NEDA urges caution on creation of ecozones

MANILA, Philippines — The government should be cautious about the creation of new economic zones in the country as this does not always result in strong development in localities, the National Economic and Development Authority (NEDA) said.

During a hearing of the Senate committee on economic affairs yesterday, NEDA assistant director Cynthia Villena upheld the position of the economic team that the creation of more business zones that provide generous tax incentives would not be an immediate boon to the economy as communities may miss out on revenues.

In place of an aggressive creation of more economic zones, economic managers are pushing for reforms in the tax system that will make the provision of incentives time-bound and merit-based.

“For the economic zones, we are also reiterating the policy stance of the Cabinet economic team that the creation of more tax-free zones does not always guarantee economic success and that communities may even lose out if the cost of giving up revenues exceeds the benefits of having the zones because of lost opportunities,” said Villena.

Proposals have so far been brought forward for the creation of new economic zones  that include the Leyte Ecological Industrial Zone and Bulacan Airport City Special Economic Zone and Freeport.

A bill has also been filed in Congress for the creation of the Mega Cebu Development Authority that will oversee the development of the Metropolitan Cebu area.

“So given the fiscal implications of the ecozone bills, the establishments of ecozones and freeports should have a thorough assessment of costs and benefits to make sure these will be beneficial to the government and the rest of the country,” said Villena.

She noted the need for a masterplan that would identify areas of the country to benefit from the establishment of ecozones and which activities should be supported.