News & Insights

PH’s first ecological ind’l zone to rise in Leyte

Published by: By: Roy Stephen C. Canivel on December 23, 2020

The Department of Trade and Industry launched a master plan to develop an industrial zone in Leyte by 2030, which is expected to host manufacturers that will process copper sustainably, instead of exporting the raw material and then importing back the intermediate product.

This will be the first ever ecological zone in the country, said Trade and Industry Secretary Ramon Lopez during the online launch on Monday. It is called the Leyte Ecological Industrial Zone (LEIZ), years after the government and the private sector completed the Copper Industry Roadmap in 2012

The master plan, which was developed by renowned architectural firm Palafox Associates, will practice a circular and green economy development. Copper is an important component in manufacturing industries such as automobiles, but the resource is yet to be maximized.

“Given our country’s vast copper deposits amounting to an estimated 1.14 billion metric tons, we envision a fully integrated Philippine copper industry by the year 2030 through the development of a wire rod casting facility and higher value copper products,” he said.

Crucial to this plan is the actual passage of a tax reform bill called CREATE, or the Corporate Recovery and Tax Incentives for Enterprises Act, according to Trade and Industry Undersecretary Ceferino Rodolfo. The tax package is being discussed by a bicameral committee after the Senate finally passed its version of the bill.

The bill will rationalize tax breaks inside economic zones and cut taxes for companies located outside these areas. The tax package will remove the nationality and export bias, which Rodolfo said was very important to the LEIZ.

Before the bill, a foreign business can own up to only 40 percent of the company to be eligible for tax breaks, unless it will export most of its products.

In essence, removing the nationality and export bias will mean that more foreign companies will also be eligible for tax breaks as long as they meet the performance-based standards set by the government.

“The situation here in the Philippines is we have copper mining resource and we mine them, then we bring them to a smelting facility, which will then produce copper cathodes,” Rodolfo said.

“These are then exported to other countries like Japan, which are processed in a wire rod facility, before being imported back here for wiring harness companies,” he added.

Lopez said the country needed to prepare for the future after the pandemic, which will be driven by digitalization and green technologies.

“We expect these technologies to accelerate a New Age of copper in the Philippines as the industries that will produce electric vehicles, 5G networks and solar power energy will all require large amounts of copper,” Lopez said.

“Presently, the electric vehicles industry makes up just 1 percent of copper demand. By 2030, many analysts expect that figure to reach 10 percent. Likewise, clean energy and digitalization programs are expected to push average annual growth demand for copper up by 2.5 percent this decade. This would likely drive consumption toward 30 million tons by 2030,” Lopez added.

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