Have you ever been to the Subic Bay Freeport Zone? Have you ever even heard of the place? You should – this Special Economic Zone may be one of the most exciting places to be in right now, not only in the Philippines but maybe throughout Asia as well.

HISTORY OF SUBIC BAY -The Subic Bay Freeport Zone in Subic Bay , Philippines (which spans a total of 13,800.60 hectares) used to be the site of the biggest overseas military navy station of the United States of America called Subic Bay Naval Base. The Americans were forced to pull out their forces after the nearby volcano Mt. Pinatubo erupted in 1991.

SUBIC TODAY - Nowadays, the Subic Bay Freeport Zone’s biggest economic draw is the deep water natural harbor of Subic Bay , where over 7000 workers man a high-end ship building facility valued at over $1 billion. Aside from the ship yard, more than 610 companies are based in the Subic Bay Freeport Zone, the sister Freeport Zone of the nearby Clark Freeport Zone. Subic Bay Freeport Zone is divided into four key investment areas, namely, the Central Business District, Subic Gateway, the Subic Bay Industrial Park , and the Subic Techno Park . Aside from ship-building, other commercial activities driving the Freeport Zone’s economic engine are manufacturing-related businesses, electronic communications technology, warehousing and transshipment, banking, and education. All development of the Subic Bay Freeport Zone falls under the jurisdiction of the Subic Bay Metropolitan Authority.

TAX INCENTIVE FOR FOREIGN INVESTORS - The big deal about this particular Philippine Freeport Zone is that foreign companies that opt to relocate to the Subic Bay Freeport Zone stand to benefit from a competitive incentive package offered by the Philippine government. To avail of these incentives, such foreign companies should decide first whether to enlist as a Subic Bay Freeport (SBF) Enterprise or as a Subic Bay Regional (SBR) Enterprise . A company which opts for SBF status must first qualify as nationals and businesses of any country operating in any field of economic activity – excluded from this qualification are any entities who are restricted because of the Foreign Investments Negative List (under the Foreign Investments Act of 1991.) SBR status, on the other hand, may be granted to all multinational firms that aim to participate in regional and/or international trade or services, as well as engage in business activities, by locating their regional headquarters within the Subic Bay Freeport Zone.

There are more tax incentives for SBR-designated Enterprises – such status merits them tax and duty free exemptions for various items. These items could be imported raw materials and supplies, capital equipment and even ordinary consumer products that are meant to be consumed within the Freeport Zone. Case in point - an imported passenger car that was purchased to be driven within Subic Bay is priced 50% less than the same kind of car bought outside. But the most dramatic savings for locators are generated through imported materials and equipment meant for daily production, meaning locators will be able to compete on a significant basis.

Another tax incentive for SBR-designated Enterprises is the Income Tax Holiday which is granted to investors on project basis. Registered enterprises do not have to pay any kind of local and national tax (including franchise taxes, fee for the Mayor’s Permit, property tax, excise and ad valorem taxes, and value-added taxes.)

TAX LIABILITY OF INVESTORS - So do investors have to shoulder any kind of tax liability at all? Actually, Enterprises are only required to declare a 5% final tax for the adjusted gross income they were able to produce from activities conducted within the Freeport . SBF Enterprises, in connection, are permitted certain deductions before they compute for the 5% final tax. SBR Enterprises, on the other hand, have to absorb a 5% final tax on gross income for their business activities with some or all countries located in the Asia-Pacific, and even with nations located elsewhere in the world (including the Philippines .) Those who have to pay this tax may also enjoy more deductions (including those on sales and marketing salaries, and losses from foreign exchange transactions.)

Investors who wish to receive the Subic Special Investors Visa only need to funnel a minimum of US$250,000 in investment into the Subic Bay Freeport Zone. Otherwise, there is no minimum investment required from investors.

COST OF LEASING PROPERTY - To lease industrial land in the Subic Bay Industrial Park will cost investors US$55 per square meter for properties measuring less than 2 hectares. For land surpassing 2 hectares, investors will have to shell out US$50 per square meter. In the Subic Techno-Park, leased industrial land costs US$75-80 per square meter but the lease only covers 50 years. Industrial land for lease in the Subic Bay Freeport is priced at US$0.50-4.00 per square meter.

