Manila's export zones lure businesses from overseas

Like most other developing countries, the Philippines wants to attract foreign industrial investors. It is especially eager to attract foreign companies that will export much of their output, thereby providing the country with badly needed foreign exchange.

"We are in a competitive situation," notes Teodoro Q. Pena, administrator of the nation's Export Processing Zone Authority (EPZA). "We are competing with all the countries around for investment."

Thus, like similar bodies in other nations, the authority hands out fancy, slick paper booklets outlining the advantages of investing in the Philippines and, in particular, in the zones developed by the authority.

The booklet has such page headlines as "Welcome to the Philippines," "A climate of confidence," and "Incentives for zone enterprises." It lists foreign companies already operating in the zones and quotes favorable comments by their executives. For instance, JAmes W. Archer, president of Mattel Philippines (Barbie Dolls), commented: "I have found the Filipinos in general to be a very warm and friendly people. Mattel has been very impressed with our overall progress in the zone and especially the efficiency of the Filipino workers we employ. I feel that this is one of our most efficient plants worldwide."

But Mr. Pena says his "biggest pitch" is that the Filipinos are English-speaking. "We are the third-biggest English-speaking nation in the world. Our medium of instruction in the schools in English. Some 99 percent of business is conducted in English. Further, we have a high degree of literacy. So the lower levels can be easily taught."

The EPZA's major success story is a 345 hectare (1 hectare equals 2.47 acres) industrial estate in Bataan, a famous World War II battlefield across the bay from Manila. Before 1972 the area contained a sleepy agricultural and fishing village named Mariveles. It has been transformed into a busy industrial area of 57 export enterprises, most of them multinationals, employing some 28,000 workers.

Mr. Pena notes there is still room for another 20 companies at Bataan. But the authority last year began offering facilities at two new export processing zones. It has already attracted two companies to a zone near Baguio City, which has been regarded as the summer capital of the Philippines in northern Luzon Island. One of these is Texas Instruments, making educational electronics products. Three more companies have decided to locate at the Mactan Export Processing Zone, in metro Cebu is the central Visayas. These are TMX Philippines, a subsidiary of the Bermudan-American Timex watchmaker, and Fairchild Philippines Inc., a subsidiary of Fairchild Semiconductors of the United States.

The two new zones represent a new strategy for the EPZA. The Bataan zone required expenditures of some $150 million to develop social and physical infrastructures, including a dam with a 2.4 billion-gallon capacity and a water treatment plant. Despite the success of the zone in attracting plants, the authority is still losing money -- some $109,000 last year, down from $190,000 in 1978.

The new zones, Mr. Pena noted, are to be located next to "population centers" and will be smaller in size. Expenditures for infrastructure will thus be reduced.

The Mactan zone, for instance, is in what was once a thriving rest-and-recreation base for US soldiers on furlough from the Vietnam war. It is near Lapu-Lapu City, which might be regarded as a suburb of Cebu City, the second-largest metropolitan area in the Philippines after Manila.

Government officials hope that the Mactan zone will have some political benefits. Cebu tends to be a center of opposition to the Marcos regime, figuring it has been ignored economically.

The processing zones have two other economic advantages: They attract industry away from Manila, where the bulk of the nation's manufacturing has settled. They also provide some work for the large numbers of youths coming onto the job market each year -- but not enough, admits Mr. Pena, a Yale-trained lawyer."

Later this year or shortly thereafter the EPZA will start construction of more export processing zones.