Wednesday, April 29, 2015

RA 7916: The Special Economic Zone Act of 1995

(as amended by Republic Act No. 8748)

Be it enacted by the Senate and House of Representatives of the Philippines in Congress assembled:



SEC. 1. Title. – This act shall be known and cited as "The Special Economic Zone Act of 1995."

SEC. 2. Declaration of Policy. – It is the declared policy of the government to translate into practical realities the following State policies and mandates in the 1987 Constitution, namely:

(a) "The State recognizes the indispensible role of the private sector, encourages private enterprise, and provides incentives to needed investments." (Sec. 20, Art II)

(b) "The State shall promote the preferential use of Filipino labor, domestic materials and locally produced goods and adopt measures that help make them competitive." (Sec. 12, Art XII)

In pursuance of these policies, the government shall actively encourage, promote, induce and accelerate a sound and balanced industrial, economic and social development of the country in order to provide jobs to the people specially those in the rural areas, increase their productivity and their individual and family income, and thereby improve the level and quality of their living condition through the establishment, among others, of special economic zones in suitable and strategic locations in the country and through measures that shall effectively attract legitimate and productive foreign investments.

SEC. 3. Purposes, Intents and Objectives. – It is the purpose, intent and objective of this Act:

(a) To establish the legal framework and mechanisms for the integration, coordination, planning and monitoring of special economic zones, industrial estates / parks, export processing zones and other economic zones;

(b) To transform selected areas in the country into highly developed agro industrial, industrial, commercial, tourist, banking, investment, and financial centers, where highly trained workers and efficient services will be available to commercial enterprises;

(c) To promote the flow of investors, both foreign and local, into special economic zones which would generate employment opportunities and establish backward and forward linkages among industries in and around the economic zones;

(d) To stimulate the repatriation of Filipino capital by providing attractive climate and incentives for business activity;

(e) To promote financial and industrial cooperation between the Philippines and industrialized countries through technology-intensive industries that will modernize the country’s industrial sector and improve productivity levels by utilizing new technological and managerial know-how; and

(f) To vest the special economic zones on certain areas thereof with the status of a separate customs territory within the framework of the Constitution and the national sovereignty and territorial integrity of the Philippines.

SEC. 4. Definition of Terms. – For purposes of this Act, the following definitions shall apply to the following terms:

(a) "Special Economic Zones (SEZ)" – hereinafter referred to as the ECOZONES, are selected areas with highly developed or which have the potential to be developed into agro-industrial, Industrial tourist/recreational, commercial, banking, investment and financial centers. An ECOZONE may contain any or all of the following: Industrial Estates (IEs), Export Processing Zones (EPZs), Free Trade Zones, and Tourist/Recreational Centers.

(b) "Industrial Estate (IE)" – refers to a tract of land subdivided and developed according to a comprehensive plan under a unified continuous management and with provisions for basic infrastructure and utilities, with or without pre-built standard factory buildings and community facilities for the use of the community of industries.

(c) "Export Processing Zone (EPZ)" – a specialized industrial estate located physically and/or administratively outside customs territory, predominantly oriented to export production. Enterprises located in export processing zones are allowed to import capital equipment and raw materials free from duties, taxes and other import restrictions.

(d)"Free Trade Zone" - an isolated policed area adjacent to a port of entry (as a seaport) and/or airport where imported goods may be unloaded for immediate transshipment or stored, repacked, sorted, mixed, or otherwise manipulated without being subject to import duties. However, movement of these imported goods from the free-trade area to a non-free-trade area in the country shall be subject to import duties.

Enterprises within the zone are granted preferential tax treatment and immigration laws are more lenient.

SEC. 5. Establishment of ECOZONES. – To ensure the viability and geographical dispersal of ECOZONES through a system of prioritization, the following areas are initially identified as ECOZONES, subject to the criteria specified in Section 6:

(a) So much as may be necessary of that portion of Morong, Hermosa, Dinalupihan, Orani, Samal, and Abucay in the Province of Bataan;

(b) So much as may be necessary of that portion of the municipalities of Ibaan, Rosario, Taysan, San Jose, San Juan, and cities of Lipa and Batangas;

(c) So much as may be necessary of that portion of the City of Cagayan de Oro in the Province of Misamis Oriental;

(d) So much as may be necessary of that portion of the City of Iligan in the Province of Lanao del Norte;

(e) So much as may be necessary of that portion of the Province of Saranggani;

(f) So much as may be necessary of that portion of the City of Laoag in the Province of Ilocos Norte;

(g) So much as may be necessary of that portion of Davao City and Samal Island in the Province of Davao del Norte;

(h) So much as may be necessary of that portion of Oroquieta City in the Province of Misamis Occidental;

(i) So much as may be necessary of that portion of Tubalan Cove, Malita in the Province of Davao del Sur;

(j) So much as may be necessary of that portion of Baler, Dinalungan and Casiguran including its territorial waters and islets and its immediate environs in the Province of Aurora;

(k) So much as may be necessary of that portion of cities of Naga and Iriga in the Province of Camarines Sur, Legaspi and Tabaco in the Province of Albay, and Sorsogon in the Province of Sorsogon;

(l) So much as may be necessary of that portion of Bataan Island in the Province of Batanes;

(m) So much as may be necessary of that portion of Lapu-lapu in the Island of Mactan, and the municipalities of Balamban and Pinamungahan and the cities of Cebu and Toledo and the Province of Cebu, including its territorial waters and islets and its immediate environs;

(n) So much as may be necessary of that portion of Tacloban City;

(o) So much as may be necessary of that portion of the Municipality of Barugo in the Province of Leyte;

(p) So much as may be necessary of that portion of the Municipality of Buenavista in the Province of Guimaras;

(q) So much as may be necessary of that portion of the municipalities of San Jose de Buenavista, Hamtic, Sibalon, and Culasi in the Province of Antique;
(r) So much as may be necessary of that portion of the municipalities of Catarman, Bobon and San Jose in the Province of Northern Samar, the Island of Samar;

(s) So much as may be necessary of that portion of the Municipality of Ternate and its immediate environs in the Province of Cavite;

(t) So much as may be necessary of that portion of Polloc, Parang in the Province of Maguindanao;

(u) So much as may be necessary of that portion of the Municipality of Boac in the Province of Marinduque;

(v) So much of may be necessary of that portion of the Municipality of Pitogo in the Province of Zamboanga del Sur;

(w) So much as may be necessary of that portion of Dipolog City-Manukan Corridor in the Province of Zamboanga del Norte;

(x) So much as may be necessary of that portion of Mambajao, Camiguin Province;

(y) So much as may be necessary of that portion of Infanta, Real, Polillo, Alabat, Atimonan, Mauban, Tiaong, Pagbilao, Mulanay, Tagkawayan, and Dingalan Bay in the Province of Quezon;

(z) So much as may be necessary of that portion of Butuan City and the Province of Agusan del Norte, including its territorial waters and islets and its immediate environs;

(aa) So much as may be necessary of that portion of Roxas City including its territorial waters and islets and its immediate environs in the Province of Capiz;

(bb) So much as may be necessary of that portion of San Jacinto, San Fabian, Mangaldan, Lingayen, Sual, Dagupan, Alaminos, Manaoag, Binmaley in the Province of Pangasinan;

(cc) So much as may be necessary of that portion of the autonomous region;

(dd) So much as may be necessary of that portion of Masinloc, Candelaria and Sta. Cruz in the Province of Zambales;

(ee)So much as may be necessary of that portion of the Palawan Island;

(ff) So much as may be necessary of that portion of General Santos City in South Cotabato and its immediate environs;
(gg) So much as may be necessary of that portion of Dumaguete City and Negros Oriental, including its territorial waters and islets and its immediate environs;

(hh)So much as may be necessary of that portion of the Province of Ilocos Sur;

(ii) So much as may be necessary of that portion of the Province of La Union;

(jj) So much as may be necessary of that portion of the Province of Laguna, including its territorial waters and its immediate environs;

(kk) So much as may be necessary of that portion of the Province of Rizal;

(ll) All existing export processing zones and government-owned industrial estates; and

(mm) Any private industrial estate which shall voluntarily apply for conversion into an ECOZONE.

These areas shall be developed through any of the following schemes:

i. Private initiative;

ii. Local government initiative with the assistance of the national government; and

iii. National government initiative.

The metes and bounds of each ECOZONE are to be delineated and more particularly described in a proclamation to be issued by the President of the Philippines, upon the recommendation of the Philippine Economic Zone Authority (PEZA), which shall be established under this Act, in coordination with the municipal and / or city council, National Land Use Coordinating Committee and / or the Regional Land Use Committee.

SEC. 6. Criteria for the Establishment of Other ECOZONES. – In addition to the ECOZONES identified in Section 5 of this Act, other areas may be established as ECOZONES in a proclamation to be issued by the President of the Philippines subject to the evaluation and recommendation of the PEZA, based on a detailed feasibility and engineering study which must conform to the following criteria:

(a) The proposed area must be identified as a regional growth center in the Medium-Term Philippine Development Plan or by the Regional Development Council;

(b) The existence of required infrastructure in the proposed ECOZONE, such as roads, railways, telephones, ports, airports, etc., and the suitability and capacity of the proposed site to absorb such improvements;

(c) The availability of water source and electric power supply for use of the ECOZONE;

(d) The extent of vacant lands available for industrial and commercial development and future expansion of the ECOZONE as well as of lands adjacent to the ECOZONE available for development of residential areas for the ECOZONE workers;

(e) The availability of skilled, semi-skilled and non-skilled trainable labor force in and around the ECOZONE;

(f) The area must have a significant incremental advantage over the existing economic zones and its potential profitability can be established;

(g) The area must be strategically located; and

(h) The area must be situated where controls can easily be established to curtail smuggling activities.

