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Cagayan Special Economic Zone
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Cagayan Economic Zone Authority
Map
Agency overview
FormedFebruary 24, 1995; 30 years ago (February 24, 1995)
TypeSpecial economic zone
Headquarters10th Floor, Ayala Triangle Gardens Tower 2, Paseo de Roxas, corner Makati Ave, Makati, Philippines
Agency executives
Parent agencyOffice of the President of the Philippines
Websitewww.ceza.gov.ph

The Cagayan Economic Zone Authority (CEZA) is a government-owned and controlled corporation (GOCC) responsible for managing and supervising the development of the Cagayan Special Economic Zone and Freeport (CSEZFP) in the Philippines.

Its creation and operation are mandated by Republic Act No. 7922, also known as the "Cagayan Special Economic Zone Act of 1995," signed into law by President Fidel V. Ramos. The Act was authored by former Senator Juan Ponce Enrile, a native of Gonzaga, Cagayan. CEZA is the first economic zone in the Philippines to host financial technology companies in the emerging fintech industry, having issued the first batch of FTSOVC certificates to three locators.

Overview

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The Cagayan Special Economic Zone and Freeport, also known as Cagayan Freeport, is a special economic zone in Cagayan Province, northern Luzon, in the Philippines. It is envisioned to be a self-sustaining industrial, commercial, financial, tourism, and recreational center, in order to effectively encourage and attract legitimate and productive local and foreign investments and eventually create employment opportunities and increase income and productivity in the rural areas around Freeport Zone. The Cagayan Special Economic Zone also serves as one of the main gambling jurisdictions in the Philippines.

CEZA is headed by Secretary Katrina Ponce Enrile as Administrator and Chief Executive Officer.

Location

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Spatially, the Cagayan Economic Zone & Freeport covers the entire Municipality of Sta. Ana, including the Islands of Fuga, Barit, and Mabbag in the Municipality of Aparri in the Province of Cagayan. Approximately 54,118 hectares of land for prime development fall within the jurisdiction of CEZA. It is surrounded by the waters of Babuyan Channel and the South China Sea on the North and the Pacific Ocean in the east.

References

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Cagayan Special Economic Zone

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from Grokipedia
The Cagayan Special Economic Zone and Freeport (CSEZFP) is a in province, northern , , established by Republic Act No. 7922, the Cagayan Special Economic Zone Act of 1995, to serve as a self-sustaining hub for export-oriented industries, agro-industrial production, , , banking, , and through tax and regulatory incentives. Administered by the Cagayan Economic Zone Authority (), a , the zone primarily encompasses the municipality of Santa Ana at the province's eastern tip and adjacent areas in , leveraging its strategic coastal location near the Babuyan Channel for port and aviation facilities. CEZA has overseen infrastructure expansions including the rehabilitation and upgrade of Port Irene into a major multipurpose facility, extension of the Cagayan North International Airport runway to 2.1 kilometers, construction of industrial parks, and full leasing of 9,000 square meters of office space to tenants such as Landbank and BDO, yielding over ₱50 million in annual revenue. These efforts, alongside ISO 9001:2015 recertification and recognition for anti-money laundering advancements by the Asia/Pacific Group on Money Laundering, position the zone as an emerging investment destination focused on manufacturing, logistics, and eco-tourism sites like Buwacag Falls. A defining feature has been CEZA's role as a separate gaming regulator from PAGCOR, licensing interactive and land-based operations—including offshore gaming businesses (OGBs) that evolved into Philippine Offshore Gaming Operators (POGOs)—which generated and foreign , particularly from Chinese entities, but drew scrutiny for links to , , and firearms smuggling. In response to these issues, No. 74, issued in November 2024, imposed a nationwide ban on POGOs and gaming, explicitly covering licensed operations; CEZA, after initial assertions of jurisdictional , affirmed compliance through inspections, task forces, and cessation of renewals, though the shutdown has disrupted local livelihoods in dependent areas.

