ABSTRACT

Two former US military installations in the Philippines now operate as self-sustaining industrial, commercial and investment centers. These are the Subic Bay Freeport in Subic Bay and the Clark Special Economic Zone in Angeles City. Subic is now a bustling community of more than 200 enterprises, mostly exporters. Firms within Subic are exempt from import duties and national taxes on imports of capital equipment and raw materials needed for operations within the zone. These establishments are required to pay only a 5% tax based on their gross income. The approximately 100 companies registered at Clark enjoy the same incentives as those at Subic. Both zones boast their own international airports with 3000-metre strips originally built by the Americans for US Navy and Air Force planes. The eruption of Mount Pinatubo in June 1991 drove the Americans from Clark, and the Philippine Senate in September 1991 rejected US pleas 136to renew the military bases agreement under which the United States wanted to cling to Subic. This forced the US Navy to hoist anchor in November 1992. Both Clark and Subic have power plants, telecommunications facilities, housing complexes and tourist facilities-some entirely new and others converted from US military operations.