Investors back Peza push to less developed sites

MANILA, Philippines—Developers will have to look outside the likes of Metro Manila and Metro Cebu to enjoy perks accorded to locators in tourism economic zones and information and technology (IT) parks.

The Philippine Economic Zone Authority (Peza) board has approved new rules for tourism economic zones where development must take place outside Metro Manila, Cebu City, Mactan Island and Boracay.

Under Resolution no. 12-610, tourism economic zones and its locator-enterprises in Metro Manila, Cebu City, Mactan Island and Boracay will no longer enjoy the five-percent gross income tax incentives.

But locators may still enjoy tax- and duty-free importation and zero-VAT [value-added tax] rating on local purchases, the resolution said.

Existing developments may continue to operate, while developers, operators and locators in areas that have already registered with Peza will not be covered by the new rules as well.

By establishing the new set of rules, Peza hopes to spur investors to develop other less prominent but no less attractive areas of the country.

Italian Chamber of Commerce in the Philippines Inc. president Alessandro Abbate told reporters that, because of the tax breaks being offered, investors are now eager to embark on projects to develop new growth areas for tourism.

“Developments in areas outside the major centers will create jobs, and this will help the local economy,” Abbate said.

Julius Guevara, associate director of real estate consultancy Colliers International Philippines, said that developers would likely go to fringe cities to take advantage of low land rates and incentives under the new rules.

But for some developers the benefits of locating to major urban zones like Metro Cebu tend to outweigh the prospect of losing incentives.

But Guevara said that developers could undertake projects “in both the major urban areas or in fringe areas where they can enjoy incentives.”

Earlier this year, Peza issued Resolution 12-329 where IT facilities and parks would no longer enjoy a 5-percent tax incentive.

Among the Peza-registered IT parks in Metro Manila and Cebu are the Northgate Cyber Zone in Alabang, Robinsons Cyberpark on Edsa, Eastwood City Cyberpark in Quezon City, E-Square Information Technology Park in Bonifacio Global City and the Cebu IT Park.

The new rules only affect owners of the buildings and facilities where locators can still be housed. These locators will still be able to enjoy Peza incentives like tax breaks.

Guidelines for the establishment of special economic zones have also been included in the new set of rules.

Developers and operators of new special economic zones for manufacturing, agro-industry, tourism and the like—occupying  less than 25 hectares of land—will not be entitled to Peza incentives.

Also, a different set of guidelines have been drawn up for single locator economic zones.