February 24, 1995

REPUBLIC ACT NO. 7916

AN ACT PROVIDING FOR THE LEGAL FRAMEWORK AND MECHANISMS FOR THE
CREATION, OPERATION, ADMINISTRATION, AND COORDINATION OF SPECIAL
ECONOMIC ZONES IN THE PHILIPPINES, CREATING FOR THIS PURPOSE, THE
PHILIPPINE ECONOMIC ZONE AUTHORITY (PEZA), AND FOR OTHER PURPOSES

CHAPTER I
Purposes and Objectives; Establishment and Nature of Special Economic Zones;
Coordination with Other Similar Schemes
SECTION 1. Title. — This Act shall be known and cited as "The Special Economic
Zone Act of 1995."
SECTION 2. Declaration of Policy. — It is the declared policy of the government to
translate into practical realities the following State policies and mandates in the 1987
Constitution, namely: acd

(a) "The State recognizes the indispensable role of the private sector,
encourages private enterprise, and provides incentives to needed
investments." (Sec. 20, Art. II)
(b) "The State shall promote the preferential use of Filipino labor, domestic
materials and locally produced goods, and adopt measures that help
make them competitive." (Sec. 12, Art. XII)
In pursuance of these policies, the government shall actively encourage, promote,
induce and accelerate a sound and balanced industrial, economic and social development
of the country in order to provide jobs to the people especially those in the rural areas,
increase their productivity and their individual and family income, and thereby improve the
level and quality of their living condition through the establishment, among others, of
special economic zones in suitable and strategic locations in the country and through
measures that shall effectively attract legitimate and productive foreign investments.
SECTION 3. Purposes, Intents and Objectives. — It is the purpose, intent and
objective of this Act:
(a) To establish the legal framework and mechanisms for the integration,
coordination, planning and monitoring of special economic zones,
industrial estates/parks, export processing zones and other
economic zones;
(b) To transform selected areas in the country into highly developed agro-
industrial, industrial, commercial, tourist, banking, investment, and
nancial centers, where highly trained workers and e cient services
will be available to commercial enterprises;cda

(c) To promote the ow of investors, both foreign and local, into special
economic zones which would generate employment opportunities
and establish backward and forward linkages among industries in and
CD Technologies Asia, Inc. 2018 cdasiaonline.com
 around the economic zones;
(d) To stimulate the repatriation of Filipino capital by providing attractive
climate and incentives for business activity;
(e) To promote nancial and industrial cooperation between the Philippines
and industrialized countries through technology-intensive industries
that will modernize the country's industrial sector and improve
productivity levels by utilizing new technological and managerial
know-how; and
(f) To vest the special economic zones on certain areas thereof with the
status of a separate customs territory within the framework of the
Constitution and the national sovereignty and territorial integrity of
the Philippines.
SECTION 4. Definition of Terms. — For purposes of this Act, the following de nitions
shall apply to the following terms:
(a) "Special economic zones (SEZ)" — hereinafter referred to as the
ECOZONES, are selected areas with highly developed or which have
the potential to be developed into agro-industrial, industrial,
tourist/recreational, commercial, banking, investment and nancial
centers. An ECOZONE may contain any or all of the following:
industrial estates (IEs), export processing zones (EPZs), free trade
zones, and tourist/recreational centers.
(b) "Industrial estate (IE)" — refers to a tract of land subdivided and
developed according to a comprehensive plan under a uni ed
continuous management and with provisions for basic infrastructure
and utilities, with or without pre-built standard factory buildings and
community facilities for the use of the community of industries.
(c) "Export processing zone (EPZ)" — a specialized industrial estate located
physically and/or administratively outside customs territory,
predominantly oriented to export production. Enterprises located in
export processing zones are allowed to import capital equipment and
raw materials free from duties, taxes and other import restrictions.
(d) "Free trade zone" — an isolated policed area adjacent to a port of entry
(as a seaport) and/or airport where imported goods may be unloaded
for immediate transshipment or stored, repacked, sorted, mixed, or
otherwise manipulated without being subject to import duties.
However, movement of these imported goods from the free-trade
area to a non-free-trade area in the country shall be subject to import
duties. cdtai

Enterprises within the zone are granted preferential tax treatment and immigration
laws are more lenient.
SECTION 5. Establishment of ECOZONES. — To ensure the viability and geographic
dispersal of ECOZONES through a system of prioritization, the following areas are initially
identified as ECOZONES, subject to the criteria specified in Section 6:

CD Technologies Asia, Inc. 2018 cdasiaonline.com

 (a) So much as may be necessary of that portion of Morong, Hermosa,
Dinalupihan, Orani, Samal, and Abucay in the Province of Bataan;
(b) So much as may be necessary of that portion of the municipalities of
Ibaan, Rosario, Taysan, San Jose, San Juan, and cities of Lipa and
Batangas;
(c) So much as may be necessary of that portion of the City of Cagayan de
Oro in the Province of Misamis Oriental;
(d) So much as may be necessary of that portion of the City of Iligan in the
Province of Lanao del Norte;
(e) So much as may be necessary of that portion of the Province of
Saranggani;
(f) So much as may be necessary of that portion of the City of Laoag in the
Province of Ilocos Norte;
(g) So much as may be necessary of that portion of Davao City and Samal
Island in the Province of Davao del Norte;
(h) So much as may be necessary of that portion of Oroquieta City in the
Province of Misamis Occidental;
(i) So much as may be necessary of that portion of Tubalan Cove, Malita in
the Province of Davao del Sur;
(j) So much as may be necessary of that portion of Baler, Dinalungan and
Casiguran including its territorial waters and islets and its immediate
environs in the Province of Aurora;
(k) So much as may be necessary of that portion of cities of Naga and Iriga
in the Province of Camarines Sur, Legaspi and Tabaco in the Province
of Albay, and Sorsogon in the Province of Sorsogon;
(l) So much as may be necessary of that portion of Batan Island in the
Province of Batanes;
(m) So much as may be necessary of that portion of Lapu-lapu in the Island
of Mactan, and the municipalities of Balamban and Pinamungahan
and the cities of Cebu and Toledo and the Province of Cebu, including
its territorial waters and islets and its immediate environs;
(n) So much as may be necessary of that portion of Tacloban City;
(o) So much as may be necessary of that portion of the Municipality of
Barugo in the Province of Leyte;
(p) So much as may be necessary of that portion of the Municipality of
Buenavista in the Province of Guimaras;
(q) So much as may be necessary of that portion of the municipalities of San
Jose de Buenavista, Hamtic, Sibalom, and Culasi in the Province of
Antique;
(r) So much as may be necessary of that portion of the municipalities of
CD Technologies Asia, Inc. 2018 cdasiaonline.com
 Catarman, Bobon and San Jose in the Province of Northern Samar, the
Island of Samar;
cda

(s) So much as may be necessary of that portion of the Municipality of

Ternate and its immediate environs in the Province of Cavite;
(t) So much as may be necessary of that portion of Polloc, Parang in the
Province of Maguindanao;
(u) So much as may be necessary of that portion of the Municipality of Boac
in the Province of Marinduque;
(v) So much as may be necessary of that portion of the Municipality of
Pitogo in the Province of Zamboanga del Sur;
(w) So much as may be necessary of that portion of Dipolog City-Manukan
Corridor in the Province of Zamboanga del Norte;
(x) So much as may be necessary of that portion of Mambajao, Camiguin
Province;
(y) So much as may be necessary of that portion of Infanta, Real, Polillo,
Alabat, Atimonan, Mauban, Tiaong, Pagbilao, Mulanay, Tagkawayan,
and Dingalan Bay in the Province of Quezon;
(z) So much as may be necessary of that portion of Butuan City and the
Province of Agusan del Norte, including its territorial waters and islets
and its immediate environs;
(aa) So much as may be necessary of that portion of Roxas City including its
territorial waters and islets and its immediate environs in the Province
of Capiz;
(bb) So much as may be necessary of that portion of San Jacinto, San
Fabian, Mangaldan, Lingayen, Sual, Dagupan, Alaminos, Manaoag,
Binmaley in the Province of Pangasinan;
(cc) So much as may be necessary of that portion of the autonomous
region;
(dd) So much as may be necessary of that portion of Masinloc, Candelaria,
and Sta. Cruz in the Province of Zambales;
(ee) So much as may be necessary of that portion of the Palawan Island;
(ff) So much as may be necessary of that portion of General Santos City in
South Cotabato and its immediate environs; acd

(gg) So much as may be necessary of that portion of Dumaguete City and

Negros Oriental, including its territorial waters and islets and its
immediate environs;
(hh) So much as may be necessary of that portion of the Province of Ilocos
Sur;
(ii) So much as may be necessary of that portion of the Province of La Union;
CD Technologies Asia, Inc. 2018 cdasiaonline.com
 (jj) So much as may be necessary of that portion of the Province of Laguna,
including its territorial waters and its immediate environs;
(kk) So much as may be necessary of that portion of the Province of Rizal;
(ll) All existing export processing zones and government-owned industrial
estates; and
(mm) Any private industrial estate which shall voluntarily apply for
conversion into an ECOZONE.
These areas shall be developed through any of the following
schemes:
(i) Private initiative;
(ii) Local government initiative with the assistance of the national
government; and
(iii) National government initiative.
The metes and bounds of each ECOZONE are to be delineated and more particularly
described in a proclamation to be issued by the President of the Philippines, upon the
recommendation of the Philippine Economic Zone Authority (PEZA), which shall be
established under this Act, in coordination with the municipal and/or city council, National
Land Use Coordinating Committee and/or the Regional Land Use Committee.
SECTION 6. Criteria for the Establishment of Other ECOZONES. — In addition to the
ECOZONES identi ed in Section 5 of this Act, other areas may be established as
ECOZONES in a proclamation to be issued by the President of the Philippines subject to
the evaluation and recommendation of the PEZA, based on a detailed feasibility and
engineering study which must conform to the following criteria:
(a) The proposed area must be identi ed as a regional growth center in the
Medium-Term Philippine Development Plan or by the Regional
Development Council;
(b) The existence of required infrastructure in the proposed ECOZONE, such
as roads, railways, telephones, ports, airports, etc., and the suitability
and capacity of the proposed site to absorb such improvements;
(c) The availability of water source and electric power supply for use of the
ECOZONE;
(d) The extent of vacant lands available for industrial and commercial
development and future expansion of the ECOZONE as well as of
lands adjacent to the ECOZONE available for development of
residential areas for the ECOZONE workers; aisa dc