History

The Cagayan Special Economic Zone and Freeport (CSEZFP) was established through Republic Act No. 7922, signed into law on February 24, 1995, by President . This , known as the Cagayan Special Economic Zone Act of 1995, created a designated area as a separate customs territory to foster industrial, commercial, and development in Province. The act's declaration of policy emphasizes translating trade and investment liberalization into benefits such as employment generation, poverty alleviation, and regional competitiveness by providing fiscal incentives, streamlined regulations, and infrastructure support. Section 3 of the act specifies the zone's coverage, encompassing the Municipality of Santa Ana and the islands of Fuga, Barit, and Mabbag in the Municipality of , all within Province. As a free port, the CSEZFP operates with preferential treatment for imports and exports, including duty exemptions and simplified customs procedures, aimed at attracting foreign and domestic investments. Investors committing at least US$150,000 are eligible for permanent resident visas, further incentivizing relocation of operations to the zone. The Cagayan Economic Zone Authority (CEZA) was concurrently created under Section 5 as a government-owned and controlled corporation tasked with administering the zone. CEZA holds broad powers, including policy formulation, investment promotion, infrastructure development, and regulatory oversight, while remaining attached to the Office of the President for strategic direction. Its corporate franchise is set for 50 years from January 1, 2000, ensuring long-term operational autonomy within the legal framework. Implementing rules and regulations, promulgated in 1997 pursuant to Section 6, further detail operational mechanisms to align with national economic goals.

Early Development and Initial Projects

Following the enactment of Republic Act No. 7922 on February 24, 1995, which established the Cagayan Special Economic Zone and Freeport (CSEZFP) and created the to manage its operations, early development efforts centered on leveraging existing infrastructure in Santa Ana municipality and surrounding areas. The zone incorporated Port Irene, originally developed in the early 1970s as Casambalangan Port under President Sr. primarily for timber exports, providing a foundational asset for transformation into a multipurpose freeport. CEZA initiated projects starting in 1997 to foster zone growth, emphasizing rehabilitation of Port Irene to shift it from log-handling operations toward diversified economic uses including trade, tourism, and . These initial undertakings involved basic upgrades to port facilities and surrounding access, aimed at attracting early investors while adhering to the law's mandates for eco-friendly development, such as preserving local forests, beaches, and marine ecosystems. Into the early , foundational projects advanced accessibility, including road network improvements and enhancements like extending a to 2.1 kilometers at the nearby to accommodate increased traffic. These efforts marked the zone's transition from conceptual setup to operational readiness, though inflows remained modest amid national economic challenges, with focus on positioning CSEZFP as a gateway for northern exports and .

Evolution Amid Economic and Political Shifts

Following its establishment in 1995 via Republic Act No. 7922 under President , the Cagayan Special Economic Zone and Freeport (CSEZFP) experienced initial hurdles exacerbated by the , which curtailed and delayed infrastructure rollout in northern . Early projects, building on 1970s-era Port Irene foundations from the Marcos Sr. era, focused on basic rehabilitation of ports, roads, and a 2.1 km in the 2000s under President Gloria Macapagal-Arroyo, aiming to position the zone as a and agro-industrial hub amid post-crisis recovery efforts. By the Aquino III administration (2010–2016), CEZA transitioned from a net-loss entity to the 13th highest-performing among 120 Philippine corporations by 2013, driven by enhanced oversight and incremental investments in and manufacturing, though broader challenges like inadequate national persisted. Under President (2016–2022), the zone expanded territorially to include 22 additional towns in 2017 to leverage the "Build, Build, Build" program, while pivoting toward digital sectors, including the 2019 launch of the Crypto Valley of Asia initiative to attract and firms amid global booms. This era also saw CEZA licensing offshore internet gaming operators—distinct from PAGCOR-regulated POGOs—generating revenue but inviting scrutiny over sub-licensing loopholes exploited for scams and illicit activities, despite a 2016 shifting some oversight that reduced CEZA's direct gaming income. The from 2020 onward stalled physical developments, with reporting slowed job creation, yet it generated 3,601 positions by 2025, 71% filled locally, underscoring resilience tied to remote-capable sectors like . Under President Ferdinand Marcos Jr. (2022–present), aligned with national priorities for economic recovery, emphasizing post-pandemic growth in technology and connectivity, but faced headwinds from the July 2024 banning all POGO-like operations by year's end, which indirectly pressured 's offshore gaming licensees and led to local economic disruptions, including up to 2,000 job losses in affected areas. officials maintained no illegal POGOs operated within the zone, attributing issues to unlicensed entities, while advocating for exemptions to preserve legitimate operations as anchors for regional security and investment. This regulatory pivot reflects broader Philippine efforts to curb crime-linked gaming amid geopolitical tensions, prompting to refocus on non-gaming incentives like 5% rates for compliant ventures.

