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Subic Bay Metropolitan Authority (MPD-SBMA)

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22 May 2009

SBMA backs free port perks for Olongapo businesses

The Subic Bay Metropolitan Authority (SBMA) is now working out a scheme whereby qualified investments based in the neighboring city of Olongapo may receive some incentives enjoyed by companies registered in the Subic Bay Freeport.

According to SBMA Administrator Armand Arreza, the perks may include fiscal incentives like sales tax and five-percent gross income tax.

“We are now in the process of formulating the implementing rules,” Arreza said.

“We are working it out with Olongapo City officials so that businesses located in Olongapo would qualify for some incentives under Executive Order 675,” Arreza added, referring to the order signed by President Arroyo that expanded the area where tax- and duty-free privileges for free port zones would apply.

Under EO 675, the tax- and duty-free privileges within the Subic Special Economic and Free Port Zone (SSEFPZ) “shall apply within the secured area consisting of the presently fenced-in former Subic Naval Base and such other areas that may be identified, fenced, secured or declared as additional secured area by the SBMA.”

But Arreza said that because the planned expansion area in Olongapo is not yet fenced in, duty-free privileges cannot be applied.

“Our main concern is merchandise control,” Arreza said. “That is why we’re initially thinking of giving incentives on sales tax and the five-percent gross income tax.”

He added that under the planned set-up, businesses wanting to avail of the perks would have to be endorsed by the Olongapo city government to the SBMA.

The system would be similar to that employed by the Philippine Economic Zone Authority (PEZA) which registers and grants perks to investors in privately-owned economic zones, Arreza said.

Among the incentives the SBMA offers to investors registering in the Subic Bay Freeport are tax- and duty-free importation; exemption from all local and national taxes, with only a 5 percent corporate tax on gross income; unrestricted entry of foreign investments; no foreign exchange control; visas for foreign nationals; and

expanded allowable deduction and higher percentage of income allowable from sources within the Customs territory for regional enterprises.

The SBMA official revealed the planned incentives for Olongapo companies after calling for the further development of the Subic-Clark growth corridor and pushing for the creation of additional industrial estates to sustain Central Luzon’s economic momentum.

Arreza said earlier that if the areas between Subic and Clark were developed into industrial estates, the SBMA could push through with its expansion program that is projected to create 150,000 new jobs.

He also said that the SBMA’s expansion plan likewise considers the development of areas in the nearby communities of Olongapo City, Subic town in Zambales, and Morong, Hermosa and Dinalupihan in Bataan.

According to Arreza, new investors who will locate beyond the fenced-in area of Subic, but still within the Subic Special Economic and Free Port Zone (SSEFPZ), will nevertheless enjoy certain privileges as provided for under EO 675, signed by President Arroyo on November 5, 2007.

He added that one investor, the Subic Neocove Corp., which is putting up a golf resort complex in Subic, Zambales, will be the first major investor to locate outside the former base land.

The development project, which will be financed by the Heung-A Property Group (HAPG) of Korea in partnership with Westgate Resorts Asia Ltd. and the Trump Organization, will incorporate hotel and vacation complexes, a 54-hole golf course and leisure-sports facilities, an eco-park, spa and therapy centers, as well as an international hospital and an international school in a 457-hectare beachfront property in Subic town.

The project, Arreza said, received the SBMA’s full incentive package upon endorsement from the governments of Subic town and the Zambales province.

As of now, the SBMA is finalizing its master plan that would increase connections between the Subic Bay Freeport and outlying areas, particularly Olongapo City, its nearest neighbor.

The plan also calls for the widening of bridges linking the free port to Olongapo, Arreza said. (SBMA Corporate Communications)

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