Breakout Session 1 - Enhancing Enhancing quality through tourism standards and accreditation
Overarching Recommendations
The DOT should revisit existing criteria, rules and regulations to be able to come up with a viable standard that applies specifically to each sector and assessment done by an independent third- party.
In order to create a credible accreditation system, we the stakeholders recommend that the certificate coming from an independent third party entity must be recognized by the LGU as part of the annual licensing requirement.
DOT should come up with a draft rules and regulations to be reviewed and commented on by the sector and stakeholders before coming up with a final version of the IRR.
The national policy should come from the National Government (DOT) in order to prevent overlapping of functions and authority. Therefore, LGUs should focus on the enforcement of the national policy without changing or adding new rules.
SEC. 85 General Principles on the Grant and Administration of Incentives
Issue
The definition of “other tourism enterprises” should include services such as health and wellness facilities, golf courses, casinos, educational and training institutions offering tourism courses and training programs, facilities catering to long stay tourism. They may either be primary or secondary enterprises
Recommendations
The definition of “other tourism enterprises” should be phrased as: “other tourism enterprises” may include but not limited to…..
The incentives should be granted only to the accredited registered tourism enterprises
Retirement villages should also be entitled to TIEZA incentives since PRA is already an attached agency to the DOT and the PRA should also co-invest in retirement villages.
Issue
SMEs account for 90-95 percent of all tourism enterprises in the country. Will the minimum requirements for SMEs in tourism be the same as those of large scale enterprises? Note that the scale of investments also vary across tourism SMEs (accommodation, transport operators, etc).
Recommendation
Define minimum requirements for micro and SMEs based on consultation with the private sector, DTI, National SMED Council and based on SME and BSMBE Laws
The minimum requirements should be defined according to the type or category of SME tourism enterprise
SEC. 86 Fiscal Incentives Available to TEZ Operators and Registered Enterprises
Issue
If enterprises are already receiving BOI or PEZA incentives, will they still be entitled to the Tourism Act’s incentives if they become part of an area designated as TEZ by TIEZA? For example, a medical tourism zone or park may be located in an area later declared as a TEZ.
Recommendation
There should be transitory provisions in the IRR on existing tourism firms that have availed themselves of same incentives such as income tax holiday or gross income taxation. Consider incremental period for the income tax holiday availment
Issue
Operationalization of gross income tax provision
Recommendation
The IRRs should clarify if registered tourism enterprises can exercise the option to avail themselves of the 5% gross income taxation from the start of the operations instead of the income tax holiday. (This gross taxation incentive is usually granted to enterprises upon the expiration of their income tax holiday).
Issue
TEZ locators and operators will be exempted from the LGU taxes and license fees. Business permits and licenses are a major source of income for LGUs. If enterprises are exempted even from payment of these permits, how will the LGUs now fund their projects? One perspective is that the LGUs will earn more from their 1/3 share of the allocation. But the problem lies in the mechanism of transferring this allocation from the national government to the LGUs. It takes a long time for the DBM to transfer the funds to the LGUs.
Recommendations
The DOT should include provision that it will formulate and implement a mechanism for the fast and reliable transfer of funds to LGUs. One possible mechanism is a memorandum of agreement with the concerned government agencies and even the TEZ Operators themselves. There should be consultation with the LGU leagues.
The DOT should coordinate and harmonize with the LGUs in the grant of incentives to the investors given the national and local taxes granted by the government. The investors should choose only one set of incentives
SEC. 86-87. Fiscal Incentives Available to TEZ Operators and Registered Enterprises and those located outside of TEZs
Issue
Travel agencies and airlines are among the overly taxed segments of the tourism supply chain. Travel agencies and tour operators are lumped with service enterprises. Apart from the overtime fees, meals and transportation allowances to customs, immigration and quarantine personnel, the gross income tax (Gross Philippine Billings) and common carriers tax (both are based on global sales) disincentivize foreign airlines and are reasons behind termination of on-line flights. The economy loses about PhP 364 million (direct and indirect) per year when a foreign airline terminates its daily Airbus 320 flight.