Governance and Administration

Role and Structure of CEZA

The Cagayan Economic Zone Authority (CEZA) is a established under Republic Act No. 7922, enacted on March 1, 1995, to manage and supervise the development of the and Freeport (CSEZFP). Its mandate focuses on transforming the designated areas into a self-sustaining industrial, commercial, financial, and tourism center, encompassing municipalities like Santa Ana and in Province, along with nearby islands such as Fuga, Barit, and Mabbag. CEZA's core functions include acquiring and disposing of , borrowing funds for development, approving and accrediting local and foreign investments, constructing and operating and utilities, and regulating activities, including casinos and other gaming operations within the zone. It also enforces measures, provides security services, and promotes export-oriented enterprises to attract foreign capital and generate employment. The authority operates with fiscal autonomy, capitalized at P2 billion, with the national government holding at least 60% ownership, enabling it to issue bonds and enter joint ventures. Governance of is vested in a comprising 15 members: the Secretary of Trade and Industry as chairperson, four other Cabinet secretaries as ex-officio members, the mayors of Santa Ana and , two representatives from labor, four from business and investment sectors, and two from the among zone residents, appointed by the President. The chief executive is the Administrator and , appointed by the President for a term of four years, currently held by Katrina Ponce Enrile, who oversees day-to-day operations. The organizational structure features a Deputy Administrator for Operations, such as Atty. Marichelle De Vera De Guzman, supporting the CEO, alongside specialized divisions including General Services (headed by Tito A. Perlas Jr.), Management Information Systems (Jomar A. Agabin), and Marketing (Gabriel L. Lingan), which handle administrative, technological, and promotional activities to facilitate zone development and investor relations.

Oversight and Regulatory Framework

The Cagayan Special Economic Zone operates under the direct supervision of the Office of the , as stipulated in Section 10 of Republic Act No. 7922, enacted on March 1, 1995, which established the zone and the Cagayan Economic Zone Authority () to manage its development and operations. This presidential oversight ensures alignment with national policy objectives, including economic development and foreign investment attraction, while functions as the primary regulatory body with delegated authority to enforce compliance within the zone's boundaries. CEZA's regulatory framework derives from RA 7922, granting it powers to promulgate rules for zone operations, including licensing for sectors such as offshore gaming, virtual asset service providers (VASPs), and activities, often featuring a unified 5% for registered enterprises to incentivize operations. Specific issuances, such as the Interactive Gaming Rules and Regulations of 2017 and AML/CFT frameworks, enable CEZA to oversee anti-money laundering compliance, geofencing for operations, and board-level governance requirements for licensees, including key risk indicators and regulatory reporting calendars. These measures position CEZA as both regulator and promoter, though its has drawn scrutiny in contexts like the 2024 Philippine Offshore Gaming Operator (POGO) ban, where RA 7922's empowerment for zone-specific regulation conflicted with broader national directives. Governance within CEZA is directed by a , chaired by the Secretary of the Department of Trade and Industry, with members including representatives from the Departments of Finance, and Highways, and Environment and Natural Resources, alongside the Governor and three presidential appointees from the private sector, ensuring a balance of public oversight and expertise. As a , CEZA adheres to general oversight mechanisms for such entities, including to the Governance Commission for Government-Owned and/or Controlled Corporations, but its zone-specific regulatory actions remain subject to presidential or policy directives under RA 7922's supervisory clause. This structure facilitates rapid adaptation to emerging sectors like licensing, as seen in 2023-2025 updates aiming for a consolidated framework, yet requires coordination with national agencies to mitigate risks such as illicit finance.

