Gloria Macapagal-Arroyo

President of the Republic of the Philippines 2001 - 2010

Developing Subic and Clark

Perspective

The Subic Special Economic and Freeport Zone (SSEFPZ) and the Clark Freeport and Special Economic Zone – part and parcel of the Luzon Urban Beltway (LUB) Super Region – are the Government's earmarked areas for development and transformation. As such, these areas are expected to exhibit and demonstrate features and processes that will convert them into a leading international services and logistics center, to pave the way in the nation's race to global competitiveness.

Clark Freeport Zone

Subic Bay Freeport

The Subic-Clark Zones are today operating in pursuit of the goals they were set up for. They are providing the sites, the infrastructure, the technical processes and the workforce for the efficient establishment and operation of various businesses, local and foreign, domestically- or export- oriented.

Through Executive Order 504 of 2006, the Zones are managed and supervised by the Subic-Clark Alliance for Development Council (SCADC) that acts as a single body responsible for the formation of development strategies and the guidance of implementing actions on the ground for the zones. The SCADC ensures a coordinated approach to the progress of the zones themselves as well as the progress of the Subic-Clark corridor in stimulating economic growth in the rest of the LUB.

The Bases Conversion and Development Authority (BCDA), Subic Bay Metropolitan Authority (SBMA), Clark Development Corporation (CDC) and Clark International Airport Corporation (CIAC) are all cooperating by performing their respective roles.

Currently, the main objectives are adding and improving transportation infrastructure, bolstering the fiscal atmosphere, and developing the potential for expansion.

Multi-Modal Transportation

Unlike many other transport infrastructure projects elsewhere in the Philippines, the focus in Subic and Clark is the completion of a multi-modal transportation platform – covering land, water, and air --that will meet the multi-faceted needs of diverse users. For all practical purposes, this platform is now in place.

Commuters and private vehicle owners alike are served by this platform. Radically improved travel conditions have cut down travel times, made travel generally more pleasant, raising business efficiency all around. It is expected that over time, and with each completed project, more and more investors, local and foreign, will be drawn to the business-conducive milieu of the zones and lead the way towards the full-scale development of the zones.

In addition to providing for the needs of business enterprises, the Government through SCADC is providing for the normal and emergency needs of residents. Thus, in the event of an emergency, the Zones Authority is making available to residents the use of land, water and air facilities. This multi-pronged approach can be expected to provide residents and business people in Subic and Clark several options for overcoming obstacles and impediments thrown up by any emergency.

This provision, along with the new and upgraded roads, seaports and airports in the zones, will not only ensure the zones' transformation into new socioeconomic centers but will also pave the way for the Subic-Clark corridor to become a world-class business and tourist destination.

The Subic Bay Freeport and Related Facilities

Found south of the SCTEx and at the heart of Southeast Asia is the Port of Subic Bay (PSB), which is the key component of the water or sea transport infrastructure being set up in the LUB Super Region. Unlike the SCTEx, however, the sea port services primarily businesses and not private citizens. Nevertheless, it remains one of the financial draws of the region, and is also the center of the county's newly bolstered local shipbuilding industry.

The President visits the Subic Bay Freeport.

In line with the importance of this sea port in terms of economic growth potential, the Arroyo administration's P8.04 billion Subic Bay Port Development Project was completed in 2007, producing for the area a finished container terminal and several support facilities. These improvements have collectively upgraded the services offered by the sea port as well as extended its physical capacity. Not only did the program solidify the Subic Bay Freeport's status as the gateway seaport of the Philippines, but due to the better quality of services resulting from the Subic Bay Port Development Project, business and employment opportunities also experienced booms that have benefited our country considerably.

The rise of Subic in the shipbuilding industry has also been noted in recent years; the cause of this is mainly attributed to the presence of Hanjin's shipyard at the Freeport. The foreign controlled shipyard ranks third among all competitive shipyards in the global shipbuilding industry, and is so far the biggest in the country with a capacity rate of one million tons per year. Along with the Subic Bay Freeport's container terminals, ship repair facilities and the specialized facilities for break-bulk cargo and other commodities, the shipyard has made it possible for our local industry to be noticed by ship buyers worldwide.

