Interview: Vince Dizon
What are the strengths of economic zones in the Philippines compared to other business clusters throughout South-east Asia?
VINCE DIZON: The Philippines has a dynamic and growing young population with a median age of around 24. This is a vital demographic advantage that is underscored by increased government spending in education and health services. The average level of English proficiency is among the highest in Asia. Comparatively, although countries like Vietnam and Thailand have strong manufacturing bases, the language barrier often inhibits them from growing their industries. In addition, the Philippines produces over 600,000 graduates each year, which enriches the professional pool and gives Filipino workers potential to move up the value chain.
The government is committed to regional and inclusive growth and thus strongly supports economic zones. By improving connectivity and regional access through the Build, Build, Build infrastructure programme, the government is able to establish development beyond Metro Manila. Zones like Clark, in Pampanga, offer solutions to congestion in urban centres.
One of these solutions is New Clark City, a 9,450-hectare fully master-planned new metropolis. Accessibility and connectivity are crucial for any economic zone, and Clark can be accessed by air, sea and land infrastructure. A new passenger terminal, scheduled for completion by mid-2020, is being built at Clark International Airport and is the perfect alternative to Ninoy Aquino International Airport for international connections. Alternative infrastructure under construction includes the ManilaClark Railway, the Subic-Clark Railway and the Central Luzon Link Expressway. The Philippine Economic Zone Authority offers fiscal and non-fiscal incentives, including income tax holidays and simplified import-export procedures. Overall, the Philippines is among some of the fastest-growing economies in the world, with GDP growth above 6%, a stable fiscal position, ample foreign exchange reserves and a normalising inflation.
How will new tax frameworks impact the development plans of new economic and business centres?
DIZON: The country’s infrastructure developments and skilled labour force will become even more attractive with the proposed Tax Reform for Attracting Better and High-Quality Opportunities Bill (TRABAHO). The proposed bill will make the corporate tax system simpler and more transparent to further improve the business climate and boost competitiveness across regions.
Economic centres will be financially stronger as the lowered corporate tax frees up more capital, enabling higher investment and expanded operations. It is also expected to generate an estimated 1.4m new jobs between 2021 and 2029, and benefit infrastructure development by broadening the tax base and improving compliance. Under the new TRABAHO bill, the incentive system will be competitive, performance-based, targeted, time-bound and transparent.
In what ways will hosting the 30th South-east Asian (SEA) Games help the Philippines attract international companies to the new business zones?
DIZON: Hosting the 30th SEA Games has enabled the Philippines to show our full potential. New Clark City – the main centre for sports during the event – displayed the progress of the Build, Build, Build programme, as well as the reduction of red tape conditions, and improved transparency of bidding and construction processes. Clark is a showcase of the modern Philippines: a well-planned, disaster-resilient, smart city on par with the world’s other great cities. This has the potential to raise the international profile of the country and could translate into a measurable increase in media attention, global recognition, acceptance, investment and tourism. New long-term and sustainable infrastructure developments, including communication and transportation links installed alongside the sports and hotel facilities, are expected to continue to benefit both the business community and local residents for many years to come.
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