Key Leadership and Policy Decisions

Secretary Katrina Ponce Enrile assumed the role of Administrator and Chief Executive Officer of the Cagayan Economic Zone Authority (CEZA) on June 7, 2023, becoming the first woman to lead the agency. Her administration has prioritized governance reforms, including a "No Take Policy" in to eliminate and enhance transparency, positioning CEZA as a model for efficient public spending. Under her direction, CEZA generated 3,601 employment opportunities by October 2025, with 2,568 positions (71.31%) allocated to local Cagayano residents, reflecting a policy emphasis on prioritizing regional workforce development. Enrile established the CEZA Anti-POGO Task Force, which she heads, to eradicate illegal Philippine Offshore Gaming Operator (POGO) activities through rigorous enforcement, including a three-day surprise inspection in Sta. Ana from to 9, 2025. CEZA maintains stringent safeguards prohibiting interactive gaming and iGaming-related operations, asserting no POGO presence within its jurisdiction despite historical licensing of precursor internet gaming activities predating the POGO framework. This stance aligns with national efforts to curb POGO-associated crimes, while CEZA claims a clean record absent or scams linked to such operations. Preceding Enrile, Raul L. Lambino served as Administrator and CEO, directing policies toward infrastructure prioritization, notably designating Port Irene's modernization and Cagayan airport expansions as flagship projects during the 2018 CEZA Investment Summit. The CEZA Board of Directors, chaired by Secretary Cristina Aldeguer-Roque, oversees strategic policy alignment with Republic Act No. 7922's mandates for economic zone development. Supporting roles include Deputy Administrator for Operations Atty. Marichelle De Vera De Guzman and Deputy Administrator for Support Services Dr. Perla C. Tumaliuan, who execute operational policies such as community programs like Lingkod-CEZA for expanded local aid. Notable administrative decisions encompass guidelines for land use reclassification within the Cagayan Special Economic Zone and Freeport, importation protocols, and special visa issuances, including renewable two-year Dependent Visas for foreign executives under implementing rules of RA 7922. In 2025, secured legislative approval for its national expenditure program, enabling implementation of key projects amid a policy pivot toward enhancement and international cooperation.

Location and Strategic Geography

Physical Setting and Boundaries

The Cagayan Special Economic Zone and Freeport is situated at the northeastern tip of Island in the , encompassing the entire Municipality of Santa Ana in Province, along with the islands of Fuga, Barit, and Mabbag in the Municipality of . The zone covers approximately 54,000 hectares, characterized by coastal lowlands, extensive undeveloped expanses, and stretches of virgin forests, providing a mix of and natural vegetation suitable for diverse economic activities. The mainland area in Santa Ana features predominantly flat terrain, with an average elevation of about 28 feet (9 meters) above and limited topographic variation, facilitating accessibility and development while bordered by marine environments. Its boundaries are defined by the to the north and east, the to the west across the Babuyan Channel, and the Municipality of Gonzaga to the south. The offshore islands, located in the Babuyan Channel, contribute rugged, greenery-covered landforms, with presenting a circular shape and elevated contours amid the surrounding waters.

Geopolitical and Economic Positioning

The Cagayan Special Economic Zone and Freeport (CSEZFP) occupies the northeastern tip of Island, spanning over 54,000 hectares across key municipalities including Santa Ana, Gonzaga, and , with direct maritime access via the Balintang and Babuyan Channels to the . This location positions it as a natural gateway to trade routes, offering proximity to high-growth markets in , , , , and , thereby reducing logistics costs for export-oriented enterprises in agro-industry, manufacturing, and logistics. Economically, the zone capitalizes on abundant —estimated at significant portions of Valley's 300,000+ hectares suitable for —and rich to promote diversified sectors like , , and hubs, with incentives enabling duty-free imports of capital goods and raw materials for qualifying export activities. In terms of economic competitiveness, CSEZFP's strategic positioning supports its mandate as a freeport authority under Republic Act 7922 (1995), facilitating through streamlined regulations and infrastructure linkages to regional ports and airports, such as the ongoing Port Irene expansion. The zone has emerged as a hub for and iGaming firms, issuing licenses for offshore virtual currency exchanges since 2019, leveraging its isolation from Manila's regulatory density to attract over 50 such operators by 2023 amid Asia's shifting gaming landscape influenced by geopolitical and regulatory factors. This has driven incremental investment inflows, though performance metrics remain modest compared to southern Philippine economic zones, with total registered investments reaching approximately 10 billion by mid-2020s, focused on light manufacturing and services. Geopolitically, Cagayan's adjacency to the Luzon Strait and —mere 200 kilometers from —amplifies its military and economic leverage, historically drawing U.S. interest for basing access under the (EDCA) since 2014, with four new sites announced in 2023 including Lal-lo Airport in Cagayan for rotational troop deployments. Concurrently, Chinese economic engagement, initiated post-CSEZFP's establishment in 1995, includes substantial trader communities and investment proposals for nearby islands like Fuga, aiming to control Pacific access points, though these faced scrutiny amid disputes. This US-China localization introduces dual-edged dynamics: enhanced partnerships potentially bolstering funding, yet risks of investment deterrence from escalatory tensions, as evidenced by stalled Chinese projects post-2016 arbitral ruling.

