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Analysis of Information Technology (IT) Parks in the Philippines (Specifically, Exposition of Philippine IT
Parks and Their Economic Effects on the Philippines)

A Research Paper Requirement for BA 180.1 THX2

Presented to Ms. Salma F. Angkaya

Presented by Bartolata, Christine Kim, Min Jeong Lao, Monina Mag-iba, Maria Andrea Orbien, Lyra
Benedicte Trajano, Christine Mae

Abstract

Information Communication Technology has become an important portion of the lives of the people. The
countries lead themselves to become the best in this field in order to create a higher standard of living
and technology. IT Parks plays crucial role in the development of this area of science and technology. But
IT Parks, asides from serving the purpose of technological advancement, aims to bring up the economic
standard of the country in which it positions itself. Through Foreign investments and infrastructure build-
ups, development of IT Parks would create job opportunities for the domestic people. How about the IT
Parks in the Philippines? Do they fully serve this purpose? The research aimed to look into the IT parks in
the Philippines and their economic impact.

Research Outline I. Introduction i). Definition and Description of IT Parks. Qualified businesses:
What businesses qualify for the technology park benefits? What incentives are being offered? Legal
Issues and Provisions of Information Technology Parks. IT Parks in the Philippines ii). Providers of the
Technology iii). Users of the Technology

II. Technology Assessment i). SWOT Analysis ii). Alternatives and Substitutes of IT Parks iii).
Feasibility and Justification of Application iv). Application of Technology

III. Conclusion

INTRODUCTION i) Definition and Description of IT parks

IT (Information Technology) Parks are areas that are developed into a complex that is capable of
providing infrastructures and support facilities that are needed by the different IT based industries
(PEZA).

IT Parks located across the world has different names attached to it such as Techo Parks, Cyber Parks, and
Science Parks. These places are built up for the purpose of integration and development of IT based
industries in the area or the country. The study entitled “An Assessment of International Best Practice for
the Establishment of Sustainable Information Technology Parks, Including Three Country studies” (2006)
described the IT Park as follows:

The IT Parks foster new business development and technological

innovation by leveraging synergies within a cluster environment.

They provide infrastructure and support services for businesses particularly

high quality (high capacity) communications, real estate and office space.

The study also portrayed to the researchers the relationship between IT Parks and research institutions.
This strategic position of having research institution and IT park together in close area helped to
generate the process of ‘technology transfer’ where the research institute ‘learns’ the technologies
developed within the IT Park (may be developed by foreign investors) to be adopted and used in
developing the local and domestic industries.

IT Parks, as anyone can observe, needs heavy investments in building up its infrastructures and systems.
Private, as well as government funds play crucial role in development of this area. To take an example,
the Taiwanese government invested a large sum of $483 million in the development of Hsinchu Science
based industrial park over a long period of 15 years. This project includes two major universities along
with the Industrial Technological Research Institute.
Technology development is not the only purpose of these IT Parks. IT Parks are capable of creating
international economic relationships with other countries through foreign investments and outsourcing
processes. This also leads to development of appropriate policies that are needed by the country in
establishing needed rules and regulations to bring about efficient transactions that would guide the
industries in rooting their investments.

In most world-class universities, Science & Technology (“S&T”) parks developed adjacent to the
campuses have provided a venue for industry-academe collaboration in R&D which have led to many
significant technological innovations. This collaboration has also strengthened the R&D programs of the
universities themselves. Examples are MIT’s route 28(Cambridge, Massachusetts, USA), Silicon Valley of
Stanford University (Palo Alto, California),which is actually considered as the first successful IT Park in the
world, Singapore Science Park and National University of Singapore, University of Tsukuba – Tsukuba
Science City ( Japan ), University of Beijing and Peking University – Haidian Science Park ( China ). The
developing countries also started to posses IT Parks of their own. Countries such as India, China,
Malaysia, Costa Rica, the Dominican Republic and the Philippines joined the row of the developed
countries to own an IT Park. But there exists certain differences between the IT Parks of the developed
and the developing countries. As mentioned by Professor Giovanni Tapang of the University of the
Philippines in his interview, the difference is that, the IT Parks in the developing countries are more
dependent on service sectors rather than manufacturing and actual technological developments. Due to
lack of infrastructures of domestic industries, the IT parks of developing countries depend on foreign
investments and firms. But in the Philippines today, UP AyalaLand TechnoHub, with its newly launched
infrastructure and system aims to achieve and narrow the gap and create environment for technology
development in the Philippines.

