxes and duties of the excess importations."

P20-B new investments to flow into Clark ecozone

Some P20 billion worth of new investments is expected to flow into the Clark Special Economic Zone (CSEZ) this year following the expected signing into law by President Arroyo, possibly in the next two weeks, of the recently passed bicameral approved bill restoring the incentives of the CSEZ and elevating the zone into a Freeport, according to Clark Development Corp. (CDC) president and chief executive officer Levy Laus.

In an interview with The STAR, Laus expressed his relief and jubilation over the approval and passage by the legislative Bicameral Committee of a bill that finally restores the incentives of CSEZ and elevates the status of the ecozone into a Freeport at par with the Subic Freeport.

"I am extremely jubilant with the bill which will restore the incentives of the CSEZ and elevate the status of Clark to a Freeport at par with Subic," Laus said.

The CDC head admitted that last year "it was difficult to bring in investors because of the uncertainty caused by the Supreme Court decision."

The SC had ruled that the CSEZ was not entitled to grant incentives, effectively stripping CSEZ locators of their tax and duty free incentives.

Laus said that with the expected signing into law, possibly in the next two weeks of the Bicameral approved bill, the CDC is expecting the entry of some "big ticket" investors.

Laus admitted that the CDC is already talking with at least nine interested parties.

However, Laus refused to give details on the potential investors as the negotiations are still quite early.

He admitted though that among the interested investors are Korean and Filipinos with some foreign partners.

Up for development, Laus said, are big tracts of land suitable for golf courses, retirement villages, hotel and casinos and entertainment centers.

For tourism and leisure development, Laus said, the CDC has some 320 hectares available out of the total 800 hectares earmarked for that purpose and part of which is already developed.

By MARIANNE GO - The Philippine Star