Economic Objectives and Incentives

Core Mandates and Designated Sectors

The Cagayan Special Economic Zone and Freeport was established by Republic Act No. 7922, enacted on March 1, 1995, to create a self-sustaining industrial, commercial, financial, investment, and center in the municipalities of Santa Ana and , Province, including offshore islands such as Fuga, Barit, and Mabbag. The Economic Zone Authority (), tasked with its management, holds the primary mandate to accelerate through job creation, productivity enhancement, income generation for rural populations, and attraction of foreign capital via export promotion and free port mechanisms. This includes powers to register and regulate enterprises, develop infrastructure such as utilities and transport facilities, and administer fiscal incentives like a 5% in lieu of other national and local levies. Designated sectors under CEZA's framework prioritize export-oriented , shipping, and services to leverage the zone's strategic northern Philippine location for . Tourism-related activities, including casinos and recreational facilities, form a core pillar, with empowered to license and oversee operations as part of broader amusement and development. Initial focuses also encompass agro-industrial processing, such as and production for export, alongside power generation and to support industrial expansion. Subsequent policy expansions have designated and as high-priority areas, aiming to capitalize on skilled labor and connectivity improvements. , resort-based eco-tourism, and emerging sectors—including offshore virtual currency exchanges—have been integrated, with CEZA issuing licenses for these since at least to diversify revenue beyond traditional industries. Interactive and land-based gaming further underscore the zone's emphasis on high-value, regulated investments, subject to CEZA's accreditation standards for foreign and domestic enterprises. These sectors align with the zone's freeport status, facilitating duty-free imports for re-export and streamlined registration for qualifying projects exceeding minimum thresholds, such as US$150,000 for foreign investors seeking residency privileges.

Fiscal and Operational Incentives

The Cagayan Economic Zone Authority (CEZA) extends fiscal incentives to registered enterprises, harmonized with those under the Philippine Economic Zone Authority (PEZA) framework as amended by Republic Act No. 11534 (Corporate Recovery and Tax Incentives for Enterprises or CREATE Act), effective April 11, 2021. Eligible businesses, classified as pioneer (new activities with high value-added) or non-pioneer, receive an income tax holiday (ITH) of up to seven years for pioneers and four years for non-pioneers, exempting them from corporate income tax during this period. Post-ITH, enterprises may elect a special corporate income tax (SCIT) regime of 5% on gross income in lieu of all national and local taxes, duties, and fees, applicable throughout the registration period for export-oriented operations. Additional fiscal benefits include duty-free importation of capital equipment, raw materials, supplies, and spare parts used directly in registered operations, along with tax exemptions on these imports. (VAT) zero-rating applies to imports and domestic purchases of goods, services, and supplies essential for zone activities, with exemptions from duties, wharfage, and other port charges. Following the expiry of core incentives, enhanced deductions are available for reinvested earnings, including 150% for labor training expenses, 200% for , 10% accelerated depreciation on buildings, and 20% on machinery. Operational incentives facilitate business efficiency beyond tax relief. Registered enterprises may employ foreign nationals in advisory, supervisory, or technical positions required for operations, subject to Board of Investments guidelines and without prejudice to Filipino hiring priorities. provides streamlined regulatory processes, including services for registration, permits, and clearances to expedite setup and compliance. These measures aim to reduce administrative burdens, though their effectiveness depends on 's administrative capacity, as noted in legislative reviews critiquing inconsistent implementation.

Infrastructure and Key Projects

Port Irene Modernization

Port Irene, situated in Santa Ana, , serves as the primary maritime gateway for the Cagayan Special Economic Zone and Freeport (CSEZFP), facilitating trade and logistics in northern with its strategic position near the Babuyan Channel. Modernization initiatives aim to enhance its capacity to handle larger vessels and increased cargo volumes, targeting a draft of at least 10 meters to accommodate ships up to that depth, thereby positioning it as a competitive hub against regional ports like those in Subic or . These efforts, managed by the Economic Zone Authority (CEZA) under public-private partnerships, include , berth upgrades, and advanced cargo-handling infrastructure to support export-oriented industries within the zone. Initial rehabilitation occurred in the , focusing on basic repairs to restore functionality after prior neglect, but comprehensive modernization gained momentum in when a South Korean firm, via its Philippine subsidiary, proposed expanding the port through of the navigational channel, upgrading existing piers and wharves, and reinforcing a one-kilometer wall. That year, Fairbridge Overseas Development , Inc. was tasked with and reclamation works as part of Phase I, alongside plans for berth lengthening, widening, container yard development, and cold storage provisions to boost throughput for perishable goods and . By 2022, Phase I implementation advanced with Freyssinet awarded a design-and-build contract to upgrade the existing wharf in Santa Ana, incorporating structural reinforcements amid 's broader redevelopment scheme. completed key enhancements that year, including of four warehouse units totaling significant storage capacity for raw materials and finished products, while seeking an additional PHP 2 billion in funding to accelerate expansion amid rising operational demands. Phase II bidding for further and reclamation was launched in December 2022 to deepen access channels and expand landside facilities. As of 2025, modernization remains a flagship project, featuring upgraded berths equipped with modern cargo-handling technology to rival competitors, alongside breakwater extensions and additional piers to mitigate risks and improve reliability. These upgrades are projected to increase annual cargo handling from current levels—handling diverse imports/exports despite disruptions—to support 's goal of transforming the zone into a powerhouse, though full realization depends on sustained funding and private investment execution.