Other areas which do not meet the foregoing criteria may be established as ECOZONES: Provided, That the said area shall be developed only through local government and/or private sector initiative under any of the schemes allowed in Republic Act No. 6957 (the build-operate-transfer law), and without any financial exposure on the part of the national government: Provided, further, That the area can be easily secured to curtail smuggling activities: Provided, finally, That after five (5) years the area must have attained a substantial degree of development, the indicators of which shall be formulated by the PEZA.

SEC. 7. ECOZONE to be a Decentralized Agro-Industrial, Industrial, Commercial / Trading, Tourist, Investment and Financial Community. - Within the framework of the Constitution, the interest of national sovereignty and territorial integrity of the Republic, ECOZONE shall be developed, as much as possible, into a decentralized, self-reliant and self-sustaining industrial,commercial/trading, agro-industrial, tourist, banking, financial and investment center with minimum government intervention. Each ECOZONE shall be provided with transportation, telecommunications, and other facilities needed to generate linkage with industries and employment opportunities for its own inhabitants and those of nearby towns and cities.

The ECOZONE shall administer itself on economic, financial, industrial, tourism development and such other matters within the exclusive competence of the national government.

The ECOZONE may establish mutually beneficial economic relations with other entities within the country, or, subject to the administrative guidance of the Department of Foreign Affairs and/or the Department of Trade and Industry, with foreign entities or enterprises.

Foreign citizens and companies owned by non-Filipinos in whatever proportion may set up enterprises in the ECOZONE, either by themselves or in joint venture with Filipinos in any sector of industry, international trade and commerce within the ECOZONE. Their assets, profits and other legitimate interests shall be protected: Provided, That the ECOZONE through the PEZA may require a minimum investment for any ECOZONE enterprises in freely convertible currencies: Provided, further, That the new investment shall fall under the priorities, thrusts and limits provided for in the Act.

SEC. 8. ECOZONE to be Operated and Managed as Separate Customs Territory. – The ECOZONE shall be managed and operated by the PEZA as separate customs territory.

The PEZA is hereby vested with the authority to issue certificate of origin for products manufactured or processed in each ECOZONE in accordance with the prevailing rules or origin, and the pertinent regulations of the Department of Trade and Industry and/or the Department of Finance.

SEC. 9. Defense and Security. – The defense of the ECOZONE and the security of its perimeter fence shall be the responsibility of the national government in coordination with the PEZA. Military forces sent by the national government for the purpose of defense shall not interfere in the internal affairs of any of the ECOZONE and expenditure for these military forces shall be borne by the national government. The PEZA may provide and establish the ECOZONES’ internal security and firefighting forces.

SEC. 10. Immigration. – Any investor within the ECOZONE whose initial investment shall not be less than One Hundred Fifty Thousand Dollars ($150,000.00), his/her spouse and dependent children under twenty-one (21) years of age shall be granted permanent resident status within the ECOZONE. They shall have freedom of ingress and egress to and from the ECOZONE without any need of special authorization from the Bureau of Immigration.

The PEZA shall issue working visas renewable every two (2) years to foreign executives and other aliens, processing highly-technical skills which no Filipino within the ECOZONE possesses, as certified by the Department of Labor and Employment. The names of aliens granted permanent resident status and working visas by the PEZA shall be reported to the Bureau of Immigration within thirty (30) days after issuance thereof.


SEC. 11. The Philippine Economic Zone Authority (PEZA) Board. – There is hereby created a body corporate to be known as the Philippine Economic Zone Authority (PEZA) attached to the Department of Trade and Industry. The Board shall have a director general with the rank of department undersecretary who shall be appointed by the President. The director general shall be at least forty (40) years of age, of proven probity and integrity, and a degree holder in any of the following fields: economics, business, public administration, law, management or their equivalent, and with at least ten (10) years relevant working experience preferably in the field of management or public administration.

"The director general shall be assisted by three (3) deputy directors general each for policy and planning, administration and operation, who shall be appointed by the PEZA Board, upon the recommendation of the director general. The deputy directors general shall be at least thirty-five (35) years old, with proven probity and integrity, and a degree holder in any of the following fields: economics, business, public administration, law, management or their equivalent."

"The Board shall be composed of thirteen (13) members as follows: the Secretary of the Department of Trade and Industry as Chairman, the Director General of the Philippine Economic Zone Authority as Vice-Chairman, the undersecretaries of the Department of Finance, the Department of Labor and Employment, the Department of Interior and Local Government, the Department of Environment and Natural Resources, the Department of Agriculture, the Department of Public Works and Highways, the Department of Science and Technology, the Department of Energy, the Deputy Director General of the National Economic and Development Authority, one (1) representative from the investors / business sector in the ECOZONE. In case of the unavailability of the Secretary of the Department of Trade and Industry to attend a particular board meeting, the Director General of PEZA shall act as Chairman."

The existing Export Processing Zone Authority (EPZA) created under Presidential Decree No. 66 shall evolve into the PEZA in accordance with the guidelines and regulations set forth in an executive order issued for this purpose.

Members of the Board shall receive a per diem of not less than the amount equivalent to the representation and transportation allowances of the members of the Board and / or as may be determined by the Department of Budget and Management: Provided, however, That per diems collected per month does not exceed the equivalent of four (4) meetings.

SEC. 12. Functions and Powers of PEZA Board. – The Philippine Economic Zone Authority (PEZA) Board shall have the following functions and powers:

(a) Set the general policies on the establishment and operations of the ECOZONES, industrial estates, export processing zones, free trade zones, and the like;

(b) Review proposals for the establishment of ECOZONES based on the set criteria under Section 6 and endorse to the President the establishment of the ECOZONES, industrial estates, export processing zones, free trade zones and the like. Thereafter, it shall facilitate and assist in the organization of said entities;

(c) Regulate and undertake the establishment, operation and maintenance of utilities, other services and infrastructure in the ECOZONE, such as heat, light and power, water supply, telecommunication, transport, toll roads and bridges, port services, etc., and to fix just, reasonable and competitive rates, charges and fees therefore;

(d) Approve the annual budget of the PEZA and the ECOZONE development plans;

(e) Issue rules and regulations to implement the provisions of this Act in so far as its power and functions are concerned;

(f) Exercise its powers and functions as provided for in this Act; and

(g) Render annual reports to the President and the Congress.

SEC. 13. General Powers and Functions of the Authority. – The PEZA shall have the following powers and functions:

(a) To operate, administer, manage and develop the ECOZONE according to the principles and provisions set forth in this Act;

(b) To register, regulate and supervise the enterprises in the ECOZONE in an efficient and decentralized manner;

(c) To coordinate with local government units and exercise general supervision over the development, plans, activities and operations of the ECOZONES, industrial estates, export processing zones, free trade zones, and the like;

(d) In coordination with local government units concerned and appropriate agencies, to construct, acquire, own, lease, operate and maintain on its own or through contract, franchise, license, bulk purchase from the private sector and build-operate-transfer scheme or joint venture, adequate facilities and infrastructure, such as light and power systems, water supply and distribution systems, telecommunication and transportation, buildings, structures, warehouses, roads, bridges, ports and other facilities for the operation and development of the ECOZONE;

(e) To create, operate and/or contract to operate such agencies and functional units or offices of the authority as it may deem necessary;

(f) To adopt, alter and use a corporate seal; make contracts, lease, own or otherwise dispose of personal or real property; sue and be sued; and otherwise carry out its duties and functions as provided for in this Act;

(g) To coordinate the formulation and preparation of the development plans of the different entities mentioned above;

(h) To coordinate with the National Economic Development Authority (NEDA), the Department of Trade and Industry (DTI), the Department of Science and Technology (DOST), and the local government units and appropriate government agencies for policy and program formulation and implementation; and

(i) To monitor and evaluate the development and requirements of entities in subsection (a) and recommend to the local government units or other appropriate authorities the location, incentives, basic services, utilities and infrastructure required or to be made available for said entities.

SEC. 14. Powers and Functions of the Director General. – The director general shall be the overall coordinator of the policies, plans and programs of the ECOZONES. As such, he shall provide overall supervision over and general direction to the development and operations of these ECOZONES. He shall determine the structure and the staffing pattern and personnel complement of the PEZA and establish regional offices, when necessary, subject to the approval of the PEZA Board.

