| Abstract | The development of economic zones in the Philippines forms part of the overall industrial
development strategy of the government. Specifically, economic zones are a venue by which
the government can encourage, promote, and accelerate balanced development among all
regions in the country by attracting legitimate ad productive investments into these areas. Two
(2) such zones, the Subic Special Economic and Freeport Zone (Subic SEFZ) and Clark Special
Economic Zone (SEZ) which were formerly US military installations have become showcase
locations for investments. Encouraged by their initial success, economic zone development in
the Philippines was given more impetus with the enactment of the Philippine Economic Zone
Act in 1995. Subic SEFZ and Clark SEZ are expected to provide the backbone for the
development of Central Luzon (Region III). The paper aims to look into the developments and
the socio-economic impact of the two Zones after five (5) years in operation, using data on
investment generation, export contribution, employment generation, and revenue collection. In
addition, the paper also aims to present the findings of the survey conducted among selected
locators on the realized host country objectives, benefits gained in locating within the Zones,
problems/gaps encountered, and competitive advantages of the Zones vis-a-vis other economic
zones in the Philippines.
Both the Subic SEFZ and Clark SEZ have certainly contributed to the Philippines' investment
generation, export earnings, employment generation, and revenue collection over the past five
(5) years. In short, the Zones have contributed both to regional and national development. The
number of locators within the Subic SEFZ jumped from 33 in 1993 to 2389 as of year-end
1997, growing at an average of 100%. For Clark SEZ, the number oflocators grew from 10 in
1993 to 222 as of end-November 1997, registering an average annual increase of 155%. The
amount of investments approved in Subic SEFZ stood at roughly US$2.2 billion as of year-end
1997, growing at an average rate of 11.25% over the past five (5) years. Investments in Clark
SEZ reached roughly US$ 2.5 billion as of November 30, 1997, representing an annual growth
of 133% during the same period. Total exports from the Subic SEFZ reached US$ 1.03 billion
from 1994 to 1997, growing at an average of 257%. Exports from Clark SEZ reached US$
389 million, growing at an average of 195%. Employment within Subic SEFZ stood at 41,034
as of December 1997, registering an average growth of 63% from 1993 to 1997. Employment
generated in Clark SEZ from 1993 to 1997 reached 40, 773. Tax revenues generated from
Subic SEFZ accounted for 0.03% to 0.12% of the country's total tax revenues from 1994 to
1997. Almost all of the respondents from both Zones indicated that the prospects of these
locations are good. For Subic SEFZ, majority cited the following reasons for their assessment:
increasing efficiency in administration; continuous improvement of infrastructure and support
facilities; increasing stability of policies; and rapid increase in high-technology industries. For
Clark SEZ respondents, their most popular reason is the continuous improvement of
infrastructure within the Zone.
Based on the analysis of the secondary data and survey findings, a number of recommendations
are forwarded basically to address some of the locators' concerns as well as to make the Zones
more productive vehicles of development in the coming years. |