(e) The availability of skilled, semi-skilled and non-skilled trainable labor

force in and around the ECOZONE;
(f) The area must have a signi cant incremental advantage over the existing
economic zones and its potential profitability can be established;
(g) The area must be strategically located; and
CD Technologies Asia, Inc. 2018 cdasiaonline.com
 (h) The area must be situated where controls can easily be established to
curtail smuggling activities.
Other areas which do not meet the foregoing criteria may be established as
ECOZONES: Provided, That the said area shall be developed only through local government
and/or private sector initiative under any of the schemes allowed in Republic Act No. 6957
(the build-operate-transfer law), and without any nancial exposure on the part of the
national government: Provided, further, That the area can be easily secured to curtail
smuggling activities: Provided, nally, That after ve (5) years the area must have attained
a substantial degree of development, the indicators of which shall be formulated by the
PEZA.
SECTION 7. ECOZONE to be a Decentralized Agro-Industrial, Industrial,
Commercial/Trading, Tourist, Investment and Financial Community . — Within the
framework of the Constitution, the interest of national sovereignty and territorial integrity
of the Republic, the ECOZONE shall be developed, as much as possible, into a
decentralized, self-reliant and self-sustaining industrial, commercial/trading, agro-
industrial, tourist, banking, nancial and investment center with minimum government
intervention. Each ECOZONE shall be provided with transportation, telecommunications,
and other facilities needed to generate linkage with industries and employment
opportunities for its own inhabitants and those of nearby towns and cities.
The ECOZONE shall administer itself on economic, nancial, industrial, tourism
development and such other matters within the exclusive competence of the national
government.
The ECOZONE may establish mutually bene cial economic relations with other
entities within the country, or, subject to the administrative guidance of the Department of
Foreign Affairs and/or the Department of Trade and Industry, with foreign entities or
enterprises.
Foreign citizens and companies owned by non-Filipinos in whatever proportion may
set up enterprises in the ECOZONE, either by themselves or in joint venture with Filipinos in
any sector of industry, international trade and commerce within the ECOZONE. Their
assets, pro ts and other legitimate interests shall be protected: Provided, That the
ECOZONE through the PEZA may require a minimum investment for any ECOZONE
enterprise in freely convertible currencies: Provided, further, That the new investment shall
fall under the priorities, thrusts and limits provided for in this Act.
SECTION 8. ECOZONE to be Operated and Managed as Separate Customs Territory .
— The ECOZONES shall be managed and operated by the PEZA as separate customs
territory.
The PEZA is hereby vested with the authority to issue certi cates of origin for
products manufactured or processed in each ECOZONE in accordance with the prevailing
rules of origin, and the pertinent regulations of the Department of Trade and Industry
and/or the Department of Finance. casia

