Olongapo City: The country’s first Freeport zone and next Hong Kong in Asia

SUBIC-OLONGAPO BUSINESS TRIANGLE: SBMA Administrator Armand Arreza, Olongapo City Mayor James Gordon Jr., and Ayala Land Inc. president Anthony Aquino sign an agreement for the development of a master plan for the Subic-Olongapo Central Business District Triangle project.

The vision of Olongapo City to become truly the country’s first Freeport zone similar to Hong Kong offering tax and duty-free privileges would soon be realized with the P3-billion development project proposed by Ayala Land Inc. (ALI) for the city’s business district.
ALI president and CEO Antonino Aquino said that fiscal incentives like Subic’s minimal 5-percent gross income tax, if successfully extended to the 7,000-square-meter Olongapo City Central Business District (CBD) Triangle, would set the stage for robust trade in the area.
Aquino said these tax- and duty-free incentives would enable the planned tripartite committee to offer attractive deals to win the cooperation of Olongapeños, particularly the business group, which he said would be the “lifeblood of this development.”
SBMA administrator Armand Arreza assured Aquino that this prospect would be realized as soon as President Arroyo approved the implementing rules and regulations (IRR) of Executive Order 675, which was signed by the President on November 05, 2007, to expand the area where tax- and duty-free privileges would apply.
“Once the President gives her approval, it is up to the City of Olongapo to decide what particular incentives to offer,” said Arreza.
Arreza and Aquino signed a memorandum of understanding with Olongapo Mayor James Gordon Jr. recently for the proposed Olongapo CBD Triangle project.
Under the MoU, Ayala Land will be drawing up the master plan for a unique business-development project in this free port and the neighboring city of Olongapo.
The project, to be called the Central Business District (CBD) Triangle, will straddle the boundary between the Subic Bay Free Port and Olongapo City near the free port’s main gate.
Arreza said the project will cover about 7,000 square meters of prime business land and will be the first step in the agency’s push to develop areas beyond Subic’s “secured area.”
Arreza said the CBD Triangle project aims to make the adjoining portions of Subic Free Port and Olongapo City “into a green, environment-friendly residential, commercial and institutional area.”
“This will be the initial project in accordance with the SBMA’s thrust to extend the physical boundaries of the Subic Free Port, and in the process generate more livelihood opportunities for people in the surrounding communities,” Arreza said.
The CBD Triangle project “will effectively generate economic activities in the city, provide more jobs, and improve the quality of life of the residents,” he said.
According to a land-use plan presented by ALI, the project will be located inside the triangle formed by Magsaysay Drive, Rizal Avenue Extension and Perimeter Road in Olongapo City.
It will also include the former SubCom area inside the free port, which will be transformed into a mixed-use area, but predominantly for retail establishments.
Olongapo’s famous entertainment district, which is bounded by Magsaysay Drive and Rizal Avenue, will be transformed into a commercial-office block.
Nearby, an institutional area will rise within the area bounded by Fendler, Third, Hansen and First Streets, also in Olongapo.
ALI’s Aquino said all the construction projects in the CBD Triangle “will be relevant to the history, culture and dynamics of Subic Bay and Olongapo City.”
The project will be environment-friendly, with the banks of the Kalalake River inside the CBD Triangle turned into a waterfront garden for relaxation, picnics and small-group activities.
“Any transformation should be planned well. Otherwise, the deterioration of the environment will continue,” Aquino added.
Arreza said the SBMA began entertaining the expansion project into Olongapo after President Arroyo signed on Novembe 5, 2007, Executive Order 675, which granted tax- and duty-free privileges to investors locating beyond the “secured area,” but within the Subic Special Economic and Free Port Zone.
He added that aside from undertaking the master plan for the CBD Triangle, ALI has also volunteered to draw the plans for beach areas in Olongapo City that are eyed for development into world-class tourist resorts.
Arreza, who pushed for the expansion of Subic’s free port regime to nearby communities, said the proposed project would boost Subic’s drive to gain more investments and create more livelihood opportunities for local residents.
He added that the recent moves of ALI, one of the biggest real-estate developers in the country today, “clearly demonstrates what EO 675 can do to the regions between Subic and Clark.”
Arreza explained that under the EO 675, tax- and duty-free privileges within the Subic Special Economic and Free Port Zone (SSEFPZ) “shall apply within the secured area consisting of the presently fenced-in former Subic Naval Base and such other areas that may be identified, fenced, secured, or declared as additional secured area by the SBMA.”
The IRR for EO 675, a collaborative work of the SBMA and the Bureau of Customs (BOC) here, details the process of identifying, administering and regulating the areas where said incentives can be extended.
Among the incentives the SBMA offers to investors registering in the Subic Bay Freeport are tax- and duty-free importation; exemption from all local and national taxes, with only a 5-percent corporate tax on gross income; unrestricted entry of foreign investments; no foreign-exchange control; visas for foreign nationals; and expanded allowable deduction and higher percentage of income allowable from sources within the Customs territory for regional enterprises.