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House backs creation of Ilocos Sur Ecozone

The House of Representatives has backed a measure establishing a special economic zone in the Province of Ilocos Sur.

House Bill 9097, or the proposed “Ilocos Sur Special Economic Zone and Freeport Act,” according to Rep. Deogracias Victor Savellano of Ilocos Sur, principal author of the bill, is in consonance with the State policy to encourage, promote, and accelerate the sound and balanced industrial, economic and social development of the country.

Savellano said the bill’s enactment shall attract legitimate and productive foreign investments as well as generate employment, especially to those in the rural areas, and increase their productivity and individual family income.

The proposal calls for the creation of the Ilocos Sur Special Economic Zone and Freeport to be referred also as the Ilocos Sur Ecozone. It has been approved on second reading at the Lower House.

Under the bill, the Ilocos Sur Ecozone shall cover a portion of the Solamague Cove and particular areas in the barangays of Dardarat, Solotsolot, Surngit, and Refaro in the Municipality of San Juan as well as Dardarat, Pila, Sagayaden, Sabang, Namruangan, Salapasap, Daclapan, Pug-Os, Turod, and Baclig, all located in the Municipality of Cabugao, Ilocos Sur.

Savellano said the concept and objective of the bill is to develop the Freeport area into a self-sustaining industrial, commercial and investment center that will put in place a wide-reaching employment and investment generation mechanism, all to strengthen the trading and foreign exchange position of the country.

“On the whole, it is looking at effectively complementing the aggressive export-oriented thrust of the country, thus enhancing the country’s global competitiveness,” Savellano explained.

The bill mandates the creation of the Ilocos Sur Special Economic Zone and Freeport Authority or ISSEZA which shall manage and operate the Ilocos Sur Ecozone.

The bill also defines the powers and functions of the ISSEZA such as to 1) operate, administer, manage and develop the Ilocos Sur Ecozone; 2) register, regulate and supervise the enterprises in the Ilocos Sur Ecozone in an efficient and decentralized manner, subject to existing laws; and 3) coordinate with LGUs and exercise general supervision over the development plans, activities, and operations of the Ilocos Sur Ecozone.

The bill directs the ISSEZA to regulate and undertake the establishment, construction, operation, and maintenance of public utilities, other services, and infrastructure in the Ilocos Sur Ecozone.

These include light and power, shipping, barging stevedoring, cargo handling, hauling, warehousing, storage of cargo, port services or concessions, piers, wharves, bulkheads, bulk terminals, mooring areas, storage areas, roads, telecommunications, transport, bridges, terminals, conveyors, water supply and storage, sewerage, drainage, airport operations and other services or concessions or infrastructure necessary or incidental to the accomplishment of the objectives provided under the Act.

The powers of the ISSEZA shall be vested in and exercised by a board of directors to be composed of the chairperson, who shall at the same time be the administrator of the ISSEZA; the Governor of the Province of Ilocos Sur or the duly authorized representative; one of the mayors of the municipalities covered by the ecozone; one representative from the investor’s group; and one representative from among the workers in the ecozone.  

The representative from the Provincial Government and the mayors of the municipalities covered by the ecozone shall serve as ex-officio members of the Board, whose terms in the Board correspond to their terms as elected officials.

On the other hand, the chairperson and members of the Board, except ex-officio members, shall be appointed by the President of the Philippines to serve for a term of six years, unless separated from service due to death, voluntary resignation or removal for cause.

Registered enterprises operating within the Ilocos Sur Ecozone may be entitled to the existing pertinent fiscal incentives as provided for under Republic Act 7916, as amended by RA 8748, also known as the “Special Economic Zone Act of 1995” or those provided under Executive Order 226 as amended, otherwise known as the “Omnibus Investment Code of 1987”.

The measure further states that no taxes, local and national, shall be imposed on business establishments operating within the Ilocos Sur Ecozone, including income tax, withholding tax, donor’s tax percentage tax, and documentary stamp tax.

In lieu of the said tax exemptions, business establishments operating within the Ilocos Sur Ecozone shall pay a five percent final tax on their gross income earned.

As provided, the ISSEZA shall comply with the provisions of RA 10708, otherwise known as “The Tax Incentives Management and Transparency Act” (TIMTA), and its implementing rules and regulations for the proper administration, management, enforcement, implementation and monitoring of tax incentives in the interest of enhancing transparency in the management and accounting of tax incentives in the Ilocos Sur Ecozone.

Topics: House of Representatives , Ilocos Sur Special Economic Zone and Freeport Act , Deogracias Victor Savellano
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