Gloria Macapagal-Arroyo

President of the Republic of the Philippines 2001 - 2010

MILESTONES AND PROSPECTS Subic-Clark Report
Subic-Clark Alliance for Development (SCAD)
30 April 2010





The story of Clark is intertwined with Subic by force of circumstance and history. In the early 1900s the Americans established Clark Air Base and Subic Naval Base. They were occupied and used for over seven decades, until the calamitous eruption of Mt. Pinatubo in June 1991 devastated Central Luzon, together with the abrogation of the Bases Treaty. Clark Air Base was completely destroyed while Subic Naval Base suffered less, but still severe, damage, prompting the Americans to abandon both facilities.

During the 9-year period between June 1991 and December 2000, serious attempts were made by past Philippine administrations to convert these former American bases and other US military reservation areas for civilian uses and sustainable development. But despite the massive reconstruction and rehabilitation efforts of government in Clark and Subic, the results were not enough to improve the socio-economic condition of the people in Central Luzon.

This could only mean that the full potentials of Clark and Subic as instruments of socio- economic development had neither been properly tapped nor effectively harnessed. Hence, since assuming office on January 21, 2001, President Gloria Macapagal Arroyo has been setting in motion new policy directions to promote the general wellbeing and improve the quality of life of the people in the region.

Consonant with this objective, the Subic-Clark Corridor was established to spur economic growth. The Corridor is envisioned to be a highly competitive international services center and logistics hub that will serve as the country's main gateway to the Asia Pacific Region, allowing the Philippines to penetrate the international supply chain system and compete in the global logistics market. In 2005, the recorded worldwide market value of this market was pegged at 3.5 trillion US dollars. It is projected to increase still further in the years ahead. Connecting to this global market increases the capacity of the Philippines to compete, grow, attract investments, create jobs and reduce poverty.

This new policy direction is aimed at increasing productivity in the key result areas (KRA) of social and economic development in the Central Luzon region, to wit: EMPLOYMENT, INVESTMENT, EXPORTS, REVENUES, and INCOME GENERATION.

The record of the 9-year period between 21 January 2001 and 30 April 2010 of the Arroyo administration has proven the efficacy and validity of the President's vision. Even when compared with the earlier 9-year period of the past two administrations, the aforementioned KRAs have shown remarkable increases, as evidenced in the following data:

The social and economic picture has changed from low productivity during the first 9-year period to high productivity in the second 9-year period, largely because a lack of clear vision and unfocused development in the former period was replaced by strong vision and well-focused policy development initiatives in the latter. The focused and vigorous pursuit of the Subic-Clark Corridor vision to its logical end spelled the big difference in productivity. Where before 2001 there was no well-defined theater for engaging development, there now stands the Subic-Clark Corridor --- generating the benefits of social and economic growth as the country competes for the global logistics market in the international management supply chain system.

MAIN GATEWAY TO THE ASIA PACIFIC REGION

The SCAD Corridor is a vast expanse of 98,000 hectares covering four provinces (Zambales, Bataan, Pampanga and Tarlac), 10 municipalities, and the cities of Olongapo, Angeles and Tarlac. Running across the middle of the Corridor is the Subic-Clark-Tarlac Expressway (SCTEx), a modern road infrastructure linking Subic and Tarlac and tying together alongside of it the various communities and local government units (LGUs) through a series of strategically located interchanges and access roads, facilitating safe and smooth travel and transport of people, goods and services.

Operating within the Corridor are:

  • (1) the Subic Bay Freeport and Special Economic Zone, with a deep-water seaport, serving as water hub,
  • (2) the Clark Freeport and Special Economic Zone, with the Diosdado Macapagal International Airport, as air hub, and
  • Tarlac City, Province of Tarlac, with its vast land serving as land hub for agricultural products and manufactured goods from Northern Luzon, thereby combining the three essential elements that make for a truly competitive international logistics center.