The Diosdado Macapagal International Airport

Along with the SCTEx, the Diosdado Macapagal International Airport (DMIA) can be considered one of the concrete and lasting infrastructure legacies of the Arroyo administration. Situated at the center of resource-rich Central Luzon in Clark, Pampanga, DMIA has the unique advantage of having at its disposal an abundance of highly trained and skilled workers, and at the same time a steady and regular target market in the form of 30% of the Overseas Filipino Workers (OFWs) population with homes in the Philippines.

In terms of business, its proximity to the Subic Bay Freeport is ideal for many airport-seaport dependent industries looking for a base of operations in Asia. Impressively, the airport's twin runways can accommodate even the Airbus A380, the largest commercial airplane in the world. Furthermore, DMIA's area of approximately 2,367 hectares makes it one of Asia's largest aviation complexes.

With its improved operations, the DMIA has been designated by the Arroyo administration as the Philippines' prospective premier international gateway airport. Its enhanced handling capabilities further improve the movement and delivery of goods and services, which is crucial for the LUB Super Region's planned internationally competitive services and logistics hub at the Subic-Clark corridor.

The DMIA has so far recorded remarkable leaps in the number of flights, passengers serviced, and cargo tonnage handled; with numbers generally improving year after year. Between 2008 and 20009, the rise in numbers is significant: a 21% increase in passenger flights, an 11% increase in passenger traffic, and a 20% increase in cargo flights. Even though cargo tonnage only increased by 1%, it is still a recorded positive change. These leaps additionally translate to growth and realization of potentials in both the business and tourism sectors. Further airport improvements also made it possible for DMIA to provide low cost carrier flights.

DMIA's twin runways

A recent airport improvement is the completion and start of operations in 2009 of a Maintenance, Repair and Overhaul (MRO) facility located inside the Clark Civil Aviation Complex (CCAC). The joint venture between the Singapore Airlines Engineering Company (SIAEC) and Cebu Pacific Air entered into an agreement with the Clark International Airport Association (CIAC) to develop and build at least five hangars on a sprawling 10 hectare lot.

Still under construction is another project located within the CCAC: The Global Gateway Logistics City (GGLC). It is a 167-hectare logistics and technology park aimed for occupancy by aviation-related and light manufacturing businesses. The project is spearheaded by the Global Gateway Development Corporation (GGDC).

Both projects are in line with the existing Master Development Plan for the DMIA, which stipulates that aside from the changes that are currently in place, the CCAC is to be further improved and transformed into an "airport city," targeting an accommodation rate of 60-80 million passengers a year and utilizing a third runway for simultaneous landing and take-off of airplanes.

An Investment-Friendly Environment

A continuing challenge for the administrators of Subic and Clark is to create and foster a friendly and welcoming environment for investors. While multi-modal transportation is an enticing come-on for many businesses and industry giants, it is simply not enough to have the right location and facilities.

For a long lasting and harmonious relationship with investors – especially foreign businesses and bodies – several steps needed to be taken by the SCADC and its related organizations in order to create and reform special policies particularly suited for the Subic-Clark corridor and its intended socioeconomic place in Philippine society. Attention was especially given to improve and expedite customs and immigration services, and to promote standardized business registration practices.

The Immigration, Customs and Quarantine Project

Simply called the ICQ Project, this particular initiative was the direct result of a signed Memorandum of Agreement (MOA) among SCADC, CDC and SBMA, calling for a consolidated effort to deliver fast and seamless transfers of people, goods and services for the betterment of Subic and Clark.

A coordinated and consistent ICQ Manual to be used as a reference and guide is in the works, but the real major accomplishment so far is the automation of the Transit and Admission Permit System (e-TAPS) for import and export permits processing. Fully implemented in 2008, this particular policy covers not only the Subic-Clark corridor but other air and sea ports as well, such as the Ninoy Aquino International Airport (NAIA) and the Port of Manila.

