Promoting Compliance of Locator Enterprises through the PEZA-DENR Memorandum of Agreement

Transcription

1 Promoting Compliance of Locator Enterprises through the PEZA-DENR Memorandum of Agreement Vivian Cerrer Toledo works at the Philippine Economic Zone Authority. Supported by a team of environment professionals from different disciplines, they come up with guidelines and implement policies that seek to further promote the sustainable development of the economic zones. A registered chemical engineer, she finished her Master s degree in Public Policy and Management at Carnegie Mellon University Australia. vrcerrer@peza.gov.ph Contact no: The partnership between PEZA and DENR was forged to establish a balance between the need to spur economic growth in the countryside and the need to identify and address the environmental impacts of the project through the EIA process. Through the Memorandum of Agreement (MOA) between the two agencies, clear-cut guidelines were established to streamline the requirements for processing of Environmental Compliance Certificate (ECC) applications in the ecozones and reduce processing time. The physical setup of an ecozone has the elements to facilitate identification of environmental impact of the project and to easily provide mitigating measures: Developers of an industrial estate provide water and power to the various locators; Locator enterprises share a centralized wastewater treatment facility and has put up systems to ensure that emissions and discharge do not adversely affect the prevailing environmental conditions; and, PEZA monitors the movement of people, goods and industrial wastes into and out of the ecozone. Majority of investments in the ecozones are classified as light to medium industries. The investors of these activities are implementing nonenvironmentally critical projects (non-ecps) under the EIS system. Tools and resources established by PEZA, with the guidance of the DENR, are used to assist the investors at the earliest stage of the project cycle to easily identify and manage the industrial wastes and emissions. Existing companies, through their respective Pollution Control Officers (PCOs) have used these guidelines to amend their ECCs whenever expansion projects have impacts to the environment that are not addressed by previous studies. All these elements have come together to simplify and promote compliance in the ecozones.

2 Promoting Compliance of Locator Enterprises through the PEZA-DENR Memorandum of Agreement Vivian Cerrer Toledo To be able to attract more investments and continue to generate jobs for the Filipino people in a highly competitive global market, the Philippines, together with other countries around the world have been taking steps to make it easier for investors to start a business. Though there are areas where reforms have clearly made an impact, especially in the economic zones, the Philippines current rank of 138 (see Box 1) in the International Finance Corporation s (IFC) 2012 Ease of Doing Business index ranks the country second from the bottom among ASEAN nations. Regulations to protect the environment are necessary to sustain our country s development. But these regulations need to be reasonable to allow businesses to grow. If the requirements are too BOX 2: FDI in 2012 Country $, B Singapore 54.4 Indonesia 19.2 Vietnam 8.4 complex or costly, it will discourage investments. In spite of the strong GDP BOX 1: Doing Business 2012 i Country Rank Singapore 1 Malaysia 12 Thailand 18 Brunei 79 Vietnam 99 Indonesia 128 Cambodia 133 Philippines 138 Lao 163 Myanmar Source: IFC 2013 No data growth figures, foreign direct investment in the Philippines is still the lowest in the ASEAN Region. In 2012, we were able to attract $ 1.5 billion ii worth of investments which is not even one tenth of the amount invested in Indonesia. Thailand 8.1 The implementation of the Philippine Environmental Cambodia 1.8 Impact Statement (EIS) System in the economic zones has evolved during the last decade due to the Philippines 1.5 Memorandum of Agreement between PEZA and DENR. Source: UNCTAD 2013 Locator enterprises are advised during the planning stage about the requirements and with the help of the streamlined procedures for securing an Environmental Compliance Certificate (ECC), locators find it easy to evaluate the impact of their projects and come up with mitigating measures to address the myriad of environment impact. About PEZA The Philippine Economic Zone Authority (PEZA) was established in February 1995 with the enactment of Republic Act The implementing rules and regulations were approved by its Board of Directors in May of the same year. As an attached agency to the Department of Trade and Industry (DTI), PEZA is tasked to promote investments, extend assistance, register, grant fiscal and non-fiscal incentives to and facilitate