SECTION 9. Defense and Security. — The defense of the ECOZONE and the security
of its perimeter fence shall be the responsibility of the national government in coordination
with the PEZA. Military forces sent by the national government for the purpose of defense
shall not interfere in the internal affairs of any of the ECOZONE and expenditure for these
military forces shall be borne by the national government. The PEZA may provide and
CD Technologies Asia, Inc. 2018 cdasiaonline.com
 establish the ECOZONES' internal security and firefighting forces.
SECTION 10. Immigration. — Any investor within the ECOZONE whose initial
investment shall not be less than One hundred fty thousand dollars ($150,000), his/her
spouse and dependent children under twenty-one (21) years of age shall be granted
permanent resident status within the ECOZONE. They shall have freedom of ingress and
egress to and from the ECOZONE without any need of special authorization from the
Bureau of Immigration.
The PEZA shall issue working visas renewable every two (2) years to foreign
executives and other aliens, possessing highly-technical skills which no Filipino within the
ECOZONE possesses, as certi ed by the Department of Labor and Employment. The
names of aliens granted permanent resident status and working visas by the PEZA shall be
reported to the Bureau of Immigration within thirty (30) days after issuance thereof.
CHAPTER II
Governing Structures
SECTION 11. The Philippine Economic Zone Authority (PEZA) Board. — There is
hereby created a body corporate to be known as the Philippine Economic Zone Authority
(PEZA) attached to the Department of Trade and Industry. The Board shall have a director
general with the rank of a department undersecretary who shall be appointed by the
President. The director general shall be at least forty (40) years of age, of proven probity
and integrity, and with a degree in economics, business, public administration, law,
management or its equivalent.
The director general shall be assisted by three (3) deputy directors general each for
policy and planning, administration and operations, who shall be appointed by the PEZA
Board, upon the recommendation of the director general. The deputy directors general
shall be at least thirty- ve (35) years old, with proven probity and integrity and with a
degree in economics, business, public administration, law, management or its equivalent.
They must have career executive service eligibility.
The Board shall be composed of the director general as ex o cio chairman with
eight (8) members as follows: the Secretaries or their representatives of the Department
of Trade and Industry, the Department of Finance, the Department of Labor and
Employment, the Department of the Interior and Local Government, the National Economic
and Development Authority, and the Bangko Sentral ng Pilipinas, one (1) representative
from the labor sector, and one (1) representative from the investors/business sector in the
ECOZONE.
The existing Export Processing Zone Authority (EPZA) created under Presidential
Decree No. 66 shall evolve into the PEZA in accordance with the guidelines and regulations
set forth in an executive order issued for this purpose.
Members of the Board shall receive a per diem of not less than the amount
equivalent to the representation and transportation allowances of the members of the
Board and/or as may be determined by the Department of Budget and Management:
Provided, however, That the per diem collected per month does not exceed the equivalent
of four (4) meetings.
SECTION 12. Functions and Powers of PEZA Board. — The Philippine Economic
Zone Authority (PEZA) Board shall have the following functions and powers:
CD Technologies Asia, Inc. 2018 cdasiaonline.com
 (a) Set the general policies on the establishment and operations of the
ECOZONES, industrial estates, export processing zones, free trade
zones, and the like;
(b) Review proposals for the establishment of ECOZONES based on the set
criteria under Section 6 and endorse to the President the
establishment of the ECOZONES, industrial estates, export
processing zones, free trade zones and the like. Thereafter, it shall
facilitate and assist in the organization of said entities;
cd i

(c) Regulate and undertake the establishment, operation and maintenance of

utilities, other services and infrastructure in the ECOZONE, such as
heat, light and power, water supply, telecommunications, transport,
toll roads and bridges, port services, etc., and to x just, reasonable
and competitive rates, fares, charges and fees therefor;
(d) Approve the annual budget of the PEZA and the ECOZONE development
plans;
(e) Issue rules and regulations to implement the provisions of this Act
insofar as its powers and functions are concerned;
(f) Exercise its powers and functions as provided for in this Act; and
(g) Render annual reports to the President and the Congress.
SECTION 13. General Powers and Functions of the Authority. — The PEZA shall have
the following powers and functions:
(a) To operate, administer, manage and develop the ECOZONE according to
the principles and provisions set forth in this Act;
(b) To register, regulate and supervise the enterprises in the ECOZONE in an
efficient and decentralized manner;
(c) To coordinate with local government units and exercise general
supervision over the development, plans, activities and operations of
the ECOZONES, industrial estates, export processing zones, free trade
zones, and the like;
(d) In coordination with local government units concerned and appropriate
agencies, to construct, acquire, own, lease, operate and maintain on
its own or through contract, franchise, license, bulk purchase from the
private sector and build-operate-transfer scheme or joint venture,
adequate facilities and infrastructure, such as light and power
systems, water supply and distribution systems, telecommunications
and transportation, buildings, structures, warehouses, roads, bridges,
ports and other facilities for the operation and development of the
ECOZONE;
(e) To create, operate and/or contract to operate such agencies and
functional units or offices of the authority as it may deem necessary;
(f) To adopt, alter and use a corporate seal; make contracts, lease, own or
otherwise dispose of personal or real property; sue and be sued; and
CD Technologies Asia, Inc. 2018 cdasiaonline.com
 otherwise carry out its duties and functions as provided for in this
Act;
(g) To coordinate the formulation and preparation of the development plans
of the different entities mentioned above;
(h) To coordinate with the National Economic and Development Authority
(NEDA), the Department of Trade and Industry (DTI), the Department
of Science and Technology (DOST), and the local government units
and appropriate government agencies for policy and program
formulation and implementation; and
(i) To monitor and evaluate the development and requirements of entities in
subsection (a) and recommend to the local government units or other
appropriate authorities the location, incentives, basic services, utilities
and infrastructure required or to be made available for said entities.
SECTION 14. Powers and Functions of the Director General. — The director general
shall be the overall coordinator of the policies, plans and programs of the ECOZONES. As
such, he shall provide overall supervision over and general direction to the development
and operations of these ECOZONES. He shall determine the structure and the sta ng
pattern and personnel complement of the PEZA and establish regional o ces, when
necessary, subject to the approval of the PEZA Board.
In addition, he shall have the following specific powers and responsibilities:
(a) To safeguard all the lands, buildings, records, monies, credits and other
properties and rights of the ECOZONE;
(b) To ensure that all revenues of the ECOZONE are collected and applied in
accordance with its budget; casia

