Domestic economic zones will likely be set up in poor provinces to promote the growth of underdeveloped areas, a Cabinet member said on Friday.
The proposal to establish such zones is still being studied by the government.
Trade Secretary Gregory L. Domingo also assured that limiting the grant of incentives to locators willing to set up in the new domestic ecozones will ensure an even playing field.
“The domestic ecozones will be outside Metro Manila, iyong domestic ecozones will be in poor provinces to promote growth of business in those undeveloped areas,” Domingo said, in a chance interview with reporters on Friday.
He added that this is in line with the administration’s pursuit of “inclusive growth.” The specific provinces, however, are still being determined.
Domingo noted that the granting of incentives has to be limited to new domestic-oriented enterprises willing to locate in the new domestic economic zones, as opposed to granting the incentives to all domestic-oriented enterprises in existing ecozones. The incentives may include the imposition of 5 percent on gross income in lieu of all other taxes.
“Kawawa naman ang mga existing manufacturers outside of ecozones if bibigyan mo ang competitors nila inside ecozones ng tax advantage, unfair naman iyon. You don’t want to create a condition of an unlevel playing field,” he added, when asked if existing domestic-oriented locators in existing economic zones can be entitled to the incentives, as well. The domestic economic zones will also be handled by the Philippine Economic Zone Authority (Peza), Domingo said.
The Joint Foreign Chambers, along with local business groups, late last year urged the Peza for the creation of such ecozones to support the growth of businesses catering to the domestic market.
The move to create domestic economic zones can also boost the share of manufacturing of the country’s total output from an estimate of 21 percent in 2012 to as much as 30 percent, and increase the labor force in manufacturing from 3.5 million calculated in 2012 to 7.5 million.
Written by: Catherine Pillas