In the Philippines, clear rules and criteria of establishing an IT Park is laid out in PEZA Resolution No. 99-
264 ‘Guidelines for the Establishing and Operation of Information Technology (IT) Parks’. The guideline
stated that the IT Parks may be located in any suitable place. But those that are located inside National
Capital Region (NCR) will be restricted to serving only service type projects and no manufacturing
operations . The area must be accredited by the PEZA. There also exist registrable activities set by the
PEZA which places importance computers and information technologies development. Also one salient
point that investors must look into is the incentives that they are provided with. Some of the important
benefits offered by the government are income tax holidays (according to classifications) and granting of
permanent resident status of the Foreigners (or foreign investors). For those who holds the ITH option
could actually wave them to accept the immediate availment of 5% gross tax income tax incentive. These
incentives greatly motivate the firms and especially foreign investors to enter the Philippine market with
their capital and plans.

Before the title of IT Parks was given, there existed the EPZA or Export Processing Zone Authority in the
Philippines. They were considered as IT Parks of the past. These zones focused on manufacturing sector
which some continues to run until now like those in Bataan, Baguio and Rosario Cavite. But as the
market flow switched to higher demand and supply of services, EPZA lost their title to other new and fast
developing IT Parks in the Philippines who involved themselves in service sectors and met the demands
of international players. Such Parks would include Silicon Valley IT Park in Fort Bonifacio, Eastwood City
Cyber Park, and Northgate Cyber Zone. But as mentioned above, the IT Parks in the developing world
gears too much to service sector that it lacks the strong foundation of manufacturing and actual
technology development needed by the country. So the title IT Park as mentioned by Professor Giovanni
Tapang, could be seen as a misnomer in this sense.

Main functions of IT Parks in the Philippines could be seen as providing the environment for investors
and firms to develop new technologies and seek profit in the country. The environment that is able to
foster a good profit is essential in attracting investors, both local and international. Philippines cost
effectiveness serves as one of the main reasons why foreigner place in their feet to the market. As
mentioned by Ms. Mariel Isobel C. Ramirez, Investment Consultant of Megaworld Corporation, the
foreigners outsource to the Philippines because of its cost effective labor force and environment.

To look into some of the IT Parks in the Philippines and what they offer, the researchers looked into some
IT Parks in the Philippines and one of them is Eastwood City Cyber Park which is under Megaworld
Corporation (1989). Megaworld is considered as one of the top developers in the Philippines just like
Ayala. It belongs to billionaire Andrew Tan who is the CEO and chairman of Megaworld Corporation.
Eastwood City (1990) was declared as an IT Park on 1999 after receiving its accreditation from the PEZA.
Eastwood is Philippines’ first initiative to create special economic zone and it is currently hosting ITES
(information technology enabled services) companies such as IBM, Citibank and E-telecare. Eastwood is
a 15 hectare development area strategically located in Metro Manila, at the center point of the C-5 Road,
a major highway linking the North and South Luzon Expressways.

Main service provided by the Eastwood City Cyber Park is their role as ‘land lord’ to all the firms and
investors in the area. They are engaged in real estate and office space rentals. Providing the adequate
environment for the firms and investors is their priority in developing this area. This has led to the
integration with transportation companies to provide convenience to the people. Some of the main
benefits provided by the Eastwood City Cyber Park are the following :

1. It provide IT infrastructure and manpower which is attractive (in terms of cost) to multinational
companies. 2. It generate employment and offer high level training to locals (employees of the locators
in Eastwood, are generally paid higher salaries than those working in non-tech related companies) 3.
It catalyzes the commercial and retail businesses in the surrounding areas. 4. It creates
linkage opportunities in areas such as construction contracts, supplies, materials and food and packaging
supplies.