(c) To ensure that the investors/ rms and employees of the ECOZONES are
properly discharging their respective duties;
(d) To give such information and recommend such measures to the Board,
as he shall deem advantageous to the ECOZONE;
(e) To submit to the Board, the ongoing and proposed projects, work and
nancial program, annual budget of receipts, and expenditures of the
ECOZONE;
(f) To represent the ECOZONE in all its business matters and sign on its
behalf after approval of the Board, all its bonds, borrowings,
contracts, agreements and obligations made in accordance with this
Act;
(g) To acquire jurisdiction, as he may deem proper, over the protests,
complaints, and claims of the residents and enterprises in the
ECOZONE concerning administrative matters;
(h) To recommend to the Board the grant, approval, refusal, amendment or
termination of the ECOZONE franchises, licenses, permits, contracts,
and agreements in accordance with the policies set by the Board;
(i) To require owners of houses, buildings or other structures constructed
CD Technologies Asia, Inc. 2018 cdasiaonline.com
 without the necessary permit whether constructed on public or
private lands, to remove or demolish such houses, buildings,
structures within sixty (60) days after notice and upon failure of such
owner to remove or demolish such house, building or structure within
said period, the director general or his authorized representative may
summarily cause its removal or demolition at the expense of the
owner, any existing law, decree, executive order and other issuances
or part thereof to the contrary notwithstanding;
(j) To take such emergency measures as may be necessary to avoid res,
oods and mitigate the effects of storms and other natural or public
calamities;
(k) To prepare and make out plans for the physical and economic
development of the ECOZONE, including zoning and land subdivision,
and issue such rules and regulations which shall be submitted to the
Board for its approval; and
(l) To perform such other duties and exercise such powers as may be
prescribed by the Board, and to implement the policies, rules and
regulations set by the PEZA.
SECTION 15. Administration of Each ECOZONE. — Each ECOZONE shall be
organized, administered, managed and operated by the ECOZONE executive committee
composed of the following:
(a) The administrator who shall be appointed by the PEZA Board upon
recommendation of the director general; and
(b) One (1) deputy administrator to be appointed by the Board upon
recommendation of the director general.
An ECOZONE advisory body shall be created with the following
members:
(1) The president of the association of investors in the ECOZONE; cdasia

(2) The governor of the province where the ECOZONE is located;

(3) The mayor/s of the municipality/ies or city/ies where the
ECOZONE is located;
(4) The president of an accredited labor union in the ECOZONE;
(5) The representative of the business sector in the periphery of the
ECOZONE; and
(6) The representative of the PEZA.
The ECOZONE advisory shall have the following functions:
(i) Advise the ECOZONE management on matters pertaining to
policy initiatives; and
(ii) Assist the ECOZONE management in settling problems
arising between labor and any enterprise in the
CD Technologies Asia, Inc. 2018 cdasiaonline.com
 ECOZONE.
SECTION 16. Salary and Other Emoluments. — The salary of the director general
shall be in accordance with the revised compensation and position classification system.
SECTION 17. Investigation and Inquiries. — Upon a written formal complaint made
under oath, which on its face provides reasonable basis to believe that some anomaly or
irregularity might have been committed, the PEZA or the administrator of the ECOZONE
concerned, shall have the power to inquire into the conduct of rms or employees of the
ECOZONE and to conduct investigations, and for that purpose may subpoena witnesses,
administer oaths, and compel the production of books, papers, and other evidences:
Provided, That to arrive at the truth, the investigator(s) may grant immunity from
prosecution to any person whose testimony or whose possessions of documents or other
evidence is necessary or convenient to determine the truth in any investigation conducted
by him or under the authority of the PEZA or the administrator of the ECOZONE concerned.
SECTION 18. Prohibition Against Holding Any Other O ce . — The director general,
deputy directors general, administrators, o cials and staff or assistants of the PEZA shall
not hold any other o ce or employment within or outside the PEZA during their tenure.
They shall not, during their tenure, directly or indirectly, practice any profession, participate
in any business, or be nancially interested in any contract with, or in any franchise, or
special privilege granted by the PEZA or national government, or any subdivision, agency,
or instrumentality thereof, including any government-owned or -controlled corporation, or
its subsidiary.
SECTION 19. Disbursement of Funds. — No money shall be paid out of the funds of
any ECOZONE except in pursuance of the budget as formulated and approved by the
PEZA.
SECTION 20. Full Disclosure of Financial and Business Interests. — Every member of
the Board of the PEZA, the director general, the deputy directors general, and their staff
shall, upon assumption of o ce, make full disclosure of their nancial and business
interests. acd

