BOTH foreign and domestic investors are deemed crucial in the government’s quest for economic prosperity, for which special economic zones – particularly free trade zones and free ports – were institutionalized.
The creation of special economic zones (SEZ) is basically designed to attract foreign and local investors to infuse capital and establish business business inside the special economic zones while enjoying tax and duty-free privileges and incentives to business locators.
To date, there are more or less 600 economic zones which are managed either by the Philippine Economic Zone Authority (PEZA) or held privately.
There’s just one glitch though, are these economic zones complying with existing environmental laws?
Wonders of Ecozones
For one, SEZs create jobs for the local population as business locators require a large workforce to operate, especially in the industrial sector which prefers an environment that makes it easier for businesses to operate, such as streamlined regulations, tax breaks, enhanced infrastructure, not to mention income tax holidays, zero-percent duty on capital equipment, and exemption from wharfage dues.
SEZs also attract Foreign Direct Investment (FDI), which can lead to economic growth and development. This can include an increase in Gross Regional Product (GRP) per capita, higher personal income levels, and higher living standards.
SEZs also trigger development of infrastructure facilities. For example, the United States military bases in Central Luzon, like the Subic Naval Base which is now known as the Subic Freeport Zone.
Adapting to Growth
However, the influx of investment and population growth caused a rapid increase in solid waste produced by the business locators, most of which are engaged in the manufacturing industry.
The good thing though is that Republic Act 7227 (Bases Conversion and Development Act of 1992), the law which created the Subic Bay Metropolitan Authority (SBMA) made sure that the agency overseeing the ecozone has the power and autonomy to address anticipated environmental concerns which include waste disposal, pollution, preservation of Subic’s natural ecosystem, energy efficiency and carbon neutrality.
Speaking of carbon neutrality, what makes the Subic Bay Freeport Zone unique is the existence of a roadmap to keep the area a carbon neutral economic zone by 2040.
SMBA Up-Close
Overseeing the Subic Bay Freeport Zone is not as easy as many would think it is since the SBMA is duty-bound to strike a balance between economy and environment as negligence may prove tragic to both marine and landmass in the area.
The SBMA has the unique authority (as provided under its mandate) to regulate environmental matters within the Subic Bay Freeport Zone. However, the Department of Environment and Natural Resources (DENR) is keeping a crucial role which is to ensure compliance to national standards and environmental protection.
Under a framework of cooperation and integration, the SBMA takes the role of an implementer, while the DENR provides overarching guidance, ensures effective environmental management while fostering economic growth and sustainability.
Additionally, the DENR ensures environmental regulations are tailored to the specific context of the Freeport Zone, balancing environmental protection with the zone’s economic development objectives.
Broader Mandate
SBMA is not just a specialized agency. It’s more like an autonomous government overseeing all aspects under a “small republic.” Its mandate also covers regulatory functions if only to make sure that the ecological integrity at the Subic Bay area is never compromised.
Itr has its own Environmental Management System (EMS) Manual which provides a detailed framework for the agency’s environmental protection and sustainable development efforts.
Procedures and guidelines for environmental impact assessments, pollution control, waste management, and other critical aspects of environmental management within the zone, to name a few.
SBMA has the authority to regulate port locators and assess their environmental compliance, as provided for under the SBMA Charter, which also covers issuance of Environmental Compliance Certificates (ECCs) since the Subic Bay Freeport Zone is a “protected area.”
International Standards
Critically, its authority extends to ensuring environmental compliance in line with international laws, agreements, and conventions.
As a responsible member of the global community, the Philippines is expected to uphold international obligations regarding environmental protection by incorporating relevant provisions of international environmental agreements into its policies and guidelines, ensuring that businesses operating within the zone adhere to global best practices.
Interestingly, not all types of businesses are allowed to operate inside the Subic Bay freeport as the SBMA maintains an embedded system to detect “money businesses” like piracy, unfair labor practice, smuggling, delinquency, among many other “red flags.”
Protecting Locators
SBMA is not limited to regulatory powers as the specialized agency also wields power to protect legitimate business locators from undue interference by external agencies, such as the Bureau of Customs (BOC), in matters pertaining to environmental compliance.
In some instances, BOC tried to seize goods based on alleged violations of DENR administrative orders. Under its mandate, the SBMA may intervene and ensure that any actions taken against port locators are justified and aligned with the Freeport’s specific environmental regulations.
The protective role is deemed necessary in maintaining a stable and predictable business environment within the zone, encouraging investment, and promoting economic growth.