In addition, he shall have the following specific powers and responsibilities:

(a) To safeguard all the lands, buildings, records, monies, credits and other properties and rights of the ECOZONES;

(b) To ensure that all revenues of the ECOZONE are collected and applied in accordance with its budget;

(c) To ensure that the investors/firms and employees of the ECOZONES are properly discharging their respective duties;

(d) To give such information and recommend such measures to the Board, as he shall deem advantageous to the ECOZONE;

(e) To submit to the Board, the ongoing and proposed projects, work and financial program, annual budget of receipts, and expenditures of the ECOZONE;

(f) To represent the ECOZONE in all its business matters and sign on its behalf after approval of the Board, all its bonds, borrowings, contracts, agreements and obligations made in accordance with this Act;

(g) To acquire jurisdiction, as he may deem proper, over the protests, complaints, and claims of the residents and enterprises in the ECOZONE concerning administrative matters;

(h) To recommend to the Board the grant, approval, refusal, amendment or termination of the ECOZONE franchises, licenses, permits, contracts, and agreements in accordance with the policies set by the Board;

(i) To require owners of houses, buildings or other structures constructed without the necessary permit whether constructed on public or private lands, to remove or demolish such houses, buildings, structures within sixty (60) days after notice and upon failure of such owner to remove or demolish such house, building our structure within said period, the director general or his authorized representative may summarily cause its removal or demolition at the expense of the owner, any existing law, decree, executive order and other issuances or part thereof to the contrary notwithstanding;

(j) To take such emergency measures as may be necessary to avoid fires, floods and mitigate the effects of storms and other natural or public calamities;

(k) To prepare and make out plans for the physical and economic development of the ECOZONE, including zoning and land subdivision, and issue such rules and regulations which shall be submitted to the Board for its approval; and

(l) To perform such other duties and exercises such powers as may be prescribed by the Board, and to implement the policies, rules and regulations set by the PEZA.

SEC. 15. Administration of Each ECOZONE. – Except for privately-owned, managed or operated ECOZONES, each ECOZONE shall be organized, administered, managed and operated by the ECOZONE executive committee composed of the following:

(a) The administrator who shall be appointed by the PEZA Board upon recommendation of the director general; and

(b) One (1) deputy administrator to be appointed by the Board upon recommendation of the director general.

An ECOZONE advisory body shall be created with the following members:

1. The president of the association of investors in the ECOZONE;

2. The governor of the province where the ECOZONE is located;

3. The mayor/s of the municipality/ies or city/ies where the ECOZONE is located;

4. The president of an accredited labor union in the ECOZONE;

5. The representative of the business sector in the periphery of the ECOZONE; and

6. The representative of the PEZA.

The ECOZONE advisory body shall have the following functions:

i. Advise the ECOZONE management on matters pertaining to policy initiatives; and

ii.Assist the ECOZONE management in setting problems arising between labor and any enterprise in the ECOZONE.

Privately-owned ECOZONES shall retain autonomy and independence but shall be monitored by the PEZA for the implementation of incentives and operations for adherence to the law.

SEC. 16. Personnel. – The PEZA Board of Directors shall provide for an organization and staff of officers and employees of the PEZA, and upon recommendation of the director general with the approval of the Secretary of the Department of Trade and Industry, appoint and fix the remunerations and other emoluments: Provided, That the Board shall have exclusive and final authority to promote, transfer, assign and reassign officers of the PEZA, any provision of existing law to the contrary notwithstanding: Provided, further, That the director general may carry out removal of such officers and employees.

All positions in the PEZA shall be governed by a compensation, position classification system and qualification standards approved by the director general with the concurrence of the Board of Directors based on a comprehensive job analysis and audit of actual duties and responsibilities. The compensation plan shall be comparable with the prevailing compensation plans in the Subic Bay Metropolitan Authority (SBMA), Clark Development Corporation (BCDA) and the private sector and shall be subject to the periodic review by the Board no more than once every two (2) years without prejudice to yearly merit reviews or increases based on productivity and profitability. The PEZA shall therefore be exempt from existing laws, rules and regulations on compensation, position classification and qualification standards. It shall however endeavor to make its systems conform as closely as possible with the principles under Republic Act No. 6758.

The PEZA officers and employees including all Members of the Board shall not engage directly or indirectly in partisan activities or take part in any election, except to vote.

No officer or employee of the PEZA subject to Civil Service laws and regulations shall be removed or suspended except for cause, as provided by law.

SEC. 17. Investigation and Inquiries. – Upon a written formal complaint made under oath, which on its face provides reasonable basis to believe that some anomaly or irregularity might have been committed, the PEZA or the administrator of the ECOZONE concerned, shall have the power to inquire into the conduct of firms or employees of the ECOZONE and to conduct investigations, and for that purpose may subpoena witnesses, administer oaths, and compel the production of books, papers, and other evidences: Provided, That to arrive at the truth, the investigator(s) may grant immunity from prosecution to any person whose testimony or whose possessions of documents or other evidence is necessary or convenient to determine the truth in any investigation conducted by him or under the authority of the PEZA or the administrator of the ECOZONE concerned.

SEC. 18. Prohibition Against Holding Any Other Office. – The director general, deputy director general, administrators, officials and staff or assistants of the PEZA shall not hold any other office or employment within or outside the PEZA during their tenure. They shall not, during their tenure, directly or indirectly, practice any profession, participate in any business, or be financially interested in any contract with, or in any franchise, or special privilege granted by the PEZA or national government, or any subdivision, agency, or instrumentality thereof, including any government-owned-controlled corporation, or its subsidiary.

SEC. 19. Disbursement of Funds. – No money shall be paid out of the funds of any ECOZONE except in pursuance of the budget as formulated and approved by the PEZA.

SEC. 20. Full Disclosure of Financial and Business Interests. – Every member of the Board of the PEZA, the director general, the deputy directors general, and their staff shall, upon assumption of office, make full disclosure of their financial and business Interests.



SEC. 21. Development Strategy of the ECOZONE. - The strategy and priority of development of each ECOZONE established pursuant to this Act shall be formulated by the PEZA, in coordination with the Department of Trade and Industry and the National Economic and Development Authority; Provided, That such development strategy is consistent with the priorities of the national government as outlined in the medium-term Philippine development plan.

It shall be the policy of the government and the PEZA to encourage and provide Incentives and facilitate private sector participation in the construction and operation of public utilities and infrastructure in the ECOZONE, using any of the schemes allowed in Republic Act No. 6957 (the build-operate-transfer law).

SEC. 22. Survey of Resources. The PEZA shall, in coordination with appropriate authorities and neighboring cities and municipalities, immediately conduct a survey of the physical, natural assets and potentialities of the ECOZONE areas under its jurisdiction.

SEC. 23. Fiscal Incentives. – Business establishments operating within the ECOZONES shall be entitled to the fiscal incentives as provided for under Presidential Decree No. 66, the law creating the Export Processing Zone Authority, or those provided under Book VI of Executive Order No. 226, otherwise known as the Omnibus Investment Code of 1987.

Furthermore, tax credits for exporters using local materials as Inputs shall enjoy the same benefits provided for in the Export Development Act of 1994.

SEC. 24. Exemption from National and Local Taxes.- 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. In lieu thereof, five percent (5%) of the gross income earned by all business enterprises within the ECOZONE shall be paid and remitted as follows:

a. Three percent (3%) to the National Government;

b. Two percent (2%) which shall be directly remitted by the business establishments to the treasurer’s office of the municipality or city where the enterprise is located.

SEC. 25. Applicable National and Local Taxes. – All persons and services establishments in the ECOZONE shall be subject to national and local taxes under the National Internal Revenue Code and the Local Government Code.

SEC. 26. Domestic Sales. – Goods manufactured by an ECOZONE enterprise shall be made available for Immediate retail sales in the domestic market, subject to payment of corresponding taxes on the raw materials and other regulations that may be adopted by the Board of the PEZA.

However, in order to protect the domestic industry, there shall be a negative list of Industries that will be drawn up by the PEZA. Enterprises engaged in the industries included in the negative list shall not be allowed to sell their products locally. Said negative list shall be regularly updated by the PEZA.

The PEZA, in coordination with the Department of Trade and Industry and the Bureau of Customs, shall jointly issue the necessary implementing rules and guidelines for the effective Implementation of this section.

SEC. 27. Applicability of Banking Laws and Regulations. – Existing banking laws and Bangko Sentral ng Pilipinas (BSP) rules and regulations shall apply to banks and financial institutions to be established in the ECOZONE and to other ECOZONE-registered enterprises. Among other pertinent regulations, these include those governing foreign exchange and other current account transactions (trade and non-trade) local and foreign borrowings, foreign currency deposit units, offshore banking units and other financial institutions under the supervision of the BSP.

SEC. 28. After Tax Profits. – Without prior Bangkok Sentral approval, after tax profits and other earnings of foreign investments in enterprises in the ECOZONE may be remitted outward in the equivalent foreign exchange through any of the banks licensed by the Bangko Sentral ng Pilipinas in the ECOZONE: Provided, however, That such foreign investments in said enterprises have been previously registered with the Bangko Sentral.

SEC. 29. Eminent Domain. – The areas comprising an ECOZONE may be expanded or reduced when necessary. For this purpose, the government shall have the power to acquire, either by purchase, negotiation or condemnation proceedings, any private lands within or adjacent to the ECOZONE for:

a. Consolidation of lands for zone development purposes;

b. Acquisition of right of way to the ECOZONE; and

c. The protection of watershed areas and natural assets valuable to the prosperity of the ECOZONE.

If in the establishment of a publicly-owned ECOZONE, any person or group of persons who has been occupying a parcel of land within the Zone has to be evicted, the PEZA shall provide the person or group of persons concerned with proper disturbance compensation: Provided, however, That in the case of displaced agrarian reform beneficiaries, they shall be entitled to the benefits under the Comprehensive Agrarian Reform Law, including but not limited to Section 36 of Republic Act No. 3844, in addition to a homelot in the relocation site and preferential employment in the project being undertaken.

SEC. 30. Leases of Lands and Buildings. – Lands and buildings in each ECOZONE may be leased to foreign investors for a period not exceeding fifty (50) years renewable once for a period of not more than twenty-five (25) years, as provided for under Republic Act No. 7652, otherwise known as the Investors’ Lease Act. The leasehold right acquired under long-term contracts may be sold, transferred or assigned, subject to the conditions set forth under Republic Act No. 7652.