CHAPTER III
Operations Within the Ecozone
SECTION 21. Development Strategy of the ECOZONE. — The strategy and priority of
development of each ECOZONE established pursuant to this Act shall be formulated by
the PEZA, in coordination with the Department of Trade and Industry and the National
Economic and Development Authority: Provided, That such development strategy is
consistent with the priorities of the national government as outlined in the medium-term
Philippine development plan.
It shall be the policy of the government and the PEZA to encourage and provide
incentives and facilitate private sector participation in the construction and operation of
the public utilities and infrastructure in the ECOZONE, using any of the schemes allowed in
Republic Act No. 6957 (the build-operate-transfer law).
SECTION 22. Survey of Resources. — The PEZA shall, in coordination with
appropriate authorities and neighboring cities and municipalities, immediately conduct a
survey of the physical, natural assets and potentialities of the ECOZONE areas under its
jurisdiction.
CD Technologies Asia, Inc. 2018 cdasiaonline.com
 SECTION 23. Fiscal Incentives. — Business establishments operating within the
ECOZONES shall be entitled to the scal incentives as provided for under Presidential
Decree No. 66, the law creating the Export Processing Zone Authority, or those provided
under Book VI of Executive Order No. 226, otherwise known as the Omnibus Investment
Code of 1987.
Furthermore, tax credits for exporters using local materials as inputs shall enjoy the
same benefits provided for in the Export Development Act of 1994.
SECTION 24. Exemption from Taxes Under the National Internal Revenue Code . —
Any provision of existing laws, rules and regulations to the contrary notwithstanding, no
taxes, local and national, shall be imposed on business establishments operating within
the ECOZONE. In lieu of paying taxes, ve percent (5%) of the gross income earned by all
businesses and enterprises within the ECOZONE shall be remitted to the national
government. This five percent (5%) shall be shared and distributed as follows:
(a) Three percent (3%) to the national government;
(b) One percent (1%) to the local government units affected by the
declaration of the ECOZONE in proportion to their population, land
area, and equal sharing factors; and
(c) One percent (1%) for the establishment of a development fund to be
utilized for the development of municipalities outside and contiguous
to each ECOZONE: Provided, however, That the respective share of
the affected local government units shall be determined on the basis
of the following formula:
(1) Population — fifty percent (50%);
(2) Land area — twenty-five percent (25%); and
(3) Equal sharing — twenty-five percent (25%).
SECTION 25. Applicable National Taxes . — All income derived by persons and all
service establishments in the ECOZONE shall be subject to taxes under the National
Internal Revenue Code.
SECTION 26. Domestic Sales. — Goods manufactured by an ECOZONE enterprise
shall be made available for immediate retail sales in the domestic market, subject to
payment of corresponding taxes on the raw materials and other regulations that may be
adopted by the Board of the PEZA. casia

However, in order to protect the domestic industry, there shall be a negative list of
industries that will be drawn up by the PEZA. Enterprises engaged in the industries
included in the negative list shall not be allowed to sell their products locally. Said negative
list shall be regularly updated by the PEZA.
The PEZA, in coordination with the Department of Trade and Industry and the Bureau
of Customs, shall jointly issue the necessary implementing rules and guidelines for the
effective implementation of this section.
SECTION 27. Applicability of Banking Laws and Regulations. — Existing banking
laws and Bangko Sentral ng Pilipinas (BSP) rules and regulations shall apply to banks and
nancial institutions to be established in the ECOZONE and to other ECOZONE-registered
CD Technologies Asia, Inc. 2018 cdasiaonline.com
 enterprises. Among other pertinent regulations, these include those governing foreign
exchange and other current account transactions (trade and non-trade), local and foreign
borrowings, foreign investments, establishment and operation of local and foreign banks,
foreign currency deposit units, offshore banking units and other nancial institutions under
the supervision of the BSP.
SECTION 28. After Tax Pro ts . — Without prior Bangko Sentral approval, after tax
pro ts and other earnings of foreign investments in enterprises in the ECOZONE may be
remitted outward in the equivalent foreign exchange through any of the banks licensed by
t he Bangko Sentral ng Pilipinas in the ECOZONE: Provided, however, That such foreign
investments in said enterprises have been previously registered with the Bangko Sentral.
SECTION 29. Eminent Domain. — The areas comprising an ECOZONE may be
expanded or reduced when necessary. For this purpose, the government shall have the
power to acquire, either by purchase, negotiation or condemnation proceedings, any
private lands within or adjacent to the ECOZONE for:
(a) Consolidation of lands for zone development purposes;
(b) Acquisition of right of way to the ECOZONE; and
(c) The protection of watershed areas and natural assets valuable to the
prosperity of the ECOZONE.
SECTION 30. Leases of Lands and Buildings. — Lands and buildings in each
ECOZONE may be leased to foreign investors for a period not exceeding fty (50) years,
renewable once for a period of not more than twenty- ve (25) years, as provided for under
Republic Act No. 7652, otherwise known as the Investors' Lease Act. The leasehold right
acquired under long-term contracts may be sold, transferred or assigned, subject to the
conditions set forth under Republic Act No. 7652.
SECTION 31. Land Conversion. — Agricultural lands may be converted for residential,
commercial, industrial and other non-agricultural purposes, subject to the conditions set
forth under Republic Act No. 6657 and other existing laws.
SECTION 32. Shipping and Shipping Register. — Private shipping and related
business including private container terminals may operate freely in the ECOZONE, subject
only to such minimum reasonable regulations of local application which the PEZA may
prescribe.
The PEZA shall, in coordination with the Department of Transportation and
Communications, maintain a shipping register for each ECOZONE as a business register of
convenience for ocean-going vessels and issue related certification. cdt

