Sponsorship Speech (Committee Report No. 687 / Senate Bill No. 3470)
AURORA PACIFIC ECONOMIC ZONE and Freeport ACT

Mr. President and esteemed colleagues, I rise to endorse Committee Report No. 687 / Senate Bill No. 3470, otherwise known as the Aurora Pacific Economic Zone and Freeport Act.

We have just witnessed the destruction brought by the twin typhoons Ondoy and Pepeng, which flooded Manila and provinces in Luzon. One thing the recent tragedy highlighted is the inefficiency of our disaster management systems, which remain largely centralized. Our cities and municipalities had a very limited capacity to respond to the catastrophe in a direct and swift manner.

Mr. President, we are again taught the value of decentralization and empowering our local governments. We must make them less dependent on the capital, Manila, who has enough problems of its own.

In short, each region must be able to stand on its own, not just as a unit of government, but more importantly as an engine of economic growth. We must give our provinces the opportunity to build and stimulate their economies.

A good example is Aurora, my home province. Aurora stands at the cusp of economic development. It is blessed with natural splendor, and great economic potential. It faces the Pacific, which makes it an ideal area for international commerce.

This makes it a prime location for an economic zone, and more importantly, a Freeport. The free movement of goods and services lies at the core of every international success story. We have Singapore and Hongkong as local examples. The concept of free movement is so powerful it has galvanized 27 countries into a real, working supranational entity. I am talking about the European Union, whose heart and soul is all about free movement of goods and services.

Aurora already is a special economic zone, thanks to its passage in Congress last 2007. This Bill strengthens that concept and makes it more meaningful. The APECO shall be developed into and operated as a decentralized, self reliant and self-sustaining industrial and trading area with agro-industrial, tourist, banking, financial and investment centers. It will enjoy the same benefits and privileges of similar zones like Subic and Clark.

APECO will be managed as a separate customs and taxation territory ensuring free movement of goods and capital within, into and out of its territory. It can provide incentives such as tax and duty-free importations of raw materials, capital and equipment to registered enterprises located in APECO.

What exactly can APECO do to achieve its mandate?

First, in addition to its existing powers, it can now give licenses and set fees in relation to the regulation and operation of its facilities and other concerns. We have expanded the list of covered subjects to MOBILE, INTERNET AND OTHER DATA FACILITIES as these fields have become essential to the success of any enterprise.

It can operate on its own, or through a subsidiary entity, or concession or license, tourism-related activities, including games, amusements and nature parks, recreational and sports facilities. APECO can become like Singapore with its zoo, theme parks and other tourist attractions.

APECO is also given two key powers integral to its status as a Freeport. It can carry out at its own expense the reclamation of any foreshore lands. And it can also create and enhance docking and harbor facilities in consultation with the Secretary of Finance and the Secretary of Public Works and Highways.

In full consideration of the environment and the need to conserve Aurora's best asset - its natural resources - APECO will be empowered to establish marine, forest, wildlife and botanical reserves, in cooperation with the Department of Environment and Natural Resources (DENR);

As a Freeport, APECO adheres to the free movement of goods and services integral to that type of entity's success. Defining Tax Treatment of merchandise and services therefore is a key characteristic of this Bill. Importations of raw materials and capital equipment are tax and duty free. However, exportations or removal of goods from the freeport zones to the other parts of the country shall be subject to customs and internal revenue regulations.

As a general rule, foreign and domestic merchandise, raw materials, supplies, articles, equipment, machineries, spare parts and other merchandise brought into the Aurora Ecozone shall not be subject to customs and internal revenue laws. This exemption covers local tax ordinances. As for merchandise purchased by a registered enterprise, from the customs territory and subsequently brought into the export processing zone, this Bill allows the export sales and exportation thereof to be entitled to the benefits allowed by law for such transaction.

With respect to services, the Bill treats a sale of service as an indirect export and thus entitled to its benefits if it is either of two things:

� It is a sale by an entity from the customs territory to a registered ecozone or free trade enterprise; or

� It is a sale by a registered ecozone or freeport enterprise to another ecozone or freeport enterprise.

However, a sale or service by a registered ecozone or freeport enterprise to the customs territory shall be subject to applicable internal revenue laws and regulations.

This Bill envisions APECO as a professionally run enterprise. We want it to be run like a private entity, incorporating the best practices available, and the key traits that make market-driven enterprises successful - one of which is competent personnel.

In order to attract the best and brightest, all positions in the APECO shall be governed by a compensation, position classification system and qualification standards based on a comprehensive job analysis and audit of actual duties and responsibilities. The compensation plan shall be comparable with the prevailing compensation plans in the Subic Bay Metropolitan Authority (SBMA), Clark Development Corporation (CDC), Bases Conversion and Development Authority (BCDA) and the private sector. There will be yearly merit reviews or increases based on productivity and profitability just like in private enterprises.

My colleagues, this Bill will strengthen APECO to deliver on its promises. We crafted a Bill that empowers APECO to drive economic progress in the province of Aurora.

Mr. President, I reiterate my call on our colleagues to entrust our provinces with sufficient power and capacity to chart their own economic destinies. Self-sufficiency requires bold steps. We must equip them with infrastructure, research, innovation, education and training. This investment formula will stimulate spending, and generate economic activity.

I urge my colleagues in this hall to pass this valuable measure.

Thank you.