The e-TAPS complies with the Joint Memorandum Order (JMO), and as such effectively reduces the number of needed documents, the processing time, and the cost for an import or export permit. Furthermore, it improves the system's integrity and lessens occurrences of red tape, precisely because the online nature of e-TAPS no longer necessitates face-to-face transactions. With these new provisions, it will only be a matter of time before the country is at par with and able to fully link to ports located nearby – such as those in Hong Kong and Singapore.

Also recently streamlined are the work permit and visa procurement processes, which was achieved after careful studies of existing immigration policies in the Philippines. Being pilot tested in Subic and Clark is the One Stop Shop (OSS), which is capable of facilitating the procurement of the following documents:

  • Alien Employment Permit (AEP)
  • Provisional Permit to Work (PPW)
  • Temporary Work Permit (TWP)
  • Working Visa (WV)
  • Investor's Visa (IV)
  • Dependent's Visa (DV)
  • I-Cards

A Value Added Service Provider (VASP) is also being designed to address the quarantine issue, especially in cases where agricultural goods are in question.

The service as a whole is very helpful, especially for new investors. The New Alien Employment, Work Permit and Visa Program helps locators and investors outside Subic and Clark to start business operations immediately through the provision of an easy and fast procedure allowing them to bring in skilled and technically qualified workers. These permits and visas are even valid even outside Subic and Clark, as long as the permit or visa holder does not seek gainful employment outside the designated Freeport zones.

The Business Registration Project

To further support and attract more investments in the Subic-Clark corridor, the processing time for business registration was reduced from 45-60 days to just five days. This, along with e-TAPS, is a direct effect of Republic Act 9485 or the Anti-Red Tape Act (ARTA) and part of the Arroyo administration's efforts to curb corruption and increase efficiency, especially in client-heavy frontline government agencies.

The Business Registration Project also aims to consolidate the administrative operations of the two Freeport zones, in terms of their permits and registration procedures, land and property lease and rate policies, and other points of possible competition; so that Subic and Clark may function as one homogenous services and logistics center instead of developing apart from each other.

Results in Real Numbers

The cultivated investment-friendly environment was highly effective. The SBMA recorded steadily increasing gains in cumulative investments, annual exports, and approved projects since 2005. The global economic crisis affected the export industry noticeably in recent years. Consistently surpassing SBMA-set targets from 2005 to 2007 – even overshooting its 2007 target by over US$100 million – the export industry numbers nevertheless slowed down in 2008 and early 2009, though still posting positive changes.

This trend of slowing down is also present in the export industry numbers of Clark. According to the CDC, Clark's export receipts had been constantly increasing – the positive change was dramatic from 2004 to 2005, in fact – until it suffered in 2007. However, the numbers recovered in 2008, with the export industry performing admirably to catch up to the losses from the year before.

Overall, the global economic crisis was definitely felt in the Subic-Clark corridor, but did little to stop the eventual growth and expansion of the new socioeconomic center. The Arroyo administration's efforts to cultivate a working local economy and an area of financial growth that will contribute to the national budget truly shine here.

Growth Potential

Potential for growth in Subic and Clark is also a consideration for foreign and local investors, as well as a necessity for future developments and projects to be fully realized. There are two components to the said potential: land area and manpower.

Without land there cannot be new establishments: no parks, no manufacturing plants, no business facilities, and no administrative buildings. The import and export industry will have no room to expand, and the tourism industry may very well be relegated to the contiguous municipalities outside Subic and Clark, instead of thriving and adding to the economic productivity of what is to be known as the home of the Philippines' world class gateway seaport and airport.

Without manpower, there can be no real and sustainable socioeconomic center in Subic and Clark. Yes, foreign and even local investors may avail of the various streamlined processes to bring in their own qualified workforce for their business operations, but the local talent is highly competitive and skilled in their own right, due in part to the education and training initiatives set up by the Arroyo administration. Hiring locally makes more sense business-wise; it is more cost-effective, more efficient and fosters better relations between the Philippines and foreign countries. It also provides more Filipinos with more jobs, making it feasible for them to stay in Subic and Clark in order to feed the area's operational economy and assist in the process of transforming Subic and Clark into a living, thriving and sustainable locale.