Ships of all sizes, descriptions and nationalities shall enjoy access to the ports of
the ECOZONE, subject only to such reasonable requirements as may be prescribed by the
PEZA in coordination with the appropriate agencies of the national government.
SECTION 33. Protection of Environment. — The PEZA, in coordination with the
appropriate agencies, shall take concrete and appropriate steps and enact the proper
measures for the protection of the local environment.
SECTION 34. Termination of Business . — Investors in the ECOZONE who desire to
terminate business or operations shall comply with such requirements and procedures
which the PEZA shall set, particularly those relating to the clearing of debts. The assets of
CD Technologies Asia, Inc. 2018 cdasiaonline.com
 the closed enterprises can be transferred and the funds can be remitted out of the
ECOZONE subject to the rules, guidelines and procedures prescribed jointly by the Bangko
Sentral ng Pilipinas, the Department of Finance and the PEZA.
SECTION 35. Registration of Business Enterprises. — Business enterprises within a
designated ECOZONE shall register with the PEZA to avail of all incentives and bene ts
provided for in this Act.
SECTION 36. One Stop Shop Center. — The PEZA shall establish a one stop shop
center for the purpose of facilitating the registration of new enterprises in the ECOZONE.
Thus, all appropriate government agencies that are involved in registering, licensing or
issuing permits to investors shall assign their representatives to the ECOZONE to attend
to investors' requirements.
CHAPTER IV
Industrial Harmony in the Ecozones
SECTION 37. Labor and Management Relations. — Except as otherwise provided in
this Act, labor and management relations in the ECOZONE shall be governed by the
existing Labor Code of the Philippines. Employees and personnel in the ECOZONE
enterprises shall receive salaries and bene ts and shall enjoy working conditions not less
than those provided under the Philippine Labor Code and other relevant laws, issuances,
rules and regulations of the Philippine government and the Department of Labor and
Employment.
SECTION 38. Promotion of Industrial Peace. — In the pursuit of industrial harmony in
the ECOZONE, a tripartite body composed of one (1) representative each from the
Department of Labor and Employment, labor sector and business and industry sectors
shall be created in order to formulate a mechanism under a social pact for the
enhancement and preservation of industrial peace in the ECOZONE within thirty (30) days
after the effectivity of this Act. cd i

SECTION 39. Master Employment Contracts. — The PEZA, in coordination with the
Department of Labor and Employment, shall prescribe a master employment contract for
all ECOZONE enterprise staff members and workers, the terms of which provide salaries
and bene ts not less than those provided under this Act, the Philippine Labor Code, as
amended, and other relevant issuances of the national government.
SECTION 40. Percentage of Foreign Nationals. — Employment of foreign nationals
hired by ECOZONE enterprises in a supervisory, technical or advisory capacity shall not
exceed ve percent (5%) of its workforce without the express authorization of the
Secretary of Labor and Employment.
SECTION 41. Migrant Worker. — The PEZA, in coordination with the Department of
Labor and Employment, shall promulgate appropriate measures and programs leading to
the expansion of the services of the ECOZONE to help the local governments of nearby
areas meet the needs of the migrant workers.
SECTION 42. Incentive Scheme. — An additional deduction equivalent to one-half
(1/2) of the value of training expenses incurred in developing skilled or unskilled labor or
for managerial or other management development programs incurred by enterprises in the
ECOZONE can be deducted from the national government's share of three percent (3%) as
provided in Section 24.
CD Technologies Asia, Inc. 2018 cdasiaonline.com
 The PEZA, the Department of Labor and Employment, and the Department of
Finance shall jointly make a review of the incentive scheme provided in this section every
two (2) years or when circumstances so warrant.
CHAPTER V
National Government and Other Entities
SECTION 43. Relationship with the Regional Development Council. — The PEZA shall
determine the development goals for the ECOZONE within the framework of national
development plans, policies and goals, and the administrator shall, upon approval by the
PEZA Board, submit the ECOZONE plans, programs and projects to the regional
development council for inclusion in and as inputs to the overall regional development
plan.
SECTION 44. Relationship with the Local Government Units. — Except as herein
provided, the local government units comprising the ECOZONE shall retain their basic
autonomy and identity. The cities shall be governed by their respective charters and the
municipalities shall operate and function in accordance with Republic Act No. 7160,
otherwise known as the Local Government Code of 1991. cdt

