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Clark, ready for takeoff as the Philippines’ city of the future

On Nov. 7, SGV Clark successfully launched the inaugural publication of Doing Business in Clark: 2023 Edition to key officers of Clark-based organizations, such as the Bases Conversion Development Authority (BCDA) and Clark Development Corp. (CDC), representatives of embassies, as well as the Clark business community. The publication is an iteration of SGV’s Doing Business in the Philippines brochure series, which highlights the excellent investment opportunities in the country and in various localities.

Clark, which rose from the ashes of the 1991 Mount Pinatubo eruption and became a prime investment destination in the Philippines, is composed of the Clark Special Economic Zone (CSEZ) and Clark Freeport Zone (CFZ). Clark is further subdivided into four main districts: the CFZ, Clark International Airport, Clark Global City, and New Clark City (NCC). Administered by the BCDA and CDC, Clark has registered more than a thousand export and domestic market enterprises in manufacturing, information technology and business process management (IT-BPM), aviation, logistics and tourism sectors, among others. The CDC has disclosed on its website that it is a home to key investors from South Korea, the US, Australia, and Japan.

The catchphrase coined by the BCDA and CDC, “Clark: It Works. Like a Dream” sums up what they say Clark stands for: efficiency, processes that actually work, convenience and ease of doing business. While locators continue to face challenges, mainly due to changes in tax rules and the pandemic, they say that Clark remains attractive to investors because of the ease of doing business, tax incentives, a rich talent pool, and infrastructure connectivity, to name a few.

To ensure ease of doing business, the CDC operates a one-stop shop that promotes efficiency in the registration process. It is currently working on automating and streamlining processes that promise application approvals in less than three weeks. Unlike in other locations, businesses have to deal with only the CDC to locate in Clark. This removes the need for dealing with a number of government agencies, which can delay permits and licenses.

From a tax perspective on fiscal incentives, the Corporate Recovery and Tax Incentives for Enterprises Act (CREATE Act) now allows the CDC to grant an income tax holiday (ITH) for a number of years depending on the project’s classification in the Strategic Investment Priority Plan (SIPP) subject to approval of the Fiscal Incentives Review Board for investments of more than P1 billion. The SIPP supports technological advancement, research, and innovation on top of the current SIPP-eligible activities in Clark. Existing locators continue to enjoy incentives under the 10-year transitory provision of the CREATE Act. Exporters can opt for a 5% special corporate income tax or enhanced deductions after the ITH period. Clark also ensures free flow of goods and grants duty and VAT exemption to qualified imports.  

To better attract local talent, the BCDA promotes a “Live, Work, Play” lifestyle in Clark that fosters innovation and inspiration. A number of Metro Manila businesses have recently expanded to Clark to cater to talent demand and take advantage of the talent pool in Central Luzon. Clark’s accessibility to nearby cities also makes it an excellent choice for hosting international and local athletic competitions.

The BCDA has also lauded Clark’s accessibility with its infrastructure network that promises a strategic international and domestic location for investors. On Sept. 28, President Ferdinand R. Marcos, Jr. formally inaugurated the new world-class and state-of-the-art terminal of the Clark International Airport (CRK). CRK can welcome eight million additional passengers annually and is equipped with the latest technologies to make travel easier. The Philippine National Railways Clark (PNR Clark), the northern section of the North-South Commuter Railway, is also expected to significantly reduce travel time from Clark to Metro Manila to less than an hour. 

The iconic Sacobia Bridge, the cover photo of Doing Business in Clark: 2023 Edition, connects the present CSEZ to the NCC. The NCC envisions itself as the future smart city in the Philippines. It is currently home to the National Government Administrative Center, Athletes’ Village, Aquatics Center, Athletics Stadium, and the Filinvest Innovation Park. The NCC has announced that it will soon have an integrated luxury mountain resort that will host golf courses, ultra-luxury hotels, premium villas, an international school, and a public park. It will also benefit from the Luzon Bypass Infrastructure Project, which will equip it with digital connectivity comparable to South Korea and Japan.

All of these developments support the CDC’s vision for Clark to become a modern sustainable aerotropolis and a premier business destination. As a haven for meetings, incentives, conferences and exhibitions (MICE) and home to major investors in the semiconductor, IT-BPM, and tourism sectors, Clark is developing to be the Philippines’ city of the future.

In fact, in September, the BCDA signed a Memorandum of Understanding with Enterprise Singapore to create a framework for affordable housing, estate management, transportation, solid waste management, waste-to-energy technology, smart cities, sustainability, green data centers, urban development and people-centric programs. Businesses in these sectors would benefit from the incentives of a future Clark registration. There are also pending bills in Congress that support Clark’s development as a priority investment destination in the Philippines, and in Asia.

The launch of Doing Business in Clark, therefore, supports the government’s efforts to promote Clark as Asia’s investment haven. Borrowing the words of Finance Secretary Benjamin E. Diokno in his message for Doing Business in Clark, “The best time to do business in the Philippines is now.” Indeed, and one of the best places to do this is in Clark.

The history of Clark, starting from a US military base and becoming a prime investment hub, demonstrates its resilience and high potential. It is, perhaps, best represented by the Sacobia bridge, which was somewhat whimsically described in one of the BCDA’s 2020 newsletters as connecting not just the old and the new Clark, but also linking the nation’s heritage to promising times ahead. 

Certainly, setting up new business operations, or moving existing ones, is a complex process. However, investors and businesses who can meet the requirements set out in the CREATE Law and other legislation would do well to consult with trusted business advisors on whether the advantages of doing business in Clark will make it worth their while and present long-term strategic opportunities for their enterprises.

This article is for general information only and is not a substitute for professional advice where the facts and circumstances warrant. The views and opinion expressed above are those of the authors and do not necessarily represent the views of SGV & Co.

Margaux A. Advincula is a lawyer and Tax Partner of SGV & Co. and the Head of the SGV Clark Office.

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