Components or infrastructure of the Eastwood City Cyber Park includes telecommunication, power,
water, and sewage system .

1. Telecommunications: equipped with V-sat, Microwave Antennae and fiber optic backbone for
voice, data, and video for a fully redundant telecommunications infrastructure within the park 2. Power:
Supported by the country’s largest electric company and complimented by generator sets that will
ensure uninterrupted power supply. 3. Water: supported by the most reliable name in water supply
and distribution complemented by cistern tanks for continuous supply of water 4. Sewage
treatment plan: endowed with top of the line sewage treatment plant that will help ensure that the park
maintains an environment friendly atmosphere.

The Cyber Park does not have direct investment or allocation of funds for the development of research
and technology in the Philippines. In spite of the global economic crisis, the Park stands firm with its
investors and inhabitant showing no sign of leaving the country or abandon their market here unlike
what happened to Intel Corp. who will be closing all their factories in the Philippines.

Another IT Park that the researchers took interest in was the UP-AyalaLand TechnoHub. This IT Park’s
masterplan was completed in 2006 and the construction began in the first quarter of 2007. UP-AyalaLand
TechnoHub is a Science and Technology Park. Generally, S&T Parks have facilities that bring together
colleagues in related fields, strengthen existing synergies and spark new ideas for research and
development in the S&T industry.

The services provided by the TechnoHub are similar to the Eastwood City Cyber Park. The TechnoHub
provides office spaces for both start-up and multinational IT and BPO companies in a campus setting,
complete with support facilities required by these IT and BPO locators. The facility gives the opportunity
for the tenants to collaborate with each other as well as the academe through the University of the
Philippines.

As mentioned in the Introduction section above, advanced IT Parks developed together with top
universities and placed importance on development of technology. In line with this goal, UP-AyalaLand
TechnoHub will be instrumental in attaining UP’s aspiration to be at par with the leading research
universities around the world. It also seeks to strengthen UP’s commitment to education, training and
research excellence by creating an environment where high-technology enterprises can interact with the
academe in R&D and other technology-oriented projects.

Instead of just providing leasing spaces, the UP-AyalaLand TechnoHub is also seen as a vehicle for
transforming innovative ideas into commercial products and start-up companies. This would in turn spur
the research and development in the country, creating investment opportunities (both local and foreign)
as well as generating employment for Filipinos. The TechnoHub initially estimate that upon full build-out,
the TechnoHub will generate jobs for approximately 30,000 employees. But in this stage, local IT and IT
Enabled Services (ITES) industry are still in their early stage of growth thus in the Hub, Multinational
Companies (MNC’s) such as IBM, Manulife, and HSBC occupy most of the available areas for lease. From
the Hub, 10% are comprised by domestic companies in terms of total offices leased as these are mostly
small start-up IT businesses.

There were different views that the IT Parks in the Philippines is geared too much on foreign investment
and that it is a source of job for the local Filipinos. In connection with this, Mr. Marc Reyes of AyalaLand
has commented that although majority of tenants in S&T Parks are foreign multinational companies,
these are foreign investments that generate jobs for Filipinos, giving them additional disposable income.
He also mentioned that the multiplier effect on the economy brought about by these jobs will outweigh
the tax exemptions given to these foreign companies and the UP TechnoHub is under a lease
arrangement so the locators merely lease the office area and cannot own the land. The land still belongs
to the University of the Philippines.

ASSESSMENT

i) SWOT Analysis

Internal Strengths • Accommodate foreign investments • Able to generate a high income (higher
GDP) • Serves as training ground for locals • Serve as incubator for high-value adding products,
specifically in the IT industry. • Accommodate not only IT-based businesses but also commercial and
retail establishments that serve the general public. • Generate employment • Knowledge-
transfer Weaknesses • Main purpose is geared towards accommodating foreign investments, thus
domestic industry participation is of minor concern. • Technological innovations by IT companies are
not absorbed by the Philippines. (lack of technology transfer)

External Opportunities • Continuous high demand for IT based services in the international
market. • Law that supports and sets the standards for the information, communication and
technology industry (E-commerce Act). • Access to information nowadays is mainly through the
internet and application of information and communication technologies. Threats • Global
Financial Crisis or the “credit crunch” • Philippine Peso appreciation • Other foreign competitors