3 operations of locator enterprises in areas throughout the country proclaimed by the President of the Philippines as an economic zone. iii Requirement for operating in an economic zone As required in RA 7916, prior to obtaining a status as an economic zone, the developeroperator is required to provide proof of land ownership and that its use as an economic zone coincides with the intended beneficial use of the land. The developer-operator secures certifications from several government agencies in support of its proposal to develop the economic zones, at the very least, these certifications/ endorsements are provided in the recommendation for Presidential Proclamation of the economic zone: Housing and Land Use Regulatory Board (HLURB) Zoning Certification or a DAR Conversion clearance/exemption; Endorsement of the Sangguniang Bayan/Panglungsod; Certification from the National Water Resources Board (NWRB) that the identified source of water shall not cause a supply problem for the adjacent communities. iv Even before the economic zone starts its operation, the developer-operator is required to secure an ECC to ensure that the impact of its land development activities (i.e. establishing infrastructure facilities, utilities, communication system, sewerage and drainage systems, garbage collection system, pollution control devices, green areas and other public amenities) shall be addressed properly at each stage of the project. An economic zone is operated and managed as a separate Customs territory, thus, the developers install perimeter fences to segregate the economic zone from adjacent areas. PEZA s control measures in the operation of locator enterprises As a separate Customs territory, the movement of persons, vehicles and goods (even wastes) are restricted and monitored by PEZA in the economic zones. An investor, seeking to locate inside the economic zone will be required to secure an ECC prior to its registration. This is to ensure that the environmental impact of its operations are addressed at each stage of the project cycle. Prior to its operation, the locator enterprise is required to connect to the centralized wastewater treatment facility, get the services of a residual waste hauler that has a partnership with a sanitary landfill and establish a procedure for on-site management of hazardous wastes before these are sent to a DENR-registered hazardous waste treatment, storage and disposal facility (HW TSD). PEZA, as an ISO 9001:2008 certified company in all processes and in all facilities nationwide has a system in place to enable zone officials to check that locator enterprises consistently follow the requirements and economic zone operations do not adversely affect the safety of the community or the condition of the environment. Implementation of the Philippine EIS System in the economic zones Though the ECC is a planning tool, it is also viewed by the regulated community as a permit because a locator enterprise cannot start its operations without first securing an

4 ECC from the DENR. Otherwise, the locator will be in violation of PD Majority of projects of locator enterprises in the economic zones are considered as Category B or those classified as non-environmentally critical projects (non-ecps) located in environmentally critical areas (ECAs). From the implementation of the Special Economic Zones Act in 1995 up to 2004, PEZA have been receiving complaints from locators who are unable to start their projects citing unclear classification of coverage of the project during screening, numerous permits required from other agencies/lgus even if these requirements have been addressed by the developer-operator during its own ECC application and the multiple requests for information as the cause of delay in processing and issuance of ECCs. President GMA in 2002 recognized the need to rationalize the implementation of the Philippine EIS System through the issuance of Administrative Order 42 (AO 42). Section 3 of AO 42 required the DENR-EMB to conduct regular consultations with DTI, affected industry groups and other stakeholders to improve processing of ECC applications. This set the tone for PEZA, as an attached agency of the DTI to work on the implementing rules and regulations to fulfill the agencies respective commitments in the MOA. Bearing in mind the engineering and administrative controls that are inherent in the economic zones, streamlining of the requirements for ECC application of typical non- ECPs is a logical step in simplifying the EIA process in PEZA. Box 3: Milestones in the implementation of the PEZA-DENR MOA Date Signatory/ Issuance PEZA-DENR MOA 25 Aug 1999 Sec. Antonio Cerilles (DENR) IRR of the PEZA-DENR MOA 11 Feb 2004 Sec. Elisea Gozun (DENR) IEE Checklist for new projects (EMB MC ) 05 Oct 2004 Engr. Julian Amador (EMB) EPRMP Checklist for EZ (EMB MC ) 14 Nov 2005 Atty. Lolibeth Medrano (EMB) Memorandum clarifying EIA policy 10 Jan 2006 Atty. Lolibeth Medrano (EMB) Letter on use of DRR-CCA checklists 23 Jul 2012 Atty. Juan Miguel Cuna (EMB) In coming up with the ECC application in checklist format, PEZA was guided by the EIA Division of the EMB Central Office, under the leadership of the late Reynaldo Alcances and the Regional Directors and EIA Chief of the appropriate Regions (i.e. Calabarzon, NCR, CAR and Region 7) where economic zones are clustered. Using the outline prescribed in the procedural manual of DENR Administrative Order , the IEE Checklist was formally approved in 2004 by the DENR-EMB as the ECC application document for new projects. The checklists replaced the need to come up with a narrative format for the project description and its impact and proposed mitigating measures. It also removed the need to describe the baseline environmental conditions since this will just be a duplication of the study conducted by the developer-operator on the land, water, air and the community for its own ECC application. For proponents who will be introducing project activities not covered in previous EIA study or expand existing projects, an Environmental Performance Report and Management Plan (EPRMP) checklist was crafted and its use in the economic zone was approved by the DENR- EMB in Box 3 provides a summary of issuances in support of the implementation

