Question & AnswerQ&A (Republic Act No. 7916)
The official title is "The Special Economic Zone Act of 1995."
The government recognizes the indispensable role of the private sector, encourages private enterprise, and provides incentives to needed investments. It also promotes preferential use of Filipino labor and domestic materials to improve competitiveness.
The objectives include establishing a legal framework for ECOZONES, transforming selected areas into industrial, commercial, tourist, banking, and financial centers, promoting investments and employment, encouraging Filipino capital repatriation, fostering cooperation with industrialized countries, and designating parts of ECOZONES as separate customs territories.
ECOZONES are selected areas with high development or potential for development into agro-industrial, industrial, tourist, commercial, banking, investment, and financial centers. They may contain industrial estates, export processing zones, free trade zones, and tourist/recreational centers.
PEZA is the governing and managing body of ECOZONES. It operates, administers, manages, and develops ECOZONES; registers, regulates, and supervises enterprises; coordinates with local governments; and issues rules and regulations implementing the Act.
The PEZA Board includes a director general (ex-officio chairman) appointed by the President, three deputy directors general, six government department secretaries or representatives, one labor sector representative, and one investors/business sector representative. The director general and deputies must possess degrees in relevant fields and proven integrity.
Businesses get incentives provided under Presidential Decree No. 66 or Executive Order No. 226 (Omnibus Investment Code of 1987). Exporters using local materials also enjoy tax credits under the Export Development Act of 1994.
No national or local taxes are imposed on businesses inside ECOZONES. Instead, five percent (5%) of their gross income is remitted to the national government, of which 3% goes to the national government, 1% to affected local government units, and 1% to a development fund for municipalities near the ECOZONE.
Foreign nationals employed in supervisory, technical, or advisory capacities must not exceed five percent (5%) of the workforce without the Secretary of Labor and Employment's express authorization.
Land and buildings can be leased to foreign investors for up to 50 years, renewable once for an additional 25 years. Such leasehold rights may be sold or transferred following Republic Act No. 7652 (Investors' Lease Act).
The national government is responsible for defense and security coordination with PEZA. Military forces assigned for defense shall not interfere with ECOZONE internal affairs, and PEZA may establish internal security and firefighting forces.
Investors with a minimum of $150,000 investment, their spouses, and dependent children under 21 are granted permanent resident status within the ECOZONE, with freedom of ingress and egress without special immigration authorization. PEZA issues working visas to foreign executives with special technical skills.
A tripartite body composed of representatives from the Department of Labor and Employment, labor, and business sectors shall be created to formulate a social pact mechanism fostering industrial peace within 30 days after the Act's effectivity.
The Director General supervises policies and operations of ECOZONES, safeguards assets, manages revenues, represents PEZA in business, oversees administrative matters, and enforces laws and regulations concerning ECOZONES, among others.
Yes, agricultural lands can be converted for residential, commercial, industrial, and non-agricultural purposes subject to existing laws such as Republic Act No. 6657 and other applicable laws.