Land for Future Expansion

The SCAD Corridor and Land Use Plan (SCoLUP) is the main instrument in this field. The SCoLUP is a well thought out, viable and practical land use plan resulting from SCADC's foresight and covering an enormous 98,020 hectares of land along 13 LGUs in four provinces. The lands selected were measured at five kilometers on each side of the SCTEx; bringing forth to reality an actual corridor leading up to the Subic and Clark area.

The provinces and areas within were selected as potential nodes of development in three fronts: land (Metro Tarlac), sea (Metro Subic) and air (Metro Clark). Through zoning ordinances and the cooperation of the various LGUSs involved, SCADC hopes to implement the SCoLUP effectively and as a consolidated, coordinated effort. It is the Arroyo administration's vision that the SCoLUP will result in the collective and simultaneous progress and growth of all the areas affected by the Plan. Funding for the Plan is taken from contributions from three organizations – BCDA, CDC and SBMA.

Available Manpower

There is definitely no shortage of available manpower in the Subic-Clark corridor. On the contrary, employment opportunities generated by the revitalization of the Subic and Clark communities have proven to be the lifeblood of the locale's working class residents. In fact, the provision of jobs to more Filipinos by the recent developments in this vicinity has been one of the greatest accomplishments so far of the numerous projects and initiatives directed towards Subic, Clark and the LUB Super Region in general. Although generated employment numbers in both Subic and Clark suffered during the early part of 2009, area administrators and the national government remain optimistic that the losses will be recouped. The numbers had been steadily increasing in the past few years due to the growing reputation of Subic and Clark as a prime location for doing business.

To combat the effects of the global crisis and other unforeseen events, SBMA has also coordinated with TESDA in order to build the capacities and develop the core competencies and technical skills of local workers. Furthermore, SBMA also brought forth a retooling program aimed to help displaced Freeport zone workers. As of June 2009, there are more than 130 displaced worked enrolled in various courses offered by training partners, including:

  • Bartending
  • Building Wire Installation
  • Commercial Cooking
  • Computer Hardware Servicing
  • Consumer Electronics Service
  • Food and Beverages
  • Housekeeping
  • Health Care Servicing

175 people so far have enrolled in and graduated from same or similar courses, availing of the SBMA and TESDA cooperative effort. This program is designed to prepare local workers for a wider range of job opportunities that may open up not only in the import and export industry or the manufacturing industry, but in the tourism industry as well.

However, because the two aforementioned industries remain the most profitable in the vicinity, both Subic and Clark provide educational establishments which prepare students for careers in or related to shipbuilding and aviation. In Subic, Wartsilla and Idess provide international standard maritime training and certification. The Clark Aviation School at the Clark Polytechnic Campus, on the other hand, offers pilot training and aircraft maintenance technology programs inside the special Freeport zone.

These training centers and schools are really where the creation of available, skilled and highly trained manpower begins. Through the continuing provision of quality education of these establishments, the Arroyo administration hopes to encourage more foreign businesses to reduce the overhead cost of operations and invest in better relations with the Philippines by starting to hire locally.

From Military Bases to a Globally Competitive Logistics Hub

The SCADC has certainly been active in the last few years of the President's term in office, and has achieved significant goals and changes which are in line with the President's dream of leaving a massive and lasting legacy of her administration as a gift to the Filipino people – the globally competitive, internationally acclaimed services and logistics center that is to be comprised of Subic and Clark. A cohesive and financially stimulating environment has been encouraged, and various agencies have been involved in facilitating smoother operations and opening doors to new markets.

Moreover, it is doubly impressive that the development of this hub has extended outside Subic and Clark and has even affected the LUB Super Region as a whole, not to mention the rest of the nation. What were formerly military bases and vestiges of the American presence in these provinces are now well-known business centers and popular tourist spots, capable of generating considerable income for the region and the country.

Though there have been massive leaps in development and economic growth, the President's dream has yet to become a reality. The Arroyo administration has done a remarkable and commendable job in laying in the groundwork and installing the foundations of success and progress in the LUB; the realization of this dream that will benefit the region and the whole of the Philippines now depends on the pertinent government bodies and the LGUs of the affected areas.