FIRB denies PEZA request to lift NCR ecozone moratorium

In a unanimous decision, the Fiscal and Incentives Review Board (FIRB) has denied the request of the Philippine Economic Zone Authority (PEZA) to lift the moratorium on the declaration of economic zones in Metro Manila.

Philippine Economic Zone Authority

FIRB Chairperson and Finance Secretary Carlos G. Dominguez conveyed their decision during the Feb. 21 meeting, in a letter to PEZA Director General Charito B. Plaza on March 7, 2022, along with the board’s decision to also deny the other request of PEZA to extend the work from home (WFH) arrangement for IT-business process management enterprises.

In denying PEZA’s request to lift the moratorium under Administrative Order No. 18 in 2019 on the declaration of ecozones in the National Capital Region, FIRB reminded PEZA that order aims to complement existing strategies and policies on rural development.

As such, FIRB told PEZA that the 10 Point Socio-Economic Agenda of the Administration calls for the promotion of rural and value chain development toward increasing agricultural and rural enterprise productivity and rural tourism, as well as investing in human capital development through matching skills and training, to meet the demand of businesses and the private sector.

To realize this, FIRB said the administration implemented a moratorium in the establishment of economic zones in Metro Manila to ensure that economic activities are dispersed in the countryside and equal opportunities are accorded to those outside the metropolitan areas.

Dominguez explained that AO No. 18, in fact, is consistent with the CREATE Law, contrary to what PEZA was trying to establish that the moratorium is inconsistent with the essence of CREATE .

On the contrary, FIRB said the law also complements the strategy of the administration by providing longer period of incentives for registered activities located outside the NCR. It noted that CREATE seeks to establish a fiscal incentives program that is performance-based, time-bound, targeted, and transparent. This complements AO 18, which aims to promote rural development, ensure inclusive growth in the countryside, and create robust economic activity and wealth generation in areas outside Metro Manila. That being said, FIRB said, “the moratorium imposed by AO 18 is still in effect.”

Even as the moratorium is still in effect, FIRB said that locator companies may still register with PEZA and commence operations in existing ecozones in Metro Manila. Likewise, new ecozones may still be established but with the condition that the same be located in areas outside of Metro Manila.

In its earlier appeal to lift the AO 18 moratorium, PEZA said that the prohibition on the establishment of ecozones in Metro Manila has not only affected local government units in Metro Manila that do not yet host ecozones, but also worsened the vacancy rate of office spaces in Metro Manila considering the exit of Philippine Offshore Gaming Operators and the shift to WFH arrangements. PEZA also implied that CREATE Act has superseded the AO 18 and in effect lifted the moratorium.

On PEZA’s other request to extend the WFH arrangement of its IT-BPM registered enterprises, which will expire end this month, March, FIRB likewise unanimously denied the request because it is not consistent with the economic strategy of the government of reopening the economy gradually and safely.

FIRB further noted its thrust that the reopening of the economy promotes higher utilization rates in infrastructure, specifically in office spaces, among concerned registered business enterprise.

“An increase in infrastructure utilization within ecozones or freeports will encourage further expansion and diversification of investments in the area and support the government’s initiative of making the country a safe investment and work destination,” FIRB said.

In fact it noted that current policies and programs of the government such as allowing the pilot opening of face-to-face classes, adopting granular lockdown measures, and expanding the vaccination to include those between 5-17 years old, are all geared towards improving mobility and enhancing greater economic activity.

Memorandum Circular No. 93 of the Office of the President stated that at least 40 percent, 60 percent, and 80 percent on-site workforce in government offices are required under Levels 4,3, and 2, respectively. The IATF has also declared Alert Level 1, the most relaxed form of restrictions, for NCR and several provinces.

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