SEC. 31. Land Conversion. – Agricultural lands may be converted for residential, commercial, industrial and other non-agricultural purposes, subjects to the conditions set forth under Republic Act No. 6657 and other existing laws.

SEC. 32. Shipping and Shipping Register. – Private shipping and related business including private container terminals may operate freely in the ECOZONE, subject only to such minimum reasonable regulations of local application which the PEZA may prescribe.

The PEZA shall, in coordination with the Department of Transportation and Communications, maintain a shipping register for each ECOZONE as a business register of convenience for ocean-going vessels and issue related certification.

Ships of all sizes, descriptions and nationalities shall enjoy access to the ports of the ECOZONE, subject only to such reasonable requirement as may be prescribed by the PEZA In coordination with the appropriate agencies of the national government.

SEC. 33. Protection of Environment. - The PEZA, in coordination with the appropriate agencies, shall take concrete and appropriate steps and enact the proper measure for the protection of the local environment.

SEC. 34. Termination of Business. - Investors In the ECOZONE who desire to terminate business or operations shall comply with such requirements and procedures which the PEZA shall set, particularly those relating to the clearing of debts. The assets of the closed enterprise can be transferred and the funds con be remitted out of the ECOZONE subject to the rules, guidelines and procedures prescribed jointly by the Bangko Sentral ng Pilipinas, the Department of Finance and the PEZA.

SEC. 35. Registration of Business Enterprises. - Business enterprises within a designated ECOZONE shall register with the PEZA to avail of all incentives and benefits provided for in this Act.

SEC. 36. One Stop Shop Center. - The PEZA shall establish a one stop shop center for the purpose of facilitating the registration of new enterprises in the ECOZONE. Thus, all appropriate government agencies that are Involved In registering, licensing or issuing permits to investors shall assign their representatives to the ECOZONE to attend to Investor’s requirements.



SEC. 37. Labor and Management Relations. - Except as otherwise provided in this Act, labor and management relations in the ECOZONE shall be governed by the existing Labor Code of the Philippines. Employees and personnel in the ECOZONE enterprises shall receive salaries and benefits and shall enjoy working conditions not less than those provided under the Philippine Labor Code and other relevant laws, issuances, rules and regulations of the Philippine government and the Department of Labor and Employment.

SEC. 38. Promotion of Industrial Peace. - In the pursuit of Industrial harmony in the ECOZONE, a tripartite body composed of one (1) representative each from the Department of Labor and Employment, labor sector and business and industry sectors shall be created In order to formulate a mechanism under a social pact for the enhancement and preservation of industrial peace in the ECOZONE within thirty (30) days after the effectivity of this Act.

SEC. 39. Master Employment Contracts. - The PEZA, in coordination with the Department of Tabor and Employment, shall prescribe a master employment contract for all ECOZONE enterprise staff members and workers, the terms of which provide salaries and benefits not less than those provided under this Act, the Philippine Labor Code, as amended, and other relevant issuances of the national government.

SEC. 40. Percentage of Foreign Nationals. - Employment of foreign nationals hired by ECOZONE enterprises in a supervisory, technical or advisory capacity shall not exceed five percent (5%) of Its workforce without the express authorization of the Secretary of Labor and Employment.

SEC. 41. Migrant Worker. - The PEZA, in coordination with the Department of Labor and Employment, shall promulgate appropriate measures and programs leading to the expansion of the services of the ECOZONE to help the local governments of nearby areas meet the needs of the migrant workers.

SEC. 42. Incentive Scheme. - An additional deduction equivalent to one- half (1/2) of the value of training expenses incurred In developing skilled or unskilled labor or for managerial or other management development programs incurred by enterprises In the ECOZONE can be deducted from the national government's share of three percent (3%) as provided In Section 24.

The PEZA, the Department of Labor and Employment, and the Department of Finance shall jointly make a review of the incentive scheme provided In this section every two (2) years or when circumstances so warrant.



SEC. 43. Relationship with the Regional Development Council. - The PEZA shall determine the development goals for the ECOZONE within the framework of national development plans, policies and goals, and the administrator shall, upon approval by the PEZA Board, submit the ECOZONE plans, programs and projects to the regional development council for inclusion in and as inputs to the overall regional development plan.

SEC. 44. Relationship with the Local Government Units. - Except as herein provided, the local government units comprising the ECOZONE shall retain their basic autonomy and identity. The cities shall be governed by their respective charters and the municipalities shall operate and function In accordance with Republic Act No. 7160, otherwise known as the Local Government Code of 1991.

SEC. 45. Relationship of PEZA to Privately-Owned Industrial Estates. – Privately-owned industrial estates shall retain their autonomy and independence and shall be monitored by the PEZA for the implementation of incentives.

SEC. 46. Transfer of Resources. - The relevant functions of the Board of Investments over industrial estates and agri-export processing estates shall be transferred to the PEZA. The resources of government-owned Industrial estates and similar bodies except the Bases Conversion Development Authority and those areas identified under Republic Act No. 7227, are hereby transferred to the PEZA as the holding agency. They are hereby detached from their mother agencies and attached to the PEZA for policy, program and operational supervision.

The Boards of the affected government-owned industrial estates shall be phased out and only the management level and an appropriate number of personnel shall be retained.

Government personnel whose services are not retained by the PEZA or any government office within the ECOZONE shall be entitled to separation pay and such retirement and other benefits they are entitled to under the laws then in force at the time of their separation: Provided, That in no case shall the separation pay be less than one and one-fourth (1 1/4) month of every year of service.



SEC. 47. Appropriation. - Upon the effectivity of this Act, all funds of the former Export Processing Zone Authority (EPZA) shall be transferred to the newly-created Philippine Economic Zone Authority, Thereafter, any sum as may be necessary to augment its capital outlay shall be Included In the General Appropriations Act to be treated as an equity of the national government.

Additional funding shall come from the following:

(a) The annual subsidies, appropriations and/or other assets of the exports processing zone, and the industrial estates and other economic areas that have been absorbed/transferred to the PEZA as mandate in this Act;

(b) The proceeds from the rent of lands, buildings, and other properties of the ECOZONES concerned;

(c) The proceeds from fees, charges and other revenue-generatlng Instruments which the PEZA is authorized to impose and collect under this Act,

(d) The proceeds from bonds which the PEZA authorized to float both domestic and abroad; and

(e) The advance rentals, license fees, and other charges which the PEZA is authorized to impose under this Act and which an investor is willing to advance payment for.

SEC. 48. Applicability of National Laws. - National laws shall prevail vis-a- vis ECOZONE rules, regulations and standards, unless there is a clear intent in this Act or other Acts of Congress to vest the ECOZONE specific power and privileges not otherwise allowed under existing laws.

SEC. 49. Authority of the President to Advance Initial Funding.-- Subject to existing laws, the President of the Philippines is hereby authorized to advance out of the savings of the Office of the President such funds as may be necessary to effect the organization of an ECOZONE which shall be reimbursed by the PEZA at reasonable term and condition.

SEC. 50. Non-Applicability on Areas Covered by Republic Act. No. 7227. - This Act shall not be applicable to economic zones and areas already created or to be created under Republic Act No. 7227 or other special laws, and governed by authorities constituted pursuant thereto.

SEC. 51. Ipso-Facto Clause. - All privileges, benefits, advantages or exemptions granted to special economic zones under Republic Act. No. 7227, shall ipso-facto be accorded to special economic zones already created or to be created under this Act. The free port status shall not be vested upon new special economic zones.

SEC. 52. Separability Clause. - The provisions of this Act are hereby declared separable, and in the event one or more of such provisions or part thereof are declared unconstitutional, such declaration of unconstitutionality shall not affect the validity of the other provisions thereof.

SEC. 53. Interpretation / Construction. - The powers, authorities and functions that are vested In the Philippine Economic Zone Authority (PEZA) and the ECOZONES concerned are intended to establish decentralization of governmental functions and authority as well as an efficient and effective working relationship between the ECOZONE, the central government and the local government units.

SEC. 54. Repealing Clause. - All laws, acts, presidential decrees, executive orders, proclamations and / or administrative regulations which are inconsistent with the provisions of this Act, are hereby amended, modified, superseded or repealed accordingly.

SEC. 55. Implementing Rules and Regulations. - The Department of Trade and Industry, the National Economic and Development Authority, the Department of Finance, the Bureau of Customs, the Department of Agrarian Reform, the Department of Interior and local Government, the Philippine Economic Zone Authority, and the representatives from the technical staff of the Committee on Economic Affairs of both Houses of Congress shall formulate the implementing rules and regulations of this Act within ninety (90) days after its approval. Such rules and regulations shall take effect fifteen (15) days after their publication in a newspaper of general circulation in the Philippines.

SEC. 56. Transitory Provisions. - Prior to the effectivity of the implementing rules and regulations of this Act, the provisions of Presidential Decree No. 66, as amended, and its implementing rules and regulations shall remain in force.

SEC. 57. Effectivity- This Act shall take effect upon its approval.


Philippine Development Plan midterm update aims to ensure sustainability and inclusiveness of the country’s economic growth, Balisacan says

The National Economic and Development Authority (NEDA) has updated the Philippine Development Plan: 2011-2016 (PDP) to ensure sustainability and inclusiveness of the country’s rapid economic growth, Socioeconomic Planning Secretary Arsenio M. Balisacan said.

