Subic Bay: Where Global Giants Invest and Innovate

Serving as the gateway to Asia’s major markets, notably China, Japan, and ASEAN countries, the Philippines shows significant potential for resilient economic growth. The country boasts a large English-speaking workforce and strong skills in Information Technology (IT), Business Process Outsourcing (BPO), and Engineering. These factors position the Philippines as one of the top destinations for investors seeking growth opportunities.

Under Republic Act No. 7042, also known as the “Foreign Investments Act of 1991,” a foreign investment is defined as an equity investment made by a non-Philippine citizen. This investment can be in the form of foreign currency or other assets brought into the country, which must be registered with the Central Bank. The Act encourages foreign companies to collaborate with local businesses, fostering a community that shares technology and skills. Additionally, the law offers various incentives to foreign investors, such as tax exemptions and preferential treatment in designated investment areas.

One of the emerging hotspots for large foreign investors is the Subic Bay Freeport Zone (SBFZ), located in the Central Luzon Region of the Philippines, specifically within parts of Olongapo City and Subic, Zambales. As the first free port in the country, SBFZ has a rich history, having served as the former United States Naval Base, the largest US military base in Asia. The Subic Bay Metropolitan Authority (SBMA) is the government agency responsible for regulating and managing SBFZ. According to their investor handbook, the tax incentives for investments at SBFZ include the following:

- 5% final tax on gross income earned computed based on Gross Sales by Section 57 of the Rules and Regulations implementing R. A. 7227, as amended by R. A. 9400.

- 100% foreign ownership (non-nationalized enterprises)

- No foreign exchange control

- Percentage of Income Allowable from Sources Within the Customs Territory: 30%

- Visa-free entry for 14 days, renewable

- Special Subic-Clark visas available to expatriates

Additionally, well-established brands from around the globe have demonstrated that SBFZ boasts a strategic location, various advantages, and, most importantly, a competitive and favorable business environment.

JAPAN

Nidec Corporation

- Manufacturer of Electronic Motors

- hailed as one of the world’s most innovative companies, ranking 13th in Forbes

Sanyo Denki Philippines, Inc.

- Electronics, Electrical Components, and Manufacturing

Nicera Philippines, Inc.

- Automotive & Manufacturing

Mitsubishi Motors

- Automobile manufacturer of cars, parts, and accessories

Toyota Tsusho Corporation

- Trading & Industrial Services

Taiyo Subic Philippines Corporation

- Electronics Manufacturing / Electronic Components

TAIWAN

Datian Subic Shoes, Inc.

- Footwear Manufacturing

Taian Subic Electric, Inc.

- Electrical & Electronics Manufacturing

Chia Hung Philippines, Inc.

- Electronics & Electrical Manufacturing

SOUTH KOREA

Hanjin Heavy Industries and Construction Co., Ltd.

- operates one of the largest shipbuilding facilities in Southeast Asia

UNITED STATES

Xerox Business Services Philippines, Inc.

- Business Process Outsourcing (BPO)

PacTec Philippines, Inc.

- Packaging Manufacturing

American Hardware Co.

- Retail (Hardware & Building Materials)

NEW ZEALAND

Buchan Global Services

- Business Process Outsourcing (BPO) / Customer Service

The companies mentioned are just a small sample of the foreign businesses located in the Subic Bay Freeport Zone (SBFZ). Several factors contribute to the area's attractiveness for foreign investors, including its strategic location and investor-friendly policies. Situated on the western coast of Luzon, near the South China Sea, SBFZ offers easy access to major markets across Asia. Furthermore, the availability of a skilled workforce aligns well with the needs of high-tech industries, particularly those specializing in electronics and information technology. With significant potential for ecotourism, the zone is undoubtedly a suitable location for long-term investments.