As mentioned before, IT parks provide infrastructure and services for businesses, specifically in the
Information, Communications and Technology sector. These are areas where businesses are
concentrated, whether IT-based, commercial such as restaurants or retail industries. With the incentives
such as tax cuts and deductions from expenses given by the Philippine government, and low labor costs
and a population that is skilled in speaking English , foreign investors are encouraged to have their
investments geared towards IT here in the Philippines. However, one cannot deny that the incentives
given by the government are aimed towards attracting foreign investment, that even if it contributes to a
higher income for the country, incentives to push domestic industry participation are given of little
concern. The investment of companies in IT parks provides jobs, and at the same time serves as training
ground working in these companies. IT parks also enable knowledge-transfer, not just in the aspect of
Information Technology and management but also in cultural diversity. Of course, the main objective of
IT parks is to develop and integrate IT based industries. With this, comes the development of new
technology, and these areas serve as incubators for products which have high-added value. However, the
technological innovations provided by IT companies are not completely absorbed by the country.
Perhaps it may be that the Philippines is still incapacitated of handling such procedure because of lack in
research institutions that serves as the bridge between the technologies and the domestic industries,
thus complete utilization of the technologies produced occasionally happens.

Today, the society is information-driven and internet-based. Access to information nowadays is mainly
through the internet and application of information and communication technologies . This further
stimulates the continuous demand for IT based services in the global market. The creation of the E-
commerce Act protects the information, communications, and technology industry, which encourages
investments and innovations, and thus guarantees the further development of IT parks here in the
Philippines. However, fluctuations (recessions) in the economy such as the global financial crisis, or the
“credit crunch” may endanger the condition of IT parks. Lay-offs and temporary shut down done by large
companies because of lack of funds and revenues caused by the financial crisis may soon (or maybe it
already has) seep to IT parks here in the Philippines and cause the foreign companies to shut down.
Another threat to IT parks is the appreciation of the Philippine Peso. Since appreciation of the peso
means it costs more foreign currency such as US dollars to buy a peso, operation cost (labor, utilities,
rent) of foreign companies based here in the Philippines will be higher. Further appreciation might cause
foreign investors to withdraw their investments and move to other countries with lower operating costs,
endangering IT parks in the country.

ii) Alternatives/Substitutes

Primarily, IT parks are established for the development of science and technology and research. In the
developed countries IT parks are also locations for the manufacturing industry, which exhibits, through
the exports that they produce, the outcome of the research that they have conducted. Here in the
Philippines, IT parks became a hub for the foreign investors, on whom we rely on for the establishment
of infrastructures for our own technology development. But instead of becoming a manufacturing site of
the latest advancements in technology, these IT parks became a location for the service sector – it
provided services for the foreign firms in the form of call centers.

It is evident in this GDP chart that the service sector did grow in the past years and is still continuing to
expand in the present . It has made significant contributions to the rise of our GDP. It has also created
many job opportunities for the Filipinos, especially the youth. Contrary to that, it is also evident in this
chart that the agriculture sector continues to fall while the manufacturing sector has shown little
improvement. Relating it to the rise of the service sector, the latter may or may not have caused this
downfall, but this could all boil down to the government and the attention that it is giving to these
sectors.

The government allows 100 percent foreign ownership of firms in the Philippines. With regards to the
information technology industry, this makes the local investors underdogs (unless he’s one of the “Big
Four”) since it is not that easy to invest in IT parks. It needs heavy investment, as mentioned in the
introduction, in building up its infrastructures and systems.
This section will present some possible alternatives or substitutes for current IT parks in the Philippines
for a more efficient economy. First of all, the government should allocate resources for the building up of
our own national industries. The Philippines is full of natural resources and rich in raw materials. It does
not need to import goods, especially the basic commodities like food and clothing, which it can already
produce. Relying on imports would definitely worsen the economy in the long run. Associated with this is
the enhancement of the manufacturing industry. IT parks were built for the manufacturing sector, but it
didn’t turn out that way. Because of this, it’s time for the government to pay attention to this industry. It
increased in the past in a span of about 20 years but it got stuck to that level for 40 years. There are a lot
of technological advancements for manufacturing recently, but it has not reached the Philippines yet.
And not only are these advancements for the manufacturing sector, they are also for the agricultural,
fishing, and forestry sector. Modern equipment and machinery would be a lot of help to a more efficient
and effective production.

