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‘WIN-WIN’ SOLUTION BREAKS ECOZONE DEADLOCK
By: Vanessa L. Almeda | Published Thursday, October 17, 2019
Aboitizland AVP Eduardo Aboitiz, MCIAA General Manager Steve Dicdican and a Japanese locator at MEPZ II exchanged pleasantries with gov. Gwendolyn Garcia after arriving at a solution favorable to all parties.

A ‘win-win’ solution was agreed upon to break the deadlock among Japanese locators of the Mactan Export Processing Zone (MEPZ) II, the AboitizLand and the Mactan Cebu International Airport Authority (MCIAA) over the adjusted rental rates at the economic zone in Mactan.

This was after Gov. Gwendolyn Garcia met with all parties to settle the problem.

Garcia successfully steered all parties to an agreement: for MCIAA and AboitizLand to impose a moratorium on the rate adjustment at MEPZ II.

The MCIAA and Aboitiz determine the rates for the rental of the 90-hectare MEPZ II, including the building structures. This is due to an existing agreement between the two for the development and operation of the property until June 2048, with a revenue sharing of 60-40 percent in favor of MCIAA.

The existing 26 locators at MEPZ II are set to end their 25-year lease contract with MCIAA and Aboitizland between 2019 and 2022, and will turn over their building to MCIAA.

In the renewed contracts, they will pay for the building’s rent at US$ 0.40 per square meter every month or the current MEPZ I rate, whichever is higher. Their land lease with AboitizLand will also increase from the current P36.79 per sqm/month to P105.18 per sqm/month.

However, the locators found the rate changes “too high” causing a deadlock in their discussions with AboitizLand and MCIAA.

Garcia facilitated two meetings, on September 18 and October 10, to settle the issue among all parties, following the request of the Japan Consulate in Cebu.

On the second meeting, MCIAA and AboitizLand offered a moratorium on the rate adjustment which will start next year instead.

The rate offered to one of the locators, Tamiya Philippines, Inc., whose lease contract expired September of this year, will be used as the benchmark. Tamiya and 20 other firms agreed to start paying land rent at P44.10 per sqm/month in 2020, P52.92 in 2021 and P63.50 in 2022.

Three remaining companies will either talk separately with MCIAA and AboitizLand, while two others said they still have to discuss with their company officials.

By 2023, the three parties will negotiate the renewal of contracts.

Philippine Economic Zone Authority (PEZA) director general Charito Plaza said a technical working group (TWG) will be created to address the 2023 building and land rates.

“For now, we agree to this with the assurance that a TWG will be created especially to address the 2023 rates. The (building) rates (however) is not yet final because from now until 2023, there is still enough time for negotiation (and) DG Plaza will be negotiating with the TWG for the rates,” Garcia said.

Tamiya contract

Tamiya, a Japanese manufacturing firm that designs and manufactures miniature toys, was one of the first locators in MEPZ II whose 25-year contract expired September this year.

Negotiations for the renewal of its contract started last June. A series of dialogues ensued but were unsuccessful until it reached the governor.

Garcia said the new rates are already comparable to other ecozone areas outside Cebu. MCIAA general manager Steve Dicdican concurred.

“We have to take note that we agreed to almost all of Tamiya’s request but we also must remember that we have to consider what is the prevalent market rate,” he said.

Land lease rates within MEPZ II range from P193 per sqm/month to P222 per sqm/month as of August 2019.

For building lease rates, it could reach as high as P319 per sqm/month and as low as P210 per sqm/month.

Building rental rates

Dicdican said rental for the buildings will remain the same since the charges will start in 2023.

Proposed rates for buildings will be classified into three. Class A buildings will be charged P151 per sqm/month; Class B buildings at P123 per sqm/month; and Class C buildings at P55 per sqm/mo, all with five percent annual escalation.

Furthermore, MCIAA will give a 50-percent discount on the first five years and another 25 percent discount on the 6th until the 10th year.

“It’s true that this is a band-aid solution but we actually have to reach that point. Incentives cannot be enjoyed in perpetuity,” Dicdican reminded the locators. (Vanessa L. Almeda)

Photo: Tonee Despojo