Tourism Act of 2009: Come to the Philippines

By Victoria Marie Domini M. Comia, 16 October 2009 (BusinessWorld)

Long weekends and piso fare — who would not want to jaunt these days? Just a few clicks in your computer and calls to friends, you can already have that quick but relaxing trip out of your busy schedules.

If there’s one thing unique in our country, it would be the implementation of the holiday economics. This unconventional scheme tends to boost domestic tourism, and increase the economic activities of the country though it may not be popular to certain businesses.

True enough, we are harvesting positive results from these trips, nationally and even personally. To date, the active promotion of local tourism has helped in creating more jobs, in generating more revenues and in encouraging consumer spending.

As reported by the World Travel and Tourism Council, our local tourism contributed 8.8% in our gross domestic product in 2008.

Given the global financial crisis and the A(H1N1) scare, traveling would normally take a back seat in the minds of the people. However, contrary to present statistics of the government, local tourism remained robust.

In a recent interview made with President Arroyo, she reported that local tourism recorded a 10.6% annual average growth in the past four years exhibiting the "best performance in 20 years of tourism history."

Taking this boom one step further, the Republic Act No. 9593 or "The Tourism Act of 2009" was passed. In its Declaration of Policy, the law has declared tourism as an indispensable element of the national economy and an industry of national interest which must be harnessed as an engine of socioeconomic growth, with an end in view of generating investment foreign exchange and employment for the country and at the same time to enhance a sense of national pride in our people.

Through this law, the Philippines is being geared not only as a premiere travel destination, but also as a potential investment haven for domestic and foreign investors.

The Department of Tourism has been appointed as the primary planning, programming, coordinating, implementing and regulatory government agency in the development and promotion of the tourism industry, both domestic and international, in coordination with various attached agencies and other government instrumentalities. Among the attached agencies working hand-in-hand with the DoT on this program are the Philippine Conventions and Visitors Corporation, which has also been reorganized as the Tourism Promotions Board (TPB), and the Philippine Tourism Authority, which has been reorganized as the Tourism Infrastructure and Enterprise Zone Authority (TIEZA).

In charge of the marketing, and promotion of the Philippines domestically and internationally as a major global tourism destination is the TPB . The TPB’s marketing strategy will be putting emphasis on projecting the Philippines as a major convention destination in Asia.

One of the salient features of this law is also the establishment of "Tourism Enterprise Zones" or TEZs, which are geographical areas, sufficient in size and capable of being defined into one contiguous territory, and are identified as viable tourism destinations in view of their historical and cultural significance, environmental beauty, existing or potential integrated leisure facilities, reasonable distances, accessibility to transportation infrastructures and strategic location, such as to catalyze the socioeconomic development of their neighboring communities.

TEZs include Greenfield Tourism Zones, i.e., areas with new and pioneer development, and Brownfield Tourism Zones, i.e., areas with existing infrastructures or development as determined by TIEZA.

TIEZA has been tasked to designate specific geographical areas as TEZs upon recommendation by the local government units (LGUs), private entities or joint ventures between the public and private sectors.

It shall also be responsible for the regulation, supervision and management of the cultural, economic, and environmental sustainable development of TEZs, and other tourism infrastructure projects in the country.

Every designated TEZ shall be administered and supervised by a TEZ Operator, which may be a private corporation, a LGU or any instrumentality of the government, through a TEZ Administrator who shall be responsible for implementing the policies, plans and projects of the TEZ operator.

Tourism enterprises within the TEZ shall register with the TIEZA for purposes of availment of the incentives provided under the law.

Tourism enterprises eligible for TEZ registration refer to facilities, services and attractions involved in tourism such as but not limited to travel and tour services, tourist transport services, tour guides, adventure sports services, convention organizers, accommodation establishments, tourism estate management services, restaurants, shops and department stores, sports and recreational centers, spas, museums and galleries, theme parks convention centers and zoos.

Under the Act, TEZ operators and TEZ registered enterprises are granted the following fiscal and non-fiscal incentives, such as but not limited to:

• Income tax holiday (ITH) for new enterprises in the Greenfield and Brownfield Tourism Zones for a period of six years commencing from the start of business operations, which may be extended up to a maximum of six years depending on the substantial expansion or upgrade to be undertaken by the enterprise prior to the expiration of its first six years ITH.
• Newly registered TEZ enterprises shall likewise be allowed to carry over as deduction from gross income for the next six consecutive years immediately following the year of the loss, their net operating losses for any taxable year immediately preceding the current taxable year which had not been previously offset as deduction from gross income; Existing enterprises in a Brownfield Tourism Zone shall also generally be granted the above-mentioned incentives.
• Five percent income tax on gross income in lieu of all other national and local taxes, license fees, imposts and assessments except real estate taxes and such fees as maybe imposed by TIEZA after the ITH;
• Exemption from all taxes and customs duties on importations of capital investment and equipment;
• Tax deduction not to exceed 50% of the cost of environmental protection or cultural heritage preservation activities, sustainable livelihood programs for local communities and other similar activities;
• Employment of foreign nationals in executive, supervisory, technical or advisory positions for such reasonable periods, and under such terms as may be provided by the TIEZA Board;
• Special investors’ resident visa for foreign nationals who shall have an investment of at least two hundred thousand dollars ($200,000.00);
• Right to repatriate the entire proceeds of the liquidation of the investment, and to remit earnings in the currency in which the investment was originally made and at the exchange rate prevailing at the time of remittance; and
• Incentives provided under the Omnibus Investments Code of 1987 since tourism is one of the preferred activities under the 2009 Investment Priorities Plan.

On top of that, LGUs are also encouraged to provide incentives for tourism enterprises such as reduction in applicable real estate taxes and waivers of fees and charges.

The same incentives are likewise extended to tourism enterprises located outside the TEZs but subject to certain conditions as the TIEZA may deem appropriate.

With its rich history and culture, our country can definitely entice investors and tourists to visit us. Unique colorful festivals in every province are offered the whole year round. World-renowned pristine beaches surround our archipelago, and various cultural, historical and scenic spots further enhance our country’s natural beauty.

Added to this is the Filipinos’ innate culture of hospitality. With all these resources, the Philippines has already an edge over other countries in terms of tourism development.

With a more focused and developed tourism program in place which is expected to spur the development of adequate infrastructure to support the tourism industry, it should just be a matter of time for the Philippines to be the next premier investment and tourism destination not only in Asia but in the whole world.