CEZA Spurs Development of Cagayan

The Manila Bulletin November 27, 2009, 3:15pm

The Cagayan Economic Zone Authority (CEZA) is a multibillion-peso self-sustaining, commercial, financial, investment free port and tourism enclave built mainly to attract foreign investment, with suitable retirement and residential amenities, Jack Enrile, economic and development consultant of his father, Senate President Juan Ponce Enrile, told a group of visiting foreign investors.Incentives, he said, include permanent resident status within the zone; and working visas renewable every two years with highly specialized skills which no Filipino possesses.

According to him, fiscal attractions include a four to six-year income tax holiday; tax and duty-free importation of capital equipment; a special tax rate of 5 percent of gross income in lieu of all local and national taxes; and tax credits for foreign corporations and effective zero-rating for articles admitted to the zone from the customs territory under proper permit.

Locators are guaranteed no taxes, except 5 percent of gross income – shared by the government which gets 2 percent; and Sta. Ana and Aparri towns, 1.5 percent each.

Its mandate is clear: “To operate on its own, either directly or through a subsidiary entity, or license to others, tourism-related activities, including games, amusements, recreational and sports facilities such as horse racing, dog racing, gambling casinos, golf courses, and others…”, under priorities and standards it sets.

It is also required to protect, preserve, maintain and develop the virgin forests, beaches, coral and coral reefs within the zone; the virgin forest, for example, was proclaimed national park covered by a permanent total log ban.

The Cagayan Freeport is situated on 125 hectares of land with white sand beaches and a diverse forest environment. Of the total land area, 12,129.81 hectares are old growth area rich in ecological heritage.

It includes diversified flora and fauna; 19,406.43 hectares of second growth area; 220 hectares of mangrove; 598 hectares of brush land; and 2,089.24 hectares of grassland.

The resort area is an ideal site for eco-tourism with over 20 rivers and three watersheds.

The Board of Directors, chaired by the trade secretary, includes the mayors of Sta. Ana and Aparri, two labor representatives, four from investors, and two locals.

Autonomous except in defense and security matters, CEZA has an authorized capital stock of P2 billion and is under the direct control and supervision of the Office of the President.

In 2008, CEZA defied low unemployment in a global recession, posting instead double employment generation last year with more than 6,800 employed over the 3,207 hiring in 2007.

CEZA administrator and CEO Jose Mari Ponce is confident that all the infrastructure facilities will be in place next year, adding the transshipment and agro-industrial strategy will become viable by 2012.

Of the total investment requirement, Ponce said between P5 billion to P6 billion would be used for the construction of the international airport and P4 billion to P5 billion for the construction of the container port.

As of end-August 2008, CEZA had 87 locators, of which 49 were already operational with actual investments of P3.826 billion.

The 87 locators have actually committed to invest a total of P16.4 billion. In 2007, there were only 68 registered enterprises and in 2006, the number stood at 55.

The investments are in real estate, banking, port operations, aviation, interactive gaming, tourism and resort services, agro-industrial, leisure facilities, international fishing, telecommunications, software development, management services, trading and importation, mining and quarrying, among others.

Among the largest investments are two leisure-resort and gaming support service complexes, with a total of 600 rooms, including villas, KTV, water sports facilities and restaurants that are now operational.

About 320 villas are being constructed as part of the expansion of the four-hectare E Suncity Holiday and Leisure Resort jointly operated by the Chinese firm Cheuk Wah Technology Leamington Orient Ltd., one of two casino complexes hosting 43 gaming companies.

The other is the P800-million, 300-room Eastern Hawaii Casino Hotel and Resort at the CEZA complex.

Following the increase in investment registrations, estimated operating revenues of CEZA climbed to more than P200 million in 2008 from P139 million in 2007.

Among the largest investments are two leisure-resort and gaming support service complexes, with a total of 600 rooms, including villas, KTV, water sports facilities and restaurants that are now operational.

“The expansion of Cagayan Special Economic Zone and Freeport changed the investment climate in the region,” according to the 2007 regional economic situationer prepared by the National Economic and Development Authority (NEDA).

Since 1995 when CEZA opened, the vision has always been to provide jobs, increase productivity and income.

Thousands of Filipinos have found employment as the new economic hub continued to draw fresh investments and international tourists.

In just seven years, the number of potential jobs in the economic zone increased from just 195 in 2002 to 5,918 as of August 2008. The 2008 employment expectation in the economic zone rose 80 percent from 3,283 potential jobs that were registered in 2007. Potential job generation was estimated at 2,541 in 2006.

Over 5,000 additional jobs are expected with the entry of three land-based casino operators – including a major American firm and two Chinese companies – once the international airport opens.