Balisacan presented during the regular press briefing in Malacanang on Monday the updates on macroeconomic policy, financial sector, good governance and the rule of law, industry and services, agriculture and fisheries, infrastructure, environment and natural resources, social development, among others.

The Philippine Development Plan Midterm Update spells out the government’s roadmap for inclusive growth, Balisacan said.

“Overall, the ultimate goal of the updated Plan is inclusive growth. Accomplishments will be measured primarily in terms of economic growth, to an average of 7-8 percent until 2016, reduction in unemployment to 6.5-6.7 percent in 2016 and the incidence of income poverty to 18 to 20 percent,” Balisacan said.

“In addition, we are committing to quality of life targets: raise the quality of employment and overall quality of life. The former will be reflected as a reduction of underemployment to about 17 percent in 2016 and the latter, as a reduction of the incidence of multidimensional poverty incidence to 16-18 percent,” the Socioeconomic Planning Secretary said.

The PDP midterm update will highlight high and sustained economic growth; growth that generates mass employment; and growth that reduces poverty and facilitates the achievement of the millennium development goals.

“Multidimensional poverty incidence, unlike income poverty, looks at deprivation in various dimensions – health, education, access to water, sanitation, secure housing, etc. This indicator can then track the supposed outcomes of the different human development strategies, which impact on future income poverty.” he said.

“Accelerating job creation requires building up of capital. Investments must continually rise for the economy to continue to grow and this requires a stable and predictable market environment. Thus, we should maintain positive expectations of consumer and business sectors through macroeconomic stability, a strong financial system, and a healthy external sector,” Balisacan said.

Balisacan emphasized the need to raise productivity and sustain growth in the agriculture, industry, and services sectors.

“Reducing the cost of doing business in the country will continue to be a priority, consistent with the platform of good governance, and in order to encourage more investments. This requires addressing infrastructure bottlenecks, improving connectivity and increasing the availability of highly trainable and skilled labor,” he said.

The plan aims to substantially reduce poverty by improving the skill sets of the poorest families and undertake more aggressive employment facilitation for better job-skills match especially concerning the poor.

“We believe that the key is to directly address the constraints faced by the poor, set against a backdrop of rapid and sustained growth. These constraints operate in a highly diverse, fragmented and hazard prone environment,” he said.

“Some cities or provinces have been experiencing economic growth, but the poorest families are being left behind perhaps because the growing sectors do not require the goods or services that the poor can provide,” he said.

“For this reason, we will make use of the data from the National Household Targeting System which identifies the poor households in these provinces by name. We will begin with the growth sectors present in these provinces, then focus on providing auxiliary and ancillary services that could be provided by the poorest families in the province. Based on our growth experience, these sectors could be IT-Business Process Management, tourism, construction, manufacturing, and logistics,” he said.

The goverment acknowledges that the overall development of the country is ultimately a product of the dynamism of the private sector, Balisacan said.

“The role of government is to set the necessary policy and regulatory framework and provide public goods and services to catalyze private initiative and encourage efficiency improvements,” he said.

The Plan emphasizes the government’s facilitative role in promoting competition and making it easy for firms and entrepreneurs, regardless of size, to do business in the country.

“The updated Plan specifies indicators of efficiency and effectiveness to measure success. The real measure of efficiency is the extent to which private effort has been steered towards the direction laid out in the Plan; effectiveness is the extent to which the well-being of Filipinos has been improved,” he said.


Philippines Table of Contents

The Philippines has traditionally had a private enterprise economy both in policy and in practice. The government intervened primarily through fiscal and monetary policy and in the exercise of its regulatory authority. Although expansion of public sector enterprises occurred during the Marcos presidency, direct state participation in economic activity has generally been limited. The Aquino government set a major policy initiative of consolidating and privatizing government-owned and government-controlled firms. Economic planning was limited largely to establishing targets for economic growth and other macroeconomic goals, engaging in project planning and implementation, and advising the government in the use of capital funds for development projects.

Development Planning

The responsibility for economic planning was vested in the National Economic and Development Authority. Created in January 1973, the authority assumed the mandate both for macroeconomic planning that had been undertaken by its predecessor organization, the National Economic Council, and project planning and implementation, previously undertaken by the Presidential Economic Staff. National Economic and Development Authority plans calling for the expansion of employment, maximization of growth, attainment of fiscal responsibility and monetary stability, provision of social services, and equitable distribution of income were produced by the Marcos administration for 1974-77, 1978-82, and 1983-88, and by the Aquino administration for 1987-92. Growth was encouraged largely through the provision of infrastructure and incentives for investment by private capital. Equity, a derivative goal, was to be achieved as the result of a dynamic economic expansion within an appropriate policy environment that emphasized labor-intensive production.

The National Economic and Development Authority Medium-Term Development Plan, 1987-92 reflected Aquino's campaign themes: elimination of structures of privilege and monopolization of the economy; decentralization of power and decision making; and reduction of unemployment and mass poverty, particularly in rural areas. The private sector was described as both the "initiator" and "prime mover" of the country's development; hence, the government was "to encourage and support private initiative," and state participation in the economy was to be minimized and decentralized. Goals included alleviation of poverty, generation of more productive employment, promotion of equity and social justice, and attainment of sustainable economic growth. Goals were to be achieved through agrarian reforms; strengthening the collective bargaining process; undertaking rural, labor-intensive infrastructure projects; providing social services; and expanding education and skill training. Nevertheless, as with previous plans, the goals and objectives were to be realized, trickle-down fashion, as the consequence of achieving a sustainable economic growth, albeit a growth more focused on the agricultural sector.

The plan also involved implementing more appropriate, market-oriented fiscal and monetary polices, achieving a more liberal trade policy based on comparative advantage, and improving the efficiency and effectiveness of the civil service, as well as better enforcement of government laws and regulations. Proper management of the country's external debt to allow an acceptable rate of growth and the establishment of a "pragmatic," development-oriented foreign policy were extremely important.

Economic performance fell far short of plan targets. For example, the real GNP growth rate from 1987 to 1990 averaged 25 percent less than the targeted rate, the growth rate of real exports was one-third less, and the growth rate of real imports was well over double. The targets, however, did provide a basis for discussion of consistency of official statements and whether the plan growth rates were compatible with the maintenance of external debt-repayment obligations. The plan also set priorities. Both Aquino's campaign pronouncements and the policies embodied in the planning document emphasized policies that would favorably affect the poor and the rural sector. But, because of dissension within the cabinet, conflicts with Congress, and presidential indecisiveness, policies such as land and tax reform either were not implemented or were implemented in an impaired fashion. In addition, the Philippines curtailed resources available for development projects and the provision of government services in order to maintain good relations with international creditors.

The Philippine government has undertaken to provide incentives to firms, both domestic and foreign, to invest in priority areas of the economy since the early 1950s. In 1967 an Investment Incentives Act, administered by a Board of Investments (BOI), was passed to encourage and direct investment more systematically. Three years later, an Export Incentives Act was passed, furthering the effort to move the economy beyond importsubstitution manufacturing. The incentive structure in the late 1960s and 1970s was criticized for favoring capital-intensive investment as against investments in agriculture and export industries, as well as not being sufficiently large. Export incentives were insufficient to overcome other biases against exports embodied in the structure of tariff protection and the overvaluation of the peso.

The investment incentive system was revised in 1983, and again in 1987, with the goal of rewarding performance, particularly exporting and labor-intensive production. As a results of objections made by the United States and other industrial nations to export-subsidy provisions contained in the 1983 Investment Code, much of the specific assistance to exporters was removed in the 1987 version. The 1987 Investment Code delegates considerable discretionary power over foreign investment to the government Board of Investments when foreign participation in an enterprise exceeds 40 percent. Legislation under consideration by the Philippine Congress in early 1991 would limit this authority. Under the new proposal, foreign participation exceeding 40 percent would be allowed in any area not covered by a specified "negative list."

Fiscal Policy

Historically, the government has taken a rather conservative stance on fiscal activities. Until the 1970s, national government expenditures and taxation generally were each less than 10 percent of GNP. (Total expenditures of provincial, city, and municipal governments were small, between 5 and 10 percent of national government expenditures in the 1980s.) Under the Marcos regime, national government activity increased to between 15 and 17 percent of GNP, largely because of increased capital expenditures and, later, growing debt-service payments. In 1987 and 1988, the ratio of government expenditure to GNP rose above 20 percent. Tax revenue, however, remained relatively stable, seldom rising above 12 percent of GNP. Chronic government budget deficits were covered by international borrowing during the Marcos era and mainly by domestic borrowing during the Aquino administration. Both approaches contributed to the vicious circle of deficits generating the need for borrowing, and the debt service on those loans creating greater deficits and the need to borrow even more. At 5.2 percent of GNP, the 1990 government deficit was a major consideration in the 1991 standby agreement between Manila and the IMF.

Over time, the apportionment of government spending has changed considerably. In 1989 the largest portion of the national government budget (43.9 percent) went for debt servicing. Most of the rest covered economic services and social services, including education. Only 9.1 percent of the budget was allocated for defense. The Philippines devoted a smaller proportion of GNP to defense than did any other country in Southeast Asia.

The Aquino government formulated a tax reform program in 1986 that contained some thirty new measures. Most export taxes were eliminated; income taxes were simplified and made more progressive; the investment incentives system was revised; luxury taxes were imposed; and, beginning in 1988, a variety of sales taxes were replaced by a 10 percent value-added tax--the central feature of the administration's tax reform effort. Some administrative improvements also were made. The changes, however, did not effect an appreciable rise in the tax revenue as a proportion of GNP.