MILESTONES IN INFRASTRUCTURE DEVELOPMENT

Rome was not built in a day, often it is said. The building of the SCAD Corridor has required the laying down of strong foundations of infrastructure consisting of

  • (1) soft infrastructures such as laws, policies, rules and regulations, systems and procedures; and
  • (2) physical structures or hard infrastructures, such as transportation and telecommunications systems, power plants, electricity and water systems, roads and bridge systems, waste management and disposal systems, storage and warehousing facilities, and the like.

Soft Infrastructures promote stability of the business and economic climate and generate investors' confidence in the marketplace, while hard infrastructures transform the Corridor into a truly competitive world-class logistics hub providing seamless delivery of people, goods, services, and information to and from the production, manufacturing, and trading centers operating within the country and in the Asia Pacific Region.

LAYING DOWN THE FOUNDATIONS OF DEVELOPMENT

Legal and Policy Framework

The idea of SCAD Corridor first came up on June 21, 2001 when the President directed the Bases Conversion and Development Authority (BCDA), Subic Bay Metropolitan Authority (SBMA) and Clark Development Corporation (CDC) to form an alliance for the integrated development of the Subic Bay Freeport and Special Economic Zone (SBFEZ) and Clark Special Economic Zone (CSEZ).

As one of the ten-point legacy agenda of the Arroyo administration, the President declared that "the Subic-Clark Corridor shall be the most competitive international service and logistics center in the region."

On June 30, 2004, subsequently, she issued Executive Order No. 504, s. 2006, creating the Subic-Clark Area Development Council with the mandate "to rationalize resources and harmonize strategies that will ensure an integrated and coordinated approach to the development of the Subic-Clark Corridor."

EO 504 was amended by EO 504-A making Clark International Airport Corporation (CIAC) a participating Member-Agency of the SCAD Council, to further strengthen its efficacy with a mandate "to formulate policies and programs to develop Subic and Clark, and the corridor in between them as globally competitive Mega Logistics Hub" and "to harmonize in the SBFZ and CFZ such programs, policies, rules and regulations affecting investments, incentives, customs, immigration, leasing, privatization, and other matters related thereto."

The North Light Railway Corporation (Northrail) was made a Member of the Council under EO 733.

On March 20, 2007, the President signed into law Republic Act No. 9400, "AN ACT AMENDING REPUBLIC ACT NO. 7227, AS AMENDED, OTHERWISE KNOWN AS THE BASES CONVERSION AND DEVELOPMENT ACT OF 1992" providing:

  • (1) under Section 12(b) that "the Subic Special Economic Zone shall be operated and managed as a separate customs territory ensuring free flow or movement of goods and capital within, into and exported out of the Subic Special Economic Zone, as well as provide incentives such as tax and duty-free importations of raw materials, capital and equipment," and
  • (2) under Section 15 that the Clark Special Economic Zone shall in the main cover all areas in the sub-zone of Clark (across the Sacobia River) outside of the Clark Air Base proper with an area of not more than 4400 hectares, which latter area shall be the Clark Freeport Zone (CFZ), and that "The CFZ shall be operated and managed as a separate customs territory ensuring the free flow or movement of goods and capital equipment within, into and exported out of the CFZ, as well as provide incentives such as tax and duty-free importation of raw materials and capital equipment,"

On August 22, 2006, the President issued Executive Order No. 500-A AMENDING EXECUTIVE ORDER NO. 500 DATED JANUARY 27, 2006 AND PROVIDING FOR THE EXPANSION OF AIR SERVICES TO THE DIOSDADO MACAPAGAL INTERNATIONAL AIRPORT (DMIA) AND SUBIC BAY INTERNATIONAL AIRPORT (SBIA).

On June 2, 2007, the President signed into law Republic Act No. 9485, "AN ACT TO IMPROVE EFFICIENCY IN THE DELIVERY OF GOVERNMENT SERVICE TO THE PUBLIC BY REDUCING BUREAUCRATIC RED TAPE, PREVENTING GRAFT AND CORRUPTION, AND PROVIDING PENALTIES THEREFOR" which, in the main, provided for the reengineering of systems and procedures to facilitate the processing and approval of all business transactions and the delivery of public services. The law covered all branches of the Government and the departments, bureaus, agencies and offices under them, including Government-Owned and –Controlled Corporations, with or without original charters---which thereby included the BCDA, SBMA, CDC, CIAC, and NORTHRAIL.