The 100 percent foreign ownership of firms is an issue. At one side, it is good – since they are the only
ones who can provide investments for the infrastructures for IT parks, they are welcome to invest here
for the benefit of boosting the IT industry. At another side, it is not favorable if we think of our local
investors. What about them and the country’s GNP? Maybe the government could limit the percentage
ownership of these foreigners to a minor part (not more than 50 percent) of their company and leave
the rest to the locals.

iii) Justification of Application

Philippines is being seen as one of the countries that is capable of handling investments and work as a
center for service sector industries and many others. Boasting its English-able labor force and strong
perspective of the government towards foreign investments, it has made its name known in areas such
as accounting, human resources, IT solutions, and engineering design . At the same time, the 2002
Global New Economy Index of the Meta Group cited the Philippines for the "excellent availability" of
skilled IT workers and for their proficiency in mainframes, minicomputers and microcomputers as well as
for their technical and business skills for ICT projects. According to the Board of Investments and the
Philippine Economic Zone Authority (PEZA), the National Capital Region (NCR) alone hosts 17 investment
sites that are specializing in information technology applications.

The Philippine Economic Zone Authority promotes infrastructures such as the IT parks by granting
incentives to the occupants or investors of the area such as tax benefits. The companies in the
Philippines who have existing investments in economic zones, were seen to be upgrading and improving
their technological level in order to stay competitive in the international market.

As we can all see, the role of IT in building businesses has never been more significant than it is at
present. Advancements in technology were developed by companies from diverse industries, which
recognized the potentials of IT for business growth.
Today, the Philippines positions itself as a global market place for information and communications
Technology. As mentioned in news article of Manila Bulletin, in the present, there are about 70 contact
centers and 50 registered Business process Outsourcing (BPO) establishments in the country and the
Philippines has high probability to encourage big portion of the world’s BPO market from developed
countries like US, Australia and European countries next to one of our competitors India.

Eastwood City Cyberpark is the country's first ever Information Technology park. As mentioned by the
Philippine Economic Zone Authority (PEZA), Eastwood City Cyberpark is the most successful IT park/zone
in terms of total number of employees and export revenues. Aside from Eastwood City Cyber Park, other
big investment infrastructures such as Robinsons Cyber Place emerged with huge investments and
massive system and infrastructures.

According to Department of Labor and Employment, employment in IT-related establishments grew by

20%, averaging 80,750 in 2004. This covers the programmers, technicians, consultants, network
specialist, IT sales, telemarketers, database administrators, IT planners, IT engineers, software
developers, contact provider & designers, medical transcriptionists, animators, IT managers, web
designer & technical customer care representatives.

Given these circumstances, IT parks and Economic Zones in the Philippines make the country a world-
class investment site and competitive in the new technology driven economy. To keep pace with its
neighboring countries, it undertakes initiatives to maintain its status as a leading player in the
information technology field.

iv) Application of Technology in the Philippine Setting

Names such as Eastwood City Cyber Park, Fort Bonicacio Silicon Valley, Northgate Cyber Zone and UP-
Ayala TechnoHub are some of the names that falls under the examples of the application of the concept
of IT Parks in the Philippines. The Philippines, considered a developing country that is starting to invest in
establishing IT Parks, has received some of the significance of having IT Parks. IT parks serve as the
reliable infrastructures that functions as “home” for technology development. These IT Parks provide the
place not only for the local but also foreign companies that invest to achieve growth in their respective
specializations that use technology. A proof of this importance is the above-mentioned Megaworld
Corporation, owner of the Eastwood City Cyberpark, which serves as the “landlord” for the companies
which wish to have their businesses developed in the Philippines.