In the Central Business District, leasing office space amounts to US$3.50-10 per square meter. On the other hand, leasing factory space in the Subic Bay Freeport is tagged at US$2-20 per square meter.

TRANSPORTATION INFRASTRUCTURE OF SUBIC - One great advantage of Subic Bay as a Special Economic Zone is the existence of an excellent transportation infrastructure – for one thing, the Freeport has a vast road network that links land areas within the Zone. The Subic Expressway is advantageous to use since it can reduce travel time from Subic to Manila by 30 minutes while eliminating the need to use the zig-zag road leading to Olongapo City . You only have to spend 5 minutes driving the 6-km. distance from the Industrial Park to the Subic Bay International Airport . In addition, a port development project valued at US$215 million is currently underway – this encompasses construction of a Cubi Point-based container port, the repair of existing Freeport wharves, as well as the purchase of required equipment and facilities (such as four goose-neck type quay gantry cranes that can each accommodate 40.6 tons per load.) These cranes are projected to increase the handling capacity of container vans within the Zone as much as six-fold. The International Airport and the Seaport of Manila are also used as additional means for transportation by certain locators within the Zone. Furthermore, the Subic-Clark-Tarlac Expressway is set to be built soon by the Bases Conversion and Development Authority – guaranteeing increased access to Subic Bay Freeport Zone by the residents of cities and provinces that the new megahighway will cut through.

POWER, WATER AND TELECOMMUNICATION SERVICES - As far as utilities are concerned, the Subic Bay Freeport Zone has adequate power and water supplies to meet the growing needs of its population. The Freeport is dependent on Subic Enerzone to provide as much as 116 megawatts of electricity to consumers (though additional power stations are set to be built within the Zone as well.) Electricity costs PhP5.56 per kilowatt - hour. Subic Water and Sewerage Company Inc. heads a consortium which is responsible for the steady supply of potable water and satisfactory sewerage services. Water capacity from this consortium (that also requires the services of BIWATER, DM Consunji, SBMA, and Olongapo City Water District) amounts to 33,000m3 daily at a cost of PhP23.13 per cubic meter. Telecommunication services are handled by Subic Telecom which, at the moment, can provide 100,000 lines to the Freeport population. At present, the utilities of the Freeport Zone are in the process of being upgraded.

MANPOWER TALENT OF THE ZONE - The Subic Bay Freeport Zone is known for the steady supply of skilled manpower which Subic Bay Enterprises can source from the nearby areas of Hermosa and Morong in Bataan , Subic town proper, and the City of Olongapo . Majority of these workers were previously employed by the US Navy, meaning they possess a high degree of proficiency in English. The SBMA Labor Center assists Subic Bay Enterprises in manpower pooling. Other manpower services providers also exist who can help locators tap into the area’s continuous and steady supply of workers – particularly when the need is immediate.

FINANCE/BUSINESS SERVICES SUPPORT - Businesspeople may opt to patronize any one of the many branches of international banking institutions for their financing, electronic banking and investment activities. Various postal and courier services have set up house within the Zone – these, along with the existence of internet service providers, help residents of the Zone keep in touch with the rest of the world.

HOUSING FOR FOREIGN INVESTORS - As far as the housing needs of Enterprise officers and their families are concerned, Subic Bay features 1,876 housing units which they can readily occupy. These housing units, which were previously occupied by members of the US Navy and their families, are situated within well-maintained and secure areas. Around 1,000 units are still available for future occupancy under short-term or long-term lease arrangements. The children of Enterprise officers may attend the nearby Brent School Subic which uses a predominantly US-based curriculum that is oriented towards the International Baccalaureate Program from Grades 1 to 12.

HEALTH AND FITNESS SERVICES - In the event of a medical emergency, Subic Bay residents can avail of excellent 24-hour emergency and outpatient health care services at three places within the Zone: the SBMA Dispensary at Cubi and at Dewey Avenue , and the New Terminal Clinic within the Subic Bay International Airport . And for those who simply want to relax at the gym after a tough day doing business or recreation, it’s good to know that the Zone is now home to Slimmers World International, conveniently located within the Central Business District.

