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25 November 2009

P2-B expansion fund for Subic and Clark proposed

The Subic Bay Metropolitan Authority (SBMA) has proposed the creation of a P2-billion fund to enable the development of new economic zones in areas near the Subic Bay Freeport and the Clark Freeport.

The proposal was made by SBMA administrator Armand Arreza during a meeting with the Senate Committee on Government Corporations and Public Enterprises, chaired by Sen. Richard Gordon, and representatives of the Clark Development Corporation (CDC) and the Bases Conversion and Development Authority (BCDA).

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

The bill also seeks to strengthen the power of the SBMA and CDC, giving them the mandate to develop nearby areas into new economic zones.

To speed up the process, Arreza then proposed the creation of a fund to develop new zones.

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

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

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

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

He also stressed that an eco-metric study made by the SBMA showed that Vietnam and China invested anywhere between 7-8 percent of their annual gross domestic product in infrastructure to boost their edge as investment sites.

In contrast, the Philippines spends only 3 percent of its GDP for the same purpose, Arreza added.

Responding to Arreza’s proposal, Gordon said he would file a bill that would set aside part of the taxes collected by SBMA and CDC in the next 20 years to develop more eco-zones in their areas.

Gordon added that Subic and Clark should be allowed to set aside parts of their income solely for infrastructure development within the area to make the Subic-Clark growth corridor constantly competitive.

Noting that Subic is remitting about P6 billion from its income each year to government coffers, Gordon said the contribution should be waived.

“Huwag na munang magbayad ang Subic (Subic should be allowed to waive payment),” said Gordon, who also served as the first SBMA chairman. “Can you imagine if we put the money generated from taxes and spread this in those areas to make industrial parks? We’ll have accelerated development,” he added.

Under his 3-3-1 Bill, Gordon has also identified other areas for development, aside from the Manila-Subic-Clark triangle. These include parts of Bataan, Zambales, Tarlac
and Pangasinan.

Gordon said these areas are ideal FOR THE development of industrial parks for factories, as well as heavy- and light to medium industries. He also wants “open skies” or a liberalized air transport system in these areas in order to attract more commercial planes and maximize the potentials of the existing air facilities.

“This will ensure development, because the more you improve the ports, the more investments will come in, and that is basically the use of this law,” the senator also said. (SBMA Corporate Communications)

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