Airports and Connectivity Enhancements

The (CNIA), situated in municipality, functions as the principal air gateway for the Cagayan Special Economic Zone and Freeport (CSEZFP), facilitating access to its northern location in province. The facility features a 2.1-kilometer designed to handle heavier , supporting both and passenger operations aligned with the zone's economic mandates. has positioned CNIA to integrate with regional infrastructure, including major highways and Port Irene, to streamline logistics for investors and trade. Enhancement efforts for CNIA include upgrades to navigational systems, construction of aircraft hangars, introduction of VIP jet services, and development of maintenance, repair, and overhaul (MRO) capabilities to enable commercial flights. In May 2019, CEZA secured investment pledges totaling $3.9 billion from Chinese firms, with $500 million specifically allocated from Pai Hao Group for expanding the airport to accommodate wide-bodied aircraft. These initiatives aim to resume local and international flights, potentially by late 2025, to boost business and tourism inflows. Additionally, the airport operates under a public-private partnership (PPP) framework for design, , operation, and as an international facility, listed among ongoing projects as of February 2024. Despite these plans, tangible infrastructure improvements at CNIA remain limited as of May 2024, with the site described as a "dusty provincial " showing few upgrades since its designation as an (EDCA) location in 2023, where U.S. forces gained rotational access. CNIA hosted the 2024 joint military exercises between Philippine and U.S. forces, underscoring its strategic military utility amid geopolitical tensions in the Luzon Strait region. In January 2020, announced plans for a new $80 million within the CSEZFP boundaries to directly attract investments, citing faster implementation over road links to ; however, no or operational evidence of this separate facility has emerged by 2025. These airport-focused enhancements are intended to elevate CSEZFP's connectivity, reducing reliance on distant facilities like and enabling seamless with seaports and roads to position the zone as a Pacific gateway. Official projections emphasize potential for investor access, though realization depends on fulfilling PPP commitments and foreign pledges, which have faced scrutiny amid broader regulatory challenges in the zone.

Other Infrastructure Initiatives

The Data Center, located in the CEZA Business Center in Santa Ana, , comprises a three-storey building spanning 4,078.82 square meters designed to provide secure, efficient digital for zone operations and locators. Upgrades to at the facility commenced in the fourth quarter of 2024 to enhance and connectivity. In April 2019, construction began on P500 million worth of corporate and commercial centers within the zone, including a P200 million corporate center and P300 million commercial center intended to accommodate firms, banks, and other es, with occupancy targeted for early 2020. These facilities form part of broader commercial developments such as a proposed , , coastal boulevard, hub, and duty-free mall to support and activities. CEZA launched an advanced in May 2025 to attract global investors, focusing on and within the Cagayan Special Economic Zone and Freeport, with infrastructure tailored for high-tech and export-oriented operations. Complementary projects include expanded warehouse capacity, new roads, bridges, and an archway to improve internal connectivity, alongside a proposed 5.1-hectare oil storage facility capable of holding 10 million US gallons to bolster . Transportation enhancements beyond airports encompass a planned six-lane expressway linking Cagayan North International Airport to Port Irene in Sta. Ana, extending to , City, , and Claveria, alongside a parallel railway for passenger and cargo services, requiring PHP14 billion in government funding as pursued in 2018; these remain in the planning and study phases without confirmed progress to completion.

