Investors Respond to Philippines Cyberparks Plan

The Philippines is going full bore on its policy to encourage cyberparks, and bundling these with a broad package of incentives aimed at making the country an attractive location for regional e-services.

According to data provided by the Philippine Economic Zone Authority (PEZA), the country is already home to three IT parks proclaimed by President Joseph Estrada, with four others awaiting endorsement by the PEZA board. Two more have applications pending, also with the PEZA board.

Instead of creating an IT corridor such as the one being developed by Malaysia, the government's plan is to link all the IT zones on the island of Luzon by fiber-optic connections, creating an islandwide network. The undertaking, which will be headed by the National Development Co. (NDC), the state investment arm, is expected to cost more than 1 billion pesos (US$22 million). NDC is looking at getting private sector participation, either through a build-operate-transfer (BOT) mechanism or a joint venture.

GUIDELINES

The PEZA, which released its guidelines for the establishing and operating IT parks (Resolution No. 99-264) last year, stipulates that IT parks will serve as locations for software development, content development, hardware design and prototype production, computer-based support services, research and development services, and manufacturing. Under the new guidelines, even buildings can be declared IT zones.

The IT parks, which will have a minimum area of 25,000 square meters, are required by the PEZA to provide high-speed fiber-optic telecommunication backbones; clean, uninterrupted power supply; computer security and building monitoring systems; educational facilities; and incubation facilities.

Moreover, these special economic zones must also provide facilities and services catering to the needs of IT service exporters such as housing, conference facilities, physical fitness and health improvement facilities; and other facilities that will complement the IT community's requirements.

According to the PEZA, IT parks may be located in any suitable location.

However, IT parks in the National Capital Region (NCR) are only allowed to serve as locations for service-type projects with no manufacturing operations.

Even vertical structures can qualify for classification as IT zones, now that PEZA has lowered the hurdle limiting special economic zones from areas not less than five hectares to just 25,000 square meters.

INCENTIVES

Under the PEZA's existing rules, IT parks developers and locators get the same fiscal and non-fiscal incentives from the government:

- Income tax holiday of up to six years; thereafter, payment of a 5 percent tax on gross income, in lieu of national and local taxes and licenses;- Additional deductions for training expenses;- Exemption from duties and taxes on capital equipment;- Exemption from wharfage dues, export tax, impost or fee;- Permanent residence status for foreign investors;- Employment of foreign nationals;- Remittance of earnings from investments; and- Other incentives under the Omnibus Investment Code of 1987DTI Secretary Manuel Roxas II recently told reporters, however, that PEZA is considering a policy that will favor locators who bring actual investments into the country.

According to Roxas, there should be a difference between park developers and locators, especially since the government has already liberalized the awarding of special economic zone status.

The three IT parks that have already been proclaimed by President Estrada are Eastwood City Cyberpark, Fort Bonifacio-Silicon IT Park, and the Northgate Cyberzone. All of these are in Metro Manila.

EASTWOOD CITY

Eastwood City Cyberpark, developed by the Megaworld Properties and Holdings, Inc., is located along the C-5 highway, in an area chosen because of its proximity to the top 15 Philippine schools and universities.

To encourage the development of more local IT companies, Megaworld is setting up a 500 million-peso venture capital fund benefiting export-oriented IT firms with promising product profiles, a steady track record, and a history of sound financial management.

Megaworld will directly invest up to 20 percent of the firm's total equity. Ten percent of the annual returns from this fund will be channeled to benefit promising students at the Asian Center of Information Technology (ACIT).

NORTHGATE CYBERZONE

Northgate Cyberzone, developed by the Filinvest Group of Companies, is an IT corridor within Filinvest Corporate City, a 244-hectare satellite city in southern Metro Manila. It is scheduled to open on Oct. 1, 2000.

A significant element of the 18.7-hectare Northgate Cyberzone master plan is the setting up of intelligent offices and the wide range of support facilities such as shared laboratories, conference facilities, a media laboratory and a cyber library. These form part of the Convergence Hall, the central venue of interaction for the IT professionals in the cyberzone. It will also house cafes and a food court, sports facilities and business support facilities.

Northgate's high-speed convergent backbone is based on IP, and capable of carrying voice, video and data. The zone will provide high-speed Internet access, telephony services, video conferencing, video services, LAN/WAN connectivity, data center (hosting and collocation), and other broadband access technologies.

Park developers say Northgate Cyberzone will be built in a campus-like setting, featuring a landscaped environment with lush greenery, pocket gardens and various open spaces surrounding buildings and pathways.

Northgate Cyberzone will also have an IT school, Filinvest says, adding that it is negotiating with several top universities to realize this part of the master plan.

E-SQUARE

Very little is known about the E-square IT park that will rise in Fort Bonifacio's Global City.

Fort Bonifacio Development Corp. (FBDC) officials would not return calls or answer e-mail about their IT park project. A press release from the company says, however, that the 25-hectare zone will be developed in two phases, with the first covering incubator offices, the IT Center, and the Boni Ridge residential condominium. No completion date was given.

HatchAsia.com, a business incubator, recently signed a contract with FBDC to locate in the zone and occupy a three-level, 24,000 square-meter complex to be completed by the end of the year, the same statement said.

The second phase of E-square will include setting up the Government Center for Investments, a major complex that will house eight key government agencies, IT schools, and a trade hall and exhibition center.

FOR PROCLAMATION

The parks waiting to be cleared by the PEZA for endorsement for presidential proclamation are the Bonifacio Information Special Technology Zone, the Cebu Civic and Trade Center (CCTC) IT Park, the Cebu Cybertown IT Park, and the RCBC Plaza IT Park.

The RCBC Plaza IT Park will be the first vertical structure to be proclaimed a special economic zone. A project of the RCBC Realty Corp. and situated on Ayala Avenue, the IT park will allocate 50,000 square meters for IT enterprises.

The Bonifacio Special Information Technology Zone is being developed by the Bases Conversion and Development Authority and has an area of 25 hectares. It is also located in Fort Bonifacio.

The Cebu Cybertown IT Park is a project of First Centro Inc. It is situated in Lapu-Lapu City in Cebu and has an area of 11.5 hectares.

Also in Cebu, The CCTC IT Park is being put up by the Cebu Property Ventures & Development Corp. (CPVDC) of the Ayala Group. It has a land area of 23.7 hectares in Lahug.

The CCTC IT Park has 100 lots available for IT firms, and will have a hotel, a row of restaurants, a school, and a telecommunications building. CPVDC will also have provisions for incubating startup businesses.

PENDING AND PLANNED

Two other IT parks have applications pending with the PEZA board. They are the Aseana Intelligent Technologies Plaza being developed by the Aseana IT Plaza Consortium, and the PBCOM Tower being built by Filinvest Asia Corp.

According to PEZA, 15 proponents have visited them to discuss their development plans and were provided application forms.

Developers that want to put up an IT park in the NCR include Ajonet Holdings, Inc., Araneta Center Corp., Asiaworld Properties Philippine Corp., Camella and Palmera Homes, Inc., Daiichi Properties and Development, Inc., Fil-Estate Properties, Inc., Hertford Management Consultant Group, RI Chemical Corp., and Robinson's Land Corp.

Four proponents wish to build IT parks outside the NCR: First Batangas Industrial Park, Group Management Corp., Systems Technology Institute, and some Taiwanese investors.

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