In the Philippines, the IT Park’s “true” purpose is to serve as an economic zone. The economic zones
under the Export Processing Zone Authority (EPZA) are basically export-oriented . The enterprises that
are located inside these zones are required to 100% of its production (but there are cases in which PEZA
approves some 30% of the production to be sold in the local market). With this rule, the Gross Domestic
Product of the Philippines, which is a measure of the country’s economic well-being, is being raised. This
contributes to the economy of the Philippines. But, the downside of this policy is that only a few are left
to the Filipinos.
The construction of IT Parks in the Philippine case generates employment, especially in the services field.
Because the companies outsource in the country, they create jobs for the Filipino. Call centers in the
country grow in a fast pace. Human power is the most needed for a call center to operate. The
companies choose to outsource here merely because of cheap labor. This is considered a competitive
advantage for the Filipinos. But, according to Dr. Tapang, the IT Parks that create more jobs in the
servicing sector may look good, but it is really not. The shift of the economy from manufacturing to
servicing sector has blinded the people in believing that the Filipinos are really benefiting. The truth is
that, those foreign companies are the ones who are benefiting more. Dr. Tapang considered what might
happen if the foreign companies decided to leave the Philippines to invest and outsource in other
countries. The employees will be laid off, and left empty-handed.

Conclusion

IT Parks of the Philippines are generating dollar inflows through foreign investments and outsourcings
made by the foreigners. Thus it is helping the country to survive and not just rely on other dollar sources
such as OFW remittances. But in the Philippine setting, this increasing service sector industry favored by
the government and the foreign investors may turn out to be a factor of instability in the long run. Strong
agricultural and manufacturing sector is needed by the economy. Heavy government subsidies set to
attract foreigners is a huge amount targeted by the government. But what we can see is that this service
sectors actually cannot create in the Philippines a general and stable source or living. It may be able to
generate employment in the present but declining manufacturing sector of the economy limits the
products that the country could actually produce by themselves instead of importing and spending up
our dollars. The Current IT Parks are important and also the foreign investments are necessary and an
integral part for the Philippine economy. But the government should be able to allocate the subsidiaries
for the foreigners to domestic industries and manufacturing sector to create balance in the economy of
the country. And more of Universities who are learning grounds of future generations must engage in
this area and create the true environment for technology development that could elevate the standard
of the Philippines in line with other developed countries.

APPENDIX Republic of the Philippines

PHILIPPINE ECONOMIC ZONE AUTHORITY Roxas Boulevard corner San Luis StreetPasay City