Economic Performance and Impact

Investment Inflows and Employment Generation

Cumulative capital investments in the Cagayan Special Economic Zone reached P15.52 billion as of 2021, reflecting a 23.45% increase from the prior year, driven by registrations in sectors such as gaming and . By the fourth quarter of 2022, this total had risen to P16.96 billion, further increasing to P17.82 billion in the first quarter of 2023 amid ongoing locator registrations. In 2024, CEZA attracted P19.1 billion in investments, primarily through new project commitments in , IT, and , setting the stage for projected expansions exceeding P21 billion in 2025. Employment generation within CEZA-registered enterprises has shown variability, influenced by sector-specific regulations and economic shifts. From to 2024, total jobs generated trended with annual fluctuations, including decreases attributed to adjustments and a 10.8% drop of 315 jobs in early . A 28.64% rise occurred in the third quarter of 2024, with local os comprising 80.49% of the workforce in key operations. As of October 2025, had generated 3,601 job opportunities overall, 71.31% of which were filled by residents of Cagayan province, emphasizing priority hiring for locals in line with the zone's mandate. Historical data indicate high local participation rates, reaching 96% of the workforce in 2019 and 99% in for zone-freeport operations. Future projections include up to 20,000 positions in upon awarding initial licenses, though realization depends on regulatory approvals and completion.

Contributions to Regional Development

The Cagayan Economic Zone Authority (CEZA) has facilitated job creation as a key mechanism for , generating 3,601 opportunities as of October 2025, with 2,568 positions (71.31%) filled by local residents from province. This prioritization of Cagayanos in hiring underscores CEZA's role in reducing local unemployment and building workforce skills through sectors like , gaming, and , which serve as primary drivers of in the region. CEZA's investment promotion has bolstered regional economic activity, accounting for nearly half (48.73%) of total investments in in 2012, primarily through incentives for export-oriented and service-based enterprises. Despite challenges like the , CEZA reported increased capital investments in 2021, laying foundations for sustained revenue growth from licensing and leasing, which indirectly supports provincial fiscal resources and multiplier effects in ancillary industries such as and . Infrastructure initiatives under , including data centers and connectivity enhancements, contribute to broader regional accessibility and digital resilience, enabling business expansion beyond the zone and fostering spillover benefits like improved cybersecurity for local enterprises and infrastructure that attracts visitors to 's coastal areas. These developments align with Cagayan Valley's 5.3% in 2024, though direct attribution to CEZA remains tied to its role in job and investment pipelines rather than comprehensive GDP metrics.

Measured Outcomes and Challenges

In 2021, the Cagayan Economic Zone Authority (CEZA) reported 139 registered business locators, generating 2,966 direct employment positions across various industries, a figure constrained by pandemic-related restrictions that limited operations and expansion. Investment commitments reached a peak of $8.13 billion in 2018, but subsequent years showed variability, with approved foreign investments totaling approximately P3.24 billion in 2024 amid a national decline in pledges. Revenue performance reflected partial recovery, with 2021 collections 10% below 2020 levels but avoiding the steeper 63% drop from 2019 to 2020, indicating resilience yet persistent shortfalls relative to pre-pandemic benchmarks. These metrics underscore modest contributions to regional employment and investment, with limited evidence of substantial GDP impact in Cagayan Valley, where agriculture remains dominant over zone-driven growth. Key challenges include low realization rates of approved commitments, as national analyses highlight a gap between pledges and actual capital inflows across investment promotion agencies, exacerbated in by its remote northern location complicating logistics and market access. Competition from more established zones under the (PEZA), which boast superior and export performance, has contributed to declining investments in the Cagayan Special Economic Zone during periods like 2017-2022. Infrastructure deficiencies, such as incomplete port and airport modernizations, further hinder operational efficiency, while external shocks like the amplified employment and revenue vulnerabilities without diversified sectoral anchors. Official reports note steady post-2020 investment trends but acknowledge prioritization needs for organizational future-proofing amid these structural constraints.