Recommendations
Definition of gross income earned should be based on type of tourism projects and should extend the list of allowable deductions to include repair and maintenance, landing fees, etc.
Include a provision in the IRRs for the DOT to enable business and investment climate through sustainable tourism taxation policies for all tourism enterprises. For example:
Discontinue payments of common carriers tax and Gross Philippine Billings by foreign airlines (not via repayment)
Eliminate CIQ overtime charges imposed on international carriers
Issue
Smuggling activities may arise inside the zones due to this incentive due to the duty-free importation of capital equipment and transportation equipment
Recommendation
Define capital equipment to refer only to those that will be used only in accredited tourism enterprises or for tourism activities
Exemptions from existing laws
Issues
What types of lands can be exempted from the Urban Housing Act and Agrarian Reform?
What are the procedures for exemption? The process of securing land exemption is more difficult compared with land conversion
Recommendation
TIEZA should define transparent, predictable and streamlined rules and regulations on land exemption in consultation with the private sector
Breakout Session 3 - Creation and Operation of TEZ
Generally, the Tourism Enterprise Zone portion of the IRR shall reinforce the following principles:
All existing laws and standards should be studied and considered in the IRR in achieving the objectives of the law (RA 9593)
Developing places to live in therefore places worth visiting and places that capture the “spirit of the place”
Where there be private sector investment, government should make it easy for private sector to come in and flourish
Specifically, the participants want to address certain issues on the following provisions:
Definition of Terms
TEZ - is part of a major destination, where investments make only sense if the destination as a whole including all relevant and non-relevant tourism services (i.e. access, telecom, energy, solid/liquid waste management)and attraction sites (coral reefs, caves, mountains, monuments, etc.) is managed properly.
Destination – is the whole complex of places and services that can be used within a day trip by visitor/s from the place where the visitor/s are accommodated.
Section 12. Office of Tourism Development Planning
Issue
The roles of TIEZA, stakeholders and other authorities are general
Recommendation
Define clearly the role of TIEZA, stakeholders and other authorities in the IRR.
Section 59. Definition of TEZ.
Issue
Definition and Scope of TEZ: Size is relevant to TEZ, however it has to be coupled with enterprise criteria such as social rate of return, internal rate of return, economic rate of return of selected locations. The number of TEZs can be subjected to these criteria
Recommendations:
Create a multi-sectoral technical working group that will decide on the size and number of TEZ to be set up in a location i.e. Provincial-run Tourism Council (to be approved by LGU, city and municipality); Incentives-based formation
Issue
Tourism development for foreigners/ locals
Recommendations
Establishment of thematic areas for specific IRRs and a separate IRR for eco-tourism development in protected areas
Issue
Proximity and accessibility (roads and communications) of TEZ
Recommendations
Location should be within 1.5 hours travel from transport hub, also applies to other local destinations and can be accessed by good (concrete) roads. ICT facilities and connections are present/ available.
Places of living and places of making a living should be closely integrated with appropriate buffer zones and make these areas walkable and bikeable to reduce dependency on motorized vehicles
Section 60. Designation of Areas and particular characteristics
Selection Issue
How can areas with political and social problems become TEZ? How to rationalize TEZ development to extend beyond the underdeveloped areas but have potential of becoming tourist destinations?
Recommendations:
Sec. 55 and 72 - Preferential attention to areas where there is “instability” with tourism potential, should focus in area with higher rate of success.
Issue
Evaluate existing laws declaring tourist zones and tourism estates to as indicated important be integrated in the designated TEZ? i.e. existing PEZA-DOT MOA existing that can be used as learning points for the formulation of this IRR.
Recommendations:
Keep those identified in pre-tourism law and subject these to criteria.
Section 61. Formulation of Development Plans
Issue
Given the varied disciplines / concerns in the management of TEZs, how can these be captured in designing master plans for the zone?
