Para sa ekonomiya: The need for regulatory coherence

(Conclusion)

One particular example that comes to mind is the current regulatory snafu hounding Metro Manila. I am talking about the moratorium on economic zone applications that’s currently in place, which has inadvertently put billions of investment pesos in proverbial limbo.

In 2019, the Duterte administration released Administrative Order No. 18 (AO18) entitled “Accelerating Rural Progress Through Robust Development of Special Economic Zones InThe Countryside.” Well-meaning as it is, encouraging development of ecozones outside of Metro Manila, the ban that it has imposed on Metro Manila ecozone development seems to conflict with this administration’s economic objectives.

Among those affected by the AO18 moratorium are three major projects that had to be shelved indefinitely – ArcoVia City in Pasig City, with an investment value reportedly upwards of P800 million, the P1.5-billion Parqal in Parañaque City and the 8912 Asean Avenue project which was valued at more than P2 billion.

This was the discussion that came up with a close friend of mine who’s well-involved with one of our government IPAs. According to them, the ecozone developers of said projects were heavily disheartened by the turn of events, when their applications were returned despite their compliance and abject readiness to execute their billion-peso projects.

It was also especially confounding to investors that even as the government passed the Corporate Recovery and Tax Incentives for Enterprises Act (CREATE) two years after the moratorium was put in place, the ecozone ban in Metro Manila remained well in place, causing a regulatory conflict between the AO and the law.

The CREATE Law was enacted in 2021, which sought to boost our post-pandemic recovery and promote our competitiveness in the region through tax incentives. And contrary to the moratorium, the law instead prescribed measures that include the National Capital Region (NCR) as a key location for ecozones and freeport zone development.

“Naturally, one would assume that a law implemented years after a past administration’s AO would supersede it,” my friend suggested. “Especially for an administration that had different priorities, too.”

If we are painting the country as a prime destination for investors, the current situation is definitely not a good look. Naturally, new entrants would almost always look at the NCR first for their venture’s location. Unfortunately, the regulatory situation could be one of the hurdles to make them turn away.

Let us also not overlook those at the other end of this matter. Over the last few months, employment rates have gone from record-highs to concerning lows, painting a picture of an unsteady labor economy, with underemployment still a looming threat. It goes without saying that, with billions of pesos of investments still up in the air, the hundreds of thousands of job opportunities these could yield are going to be delayed indefinitely.

I’m hoping that the current administration can apply regulatory coherence in this conflict between AO18 and the CREATE Law. In percolation of the decisions, perhaps they can factor in what really best serves the country’s objectives. As the kids would say, para sa ekonomiya.