Problems with the Philippine tax system appear to have more to do with collections than with the rates. Estimates of individual income tax compliance in the late 1980s ranged between 13 and 27 percent. Assessments of the magnitude of tax evasion by corporate income tax payers in 1984 and 1985 varied from as low as P1.7 billion to as high as P13 billion. The latter figure was based on the fact that only 38 percent of registered firms in the country actually filed a tax return in 1985. Although collections in 1989 were P10.1 billion, a 70 percent increase over 1988, they remained P1.4 billion below expectations. Tax evasion was compounded by mismanagement and corruption. A 1987 government study determined that 25 percent of the national budget was lost to graft and corruption.

Low collection rates also reinforced the regressive structure of the tax system. The World Bank calculated that effective tax rates (taxes paid as a proportion of income) of low-income families were about 50 percent greater than those of high-income families in the mid-1980s. Middle-income families paid the largest percentage. This situation was caused in part by the government's heavy reliance on indirect taxes. Individual income taxes accounted for only 8.9 percent of tax collections in 1989, and corporate income taxes were only 18.5 percent. Taxes on goods and services and duties on international transactions made up 70 percent of tax revenue in 1989, about the same as in 1960.

The consolidated public sector deficit--the combined deficit of national government, local government, and public-sector enterprise budgets--which had been greatly reduced in the first two years of the Aquino administration, rose to 5.2 of GNP by the end of 1990. In June 1990, the government proposed a comprehensive new tax reform package in an attempt to control the public sector deficit. About that time, the IMF, World Bank, and Japanese government froze loan disbursements because the Philippines was not complying with targets in the standby agreement with the IMF. As a result of the 1990-91 Persian Gulf crisis, petroleum prices increased and the Oil Price Stabilization Fund put an additional strain on the budget. The sudden cessation of dollar remittances from contract workers in Kuwait and Iraq and increased interest rates on domestic debt of the government also contributed to the deficit.

Negotiations between the Aquino administration and Congress on the administration's tax proposals fell through in October 1990, with the two sides agreeing to focus on improved tax collections, faster privatization of government-owned and government-controlled corporations, and the imposition of a temporary import levy. A new standby agreement between the government and the IMF in early 1991 committed the government to raise taxes and energy prices. Although the provisions of the agreement were necessary in order to secure fresh loans, the action increased the administration's already fractious relations with Congress.

Monetary Policy

The Central Bank of the Philippines was established in June 1948 and began operation the following January. It was charged with maintaining monetary stability; preserving the value and covertibility of the peso; and fostering monetary, credit, and exchange conditions conducive to the economic growth of the country. In 1991 the policy-making body of the Central Bank was the Monetary Board, composed of the governor of the Central Bank as chairman, the secretary of finance, the director general of the National Economic and Development Authority, the chairman of the Board of Investment, and three members from the private sector. In carrying out its functions, the Central Bank supervised the commercial banking system and managed the country's foreign currency system.

From 1975 to 1982, domestic saving (including capital consumption allowance) averaged 25 percent of GNP, about 5 percentage points less than annual gross domestic capital formation. This resource gap was filled with foreign capital. Between 1983 and 1989, domestic saving as a proportion of GNP declined on the average by a third, initially because of the impact of the economic crisis on personal savings and later more because of negative government saving. Investment also declined, so that for three of these years, domestic savings actually exceeded gross investment.

From the time it began operations until the early 1980s, the Central Bank intervened extensively in the country's financial life. It set interest rates on both bank deposits and loans, often at rates that were, when adjusted for inflation, negative. Central Bank credit was extended to commercial banks through an extensive system of rediscounting. In the 1970s, the banking system resorted, with the Central Bank's assistance, to foreign credit on terms that generally ignored foreign-exchange risk. The combination of these factors mitigated against the development of financial intermediation in the economy, particularly the growth of long-term saving. The dependence of the banking system on funds from the Central Bank at low interest rates, in conjunction with the discretionary authority of the bank, has been cited as a contributing factor to the financial chaos that occurred in the 1980s. For example, the proportion of Central Bank loans and advances to government-owned financial institutions increased from about 25 percent of the total in 1970 to 45 percent in 1981-82. Borrowings of the government-owned Development Bank of the Philippines from the Central Bank increased almost 100-fold during this period. Access to resources of this sort, in conjunction with subsidized interest rates, enabled Marcos cronies to obtain loans and the later bailouts that contributed to the financial chaos.

At the start of the 1980s, the government introduced a number of monetary measures built on 1972 reforms to enhance the banking industry's ability to provide adequate amounts of long-term finance. Efforts were made to broaden the capital base of banks through encouraging mergers and consolidations. A new class of banks, referred to as "expanded commercial banks" or "unibanks," was created to enhance competition and the efficiency of the banking industry and to increase the flow of long-term saving. Qualifying banks--those with a capital base in excess of P500 million--were allowed to expand their operations into a range of new activities, combining commercial banking with activities of investment houses. The functional division among other categories of banks was reduced, and that between rural banks and thrift banks eliminated.

Interest rates were deregulated during the same period, so that by January 1983 all interest rate ceilings had been abolished. Rediscounting privileges were reduced, and rediscount rates were set in relation to the cost of competing funds. Although the short-term response seemed favorable, there was little long-term change. The ratio of the country's money supply, broadly defined to include savings and time deposits, to GNP, around 0.2 in the 1970s, rose to 0.3 in 1983, but then fell again to just above 0.2 in the late 1980s. This ratio was among the lowest in Southeast Asia.

Monetary and fiscal policies that were set by the government in the early 1980s, contributed to large intermediation margins, the difference between lending and borrowing rates. In 1988, for example, loan rates averaged 16.8 percent, whereas rates on savings deposits were only slightly more than 4 percent. The Central Bank traditionally maintained relatively high reserve requirements (the proportion of deposits that must remain in reserve), in excess of 20 percent. In 1990 the reserve requirement was revised upward twice, going from 21 percent to 25 percent. In addition, the government levied both a 5 percent gross tax on bank receipts and a 20 percent tax on deposit earnings, and borrowed extensively to cover budget deficits and to absorb excess growth in the money supply.

In addition to large intermediation margins, Philippine banks offered significantly different rates for deposits of different amounts. For instance, in 1988 interest rates on six-month time deposits of large depositors averaged almost 13 percent, whereas small savers earned only 4 percent on their savings. Rates offered on six-month and twelve-month time deposits differed by only 1 percentage point, and the rate differential for foreign currency deposits of all available maturities was within a single percentage point range. Because savings deposits accounted for approximately 60 percent of total bank deposits and alternatives for small savers were few, the probability of interest rate discrimination by the commercial banking industry between small, less-informed depositors and more affluent savers, was quite high. Interest rates of time deposits also were bid up to reduce capital flight. This discrimination coupled with the large intermediation margins, gave rise to charges by Philippine economists and the World Bank that the Philippine commercial banking industry was highly oligopolistic.

Money supply growth has been highly variable, expanding during economic and political turmoil and then contracting when the Philippines tried to meet IMF requirements. Before the 1969, 1984, and 1986 elections, the money supply grew rapidly. The flooding of the economy with money prior to the 1986 elections was one reason why the newly installed Aquino administration chose to scrap the existing standby arrangement with the IMF in early 1986 and negotiate a new agreement. The Central Bank released funds to stabilize the financial situation following a financial scandal in early 1981, after the onset of an economic crisis in late 1983, and after a coup attempt in 1989. The money was then repurchased by the Treasury and the Central Bank--the so-called Jobo bills, named after then Central Bank Governor Jose Fernandez--at high interest rates, rates that peaked in October 1984 at 43 percent and were approaching 35 percent in late 1990. The interest paid on this debt necessitated even greater borrowing. By contrast, in 1984 and 1985, in order to regain access to external capital, the growth rate of the money supply was very tight. IMF dictates were met, very high inflation abated, and the current account was in surplus. Success, however, was obtained at the expense of a steep fall in output and high unemployment.


When Aquino assumed the presidency in 1986, P31 billion, slightly more than 25 percent of the government's budget, was allocated to public sector enterprises--government-owned or government-controlled corporations--in the form of equity infusions, subsidies, and loans. Aquino also found it necessary to write off P130 billion in bad loans granted by the government's two major financial institutions, the Philippine National Bank and the Development Bank of the Philippines, "to those who held positions of power and conflicting interest under Marcos." The proliferation of inefficient and unprofitable public sector enterprises and bad loans held by the Philippine National Bank, the Development Bank of the Philippines, and other government entities, was a heavy legacy of the Marcos years.

Burdened with 296 public sector enterprises, plus 399 other nonperforming assets transferred to the government by the Philippine National Bank and the Development Bank of the Philippines, the Aquino administration established the Asset Privatization Trust in 1986 to dispose of government-owned and government-controlled properties. By early 1991, the Asset Privatization Trust had sold 230 assets with net proceeds of P14.3 billion. Another seventy-four public sector enterprises that were created with direct government investment were put up for sale; fifty-seven enterprises were sold wholly or in part for a total of about P6 billion. The government designated that about 30 percent of the original public sector enterprises be retained and expected to abolish another 20 percent. There was widespread controversy over the fairness of the divestment procedure and its potential to contribute to an even greater concentration of economic power in the hands of a few wealthy families.

More about the Economy of the Philippines.

