RAISING THE BAR

FOR PUBLIC SERVICE:

THE PEZA EXPERIENCE

By Lilia de Lima
2017 Ramon Magsaysay Awardee

Presented at the 59th Ramon Magsaysay Awards Lecture Series

5 September 2017, Manila, Philippines

Ladies and gentlemen, a pleasant good morning!

It is my great pleasure to share with you my very exciting 21

years' journey in the Philippine Economic Zone Authority or
PEZA.

PEZA is an investment promotion agency attached to the

Department of Trade and Industry, mandated to support
government's efforts to promote investments, generate exports
and create jobs especially in the countryside. It evolved from the
Export Processing Zone Authority or EPZA but the Law gave
this new agency wider scope and bigger functions.

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Here is PEZA's 21 year score card:

Total Investments: 3 trillion 227 billion pesos.

Note that in our first year of operations alone in 1995,

investments grew 5 times more than the previous year and more
than double the 9 year period under EPZA.

Total Exports: 629 billion 263 Million dollars

Total cumulative direct employment: 1,183,982

This translates to some 6 million direct and indirect jobs created.

In 1995 we inherited 16 economic zones. These grew to 343

economic zones all over the country or a 2,044% growth.

The number of registered enterprises ballooned from 331 to

3,756 for a growth of over 1037%.

While all statistics showed staggering growth, in one area we

registered a big drop by more than 50%. We reduced our
personnel from 1,006 to a lean and efficient 460 warm bodies
that just as warmly help and assist investors. Under EPZA, 3
employees serviced one company. While under PEZA, one
PEZAn serviced 8 companies.

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Unlike the other investment promotion agencies, PEZA does not
get any budget from the government. On the other hand, we
remit one half of our total annual net earnings to the national
government. We also pay income taxes. Ironic, because while
we grant income tax holidays to companies we supervise, we are
not exempted from paying taxes. We likewise inherited loans
incurred by EPZA.

From 1969 to 1994 EPZA remitted P145,498.00 to the

government. On the other hand, PEZAs total remittance to the
government amounted to 16 billion 621 million pesos
representing dividends, income taxes and payment of EPZA
loans.

Ladies and gentlemen, you might ask, how did we achieve this?

First, we restructured and trimmed down the fat of the bloated

bureaucracy. Simultaneously, we made sweeping structural and
policy reforms. We humbly share with you that these statistics
are a result of PEZA's responsiveness to the dynamics of
business and to the rapid changes in the global environment. We
remained focused to pursue and fulfill our principal mandate:
generate investments and create jobs for Filipinos.

Our first major and most pivotal policy reform and I think the
key to its success was, PEZA will not develop economic zones
and leave this task entirely to the private sector. This was in line
with our fundamental guiding principle that the task of
government is to be an enabler to business, not to be its

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competitor. We recognized that business knows its business and
government's role should be to provide an environment that will
induce private capital into government's nation building efforts.

Thankfully, the private sector responded enthusiastically and the

figures now speak for themselves.

Then, we innovated. We started accreditation of IT Parks and

later on IT Centers or stand-alone buildings to entice IT
companies. Seeing the need to boost the moribund tourism
sector, we later on registered Tourism Economic Zones then
Medical Tourism Parks. To push the agricultural sector we
accredited Agro-Industrial Parks. We have to be constantly on
our toes and grab every opportunity which may come only once.
Carpe Diem! And we grabbed the day.

The rest, as they say, is now history. In the IT industry, the

Philippines ranks number one in the voice sector since four or
five years ago. In the non-voice sector, we rank second or third.

In manufacturing inroads, I can share with you a litany of them.

Just to mention a few, in Shipbuilding we now rank fourth next
only to Korea, Japan and China in the world. In West Balamban,
Cebu, Tsuneishi Shipbuilding has launched hundreds of bulk
carriers the biggest with capacity of 180,000 mt dead wt;

In Aerospace, all the Boeings, the Air Buses, and Bombardiers

that fly, Moog Controls in Baguio City manufacture their most
sensitive parts including the Servo system. In fact they also

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manufacture parts that go to the moon; Analogue Devices
another aerospace company established its state of the art
Research and Development Center in Cavite where young
Filipino scientists have researched, developed and now
manufacture parts that will go to Mars in 2020.

Texas Instruments in Baguio City and Clark produces 80% of

the chips of all cellphones worldwide. Easily the brains of all the
cellphones in this room now were made by our brilliant Filipino
engineers and technicians. I salute our Filipino workers
especially our engineers. They continue to be our cutting edge in
the stiff competition for investment. Oh, I could go on and on.

What PEZA is today was made possible because of the trust and
confidence of the private sector who have been responsible for
the development, operation and maintenance of all, except the
four original PEZA economic zones, at no cost, not a single
centavo to the government.

The same trust we likewise enjoyed from the companies inside

these zones which are mostly foreign owned, many of them
Fortune 500 listed. These companies continued to expand their
operations and even convince their head office to transfer
existing projects to this country.

This confidence in our organization would not have been

possible without the culture of integrity we have inculcated and
engendered among PEZANS.