CERTIFICATE OF BOARD RESOLUTION

This is to certify that at the Board Meeting of the Philippine Economic Zone Authority held on 06
October 1999, during which a quorum was present, the following resolution was approved: RESOLUTION
NO. 99-264 B. LOCATION - IT Parks may be located in any suitable location: Provided, That in the National
Capital Region (NCR) IT Parks shall be allowed to serve as locations only for service-type projects with no
manufacturing operations. D. REGISTRABLE ACTIVITIES - IT Parks shall serve as locations for the following
PEZA registrable activities: 1. Software development for business, e-commerce, education and
entertainment; 2. Content development for multimedia or internet purposes; 3. Hardware
design, prototype production and related activities; 4. Knowledge and computer-based support service
activities such as, but not limited to, the following: o Regional/worldwide software support o Data
encoding and conversion o Internet facilitation o Systems integration o Project implementation
o IT consultancy oCall center Research and development services; 5. Other related IT and
computer-based services/activities as may be identified and approved by the PEZA Board; and 6.
Manufacturing facilities for IT Parks outside NCR. F. INCENTIVES FOR IT PARKS DEVELOPERS/OPERATORS
IT Parks Developers/Operators shall qualify for availment of the following incentives, subject to such
conditions as may be prescribed by the PEZA Board: 1. Income Tax Holidays (ITH), subject to the
provisions of Executive Order No. 226 (EO 226) and the Investment Priorities Plan (IPP): a. Four (4)
years for IT Parks located outside the National Capital Region, the Provinces of Cavite and Laguna, as
provided under EO 226 and the IPP; b. Six (6) years for IT Parks located in less developed areas
identified in the IPP. Developers/Operators of IT Parks not entitled to the ITH may avail of the Special 5%
tax on gross income incentive in lieu of the national and local taxes; 2. For IT Parks
Developers/Operators entitled to ITH, option to waive the ITH in favor of immediate availment of five
percent (5%) gross income tax incentive, in lieu of all national and local taxes, except real property tax on
land owned by developers. Otherwise, the said 5% gross income tax scheme shall apply after the
expiration of the ITH period; 3. Permanent resident status for foreign investors and immediate family
members with initial investment of at least US$150,000.00, subject to such guidelines as may be
prescribed by the PEZA Board; 4. Employment of foreign nationals; and 5. Simplified customs
procedures. G. INCENTIVES FOR IT SERVICE EXPORTERS AND EXPORT PROCEDURES OF IT-RELATED
PRODUCTS IT service exporters and export producers of IT-related products shall qualify for availment of
the following incentives, subject to such conditions as may be prescribed by the PEZA Board: 1. Income
Tax Holidays (ITH), for firms located I IT Parks for the period as follows: o New registered pioneer firms -
six (6) years from commercial operations o New registered non-pioneer firms - four (4) years from
commercial operations o Expanding firms - three (3) years from commercial operations IT service type
exporters locating in the National Capital Region may also qualify for availment of the ITH. 2.
Exemption from all government imposts, fees, licenses and taxes. However, during the ITH
period, the enterprise shall pay real property tax except on: (a) machinery owned by zone registered
enterprises which are actually installed and operated in the park for the first 3 years of operation; and (b)
production equipment of machinery, not attached to real estate, used directly or indirectly in the
production, assembly or manufacture of the registered product of the zone registered product
enterprise; 3. After the ITH period, the option to avail of exemption from national and local taxes, in
lieu thereof, the enterprise shall pay a 5% tax on gross income earned; 4.Exemption from duties and
taxes on imported capital equipment, spare parts, raw materials and supplies; 5. Exemption from
wharfage dues, export tax, impost or fee; 6. Additional deduction equivalent to 50% of training
expenses, chargeable against the 3% national government share in the 5% tax on gross income; 7.
Unrestricted use of consigned equipment; 8. For the first five years of operation, additional
deduction equivalent to 50% of the wages paid corresponding to the increment in the number of direct
labor for skilled and unskilled workers, subject to such conditions as may be prescribed by the PEZA
Board; 9. Permanent residents status for foreign investors with initial investment of at least
US$150,000.00, subject to such guidelines as may be prescribed by the PEZA Board; 10. Employment of
foreign nationals; 11. Domestic sales allowance equivalent to 30% of total export sales, subject to such
conditions as may be prescribed by the PEZA Board; 12. Exemption from SGS inspection; and 13.
Simplified customs procedure.

Bibliography

WEB PAGES:

Government.ph. The Official Website of the Republic of the Philippines. 19 Feb. 2009.
http://www.gov.ph/news/?i=4418. Itmatters.com.ph. I.M. as Pinoy as texting—Chikka.com. 20 Feb.
2009. http://www.itmatters.com.ph/bulletins.php?id=000. Peza.gov.ph. Philippine Economic Zone
Authority. 19 Feb. 2009. www.peza.gov.ph/ “PGMA's Speech during the Inauguration of U.P.-Ayala Land
Technohub.” Presidential Speeches and Statements for 2008. 20 Feb. 2009.
http://www.ops.gov.ph/speeches2008/speech2008_nov21.htm “QUEZON CITY: The ICT Capital of the
Philippines.” Philippine News by MySearch Philippines. 19 Feb.2009. http://mysearch.ph/philippine-
new/2007_01_01_archive.html. “Why Invest in the Philippines.” Philippine Ecozones Association. 19 Feb.
2009.

http://www.philea.com.ph/why%20the%20philippines.htm.

INTERVIEWS:

Giovanni Tapang PhD,

University of the Philippines Diliman, Department of Physics

Ms. Mariel Isobel C. Remirez,

Investment Consultant, Business Devt. & Leasing Division, Megaworld Corporation

Mr. Marc Reyes

Ayala Land Corp

Category: Student Papers

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