Recommendations:
Give importance to culture studies using interdisciplinary researches. Tourism offerings should capture “Spirit of Place” so that different zones differentiate their offerings
Issue
Lack of internal and appropriate tourism zoning plans/ ordinances and regulatory bodies within the TEZs
Recommendations:
TEZ should be insync with CLUP of LGU especially in the overall zoning ordinance of the LGU , Create a Development Authorities within TEZs ‘a la MMDAs within each zone with the objectives of enforcing the 3 regulatory instruments
Instrument to Capitalize on Development (user-charges; entrance fees; enviro protection fees, etc.)
Instrument to penalize development (building code deviance/ violation penalties; penalties against physical setbacks violations; charges against going beyond what is within the zone)
Instrument to Facilitate investments (e.i. BOT projects)
Issue
No preference and consideration on the effects of climate change (Carbon footprints of tourists)
Recommendations
Come up with programs of reducing carbon footprints of tourists ei. Plant trees
Must have programs on Green architecture, green urban planning, green energy, green technology and must consider Disaster Risk Management
Section 62. Operation of TEZ.
Issue
Availability of utilities (Water, electricity and communication)
Recommendations:
Adequate source of water, uninterrupted power supply and good solid waste program.
Availability of utilities, infrastructures and support services for hubs but optional for spokes.
Once TEZ is approved, TIEZA should commit fund to ensure that basic services/ structures, statutory requirements and infrastructures are in place
(N.B.) TEZ Operation can be successful only if the destination it is part of is sustainably managed. Therefore this requires for the establishment of sustainable destination management bodies, that is multi-stakeholder coordination unit (tourism cluster) that takes care of the issues that are beyond the responsibility of the TEZ.
Section 79. Administration of TEZ.
Issue
What to do with conflicting interests? (TIERED TEZ, LGU TEZ or PRIVATE TEZ)
Recommendations:
A method of resolving conflicts should be defined clearly by the IRR and periodically studied and improved. Best practices in conflict resolution must be documented and shared. DOT should ensure DILG, DENR and other agencies to draw up guidelines for LGUs to directly support tourism promotion
Issue
Who has the final authority? (also relevant to Sec 12) How to facilitate the acquisition of land?
Recommendations
Define sole / ultimate authority or governing body who will decide on establishing TEZ in LGUs after involving and consulting different offices
Issue
Tourism development for foreigners/ locals
Recommendations
Establishment of thematic areas for specific IRRs
Separate IRR for eco-tourism development in protected areas
Issue
Access to funds
Recommendations
Provision for soft loans for MSMEs involved in Tourism
Provide financial aid to LGUs and POs undertaking direct tourism programs/ projects in underdeveloped areas.
Breakout Session 4 - Destination Management, Marketing and Financing Options
General Recommendations
Create feasibility study highlighting the social economic benefits that the local people will enjoy, translated into jobs created and family income generated.
Make consultancy services from the national level available to the local communities.
Ensure allocation and release of the P500M marketing budget to the Tourism Development Fund in 2010.
Encourage Public-Private Partnership in the development and implementation destination management, marketing and financing options.
Ensure allocation and release of the P500M marketing budget to the Tourism Development Fund in 2010.
The IRR should include assurance to “when will the funds be released”. Time frame for releasing funds.
Recognized associations should be allocated funds for promotion since they are the practitioners – they police their own ranks
Require DepEd to develop a tourism education program for integration at all levels in the elementary and secondary and tertiary curriculum
Develop a short term marketing program that can address the immediate need to boost tourism in the near future and a long term program that can build up tourism industry in the next 10 years
Create awareness through an effective campaign that would motivate people to participate on tourism
Unify and streamline our marketing message to promote Philippine tourism in terms of tag lines, campaigns and the likes that will downplay negativism and capitalize on our strengths
Marketing plans must be well guided from inputs of stakeholders in the community; How they want to be promoted, where the focus will be, how in the specific terms can they be engaged
Create a tourism master development plan in every municipality from where we will draw our marketing strategies, e.g. Lakbay Aral, tourism study tours
