TEZ – The big wave in Philippine Tourism you want to catch

With the National Tourism Development Plan in full swing, and the Tourism Enterprise Zone (TEZ) model fully in place,
there has never been a time as perfect as today to invest in Philippine Tourism. In a manner of speaking, the stars are
aligned, and as an added bonus, not only could an investment in Philippine Tourism be highly profitable, it will also have a
ripple effect that will benefit virtually every Filipino.

Tourism is easily one of the world’s biggest industries, it accounted for 9.8% of the global GDP in 2016, and it employed
284 million people in that same period. The Philippines enjoys the privilege of having the top two islands on the top ten
best island destinations lists of two of the world’s most prestigious travel and lifestyle publications Conde Nast Traveler,
and Travel and Leisure. For the past three years, Palawan and Boracay have simply swapped first and second place every
year on both lists; Cebu also makes the top ten routinely, but it isn’t nearly enough.

Anyone who has been to Boracay or Palawan’s El Nido or Coron will tell you that it is getting more than a little crowded.
On an evening in the peak season, only sand and swimwear distinguish Boracay from a street in Malate on a Friday night.
Even lesser known destinations such as Bohol are often saturated at certain times of year. Our current array of tourist
destinations cannot cope with the current demands on Philippine Tourism.

When you consider the fact that despite recent gains, Philippine tourist arrivals still lag far behind our ASEAN neighbors
such as Thailand, Malaysia, Indonesia, Singapore and even Vietnam, the problem is put in sharper focus: We need to
develop more viable tourist destinations, and we need to do it yesterday. Even if we had the tourist arrival numbers to
match our nearest competitor Vietnam, we would not have the destinations and the accommodations to send them to.

We can’t simply wait for the next Boracay or Palawan to emerge organically, neither destination was built in a day. It isn’t
just a question of profit; allowing the two destinations to be constantly overbooked will diminish their value over time, and
far more quickly than can be imagined. TIEZA Chief Operating Officer Atty. Guiller Asido believes that “the Philippines
must go the extra mile to be competitive” in the tourism industry by building better infrastructure and by providing and
offering better business environment opportunities, specifically through the establishment of TEZs.”

A TEZ is the Philippine government extending a hand to the private sector through incentives that greatly reduce the risks
associated with large investments. The goal is to accelerate the development of the next Boracay and Palawan by
stimulating investments, and by giving operators the elbow room they need to expand rapidly.

TIEZA is the sole entity in the Philippines with the authority to designate a TEZ. A TEZ is a tract of land with defined
boundaries, master planned for development into an integrated tourism complex with prescribed carrying capacities, to
host tourism enterprise facilities and services within. The following are the qualifications that make a geographical area in
the country eligible for becoming a TEZ:

 The area is capable of being defined into one contiguous territory;

 It has historical and cultural significance, environmental beauty, or existing or potential integrated leisure facilities
within its bounds or within reasonable distances from it;
 It has, or it may have, strategic access through transportation infrastructure, and reasonable connection with
utilities infrastructure systems;
 It must be at least five (5) hectares and sufficient in size, such that it may be further utilized for bringing in new
investments in tourism establishments and services;
 It is in a strategic location such as to stimulate the sustainable socio-economic development of neighboring
communities; and
 The area must be situated where controls can easily be established to curtail illegal activities. (Section 65, RA 9593)
To help encourage investments in TEZs, TIEZA provides fiscal and non-fiscal incentives to potential investors. Based on the
Revenue Regulations recently released by the Bureau of Internal Revenue, TIEZA may grant the following fiscal incentives:

 A six-year income tax holiday (ITH) that may be extended for another six years;
 A 5% preferential tax on gross income in lieu of national taxes except for real property tax and fees of TIEZA;
 A net operating loss carry over (NOLCO) scheme;
 Import tax exemptions for capital goods and equipment needed for TIEZA-registered activities;
 Import tax exemptions for transport equipment and spare parts needed for TIEZA-registered activities;
 Exemption from value-added tax (VAT) and excise tax goods imported by TIEZA-registered activities;
 Tax credit equivalent to taxes paid on locally sourced goods;
 And tax deduction of up to 50% of cost of environmental protection and cultural heritage preservation activities, as
well as of sustainable livelihood programs of the registered tourism enterprises (RTEs).

The granting of fiscal incentives to TEZ operators and registered tourism enterprises will help pave the way for a more
competitive Philippine tourism industry. Operators now have much needed leeway as well as a safety net to think bigger,
and expand more aggressively. Not content to simply have these incentives to offer, TIEZA is taking this once in a lifetime
investment opportunity on the road. In the coming months, TIEZA will be holding a series of road show presentations to
ensure that anyone who may be interested in Philippine tourism, and who has the resources to invest is educated on this
ground breaking initiative.

For more information on TIEZA, the TEZ model, and the upcoming road shows please visit the TIEZA website at
www.tieza.gov.ph. For inquiries, you may contact the TEZ Management Sector of TIEZA through landline number 551-9556
or at tez.secretariat@gmail.com.

Media Contact

Myk Flororita
09175918454
Mykflororita.tieza@gmail.com