ESTABLISHMENT OF DOMESTIC ECONOMIC & EXPORT ZONES
The planned establishment of Domestic Economic and Export Zones (DEEZ) by the Philippine Economic Zone Authority (PEZA) can help boost the economy and foster inclusive growth.
According to PEZA, there is a clamor among foreign investors wanting to invest in its administered economic zones to serve the growing domestic market. And while current locators in economic zones are required to re-export 70% of their manufactured goods, with only 30% allowed to be sold in the local markets, with the DEEZs, its locators would be allowed to sell 100% of their manufactured goods to the local market.
With the resolution of some issues and concerns by other government agencies like the Bureau of Internal Revenue (BIR) and the Bureau of Customs (BOC) in terms of taxes among others, PEZA hopes to see the realization of DEEZ’s soon, taking into consideration of course, the new policy directions of the incoming government leadership for PEZA, should there be any.
There are also concerns on how the DEEZ’s would affect the local manufacturing industry. The incentives now enjoyed by locators in PEZA administered economic zones are, income tax holidays that would entitle a 100% exemption from corporate income tax for four (4) years for non-pioneer projects and six (6) years for pioneer projects. Upon expiry of the income tax holiday, a five (5) percent special tax on gross income and exemption from all national and local taxes, including the duty free importation of raw materials, capital equipment, machineries and spare parts among others. However, the imported raw materials used by economic zone locators for the manufacture of goods to be sold in the local market shall be subject to duties and taxes.
According to PEZA Director General Lilia De Lima, they have not abandoned the plan to establish DEEZ, despite the concerns of some government agencies. “This is what I want to push for. We’re still threshing out some concerns with the BIR,” De Lima said.
The DEEZ will also help spur economic activity and generate employment in the countryside. De Lima wants to spread manufacturing activities to support the goals of inclusive economic growth. According to her, should firms catering to the domestic market be allowed to operate in economic zones, she will encourage them to locate in less developed areas to help generate employment and spur economic activity. – tradeinmagazine.com