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Cagayan Economic Zone Authority is primed for boom in 2019

BY: THE MANILA TIMES

Secretary Raul Lambino, CEZA administrator and CEO,and concurrent presidential advisor for Northern Luzon, is determined to turn the Zone into a haven for financial technology, innovation and tourism-driven entertainment

LAST YEAR, the Cagayan Economic Zone Authority (CEZA) experienced a surge of investments—its biggest jump in more than two decades—following the unveiling of its cryptocurrency and blockchain hub, a first in the country, and the retooling of its online gaming industry sans the control of a duopoly.

Both programs are at the tip of a three-pronged initiative that Secretary Raul Lambino, administrator and CEO of the Cagayan Economic Zone Authority is pursuing relentlessly to turn the Zone into a haven for Financial Technology (Fintech) innovation and tourism-driven entertainment.

With Lambino at the helm of CEZA, the route he chose for the Zone’s recovery was daring, if not grand in vision.

Like a modern-day savant spinning the wheels of innovation, out to find a formula to perk up growth at the economic enclave in Sta. Ana, Cagayan, Lambino came upon one Eureka moment, and then another, and then a third one.

First, he transformed the landscape of online gaming. Where only two firms used to wield immense power over the entire operations — being the Cagayan Freeport’s master licensors for online gaming — Lambino decisively dismantled the duopoly with one masterstroke: he changed the lopsided rules.

So online gaming became a rule-based operation.

He led a CEZA crackdown on illegal online gaming that had the registration of 58 Inter-Active Gaming Licensees (IGLs) cancelled, as well as those of 77 Business Process Outsourcing (BPO) firms that served as their back offices in compliance with the mandate of Executive Order No. 13 which prohibited the operations of CEZA-licensed IGLs outside of the Cagayan Special Economic Zone and Freeport in Santa Ana, Cagayan.

Its impact was to restore confidence in the agency and belief in clean and efficient government, the hallmark of the Duterte Administration, which promised change in 2016 when it claimed power.

The most visible benefits were felt within a few months when a new wave of big players (locators) from overseas started flowing in, attracted by the suddenly diversifying, oxygen-fed air of a formerly suffocating economic zone.

In mid-May, Lambino unveiled the cryptocurrency initiative that he fittingly christened “Crypto Valley in Asia.” It was a low-key move, but the innovation set off a rush of cryptocurrency and Fintech firms to locate in Santa Ana, applying with CEZA as principal licensees for blockchain and virtual currency trading.

This transpired despite CEZA’s high ceiling for the initial investment to be made by the licensed exchanges just to locate their permanent offices in Santa Ana: $100,000 for application fees, $150,000 for license fees, and $1 million each as investment commitment to be delivered in two years.

At the end of the year, 25 offshore fintech firms were given principal licenses by the agency. Every exchange given the license to operate had to commit a minimum of $1 million in investment, and sign up at least a minimum of four traders or brokers.

What these licensed exchanges will find at the Zone, Lambino said, is “a haven where they can design and gestate their financial technology innovations—and we are going to be partners in building the future of Fintech.”

CEZA is creating, he said, “an ideal atmosphere that will inspire the best minds of the young generation and the world‘s leading cryptocurrency companies to engage in the development of the next wave of technological breakthroughs.” The third innovation in Lambino’s book is the most ambitious in scope, in scale, in vision, and in goals: A new satellite city southwest of Santa Ana.

It is a proposed $4.5 billion joint venture between CEZA and a leading local property development and global entertainment firm — First Cagayan Leisure Resorts Corporation, Asia’s online gaming industry pioneer.

Inspired by the North Star—the bright point of light nearly directly above the Earth’s magnetic north pole and a beacon to travelers, it will be named “City Polaris.” It will be master-planned by the Italian company Mercurio Design Lab” and financed by Singapore-based LongRunn Capital Pte. Ltd.

The modern city will rise with integrated resorts, six-star hotels, public and championship golf courses, water theme parks, movie theme parks, retirement village, private villas, condominiums, cyberparks and iconic architecture and the latest amenities and innovations—one of the finest in this part of the world.

Construction will begin this year on a scenic mountainside overlooking enchanting Palaui Island and in another seaside site—and if LongRunn Capital’s work timetable will not run into unexpected delays, the 500-hectare city could be inaugurated sometime in early 2021.

“We have never imagined in our lifetime a project of this magnitude and scale,” said Lambino, seeing City Polaris as an entertainment gem that could pull in foreign and local business to perk up growth in the Zone—and contribute to Northern Luzon’s economy.

LongRunn Capital has lined up other major investments in the Zone, one of them a joint venture with Cagayan Premium to develop, upgrade, expand and modernize the Cagayan North International Airport in Lallo with a multi-story passenger terminal, modern facilities and MRO services, and a new regional airline company.

A multiple lane expressway connecting Santa Ana and Lal-lo, the airport town some 60 kms to the southwest, would be constructed to cut travel time between them to thirty minutes or less.

Santa Ana itself is poised to become the country’s next major beach destination. Shanghai’s Jucheng Supply Management Group is pouring US$100 million into the development of an integrated resort promoting its pristine white beaches. The resort will rise in the middle of some of the finest unspoiled natural beauties of Luzon’s extreme northeast region.

The world’s leading apparel manufacturer, China’s Zhejiang Guannan Group, is breaking new ground in the Zone this year with a $100-million initial investment for “green” textile production and real estate development.

To boost health care for visitors and the entire Northern Luzon population, a Slovak firm stepped with a proposal to build a modern hospital. “The beginning of a new era of health care in our region,” said Lambino, adding that CEZA would give medical tourism and retirement communities an added premium.