To further fortify the legal framework, the SCAD Council has formulated policies, rules and regulations, systems and procedures in close consultation with all the stakeholders concerned---namely: the investors and locators of CFZ and SFZ and the various business chambers in the SCAD Corridor, value service providers, Bureau of Customs, Department of Finance, Bureau of Immigration, Department of Labor and Employment, Department of Trade and Industry, Department of Tourism, Philippine Economic Zone Authority, Department of Budget Management, Bureau of Investment, and the National Economic & Development Authority, among others.

These formulations ensure

(1) the establishment of a stable business and economic policy climate and business-friendly customer relations in SFZ and CFZ;

(2) reduction of costs of doing business and facilitation of the ease of doing business;

(3) the easy availability of tax incentives and duty free privileges granted under RA 9400; and

(4) the fast and automated processing and approval of all business transactions as provided under RA 9485 otherwise known as the Anti Red Tape Act, supra, to wit: Business Registration System, Quarantine System, Immigration, Visa and Work Permit System, Electronic Transit Admission System, Export System, Bring-in/Bring-out System, and Cross-Border Information Exchange Project, among others.

Physical Infrastructure Framework

Multi-Modal Transport System. To enhance the competitiveness of the SCAD Corridor as a viable logistics and services center, the strategy was to adopt a multi-modal transport system that has the necessary capabilities to establish effective linkages connecting the Corridor to the key growth areas in Asia and the Pacific Rim countries. A multi-modal transport system that integrates air, sea, and land connectivity to ensure fast, convenient and reliable flow of goods, services, capital and manpower was put in place.

The Diosdado Macapagal International Airport (DMIA). DMIA was developed as a premier international airport facility to serve as the main gateway of the Subic-Clark Corridor. Its terminal building was expanded, doubling the terminal capacity from 1 million to 2 million passengers annually. Its aviation facilities were modernized according to international standards with the installation of US$9.987M Terminal Radar Approach Control (TRACON) facility enhancing the safety of all aircraft operations. As a result, the DMIA registered a sustained record-breaking productivity in all key areas of operations during the 9-year period from 2001 to 2009, as shown by Chart 2, below:

Port of Subic Bay (PSB). Complementing the development of the DMIA is the PHP8.04-B rehabilitation and expansion of the Port of Subic which has set the PSB as the Gateway Seaport of the country.

Subic has one of the world's few deepwater ports. Its unique mountains-meet-the-sea topography offers safety shields against natural disturbances. These features make Subic the most strategic deepwater port in Southeast Asia, ideal for transshipment operations in the region's supply chain. The PSB will serve as the networking site of the Subic-Clark Logistics Hub because it will provide services to ships and cargo at land and sea interface.

The construction of the new Terminals 1 and 2 was completed in 2007 and 2008, respectively. The port now has a capacity to accommodate 600,000 twenty-foot equivalent units (TEUs) per year, boosting its competitive advantage against other international ports in the Asia Pacific Region.

The Subic seaport also presents itself as a role model for having both the supply infrastructures and recreational perks (like land, air, water and jungle attractions and adventures) for maritime players and crew. With this, the Subic is likewise being promoted as a destination for international cruise liners.

Subic-Clark-Tarlac Expressway (SCTEx). Considered as the backbone of the Subic-Clark Logistics Hub, the Php34.1-Billion SCTEx links the Clark airport to Subic seaport and the industrial centers of Tarlac for a seamless logistics corridor.

