With soaring wages and operating costs in China, numerous manufacturers are looking for alternative production bases in Southeast Asia to relocate or diversify their production. The Philippines has become an ideal relocating site due to its comparative advantages and opportunities such as low-cost labor, thriving local sales market, English‑speaking skilled labor, and management efficacy.
The country has over a hundred industrial parks that are classified as special economic zones (SEZs) under the administration of the Philippine Economic Zone Authority (PEZA). These parks are usually located in countries with a comparative cost advantage in labor and logistics.
Here are some of the biggest advantages of locating inside an industrial park in the Philippines:
1. Numerous Tax Benefits
Operating within a PEZA Special Economic Zone entitles foreign and local investors to various tax perks and incentives unavailable in other parts of the country. These advantages include income tax holidays, exemptions from wharfage dues, export tax, and simplified customs procedures.
When combined, the tax benefits and duty exemptions available in PEZA-certified economic zones allow investors to start doing business with relatively limited capital investments. Once these perks are added with the cost-saving benefits of SEZs, these can make locating at a top Philippine economic estate even more compelling.
2. Long-term Land Leases
Foreign nationals investing in PEZA-registered economic zones could lease land assets for up to 75 years, far exceeding the standard 50-year lease period provided for under the Investor’s Lease Act. This enables foreign investors to establish a long-term presence in the Philippines, taking full advantage of all the other perks.
3. Quality and Centralized Support Infrastructure
In order to operate seamlessly and more efficiently, industrial parks provide complete support in terms of available resources and utilities within the area so that it can easily be accessed by properties within the zone.
Industrial parks have their own and independent electrical grid that supplies an adequate voltage of electricity, as structures within their area require higher amounts of energy to operate. This promotes successful and stable operations, ensuring no power outages or electricity rationing.
Manufacturing companies and warehouses in Philippine industrial parks are encouraged to have their own water supply and wastewater treatment facilities. This promotes sustainability and reduces the negative environmental impacts of manufacturing and production.
Meanwhile, top commercial and industrial real estate developers are already constructing infrastructure to support the types of commercial and industrial activities that will be commonplace in the next generation. Aside from providing the necessary power, water, and communication infrastructure, these major developers also establish logistics infrastructure to make their land developments more appealing to foreign locators.
4. Sustainable Development
Since industrial parks are large-scale areas, it is designed to reduce negative impacts on the environment and are now focusing on people. These developments are more than just places to manufacture goods or provide back-office services.
Numerous warehouses also include environmentally friendly features such as wastewater treatment, water conservation technology, recycling, and so on. Industrial parks can support infrastructure and technology that promotes sustainability and more environmentally friendly workplace practices.
5. Attract Foreign Investments
PEZA economic zones are intended to attract foreign investments due to the benefits it provides. Within PEZA economic zones, some ownership restrictions on a foreign company are usually lifted or relaxed. Furthermore, listing an industrial park as the location of one’s headquarters is said to be beneficial to companies seeking foreign investment, as it provides firms with the capacity and legitimacy that foreign investors require.
Moreover, warehouses in industrial parks have lower operating costs, making duty payments and shipment more convenient and efficient. All of these factors could be a huge advantage in promoting export activity and producing more goods to meet consumer demand.
Given the rise in industrial property developments and real estate over the last two decades or so, it is no surprise to see that there are new industrial parks being established across the Philippines. This area is designed to accommodate small, medium, and large-scale operations with similar-sized requirements.
Listing an industrial park as the location of one’s headquarters is said to be beneficial to businesses looking to attract foreign investment, as it provides firms with the stature and legitimacy that foreign investors seek.
Written by: Mary Grace Ladringan
AVISO is a real estate consultancy firm that provides Valuation and Comprehensive Site Selection (CSS) services for Manufacturing companies. Our team assists in the process of securing a new location for clients through a comprehensive approach that includes several criteria with consideration for technical, economic, social, and environmental aspects. For inquiries and property requirements, you may send us an email at brokerage@askaviso.com, or call us at (02) 8 570 6535 and 0917-629-8396.