5 of the MOA in the economic zones. EMB followed suit with its own set of IEE Checklists that are industry-based, an example of this is EMB MC for the IEE Checklist for wind energy projects. Currently, ECC applications for new projects use the format prescribed in EMB MC , incorporating considerations on Disaster Risk Reduction Climate Change Adaptation (DRR-CCA) in the EIS process. BOX 4: Locators per type of registered activity Export 1,223 IT 742 Domestic market 1 Agro-industrial 3 Free trade 2 Service 3 Facilities 283 Logistics 221 Medical tourism 4 Tourism 30 Regional warehouse 2 PEZA has been conducting procedural screening of all ECC and CNC applications of locator enterprises inside the economic zones since As of 31 May 2013, PEZA has already processed 2,368 (2,108 HO, 345 CEZ, 25 BCEZ) applications nationwide. Using the DAO revised procedural manual, PEZA evaluates at the feasibility study stage whether a project will be considered as Category A (ECP), Category B (non-ecp but located in an environmentally critical area (ECA)) or Category C or D, outside the purview of the Philippine EIS System. In cases where there are gray areas, PEZA confers with the concerned EMB Regional Office. Investors, both foreign and local, have found the Checklists easy to use and rarely employ the services of consultants in accomplishing their ECC application. For existing projects, Pollution Control Officers (PCOs) regularly come to the PEZA office to inform about expansion projects and clarify the requirements in the EPRMP Checklist. Utilities 21 Currently, there are 2,535 locator enterprises registered in the economic zones nationwide. The type of export Total 2,535 enterprise is summarized in Box 4. The reduced Source: PEZA (as of 30 April 2013) processing time in processing of their ECC application is one of the non-fiscal incentives that a locator enjoys as a registered enterprise in the economic zone. As part of PEZA s commitment in the MOA, procedural screening is conducted within ten (10) days in PEZA and another ten (10) days are allocated for the DENR for the substantive review. PEZA guides the locators to ensure that application documents are complete, PEZA also conducts inspection of the facilities and provides a report to the DENR on the condition of the site during the Box 5: Comparison of processing time Actual processing time Official processing time WB/ADB report 104 days* 60 days Within EZ 14 days** 10 days Source: *Tuyor, 2007; **DENR-EMB Calabarzon 2013 inspection. This arrangement has dramatically reduced the processing time of ECC applications in the economic zone as provided in Box 5. Tuyor et al. (2007) in a World Bank study of randomly sampled projects, have reported that the average processing time from submission of EIS for Category B projects will take up to 104 days. In

6 contrast, a review of the recent ECC applications endorsed to DENR-EMB Calabarzon havs shown that the processing takes an average of 14 days for non-ecps in ECAs. The Philippines v has improved its ranking in the latest World Competitiveness Scoreboard. From a rank of 43 in 2012, we are now rank 38, one step ahead of our neighbour Indonesia. Through the participation of a large number of people across government agencies, local government units, the private sector and academe, collective efforts are being made to raise governance standards to boost the country s competitiveness. Rationalization of requirements for ECC applications is just one of the many steps taken by DENR and PEZA to contribute to improved compliance of locator enterprises. This has resulted in less issuance of sanctions by the DENR-EMB in relation to PD 1586 and has caused a more positive perception on the ease of investing and starting a business in the economic zones. More steps will be taken by both agencies in relation to the targets in their respective Balance Scorecard management tool. This is with the end view that compliance to government regulations, especially on environment, will be simple, straightforward and inexpensive. i ii Global Investment Trends Monitor iii PEZA Homepage. iv IRR of RA v IMD World Competitiveness Center wcy ranking/ References Environmental Impact Assessment PD 1586 EPRMP Checklist for Economic Zone Enterprise, EMB Memorandum Circular 07 Series of 2005 IEE Checklist for Economic Zone Enterprise, EMB Memorandum Circular 04 Series of 2004 IEE Checklist for Wind Energy Projects, EMB Memorandum Circular 03 Series of 2006 Incorporating Disaster Risk Reduction (DRR) and Climate Change Adaptation (CCA) concerns in the Philippine EIS System, EMB Memorandum Circular No 05 Series of 2011 Ouano, E.A.R Commentaries on the EIA Practices. Central Book Supply, Inc., QC PEZA-DENR Memorandum of Agreement and its implementing rules and regulations Rationalizing the Implementation of the Philippine Environmental Impact Assessment and giving authority in addition to the Secretary of DENR, to the Director EMB and Regional Directors of EMB to grant ECC, AO 42 of 2002 Revised Procedural Manual for DENR Administrative Order No 30 Series of 2003 Special Economic Zone Act RA 7916 and its implementing rules and regulations Tuyor, Josefo B. et al The Philippine Environmental Impact Statement System: Framework, Implementation, Performance and Challenges. Discussion papers, East Asia and Pacific Region. Rural Development, Natural Resources and Environment Sector. Washington, DC: World Bank.

