Philippine Economic Zone Authority
The Philippine Economic Zone Authority or PEZA is one of the eight offices under the Office of the Secretary (OSEC) of the Department of Trade and Industry. It was established as a body corporate attached to DTI through Chapter 2 of Republic Act No. 7916, better known as The Special Economic Zone Act of 1995 and is tasked to “promote investments, extend assistance, register, grant incentives to and facilitate the business operations of investors in export-oriented manufacturing and service facilities inside PEZA Special Economic Zones.”
The Special Economic Zone Act of 1995
Republic Act No. 7916 is an act that provides the legal framework and mechanisms for Special Economic Zones in the Philippines, and a body corporate that will create and oversee them, the PEZA, and for other purposes.
Republic Act No. 8748
Republic Act No. 8748 is an act amending The Special Economic Zone Act of 1995 that was approved on June 1 1999. There were enacted changes to the qualifications for the selection of the director general and his assistants, the three deputy directors general and changes to the composition of the board, and provisions were introduced for privately-owned ecozones. Ecozones are special economic zones or selected areas with highly developed or that have the potential to be developed into PEZA business centers. Provisions for the salary scheme of all positions in PEZA were enacted and clauses on involvement in elections of government officials and termination of employment were also provided. There were amendments related to tax exemption and percentage allocations from the five percent (5%) of the gross income paid and remitted, and the taxes that persons and service establishments in the ecozone are subject to. Amendments to the section on eminent domain were made with emphasis on provisions for those who would be displaced by eviction from their land within the ecozone and to the section on Non-Applicability on Areas Covered by R.A. No. 7227.
The PEZA Board
PEZA is governed by a 13-man board composed of the following:
- Secretary of Department of Trade and Industry, chairman
- Director of General of PEZA, vice chairman and CEO of PEZA
- Undersecretary of Department of Finance, member
- Undersecretary of Department of Labor and EmploymentLink title, member
- Undersecretary of Department of Interior and Local Government, member
- Undersecretary of Department of Environment and Natural Resources, member
- Undersecretary of Department of Agriculture, member
- Undersecretary of Department of Public Works and Highways, member
- Undersecretary of Department of Science and Technology, member
- Undersecretary of Department of Energy, member
- Deputy Director General of the National Economic and Development Authority, member
- One (1) representative from the labor sector, member
- One (1) representative from the investors / business sector in the economic zone, member
Who Can Be Eligible for PEZA Benefits?
Companies looking to export and are interested in being located in a PEZA Zone or PEZA building may be eligible provided that those with existing operations outside PEZA zones should close these operations and relocate inside a PEZA zone. Filipino citizens are required to export 50% of total services while foreigners should export 70%. IT services for registration are not required to export. Interested parties may further check available benefits at the PEZA website PEZA website. Other topics that may be found at the site are PEZA’s vision and mission, board members, organizational chart, directory, implementing rules and regulations, economic zones, PEZA firms, eligible activities and incentive, registration process, issuances such as a list of memorandum circulars, list of memorandum of agreements, list of memorandum orders and guidelines for registration of specific businesses, downloadable forms and other aids, cost of doing business, feedback from PEZA firms, the PEZA Citizen’s Charter and the Handbook for Expatriates.
Activities Eligible for PEZA Registration and Incentives
Investor companies that engage in the following activities are eligible for PEZA registration and incentives:
- Export manufacturing
- IT (Information Technology)Service Export
- Medical Tourism
- Agro-Industrial Export Manufacturing
- Agro-Industrial Bio-Fuel Manufacturing
- Logistics and Warehousing Services
- Economic Zone Development and Operation – development, operation and maintenance of an economic zone for the following activities:
- IT Park
- Medical Tourism
- Facilities Providers
- Facilities for Manufacturing Enterprises
- Facilities for IT Enterprises
- Retirement Facilities
Certificate of Incentives
PEZA-registered enterprises that are entitled to income tax incentives submit annually a letter of request addressed to the PEZA Director General for the issuance of a certification granting them incentives upon their submission of the required reports on their operations.
Participation in Drafting Investment Priorities Plan
PEZA is one of several government agencies that participated in drafting the 2012 Investment Priorities Plan (IPP) that was approved by President of the Philippines on June 13 2012 through Memorandum Order No. 40. Areas of focus for this year’s IPP are job generation, enhanced delivery of social services, international competitiveness and climate change mitigation and adaptation.
In order to encourage development of the information technology industry in areas outside Metro Manila and Cebu City and level the playing field between developers and operators of IT parks and buildings in Metro Manila and Cebu and those from outside, PEZA passed a board resolution that provided special five percent tax on gross income and other fiscal incentives to IT facilities that would be located in areas outside instead of in the first four PEZA-registered IT parks in Metro Manila and Cebu.
Developers of new economic zones that are less than 25 hectares for manufacturing, agro-industries and tourism will no longer enjoy incentives but their areas can be recommended as special economic zones for marketing.
The Cebu Chamber of Commerce and Industry formally requested the board through PEZA Director General Lilia De Lima to reconsider the decision to remove incentives for Cebu since Cebu has yet to develop infrastructure for BPO and ICT. Joel Mari Yu of Cebu Investments Promotions Center said, however, that the move will not impact developers’ decisions to build more IT buildings.
Interested parties may e-mail PEZA at email@example.com or call their numbers at (632) 551-3436 or (632) 551-3438.
- Activities Eligible for PEZA Registration and Incentives. Activities Eligible for PEZA Registration and Incentives. (Accessed 8 January 2013).
- SPECIAL ECONOMIC ZONE ACT OF 1995. Chan Robles Virtual Law Library. (Accessed 8 January 2013).
- About PEZA. PEZA website. (Accessed 8 January 2013).
- Philippine Economic Zone Authority (PEZA). DTI website. (Accessed 8 January 2013).
- PEZA vs. BoI Registration in the Philippines. Kittelson & Carpo Consulting. (Accessed 8 January 2013).
- Procedure for the Registration of Economic Zone Export Manufacturing Enterprise. PEZA website. (Accessed 8 January 2013).
- Directory: Department of Trade and Industry – Attached Agencies. WikiPilipinas. (Accessed 8 January 2013).
- Republic Act No. 8748. The LawPhil Project. (Accessed 8 January 2013).
- PEZA Board Members. PEZA website. (Accessed 8 January 2013).
- Peza removes perks from IT parks in MM, Cebu. Inquirer.net. (Accessed 8 January 2013).
- Chamber endorses incentive . Sunstar Cebu. (Accessed 8 January 2013).
- Peza policy ‘no cause for worry’. Sunstar Cebu. (Accessed 8 January 2013).