Ecozones, incentives eyed for startups

MANILA, Philippines — The Department of Trade and Industry (DTI) is planning to develop economic zones and craft rules for incentives to startups.

Speaking at the Inclusive Innovation Conference 2019, Trade Secretary Ramon Lopez said the DTI is looking at setting up economic zones dedicated to startups in line with Republic Act 11337 or the Innovative Startup Act which was signed into law by President Duterte in April.

He said the DTI would be taking the lead in coming up with a plan for the development of ecozones for startups, as well as with rules on how to select startups qualified for incentives and the type of support to be extended by government.

“It could be a future export business model but we’re not limiting it to the export nature, and to separate really, this will be with different guidelines, rules and incentives. It’s really different from a PEZA (Philippine Economic Zone Authority) system,” he said.

At present, PEZA administers special economic zones hosting firms which export 70 percent of their production.

Section 9 of RA 11337 provides that PEZA, in consultation and coordination with the DTI, Department of Science and Technology and Department of Information and Communications Technology, will promote the creation of startup ecozones to encourage the growth and development of startups or entities aiming to develop an innovative product, process or business model, as well as startup enablers or those providing goods and services identified to be crucial in the operations of startups.

The law also states that the PEZA is authorized to extend applicable benefits to startups and startups enablers.

Lopez said the DTI has yet to identify where the ecozones would be located, but would want it spread throughout the country.

In terms of support to be extended, he said the government is looking at providing non-fiscal incentives like assistance on rent or other forms of assistance to help bring down the cost of operations of startups.

“Normally where they need support is on cost of operation while they are developing, fine-tuning their models, like giving them an office space. That’s the usual requirement,” he said.

Mindful of the Department of Finance’s push to modernize the incentives system to reduce foregone revenues, he said the support to be given to startups is stated in the law and would be focused, purposive and time-bound.