The year 2015 was a record one for the Philippine tourism industry. The country received 5.36 million international arrivals spending a total of Php 227.6 billion, capping off a trajectory that kicked into higher gear in the last five years. Part of that growth can be attributed to the Tourism Act of 2009 (Republic Act No. 9593), which made significant reforms in the governance structure of the industry.
The first and most visible aspect was the promotions campaign – tourists cannot go to a place or enjoy its attractions if they do not even know it exists. Some ASEAN countries spend over USD 100 million for this, so the law created a fund to put the country at least within striking distance. It also brought public and private sectors together in the Tourism Promotions Board (TPB) to manage fund responsibly.
The second, but less visible, aspect focuses on the quality of our facilities and services. The Department of Tourism (DOT) was required to revamp the accreditation of hotels, travel and tour businesses, among others, to bring them in line with recognizable international standards. The Tourism Congress was also created to represent the private sector and work with DOT to ensure that all stakeholders are involved in the process. A National Tourism Development Plan was mandated to map out the development of the industry.
Finally, the third aspect is critical in sustaining long-term tourism growth – ensuring that communities benefit from tourism, and that the local environment and culture is respected and protected. This is the responsibility of the Tourism Infrastructure and Enterprise Zone Authority (TIEZA).
Our ability to continue to attract tourists over a period of time, while supporting business and investment, and managing environmental and social impacts, depends on the proper planning of tourism zones.
The role of TIEZA is to ensure that tourism enterprise zones (TEZs) are developed in an economically, environmentally, and socio-culturally responsible manner by combining investment incentives with strong regulations. A TEZ developer must present a development plan that considers environmental and socio-cultural impact together with proper tourism design. Only when the plan is approved will the developer and investors in the zone be able to enjoy tax incentives – an income tax holiday, a 5% gross income tax rate, tax and duty free importation, among others. Crucially, if a developer is unable to meet the standards and goals set out in the development plan, the tax incentives can be suspended, and even withdrawn.
What gives TIEZA a competitive advantage over other investment agencies is that it supports both local and foreign tourism. Other investment agencies require investors to prove that much of their income is from “export sales.” This often proves unrealistic, as the industry needs to be flexible in catering to both markets to meet the bottom line. Moreover, our country needs to encourage our people, as we grown wealthier and travel more, to spend our money here, and discover our own country.
As a new agency, however, TIEZA has encountered problems under the previous administration. The Department of Finance and Bureau of Internal Revenue refused to honor its incentives powers, resulting in the freezing of billions of pesos in tourism investments. Imagine how much more our tourism industry could have grown if the hotels and attractions had been built in the last six years?
This is now the challenge facing the Duterte administration – if it can truly understand and carry out what needs to be done to grow the tourism industry and boost the Philippine economy.
Atty. Mark Richard Evidente is both a lawyer and licensed environmental planner. He is President of TwoEco, Inc. a consulting firm on tourism development, which crosses the fields of law and policy, economics and business, enviroment and culture, and planning and design. He has handled TIEZA applications and prepared tourism development plans for businesses and local governments.
Mark worked in the Philippine Senate under Sen. Richard Gordon, and in private practice with the SyCip Salazar Hernandez and Gatchalian. He obtained his law and political science degrees from the University of the Philippines, and his masters in environmental management from Yale University.