The Cagayan Economic Zone Authority (Ceza) is targeting to bring in P3.6 billion of investments from financial technology (fintech) firms after the first blockchain operator in the region was granted on Tuesday a license to operate.
Ceza Senior Deputy Administrator Raymundo T. Roquero said the agency has given the green light to three fintech firms to operate in Cagayan’s economic zone (ecozone). The Ceza is allowing only 25 fintech companies to do business in the region for the year, and the first to be handed a licence was the Golden Millennial Quickpay Inc. Ltd.
In an interview with reporters, Roquero said Golden Millennial invested $1 million in the Ceza for its start-up, along with two other firms engaged in cryptocurrency, or digital money. Its operations, he added, will require 5,000 workers.
“The license was issued last week. They were the first, [along with two other firms]. These are all Hong Kong-based, [while one] is from Bangkok, Thailand. These are offshore companies with a capital investment of $500,000. They have a committed investment to us of $1 million [each],” Roquero said.
The fintech firms will begin their operations in Manila first because they have yet to build their facilities in Cagayan. However, they are bound by contract to transfer to the ecozone in two years, or else their license will be revoked by the Ceza.
“Within two years, they have an incubation period here in Metro Manila,” Roquero explained.
“They are supposed to build their infrastructure and facilities in Santa Ana, Cagayan, within two years. They have a timeline. First quarter of next year, they should have bought land in the ecozone. Second quarter, they should start building already,” he added.
The Ceza official also said the agency is expecting to generate P3.6 billion of investments for the initial 25 licenses it will issue to fintech firms. Each firm will require around 500 workers, he added.
The Ceza requires blockchain start-ups to pay $100,000 for application fee, $150,000 for the license to operate and $100,000 for the agency’s probity check. Should the applicant fail the probity check, the $100,000 will not be refunded, according to Roquero.
“There are more than 70 applicants, but so far, only three licenses have been granted. Six other applicants have fully paid their obligations, but they are still undergoing probity checks,” he said.
In a speech at the license awarding ceremony of Golden Millennial, Ceza Administrator and CEO Raul L. Lambino said his agency will use advanced security measures to ensure fintech firms doing business in the ecozone will not suffer from fraud transactions and data breaches.
“Let me assure you that the security, privacy and accuracy of information are sacrosanct to us. We will have state-of-the-art technology to lessen the risks of online transactions and also to prevent unlawful activities, such as money laundering and funding for extremist objectives,” Lambino said.
Under Lambino, the Ceza is looking to develop its ecozone into a fintech hub. “We are, at this moment, standing on the very edge of history—that of inaugurating the country’s first cryptocurrency park in the idyllic northeastern edge of Cagayan province,” he said.
“Our charter has put us in this perfect position to create this fintech hub that shall produce financial products relating to blockchain, cryptocurrency exchanges, initial coin offerings, payment solutions, cloud computing, big data, artificial intelligence, robotic advice and other fintech solutions. [The] Ceza, by its involvement in this venture, will keep its commitments,” he added.
“Our goal is to push the logical progression of these technologies into the mainstream, so that transactions that are mediated by them will be fail-safe, will be secure and will be easier and faster. Technology’s benefits are awesome, but they coexist with risks, such as the threat of fraud and possible data breaches,” Lambino said.
With a report from Beatrice Laforga