DTI bucks domestic ecozones bid

Setting up domestic economic zones to boost local businesses may not only prove to be problematic, but may also fail to address the various challenges faced by industries, according to the Department of Trade and Industry.

Reacting to calls for the creation of domestic ecozones, trade officials last week stressed the complexities of setting up such sites as well as the need for a deeper study on this proposal.

“The idea of setting up domestic zones has been proposed before, but it can be complicated to set up because the Philippine Economic Zone Authority (Peza) was created originally to manage ecozones for export-oriented businesses. It remains unsure whether or not a domestic ecozone is feasible,” said Trade Secretary Gregory L. Domingo.

Domingo also pointed out that the creation of domestic ecozones might entail a change in the charter of the Peza.

Trade Undersecretary Adrian S. Cristobal Jr. noted that while they were not rejecting the proposal, they were also weighing other options that might be more effective in boosting the competitiveness of Philippine industries.

“It is important to identify the fundamental problems, which include the legal and regulatory regimes that exist and that give difficulties to businesses. We know these include red tape, overlapping regulations and the number of steps needed in acquiring permits and licenses, among others,” Cristobal explained.

“We’re looking into that proposal [of setting up domestic ecozones] but we also started looking at other possible policy reforms. We’ve also looked at exempting domestic enterprises from duties on the importation of capital equipment to make them more competitive. We’re finding other ways to improve competitiveness,” he further said.

Also being looked at, according to Cristobal, was a proposal to exempt all domestic enterprises from duties on the importation of capital equipment and to address the conflicts between national laws and local ordinances.

He likewise stressed the need to “look at the impact on creating more zones.”

“The challenge is how to ensure growth and development as a whole. If we will continue putting up these ecozones, the challenge is how do we link them to the rest of the economy and how do we get more of the local small and medium enterprises (SMEs) to supply to these ecozones so we can spread the growth,” Cristobal said.

Earlier this December, the Joint Foreign Chambers urged the government to expand the authority of Peza and pursue the creation of a new type of economic zone that will support more of production for the domestic market rather than for export.

The JFC had urged Congress not to increase the number of the existing type of ecozones, given the “unfortunate history of smuggling in special economic zones” that has been “destructive to a healthy public revenue of the government and has shaken the confidence of foreign and domestic investors in the automotive, petroleum, and textile industries.”