The SCTEx was designed to provide the shortest and most direct, efficient, and practical link among the major development areas of Central Luzon---the Subic Freeport Zone, Clark Freeport Zone, and the Central Techno Park in Tarlac. The expressway is also interconnected with the Roman Highway in Bataan and the North Luzon Expressway in Pampanga, allowing for greater access that promotes the integrated development of the region. It has also alleviated the increasing vehicular traffic along the North-South axis of Central Luzon by providing a better alternative to motorists.

Through the SCTEx , travel time to and from the key areas along the SCAD Corridor was reduced almost by half the original travel time, as shown below:

With travel time and vehicle operating costs reduced, SCTEx has registered increased tourism figures from 427,304 in 2007 to 530,802 in 2008; traffic volume increased from daily average of 9,200 vehicles in 2008 to 19,000 in 2009 reflecting an increase of 100%.

Commercial operations of the SCTEx have triggered economic activity in the SCAD Corridor, significantly boosting tourism in SBMA following the opening of the SCTEx in 2008 thusly: Hotel occupancy rate in Subic in April-July 2007 or before the opening of SCTEx was only 59.12% as against 71.32% hotel occupancy rate after opening in the same 2-month period; while the increase in number of vehicles going to Subic was from 312,370 before SCTEx opening going up to 443,585 (42% increase) after the opening.

NORTHRAIL Project (Phase 1, Section 1). The Northrail will be the link of the SCAD Corridor to the rest of the Urban Luzon Beltway Super Region, a booming center for industrial, commercial and financial services.

Running parallel to the North Luzon Expressway (NLEX), Northrail is divided into 2 sections: Caloocan City to Malolos in Bulacan, and Malolos to Clark Freeport Zone in Pampanga. The 82.12 km, double-track modern railway system project will provide a fast, efficient, and reliable mass transit system for people and goods to and from the business centers of Metro Manila. With an operating speed of about 80-120 kph, travel time from Caloocan to Malolos will be reduced by about half an hour, and Caloocan to Clark to about 89 minutes.

The introduction of the rapid rail service will accelerate the development of Central Luzon and Northern Luzon by providing easy access to these new economic growth areas. This will also improve the interconnection of major transportation facilities from the congested Metro Manila to the fast developing provinces of Central and Northern Luzon.

*Tarlac-Pangasinan_La Union Expressway (TPLEx). This expressway will be connected to SCTEx in La Paz, Tarlac to serve as the Corridor's Gateway to the Northern Luzon areas. The 88.58 km-expressway runs parallel to the McArthur Highway, from Tarlac City/La Paz, passing through the municipalities of Victoria, Gerona, Paniqui, Moncada, and San Manuel in Tarlac, Carmen, Urdaneta, Binalonan, Pozorrubio, and Sison in Pangasinan, up to Rosario in La Union.

*Tarlac-Nueva Ecija-Aurora-Dingalan Port Road. This road provides continuous access from the Subic-Clark Logistics Hub to the Dingalan Port in Aurora Province. Through the extension of SCTEx, the Php 1.57-B west-to-east link connects the Subic Port, which is on the China Sea coast, with the Port of Dingalan along the Pacific Ocean. The 120.65 km-road aims to facilitate agricultural and industrial development in the otherwise isolated areas of northeastern Luzon.

The well-laid foundations of legal and policy frameworks coupled by modern physical infrastructures having been put firmly in place in the SCAD Corridor spelled the remarkably high increase in productivity in the key critical areas of EMPLOYMENT, INVESTMENT, EXPORTS, and REVENUES generation achieved during the 9-year period (21 January 2001 -30 April 2010) under the present administration.

A LEGACY CAST IN STONE

The big difference is that there now stands the SCAD Corridor---when before 2001 there was none. When before the country did not have the capability or capacity to viably compete in the global logistics market, now the country has the SCAD Corridor engaged in active and strong competition in the rich and rapidly growing international logistics and supply management market---as the country's main gateway to the Asia Pacific Region.

Indeed, there now stands the SCAD Corridor---a strong testament, cast in stone, to a legacy that will give lasting social and economic benefits to the present and future generations of our countrymen and a source of pride to our nation.