Factors influencing the location decisions of selected investors at special economic and freeport zones

Abstract

DISSERTATION ABSTRACT 1. Title: FACTORS INFLUENCING THE LOCATION DECISIONS OF SELECTED INVESTORS AT SPECIAL ECONOMIC AND FREEPORT ZONES Total Number of Pages: 214 Text Number of Pages: 197 2. Author: BADA, JOSEFA CATHERINE TAYABAN 3. Type of Document: Dissertation 4. Type of Publication: Unpublished 5. Accrediting Institution: Saint Louis University Baguio City 6. Key words: Location Decisions, Zones’ Characteristics, Investors’ Profile, Special Economic and Freeport Zone 7. Abstract: It was the purpose of the study to make a profile of the investors and special economic and Freeport zones created under Republic Act No. 7227 in order to determine the factors influencing the location decision of investors. Also, this research was to analyze the factors influencing investors in the selection of special economic and Freeport zones relative to their profile. The study included forty-seven corporations in Subic Freeport Zone, Clark Freeport Zone, Poro Point Freeport Zone, John Hay Special Economic Zone, and Morong Special Economic Zone participated in the study. The study was conducted from September 2007 to May 2008. Peace and Order has the highest influence (4.08) on the investors on the choice of a zone, followed by utility services (3.82), ease in starting a business (3.69), government rules and regulations (3.67), tax incentives and non-fiscal incentives (3.56), after-care services (3.49), cost of doing business (3.44), and On the other hand, available amenities moderately influence investors on the choice of a zone (3.08). The test of statistical difference on the extent of influence of the different zone characteristics on the choice of the zone when the respondent-firms were grouped according to zone location along the dimensions of tax incentives and non-fiscal incentives, government rules and regulations and peace and order yielded no significant difference, at 0.05 level of significance. However, there is significant difference in the extent of influence of cost of doing business, available amenities, utility services, ease in starting a business and after-care services at .05 level of significance. The differences in the extents of influence on the zone characteristics on the choice of a zone when the respondent-firms were classifies according to the type of firm yielded no significant differences at 0.05 level of significance. However, there is a significant difference in the extent of influence along the area of peace and order. Statistical test on the differences in the extent of influence of zone characteristics on the choice of a zone by nature of business yielded significant differences at 0.05 level of significance. However, there is no significant difference in the extent of influence along the area of tax incentives and non-tax fiscal incentives. The test of statistical difference in the extents of influence of zone characteristics on the choice of a zone by year of establishment and size of firms yielded no significant differences. There is significant difference in the extent of influence along the dimensions of government rules and regulations, ease in starting a business, and after-care services. From the findings of the study, it can be concluded that the dimensions on tax incentives and non-fiscal incentives, government rules and regulations and peace and order are not the factors used by investors when grouped according to zone location. Influencing factors used by investors when grouped according to zone location are the cost of doing business, available amenities, utility services, ease in starting a business and after-care services. Foreign firms were highly influenced by the presence of peace and order inside the zone. Investment Promotion Agencies need to establish a market-oriented strategicplanning process to meet the factors influencing the location decisions of investors to locate at the Special Economic and Freeport Zones. Priority should be in the maintenance of peace and order, provision of utility services, improvement in the ease in starting a business, reduce the cost of doing business, provision of after-care services and the provision of available amenities to entice investors to locate at the zones. Specifically, the following are the recommendations for the investment promotion agencies: 1. The presence of peace and order inside the zone reassures investor’s confidence on security and safety. To this end, SBMA and CDC continue to maintain its high level of security in order to retain its present locators and attract new investors. PPMC, JHMC, and BTP Inc. to include in their priority activity the maintenance of peace and order because in location decisions, foreign and local investors are highly influenced by the secured area (fence-in), visibility of law enforcers at points of entry and exit and low crime rate in their choice of a zone. 2. Utility service is an important influencing factor in location decisions of investors. SBMA and CDC should continue to assure its investors the high level of dependability and reliability of electricity, availability of water, and telephone service. PPMC, JHMC, and BTP Inc., to study the possibility of inviting electric and water companies assuring investors of stable supply of services. 3. Ease in starting a business highly influences location decisions of investors. SBMA should house in one area its one-stop shop center and CDC to strengthen its existing onestop action center. PPMC, JHMC, and BTP Inc. tom set up full blown one-stop action center on order to ease out the requirements and procedures on company registration, tax registration, social security system registration, local/municipal business licenses. 4. SBMA and CDC to continue monitoring its achieved progress in policy and regulatory strengthening. PPMC, JHMC, and BTP Inc. consider refining, improving and revising its internal rules and regulations. 5. Cost of doing business is a significant factor in the attractiveness of a zone in the location decision of investors. SBMA, CDC, PPMC, JHMC, and BTP Inc. to study its cost competitiveness for building rent, land rent, labor, electricity, water, and registration cost. 6. Investment Promotion Agencies like SBMA, CDC, PPMC, JHMC, and BTP Inc. should treat after-care services as a core function in investment promotion. 7. Available amenities to include indicators such as housing, land transportation, recreation centers, shopping centers, hospitals, and quality schools influence investors. Access to airport highly influenced the location decision of investors and moderately influenced by both the accessibility to occupational health safety office/industrial clinic and access to the seaport. SBMA, CDC, PPMC, JHMC, and BTP Inc. should continue to maintain its accessibility by air, sea and land in order to influence investors on their location decisions.