SPORTS AND RECREATIONAL ACTIVITIES - Subic Bay maintains various sports and recreational facilities – these include parks, bowling alleys, swimming pools, horse-back riding stable, gymnasium, and an 18-hole golf course. Subic maintains a private yacht club within the marina, and various shopping malls abound in the area. For those inclined to appreciate the well-preserved environment of Subic, various eco-activities have been provided – these include hiking the Apaliin trail, being immersed by indigenous Aeta tribesmen in their culture, visiting the dormant volcano Mt. Pinatubo, camping, a journey through the nearby Zambales Mountain Range, and a fun-filled tour of duty with the Jungle Environment Survival Training (JEST) Camp.

If the JEST Camp doesn’t raise your adrenaline levels enough, Subic Bay Freeport Zone also has different theme parks that might appeal to you. There’s the Subic Extreme Adventure Park which offers Tension Traversing, High Ladder Climbing, Canopy Sliding, and High Pole Jumping. Another popular offering at the Zone is the Jungle Life Encounter – you can visit the tiger sanctuary, the serpent and reptile den, the flamingo ponds, the boar pen, the ostrich pen, the farmer’s barn, as well as various lagoons and man-made waterfalls. Those who feel nervous about security need not worry - every entry and exit point of Subic Bay is well-guarded because the Zone is founded on the location of the former US Naval Base.

SUBIC AS HOME FOR RETIREES – Real estate developers have capitalized on the clean, safe, environmentally-friendly and peaceful community of Subic Bay to attract retirees from different countries. Four condominiums have already been put up to cater to this market made up mainly of retirees from Canada , Europe , the United States , Taiwan , China , Japan , and Korea . Subic Bay has been tagged as one of 14 ideal areas for retirees to relocate to in the Philippines . This means Subic Bay developers have the potential to secure a sizeable portion of the $40 billion in revenue that the country may generate by 2015, if the Philippines is transformed into the retirement capital of Southeast Asia , according to the Philippine Retirement Agency.

FOREIGN CARRIERS TO GET AERONAUTICAL FEES DISCOUNTS – The Subic Bay Metropolitan Authority is offering discounts on aeronautical fees that airlines have to shoulder for using the Subic Bay International Airport . Carriers will enjoy an 80% cut in fees on weekdays and 60% discount during weekends. These fees will cover charges such as use of navigational equipment and radar, lighting, parking, and take-off and landing. The SBMA is providing such cuts on its fees because it would like more airlines to use the Subic Bay International Airport . Airlines which are presently using the Subic Bay International Airport for their international flights are Inter-Island Airlines, Mandarin Air, Cebu Pacific Air, and Air Philippines .

SHIPBUILDING THRIVES IN SUBIC - In 2007, Hanjin Heavy Industries Corp.-Philippines, a major ship-building concern headquartered in South Korea, is expected to produce over 30,000 jobs (directly and indirectly) as it spurs its operations in Subic Bay to reach full capacity this year. Hanjin presently employs 6,900 workers in Subic Bay , with around 4,900 of these being skilled staff recruited when its Philippine operations were at the pre-operations and construction stages. With the addition of Hanjin’s ship-building activities in Subic Bay , export industries are expected to expand to around $2 – 3.5 billion this year. (Hanjin is currently ranked as one of the biggest shipyards in the world.)

Hanjin’s Subic Bay facility has been tagged to build new 4,300 Twenty Foot Equivalent Units container ships earmarked for Greece and Germany . Initial production will be composed of six 4,300 TEU capacity container ships ordered by Diorxy Maritime Corp. of Greece which are scheduled for completion and delivery by 2009. During the second series of production, six more ships will be constructed for delivery to the German company NSC Schiffartsgeselhaft.

According to DTI secretary Peter Favila, the local economy – as well as the Hanjin company - are expected to benefit significantly from these two orders. Favila further noted that construction of the 12 new ships will launch the Philippines ’ into its new role as the center of shipbuilding activities in Asia and the Pacific because of its capacity to undertake large-scale shipbuilding. This will become possible because Hanjin has invested in the training of its Filipino workers who have the necessary expertise for the job, and also because Hanjin itself is renowned for its vast stores of knowledge and skills in shipbuilding.