SECTION 45. Relationship of PEZA to Privately-Owned Industrial Estates. —

Privately-owned industrial estates shall retain their autonomy and independence and shall
be monitored by the PEZA for the implementation of incentives.
SECTION 46. Transfer of Resources . — The relevant functions of the Board of
Investments over industrial estates and agri-export processing estates shall be
transferred to the PEZA. The resources of government-owned industrial estates and
similar bodies, except the Bases Conversion Development Authority and those areas
identi ed under Republic Act No. 7227, are hereby transferred to the PEZA as the holding
agency. They are hereby detached from their mother agencies and attached to the PEZA
for policy, program and operational supervision.
The Boards of the affected government-owned industrial estates shall be phased
out and only the management level and an appropriate number of personnel shall be
retained.
Government personnel whose services are not retained by the PEZA or any
government o ce within the ECOZONE shall be entitled to separation pay and such
retirement and other bene ts they are entitled to under the laws then in force at the time of
their separation: Provided, That in no case shall the separation pay be less than one and
one-fourth (1 1/4) month of every year of service.
CHAPTER VI
Miscellaneous Provisions
SECTION 47. Appropriation. — Upon the effectivity of this Act, all funds of the former
Export Processing Zone Authority (EPZA) shall be transferred to the newly-created
Philippine Economic Zone Authority. Thereafter, any sum as may be necessary to augment
its capital outlay shall be included in the General Appropriations Act to be treated as an
equity of the national government.
Additional funding shall come from the following:
(a) The annual subsidies, appropriations and/or other assets of the exports
CD Technologies Asia, Inc. 2018 cdasiaonline.com
 processing zone, and the industrial estates and other economic areas
that have been absorbed/transferred to the PEZA as mandated in this
Act;
(b) The proceeds from the rent of lands, buildings, and other properties of
the ECOZONES concerned;
(c) The proceeds from fees, charges and other revenue-generating
instruments which the PEZA is authorized to impose and collect
under this Act;
(d) The proceeds from bonds which the PEZA is authorized to oat both
domestic and abroad; and
(e) The advance rentals, license fees, and other charges which the PEZA is
authorized to impose under this Act and which an investor is willing to
advance payment for. cd i

SECTION 48. Applicability of National Laws. — National laws shall prevail vis-a-vis
ECOZONE rules, regulations and standards, unless there is a clear intent in this Act or other
Acts of Congress to vest the ECOZONE speci c powers and privileges not otherwise
allowed under existing laws.
SECTION 49. Authority of the President to Advance Initial Funding . — Subject to
existing laws, the President of the Philippines is hereby authorized to advance out of the
savings of the O ce of the President such funds as may be necessary to effect the
organization of an ECOZONE which shall be reimbursed by the PEZA at reasonable terms
and conditions.
SECTION 50. Non-applicability on Areas Covered by Republic Act No. 7227 . — This
Act shall not be applicable to economic zones and areas already created or to be created
under Republic Act No. 7227 or other special laws, governed by authorities constituted
pursuant thereto.
Any provision of this Act which provides bene ts or privileges less than those
granted or imposes obligations or burdens more onerous to special economic zones
created or to be created under special laws shall not apply to them.
SECTION 51. Ipso-Facto Clause. — All privileges, bene ts, advantages or
exemptions granted to special economic zones under Republic Act No. 7227, shall ipso
facto be accorded to special economic zones already created or to be created under this
Act. The free port status shall not be vested upon the new special economic zones.
SECTION 52. Separability Clause. — The provisions of this Act are hereby declared
separable, and in the event one or more of such provisions or part thereof are declared
unconstitutional, such declaration of unconstitutionality shall not affect the validity of the
other provisions thereof.
SECTION 53. Interpretation/Construction. — The powers, authorities and functions
that are vested in the Philippine Economic Zone Authority (PEZA) and the ECOZONES
concerned are intended to establish decentralization of governmental functions and
authority as well as an e cient and effective working relationship between the ECOZONE,
the central government and the local government units.
SECTION 54. Repealing Clause. — All laws, acts, presidential decrees, executive
CD Technologies Asia, Inc. 2018 cdasiaonline.com
 orders, proclamations and/or administrative regulations which are inconsistent with the
provisions of this Act, are hereby amended, modified, superseded or repealed accordingly.
SECTION 55. Implementing Rules and Regulations. — The Department of Trade and
Industry, the National Economic and Development Authority, the Department of Finance,
the Bureau of Customs, the Department of Agrarian Reform, the Department of the Interior
and Local Government, the Philippine Economic Zone Authority, and the representatives
from the technical staff of the Committee on Economic Affairs of both Houses of
Congress shall formulate the implementing rules and regulations of this Act within ninety
(90) days after its approval. Such rules and regulations shall take effect fteen (15) days
after their publication in a newspaper of general circulation in the Philippines. cda

SECTION 56. Transitory Provision . — Prior to the effectivity of the implementing

rules and regulations of this Act, the provisions of Presidential Decree No. 66, amended,
and its implementing rules and regulations shall remain in force.
SECTION 57. Effectivity. — This Act shall take effect upon its approval.
Approved: February 24, 1995

CD Technologies Asia, Inc. 2018 cdasiaonline.com