Guidelines on Mainstreaming DRR in Development

The Medium-Term Philippine Development Plan for 2004-2010 outlines the country’s goals of reducing poverty and accelerating development, and specifies the strategies and action plans to bring about a better quality of life for the citizenry.

But even as these guideposts for development are in place, the attainment of these goals is hampered by the constant threat of disasters. The frequent occurrence of natural and man-made disasters in the country does not only take its toll on the economy, but has implications on our socioeconomic conditions, particularly among the poor and those in remote areas where access to services become even more difficult.

The Guidelines on Mainstreaming Disaster Risk Reduction in Subnational Development and Land Use/Physical Planning is envisioned to improve our capacity to prevent and mitigate disasters. It is a tool for enhancing regional and provincial planning analyses by recognizing risks posed by natural hazards and the vulnerability of the population, economy and the environment to these hazards. By introducing risk analysis in development planning, regions and provinces can strengthen their ability to identify areas at risk to disasters, ensure proper siting of development undertakings, and identify appropriate mitigation measures. This is well within track of our country’s commitment to the Hyogo Framework of Action that aims to integrate disaster risk reduction into sustainable development policies and planning. 

Ultimately, the main goal is to enable communities to reduce vulnerability and to increase their capacity to cope with disasters. NEDA believes that a stronger collaboration with local governments is necessary to achieve the country’s desired economic growth and development. In line with this, NEDA formulated the Guidelines as part of its commitment to provide local government units with the necessary tools that can help them to effectively carry out their mandate.

Guidelines on Mainstreaming DRR in Subnational Development Land Use Planning

National Framework Strategy on Climate Change


The Philippine Development Plan 2011-2016 adopts a framework of inclusive growth, which is high growth that is sustained, generates mass employment, and reduces poverty. With good governance and anticorruption as the overarching theme of each and every intervention, the Plan translates into specific goals, objectives, strategies, programs and projects all the things that we want to accomplish in the medium term.

Through this Plan, we intend to pursue rapid and sustainable economic growth and development, improve the quality of life of the Filipino, empower the poor and marginalized and enhance our social cohesion as a nation. Our strategic development policy framework thus focuses on improving transparency and accountability in governance, strengthening the macroeconomy, boosting the competitiveness of our industries, facilitating infrastructure development, strengthening the financial sector and capital mobilization, improving access to quality social services, enhancing peace and security for development, and ensuring ecological integrity.

The Philippine Development Plan will serve as our guide in formulating policies and implementing development programs for the next six years. It enables us to work systematically to give the Filipino people a better chance of finally finding their way out of poverty, inequality, and the poor state of human development.


History of Modern Urban Planning

Urban planning as a modern discipline originated fairly recently- in the latter part of the 19th century, mainly as a reaction to the disorder and squalor of the industrial city. The first academic program began in England, in the university of Liverpool, in 1909, and the first North American program was established in Harvard University, in 1924. Unplanned and explosive growth of cities in Europe and North America gave rise to giant sprawling cities developed during this era, exhibiting extreme wealth and depressing poverty side by side. Not only were the slums of the large cities ugly, crowded and dirty, they were a threat to healthy living.

The recognition of recreation and areas that were set aside for recreational purposes became a standard part of modern urban planning in the later half of the nineteenth century. New York's Central Park, which was conceived in the 1850s, was designed by architects Calvert Vaux and Frederick Law Olmsted. This quickly became a model for other cities to follow, like providing for lungs for a whole city to breathe, an area of wonderful greenery and open space in the midst of an unending urban sprawl.
After World War ll Lots of European countries began re-constructing new towns as government enterprises, those cities were Germany, The Netherlands, The Soviet Union, and especially France. The government had many concerns such as too much density within urban areas, they constructed towns that means of capturing the over spill from cities with planned developments. In Sweden the government successfully constructed new towns with mixed-income occupancy. In Asia, after the World War ll produced, populated, metropolises. The Chinese government constructed Pudong New Area- a planned central commercial business district along with houses and factories. 

by Michael 

In this article, I shall give a brief outline the historical development of several theories, trends and styles in urban planning and the growth of cities. For all intents and purposes, this article will focus almost exclusively upon examples drawn from European and North American urban patterns. After a brief overview of how city populations have changed radically over the last couple centuries, I will describe several of the most notable urban planning styles and trends as they developed in response to the myriad of problems that were associated with large and growing industrial era cities.
The ideal centrally-planned urban space: Sposalizio by Raphael Sanzio, 1504

Prior to the 18th century, the vast majority of cities and towns had populations of about two to three thousand people, with 85-90% of the population living in small agricultural hamlets and villages of 300-400 people scattered across the countryside. Generally, a market town would likely develop at a suitable place to serve the needs of the surrounding villages - usually defined as being within a convenient one-day’s walk (approximately 12 miles). This was of course back in the days when farmers brought their goods to market on donkeys or horse-drawn carts so that populations needed to live close to the land that fed them - thus limiting the size of cities and towns. As a general rule, what larger cities and towns that did exist at this time in history generally had their origin as either A) a consolidation of several neighboring villages; B) a key transportation point (such as a river-crossing or harbor); or C) proximity to a power-center such as a castle, palace or key religious institution.

In pre-industrial Europe of that time, there were perhaps 20-30 cities in the 10-20,000 population range with another half-dozen in the 50-150,000 range (Florence, Rome, Milan, Venice, Paris & London). In every case, these larger urban centers were located either on the coast or on navigable rivers - a necessity for food supply given the lack of refrigeration. All of these old cities and towns have intricate and complicated street patterns in their oldest districts - often called ‘organic’ pattern as the streets generally follow the topography of the land - twisting and turning in odd directions.

It is only with the advent of the 18th century industrial revolution where we see the beginning of a steep rise in urban development and city sizes. The city is where industry was usually located or developed and this attracted more and more people looking for work and/or higher wages or opportunities. Thus, throughout the 18th & 19th centuries, urban populations all over Europe and North America rose rapidly, with London and Paris passing the million mark by 1800 and many other cities in the 100,000-500,000 population range. Even at this time, all of these large cities were located upon coastlines or navigable rivers.

Between 1840 and 1960, a veritable spider web of canals, railroads and highways was laid down across Europe and North America. With the assistance of electrical power and the wonders of refrigeration, it was now possible for many cities to grow ever larger, outgrowing the old need for coastlines and navigable rivers. Elaborate systems for the supply of fresh water, sewage, garbage, public health services and public transit were developed to address the needs of a vast growing metropolis.

The first notable trend in urban planning arises with renaissance era political authorities, most notably absolutist-minded princes of Europe, seeking to fortify or to ‘perfect’ their capitol cities. The spoked wheel was deemed to be the most perfect city shape for the purpose of military and civil defence - to allow easy routes for the movement of troops to quell riots in the center of the city - or to move rapidly to defend the walls against external enemies. The city of Palmanova in Italy (built 1593-1623) is an almost perfectly preserved example of this type of radial starburst design with extensive fortifications and outworks.

But military and civil control were not the only driving passions of these renaissance princes. Artwork and beautification were also high on their minds, with figures such as Michelangelo laying out new streetscapes in Rome. In the hands of a great artist, these new corridor streets became Grand Avenues, cutting through the old fabric of the organic city and linking together key landmarks with well placed sight-lines for optimal viewing pleasure and taking advantage of dramatic topography. Wherever possible, these avenues were set wide to admit of being lined with trees. Monuments, Cathedrals, Government Buildings, Palaces or Museums would serve as focal points for these avenues and promenades. Plazas, gardens, waterfalls, equestrian statues and/or public fountains used for dramatic effect in marking the route. These grand avenues would serve for ceremonial processions of the princely power. This “Baroque” or “Grand Manner” style is also often associated with neo-classical architecture, with a focus upon symmetry, marble columns and government buildings that look like ancient Roman Temples.

Rome (Renaissance & Mussolini eras), Paris (post-Haussmann), Versailles, Washington D.C., and St. Petersburg are some of the most notable examples of this “Grand Manner” in urban design applied in practice.

In the face of growing problems associated with the early industrial city, such as high-density urban slums, poor health and sanitary conditions, industrial pollution and smog, one of the first attempted solutions was a throwback to the now cherished medieval past. Thus was born the idea of the industrial village - patterned upon an old medieval village. Instead of peasants in their cottages working in the feudal lord’s fields, we had workers in their cottages (or dormitories) working in the company factory - away from the ugliness of the newly industrial city. A focus upon ‘planned picturesque suburbs’ is associated with this period - a reaction against the ugliness of the industrial revolution and the absolutist political character of the Grand Manner. This trend or style that is called Gothic Revival celebrates the human scale and seeks to recreate the natural organic street pattern of old medieval towns and villages. In many ways, this style or trend is ‘anti-city’ as it seeks to escape from urban squalor by working with a smaller scale in the countryside, and taking advantage of modern forms of transportation - such as canals and railroads - to link up with distant markets. This era also coincides with a revival of medieval-gothic styles of architecture in residential as well as institutional buildings. Government legislature buildings in many British colonies display this favoured style of the 19th century.

Setting up a series of small industrial villages in the manner of the small English mill or mining towns was only partially successful because the enormous scale of industrial production required, or encouraged, ever larger cities as centers of production and consumption. While elaborate sewage systems and public health services went a long way to curbing the worst problems, many challenging problems remained. Big industrial cities were deemed to be inhuman in scale, reducing human beings to mere cogs in a machine. Big industrial cities were still decried as filthy, polluted and congested.