Maglev train R&D hub

Two Chinese companies, one engaged in train technology and the other in finance, entered into agreements with CEZA to establish a hub in the Zone dedicated for the development and production of Maglev (magnetic levitation) trains, the world’s fastest floating trains. For the initial R&D effort, Hunan Goke Maglev Technology Development Ltd. of Changsa City and Hongkong-based Eminova Asset Management Ltd are investing P1.5 billion.

A P30-million investment made by the Taiwan Electronic Company-EV will usher in production of electric vehicles in support of the agency’s advocacy of green technology.

In August 2018, CNIA received the long- awaited International Civil Aviation Organization certification and accreditation by the International Association of Travel Agencies, clearing the last hurdle for it to go into full commercial operation.

“With an airport code and a spot in the global travel map,” Lambino said, “CNIA can now operate international flights. Cagayan province, not only CEZA, is entering a new age.”

To guarantee a stable electric power supply as the country’s emerging new investment jewel, CEZA signed MoA’s enabling the power generation and distribution companies to manage the Zone’s surging power requirements.

In this technological age, CEZA is adapting to innovative technology as fast as it could. In an agreement, it gave Converge Information and Communications Technology Solutions the green light to install underground fiber optic cable and an aerial distribution network to secure a digitally-enabled special economic zone.

Linked to Taiwan and the world, the Converge submarine cable will boost the existing cable infrastructure built by LR Data and connected by submarine cable to Hongkong, and by underground fiber optic line to its Makati City-based headquarters.

An efficient infrastructure system will have to be put in place to further transform the Freeport’s investment climate. This year, CEZA is determined to roll out a building and rehabilitation program.

A major facelift of Port Irene will be undertaken including the dredging of its mooring waters. CEZA is also building three additional huge warehouses along the coast of Santa Ana where a coastal boulevard running all the way to nearby San Vicente Port, which will also be rehabilitated, will be constructed.

San Vicente will have a bigger wharf to allow cruise vessels to berth while also boosting facilities for inter-island services.

Two jetty ports that will be constructed in Palaui Island, named one of the Top Ten best beaches in the world by CNN Go, to go with the development of a 200-hectare property, part of a concept to turn it into a tourism enclave.

Nangaramoan beach, another destination off the beaten track, will have its share of development funds. CEZA has allocated part of its 2019 corporate budget for the building, near its beachfront, of rest houses and boutique hotels accessible to backpackers and budget tourists.

For several years, CEZA impounded a fleet of high-end imported cars that had illegally through Port Irene, a grim reminder of the Freeport’s past as the entreport for high-duty contraband items.

Upon being named CEZA Administrator and CEO by President Rodrigo Duterte, Lambino made known his resolve to give the agency a clean, squeaky image—that “CEZA does not, and will never tolerate, condone or encourage smuggling or wrongdoing of any kind at the Freeport”.

On March 14, 2018 in Santa Ana, as the President and a group of ranking government officials watched while TV network cameras rolled, a bulldozer and backhoe rolled over several rows of Porsches, BMWs, and Benzes plus a collector’s Maserati, GT3, Alpina B12, Opel Manta and a Renault R5.

On July 31, 2018 followed a second public condemnation, again watched by the President in Santa Ana. An entire fleet of Hummers, Lamborghinis, Land Cruisers, and Harley Davidson big bikes was turned into scrap by the same bulldozer and backhoe.

From the scrap CEZA will build, in Lambino’s catchy phrase, a “Memorial of Transformation”.

It was a year of moral rebirth in the agency and a turnaround in its revenues—a dramatic, but hardly surprising development. Lambino is typically driven, a man of boundless energy and bold imagination who loves to lead by blazing new trails and exploring unchartered territories.

For instance, his “Crypto Valley in Asia” project launched only in May with little fanfare has caught on. Within six months, it generated the bulk of CEZA’s revenues for the year, contributing P476.314 million to its coffers, P31.482 million to Customs collections while paying to the BIR a corporate tax amounting to P110 million.

CEZA more than tripled its 2017 revenue collections of P233.063 million to P706.512 million last year, or a 330 percent increase—an all-time new agency record in total revenues collected. Because of this, CEZA earned a net of P295.661 million to set aside dividends worth P147.830 million for the national government.

OVCE Principal Licensees stripped the title of the online gaming operators as CEZA’s major tax payers, but their biggest contributions are expected to overflow CEZA’s coffers this year. That is when their asset-backed tokens start to be traded in the offshore market and their coins used as tokens in the lucrative online gaming industry.

Even land-based gaming and online gaming would eventually be overshadowed by the influence of the cryptocurrency market in the expanding territory of global entertainment and tourism promotions.

The reason for this, as Fintech advocates argue, is that digital assets enjoy certain unmatched advantages.

Not only are they low in transaction costs, much lower than those incurred using credit cards or bank transfers. More significant is that they are irreversible and transparent, done at the flick of a finger, and have no chargebacks because proof of payment is readily available on blockchain (distributed ledger).

The long-term viability of doing business in cryptocurrencies using the blockchain technology to be more consumer-autonomous, has brought increasing optimism to online gaming operators.

Admirably, Lambino has provided the right stimulus package and impetus to attract foreign investors to the zone.

The challenge for him this year is to surpass his standard. The consensus is, CEZA is going to experience another year of robust growth and achievement in 2019.

https://www.manilatimes.net/cagayan-economic-zone-authority-is-primed-for-boom-in-2019/516500/

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