PRIB: Senate approves establishment of Special Defense Economic Zone in Bataan
January 28, 2025
Senate approves establishment of Special Defense Economic Zone in Bataan
The Senate approved on Monday, January 27, 2025, on third and final reading Senate Bill No. 2900, an act establishing a Special Defense Economic Zone (SpeDEZ) inside the government arsenal defense industrial estate located in Camp Gen. Antonio Luna, Lamao, Limay, Bataan.
The bill, once passed into law, will pave the way for the creation of the Special Defense Economic Zone Authority (SpeDEZA).
"With the Special Defense Economic Zone, we look forward to foreign direct investors planting their feet in Limay, and we can also look forward to technological, skills-building, and research and development exchanges between them and our government arsenal, as well as infrastructural development that will benefit not just the economic zone but the entire municipality as well," Sen. Juan Miguel "Migz" F. Zubiri said in his sponsorship speech.
According to Zubiri, the Special Defense Economic Zone Act (SpeDEZA) is a vital complementary bill to the recently passed Self-Reliant Defense Posture Act or the SRDP Act.
"When the President signed the SRDP Act into law in October (2024), I celebrated it as a step towards positioning the Philippines as a key player in the global defense market, with a robust homegrown defense industry that produces top-tier defense material, primarily for the use of our own troops, but for export in the global market as well," Zubiri said.
"But with the SRDP's signing also came a big question: Where will defense investors go? Which of our economic zones would be best suited to welcome the defense manufacturers looking to set up shop here?," he asked.
The production of defense materials carries significant security and safety hazards, and the defense manufacturers cannot be treated just like any other economic zone locator. They have to be in relative isolation, far from putting the public in harm and must be located in a secure location with due consideration for national security.
The government proposes to set up a 370-hectare Special Defense Economic Zone in Limay, Bataan, to give SRDP-empowered locators a place to go.
Under the bill, locators in the Special Defense Economic Zone will be entitled to VAT exemption in importation, as well as VAT zero-rating on local purchases. They will also enjoy an income tax holiday, with their fiscal incentives terminating after 20 years. In return, they will be required to pay a 5% final tax on their gross income earned, which shall then be distributed in the following manner: 1% to the AFP Pension Fund; 1% to the Province of Bataan; 1% to the host city or municipality; and 2% to the Special Defense Economic Zone Authority.
The Special Defense Economic Zone will also have a Special Labor Center, comprising of labor office, an industrial health and safety office, an inspection and investigative disputes office, and an enforcement office.
The Center shall oversee labor issues and disputes, and to monitor workplace hygiene and safety standards which is crucial, given the high-risk nature of the defense industry.
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