The first signs of this new response to the ugliness of the industrial city comes in the form of several late 19th century plans for new “ideal” cities laid out in an entirely different pattern.. The various parts of a city were to be separated and isolated into industrial, commercial, public service and residential zones - insulated from each other with greenbelts of parklands and plenty of trees. Straight arterial roadways would carry the traffic, while low density residential zones would be laid out with meandering or curving streets reminiscent of the medieval village. Riverside, Illinois and Glendale, Ohio are two notable 19th century examples from the USA of this type of ‘ideal’ planned town. Frederick Law Olmsted was a noted practitioner of this style and his design for Central Park in NYC are considered a classic example of this new style.

In 1898 Ebenezer Howard published his landmark book “To-Morrow, A Peaceful Path to Social Reform” - later renamed and republished in the USA as “Garden Cities of To-Morrow”. Here the ideal of the self-contained and modestly scaled city is laid out with precision. Howard believed that this style of urban planning was really only possible with socialistic or communal property laws. Nevertheless, Unwin & Parker, two early 20th century British urban planners, picked up on Howard’s ideas and put many of them into practice with traditional private property holdings. The most notable example is Letchworth in England, a “garden-city” commuter town served by rail from London. In the 1920’s & 30’s, many of these “garden-city” inspired commuter suburbs were built all over England, France and North America, surrounded by green-belts of parkland.

Developed around the same time as the ideas of Garden Cities, and in response to the same problems of the industrial monster city, Modernism in urban planning goes in the opposite direction as that of the Garden Cities. Modernism celebrated the density, excitement and egalitarianism of the modern city and strove to improve upon it with new ways of urban living. Many noted modernist architects criticised the ‘old’ European cities as tradition-bound and inefficient for modern living. Modernism required new open spaces to showcase modern skyscrapers and an efficient traffic network. Le Corbusier (a notable French modernist architect) made many practical suggestions for a graduated road-network (fast traffic on arterial roadways, local traffic on smaller side streets and a network of pathways to serve pedestrian traffic) to serve the needs of modern living.

Modernism in urban planning also came to be associated with large scale renewal projects after WWII in both Europe and North America. Many large bombed out cities or decrepit industrial slums were bulldozed and laid down as if new - with huge blocks of residential buildings and efficient road networks.

The one thing that is most notable in many of today’s larger cities is that all of the styles described here are often all present together and co-existing. Certainly the “City Beautiful” movement admired several aspects of the “Grand Manner” - as well as having its roots in “The Gothic Revival” movement. Modernism has placed its stamp with a network of highways and system of graduated roads, along with forests of glass skyscrapers and odd-shaped cantilevered buildings. And once again, there is a ‘gothic revival’ of sorts going on with a popular movement towards preserving older buildings, building on a smaller or more ‘human’ scale and mixed-use zoning laws with less reliance (and favortism) upon automobiles for inner city transportation. One thing is certain - large urban cities remain as popular as ever with major cities continuing to grow ever larger as more and more people are attracted to the bright lights of the big city.

Wednesday, April 8, 2015

Adhesives, Sealants, and Coatings by CORD Chemicals

CORD CHEMICALS, INC. is a manufacturer/distributor of high performance adhesives, sealants, and coatings. It has been in the business for almost 36 years and since then built a reputation of providing innovative solutions and offers high performance products. CORD CHEMICALS, INC. supplies to a wide variety of industries including marine, construction, manufacturing, handicrafts, automotive, heavy structures, and civil engineering.

CORD offer epoxy floor coatings, epoxy tank lining for cistern tank, epoxy injection for crack repair, protective coatings for structural steel works, adhesives, waterproofing and sealants.

Industrial Adhesives
Concrete Bonding Solutions
StrongHold 200 RSC                   STRUCTURAL REPAIR AND BONDER EPOXY
StrongHold 600 TCB                  NEW TO OLD CONCRETE EPOXY BONDER

Support & Foundation Solutions
StrongHold 300 VSA                  VERTICAL STRUCTURE EPOXY

Specialized Adhesive Solutions
StrongHold 201 SS                      MULTI-SUBSTRATE STRUCTURAL EPOXY
StrongHold 550 BMC                 FAST SETTING BALL MILL LINING EPOXY
StrongHold 800 MFT                 METAL-FILLED TOOLING RESIN
StrongHold Clear                       WOOD LAMINATING EPOXY

Protective Coatings
Advanced Waterproofing and Tank Lining Solutions
Fortress DPS                                   DEEP PENETRATING SEALANT
Fortress Tank Lining CTL           FOOD GRADE TANK LINING EPOXY

High Endurance Protective Flooring Solutions for Industrial Environments
Fortress HCR                                  CHEMICAL-RESISTANT FLOOR COATING
Fortress FCH                                  INDUSTRIAL GRADE IMPACT RESISTANT FLOOR COATING
Fortress FCL                                    ABRASION-RESISTANT FLOOR COATING

High Endurance Protective Coating Solutions for Extreme Environments
Fortress SPR                                    EPOXY PRIMER FOR CORROSIVE ENVIRONMENT
Fortress SPZ                                    HEAVY DUTY RUST INHIVITIVE PRIMER
Fortress SPZR                                 ZINC RICH EPOXY PRIMER
Fortress FTC                                   ANTI-CORROSIVE TOP COAT
Fortress ECT                                   EPOXY COAL TAR
Fortress RTB                                   SELF-PRIMING ANTI-CORROSIVE COATING
Fortress 2000 AF                          CORD 2000 ANTI-FOULING PAINT
Fortress VAF                                   VINYL ANTI-FOULING PAINT

CORD High Performance Adhesives

·        Provides strong and fast on-the-go repairs.
·        Gives instant bonding to just about anything.
·        Works on porous and non-porous materials.

·        Best for instant repair of wood and leather.
·        Formulated specifically for bonding of porous items such as upholstery, handbags, arts and crafts.

·        The advanced adhesive solution for fast and strong bonding of metal, glass, plastics, ceramics and other non-porous materials.

ALTRA Clear Epoxy
·        Altra Clear is an all purpose fast-setting adhesive. It dries fast in just 3 minutes.
·        Best for bonding of antiques, plaques, china, jewelry and other items made of crystal.

ALTRA White Epoxy
·        Altra White is the fastest-setting white epoxy. It offers permanent bonding while giving a pristinely clean white finish in as fast as 3 minutes.
·        Best for bonding and repair of porcelain, ceramics, figurines, enamels and other white items. Also perfect for repairs of toilet fixtures and accessories.

CORD All Purpose Marine Epoxy
·        The all around adhesive, filler and patching compound
·        Has excellent adhesion to wood, metals, plastics, concrete and glass.
·        Can also be used as a patching compound to level uneven surfaces. Mix it with paint to make a colored filler compound.



CORD Chemicals, Inc. is a recognized industry leader in the field of adhesives, coatings and sealant established on July 7, 1977 by Mr. Francisco K. Sanz. The company was the first to develop and introduce the CORD MARINE EPOXY COATING SYSTEM, the original comprehensive protective coating system designed specifically for harsh marine conditions. With the breakthrough introduction of this highly innovative product system, CORD set the standard, which would be the trademark of the company’s business strategy for the years to come – LEADERSHIP IN INNOVATION.

CORD Chemicals, Inc. has been at the forefront of the adhesives, coatings and sealants industry. It is active in the design, manufacture and marketing of the products that better the lives of the Filipinos. From a simple repair of broken cup handle to the construction of major infrastructures, CORD has innovative products intended for specific type of consumers. CORD today is the largest importer of raw materials for epoxy resins and is the largest manufacturer of epoxy-based products in the Philippines.

CORD makes products accessible not only to the general consumer market but also to a wide variety of industrial consumer segments that include Maritime, Construction, Manufacturing, Food and Drugs, Automobile and Infrastructures. It took part in projects where only few dared to stake their reputation. Its commitment to high performance and excellence made CORD Chemicals, Inc. the only local company that can compete directly with foreign companies in supplying epoxy-based products.

As a testament to its culture of innovation, CORD is the first and the only Philippine company in the category of adhesives, coatings and sealants to achieve SUPERBRANDS status, beating other companies who have been in the market longer.


CORD products reach consumers through a wide network of channel partners nationwide. From its head office in Mandaluyong City, CORD’s innovative products head out to retail outlets in different parts of the archipelago. CORD has established branches in key strategic areas of Cebu, Davao, General Santos and Zamboanga.


 CORD takes high regards of its products and performance. We make sure that every product we serve delivers high performance solutions for both channel partners and consumers. CORD ensures optimum business performance and a good return-on-investment.

CORD pursues an aggressive marketing program using tri-media advertising tools and below-the-line campaigns. We develop and produce various communications campaigns in television, radio and print to reach a wider audience and create a variety of merchandising materials and collaterals designed to reach our trade partners and end-users. CORD is also a proud supporter and sponsor of major sporting events.

Our professional team maintains close coordination with various industries like shipbuilding, construction and infrastructure; always ready to provide CORD’s more than thirty years of expertise to assist customers in securing tailor-made and simplified solutions designed to enhance their business. CORD’s technical assistance is present from start and until the job is completed.


 CORD treats the customers as the most important stakeholder in the company. It aims to build long-term partnership with them. It is our mission to attain true business growth by providing our customers with only technologically superior products and services that help them better their lives and businesses. The Research & Development program of CORD Chemicals, Inc. continuously introduces new and innovative products onto the market to meet the ever changing needs of our consumers.

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