7 Promoting Compliance of Locator Enterprises Through the PEZA-DENR Memorandum of Agreement 19 June 2013 Vivian Cerrer - Toledo

8 What is the Agreement all about?

9 Achieving Balance between need to spur Economic Growth need to identify and address Environmental Impact

10 Before implementation of the MOA Government DAO as basis for implementation first comprehensive procedural manual no limiter for determining coverage EMPAS reviews ECC application RED issues ECC Industry ECC processing limited to consultants Difficulty in complying with requirements Delays in start of project because of uncertainty in ECC issuance

11 MOA signing IRR First ECC application IEE Checklist approved by EMB DRR CCA Joint workshop EMB as line bureau AO 42, prescribes processing time, consultation with DTI EPMRP Checklist approved Joint workshop 1 Policy clarification Milestones on ECC processing in the EZ

12 Milestones in the implementation of the PEZA-DENR MOA Date Signatory/ Issuance PEZA-DENR MOA 25 Aug 1999 Sec. Antonio Cerilles (DENR) IRR of the PEZA-DENR MOA 11 Feb 2004 Sec. Elisea Gozun (DENR) IEE Checklist for new projects 05 Oct 2004 Engr. Julian Amador (EMB) (EMB MC ) EPRMP Checklist for EZ 14 Nov 2005 Atty. Lolibeth Medrano (EMB) (EMB MC ) Memorandum clarifying EIA policy 10 Jan 2006 Atty. Lolibeth Medrano (EMB) Letter on use of DRR-CCA checklists 23 Jul 2012 Atty. Juan Miguel Cuna (EMB)

13 The partnership aims to: # 1 Advise proponents on type of coverage # 2 Streamline requirements for non-ecps # 3 Reduce processing time # 4 Enable proponents as preparers

14 #1 Proponent is advised on type of coverage Investors know the coverage during feasibility study stage ECC application is done concurrently with PEZA registration Category A Category B Category C Category D only non-ecps and those outside the purview of EIS system are covered by the MOA

15 PEZA-registered companies enjoy the one-stop shop service (i.e. building permit, ECC / LC and visa application) as part of their non-fiscal incentives Locators per type of registered activity Export 1,223 IT 742 Domestic market 1 Agro-industrial 3 Free trade 2 Service 3 Facilities 283 Logistics 221 Medical tourism 4 Tourism 30 Regional warehouse 2 Utilities 21 Total 2,535 Source: PEZA (as of 30 April 2013)

16 #2 Streamline requirements for non-ecps IEE / EPRMP Checklists No more baseline environmental conditions No more locational clearance from LGU Adoption of PEZA's inspection report ISO 9001:2008 certified system for feedback on request for additional information

17 Average Annual No. of ECC applications issued with an ECC by EMB (all projects) DAO ~ <0.5% DAO ~ <2% Percentage of ECP for all projects issued with an ECC DAO ~ <4% Category A Category B Majority of projects in the economic zones are non-ecps... same as the ones outside PEZA Source: Tuyor (2007)

18 Why can we / did we streamline?

19 Why not?? Developer operator has conducted its own EIS study and has the ff : HLURB permit / DAR certification Endorsement from the LGU on the EZ NWRB certification on water source Centralized WTP Since owner of EZ has conducted the above, no need for the locators to duplicate the study / permits

20 #3 Reduce processing time Typical processing time 104 days * WB/ADB Report 14 days** Within EZ Commitment during processing Procedural screening incl. inspection Substantive review & ECC issuance

21 Notes on the Checklists Singular IEE (2004) and EPRMP (2005) Checklists for all non-ecps in the EZ Derived from prescribed outline of DAO Drafted under the supervision of EMB CO Joint workshop with EMB regions where EZ are located Simple and easy to understand requirements translates to easier evaluation

22 #4 Enable proponents as preparers PCOs are: Familiar w/ the operations Knowledgeable about w/c measures will be applicable

23 Role of PEZA In the Economic Zones Promote investments Generate exports Create jobs

24 Economic Zones are separate customs territory Movement of persons, vehicles, goods and wastes are monitored by PEZA

25 Industrial wastes can only be allowed to be transported out of the zone if... HW will be sent to a TSD facility RW will be sent to a sanitary landfill

26 Fast facts #138 Rank in Ease of Doing Business Slightly higher than Laos Singapore # 1 Vietnam # 99 Cambodia # 133 $ 1.5 B FDI in 2012 lowest in Asia Singapore $ 54.4 B Vietnam $ 8.4 B Cambodia $ 1.8 B # 38 Rank in World Competitiveness Report While regulation is important, government needs to simplify processes so that the Philippines will be viewed as a competitive business destination!

27 Where compliance is simple, straightforward and inexpensive, all stakeholders will benefit from the efficient implementation of regulations