Delay in restoration of incentives alarms Clark locators

Clark Development Corp. (CDC) president Antonio Ng has expressed apprehension that the continued delay in the passage of remedial legislation on the restoration of incentives for locators at the Clark Special Economic Zone (CSEZ) would be overtaken by a final and executory ruling by the Supreme Court.

In a press briefing, Ng warned that Clark locators are becoming "angry and frustrated" over the continued delay in the passage of legislation restoring the grant of incentives to locators in the CSEZ.

According to Ng, "the slow pace of a permanent legislative solution creates uncertainty among Clark investors who are getting angrier and more frustrated."

Ng pointed out that "they were invited in Clark in good faith."

Ng said locators expect that next week a pending bill in Congress that would grant amnesty to Clark locators and restore the incentives that they used to enjoy would be passed.

If the bill is not passed before Congress goes on another recess in June, Ng warned, the SC may overtake the legislation and issue its final and executory ruling on its initial decision in August last year nullifying the incentives to Clark locators.

Clark, along with a few other special economic zones, lost their tax incentives following the August 2005 SC ruling that Republic Act 7227 grants incentives only to locators in the Subic Bay Freeport and not to those located in Clark, Poro Point in La Union and Camp John Hay in Baguio.

Locators in Clark, which include big American and Japanese firms, have expressed concern that they would now be subject to the regular 32 percent corporate income tax as well as excise tax and duties on their imports of raw materials.

Without the promised tax incentives, Clark locators may pull out their investments resulting in loss of employment to thousands of Filipino workers in Pampanga where the CSEZ is located.

However, since the passage of the necessary legislation is expected to take some time, government decided to allow the registration of existing locators either with the Board of Investments or with the Philippine Export Zone Authority.

Government, likewise, designated CSEZ as a customs bonded warehouse wherein goods that enter the area are not subject to import taxes and locators would also be shielded from the regular income tax.