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While companies operating inside these zones enjoy tax perks,
other countries also offer similar Incentives. We realized
however, that these incentives alone provided by law wouldn't
cut it. To entice foreign investors and to be truly competitive,
our agency must be rid of inefficiency, red-tape, corruption and
other "disincentives". It was an uphill battle to breach what often
ails government bureaucracy.

From my first day as Director General, our mantra has been

absolute honesty and integrity and utmost service. Thus we
institutionalized the PEZA brand of service:

First, PEZA is a ONE-STOP SHOP.

Through a series of memoranda of agreement with other

government agencies, Import and Export Permits, Building and
Occupancy Permits, Visa processing, ECCs, etc. are done or
pre-processed by PEZA.

Second, PEZA is a NON-STOP SHOP.

In the manufacturing zones and air ports PEZANS render

service 24 hours a day seven days a week, including Saturdays,
Sundays and holidays. Yes, including Christmas Day and New
Year except Good Friday. Permits for the transit of raw
materials and parts are processed round the clock especially for
the electronics sector that demands quick turn-around time
required by customers abroad. Since even just a minute of delay
translates to added costs, we instituted a fully automated import

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permit system, the first among some 40 import permit issuing
agencies to do it. Top officials at head office particularly the
Director General were likewise on call 24/7.

Third, in PEZA there is NO RED-TAPE, ONLY RED

CARPET treatment to investors.

If you filed your application today and we have a Board meeting

tomorrow, the same was calendared and approved the following
day. The Board meets twice a month. We continued to review,
revise, reduce and simplify process requirements to the barest
minimum for ease and transparency.

Fourth, and most important, in PEZA there is NO GRAFT

AND NO CORRUPTION.

All companies are required to sign an 'Anti-Graft Certificate'

that states that they will not give or promise to give anything to
any PEZA officer or employee.

We have been weeding out misfits, filing them administrative

charges. It is heart-rending to fire an employee, even a corrupt
one, especially when I think of their family. On the other hand,
think of the headaches and heartaches they inflict on
stakeholders that could cause their closure and the consequent
misery and hopelessness of the jobless.

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To further eliminate this scourge, we did not allow our
employees to engage in any business as long as they are in
PEZA. We demanded 100% of their time and energy to focus on
their job. We assured our stakeholders a level playing field. It
was a double no- no for PEZAns and immediate family
members to have any business inside these zones, more
especially because we do regulatory functions.

This no corruption policy applies as well internally. And for any

expense especially capital expenditure, our guideline is: "If these
were my own money would I spend it this way?"

And very essential, to standardize processes and eliminate

discretion and to confirm with our quality objectives, we worked
on ISO certifications. For the past ten years, PEZA is the only
government agency ISO 9001:2008 certified for ALL processes,
at all levels in all our offices nationwide.

With these reforms investors in time realized that we were on

their side and that they can trust us.

The results are palpable; middle to high-end subdivisions have

mushroomed in the CALABARZON area, our mini Silicon and
mini Detroit, where most electronics and car and car parts
manufacturers are located. In Metro Manila, day and night have
become seamless because of the IT Parks and IT Centers
scattered throughout the metropolis where a slew of
establishments have flourished from the well paid employees of
the IT companies. These have now been replicated in Cebu and

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other urban cities. Elsewhere, manufacturing, tourism and agri-
industrial zones have started pockets of development in the
countryside.

I am pleased that the hallmark of our corporate culture of

"absolute honesty and integrity and utmost service" which we
have built through the years have been acknowledged not only
by our stakeholders but even outside the Philippines.

In a study FIAS: LEADERS IN INVESTMENT CLIMATE

SOLUTIONS written by MR. Gohan Akinci of the IFC-
WORLD BANK, only PEZA was cited for best practice among
Economic Zones worldwide, stating that "Under PEZA, the
Philippines has shown dramatic improvements in business
climate... End result- PEZA is a shining example of successful
regulatory reform improving overall investment climate in the
country."

While we have reaped the fruits of more than two decades of

developing the PEZA BRAND, it was not an easy journey. But
by then I had the support of very highly motivated, passionate
and hard working professionals, the best that one can wish for,
and I have high hopes my PEZANS will continue to be so.

My take home message:

Foremost, we must walk the talk. Generally, employees will

follow where the leader will lead them. It is also imperative that
as early as the hiring stage the employees must know the rules

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and it must be made emphatically clear to them that if they
violate these, you throw the book without exception. Once you
make an exception you lose credibility.

Encourage regular feedbacks from stakeholders. It is very

important to watch out on your people's lifestyles. Employees
who live the lifestyle of a Mercedes Benz on a salary of a
Multicab will immediately tell you something is wrong. Once
these people have adopted a certain lifestyle, no amount of
salary increase will appease or satiate their appetites.

Very importantly, have the will of steel to fight corruption. This

I did at the start when I cleaned up and with one full sweep
reduced the staff by more than half. The political patrons went
after me, threw everything at me including the kitchen sink. It
was an arduous, agonizing and emotionally draining passage, the
most bruising experience in my public career. But it had to be
done. In fighting corruption, one must be resolute. If in this
world the righteous will now cower before rogues what kind of
world would it be.

Good must triumph over evil to make this world a better place to
live in.

Thank you and good day.

Copyright 2016 Ramon Magsaysay Award Foundation