Controversies and Criticisms

POGO and i-Gaming Scandals

The Cagayan Economic Zone Authority (CEZA) introduced internet gaming (i-Gaming) operations in the early 2000s, licensing offshore entities to conduct online gambling targeting foreign markets, primarily in China, under the First Cagayan Leisure and Resort Corporation (FCLRC) as its master licensor. These licenses predated the national Philippine Offshore Gaming Operator (POGO) framework established by the Philippine Amusement and Gaming Corporation (PAGCOR) in 2016, which replicated CEZA's model but centralized regulation. However, CEZA's i-Gaming regime faced early controversies, including the 2009 shutdown of Meridien Vista Gaming Corporation (MVGC), a CEZA-licensed firm involved in unauthorized virtual jai alai betting and off-site operations, prompting orders from CEZA, the Department of Justice, and the Department of Interior and Local Government to halt its activities due to regulatory violations. MVGC, associated with businessman Charlie "Atong" Ang, drew further scrutiny for alleged , leading to a probe in 2018, and faced arrests of employees in 2011 for illegal exceeding authorized bet limits. CEZA's i-Gaming licenses were also implicated in broader criminal networks; a 2024 United Nations Office on Drugs and Crime (UNODC) report linked FCLRC-licensed operations to underground banking syndicates and casino-related crimes originating from on the Myanmar-China border, including scam operations and . Despite CEZA's assertions of no direct criminal involvement, enforcement raids in Santa Ana, Cagayan, uncovered illegal hubs, such as the August 4, 2020, arrest of 76 individuals (73 Chinese nationals and 3 Filipinos) at a for unlicensed operations. As POGO expansion overlapped with 's framework, i-Gaming licensees evolved into Internet Gaming Licensees (IGLs), which PAGCOR identified as encompassed by the July 2024 national POGO ban due to similar foreign-facing structures and associated risks like and scams. initially claimed exemption for its zones but was directed by Malacañang in November 2024 to revoke all such licenses and cease operations by December 31, 2024, amid reports of fraudulent visas—17,000 issued since 2021—facilitating fugitive entries under fake identities. These scandals contributed to the sector's decline, with licensees dropping from around 300 pre-2017 to 30 after 13 restricted foreign worker visas, highlighting regulatory gaps that enabled crime despite 's oversight.

Corruption and Regulatory Failures

In 2020, former Cagayan Economic Zone Authority () administrator Raul Lambino faced allegations of corruption, including claims that companies operating within the zone had transferred 10% of their capital stock to officials as bribes, as detailed in a (NICA) report highlighted by journalist . Lambino denied the accusations, describing them as "malicious" and submitting to a lifestyle check ordered by the Office of the President to verify his assets against his declared income. No formal charges resulted from the probe, though the incident underscored vulnerabilities in oversight of economic zone incentives, where lax enforcement could enable over licensing decisions. Regulatory shortcomings have also manifested in CEZA's handling of operational licenses and compliance. In November 2022, CEZA revoked the license of First Cagayan Digital Leisure Corporation (FCDLC), citing its failure to meet multimillion-peso investment commitments and terms deemed "grossly disadvantageous" to the government, revealing prior inadequacies in during license approvals. Similarly, in February 2022, the (BIR) temporarily shut down 18 unregistered entities within the zone for and non-compliance, highlighting gaps in CEZA's monitoring of registrant status and revenue reporting. Further lapses emerged in and import controls. In 2018, the Department of Justice directed an investigation into CEZA's issuance of over 1,300 working visas to Chinese nationals later arrested for involvement in scams, questioning the authority's vetting processes for foreign workers in registered firms. By 2024, hundreds of imported luxury vehicles valued at billions of pesos were reported rotting at CEZA ports after failing to comply with import regulations, pointing to enforcement delays that allowed initial entry without full documentation verification. These incidents reflect systemic regulatory frailties, where decentralized authority under Republic Act No. 7922 has occasionally prioritized attraction over rigorous compliance, contributing to perceptions of uneven governance despite CEZA's mandates for fiscal accountability.

Geopolitical Tensions and Security Risks

The Cagayan Special Economic Zone (CSEZ), encompassing strategic coastal areas including Port Irene in Santa Ana, has become a focal point of U.S.-China rivalry due to its proximity to the , approximately 200 kilometers south of . This location positions CSEZ within potential spillover zones of cross-strait conflict, prompting the Philippines to designate four (EDCA) sites in province in April 2023 for U.S. rotational troop access, enhancing interoperability amid rising tensions. Local officials, including Governor , have expressed opposition to these sites, citing risks of entanglement in a U.S.- war over and prioritizing economic ties with . Chinese economic engagement in CSEZ, initiated after its establishment in 1995 under Republic Act No. 7922, has drawn substantial investments from Chinese firms, particularly in mining and port operations at Port Irene, where over 2.4 million tons of were exported to between 2010 and 2016. This influx has fostered a of approximately 4,600 Chinese nationals in by 2024, including students enrolled in local universities in , raising alarms of a "creeping " and potential influence operations. The has identified pervasive Chinese malign influence in the , including in northern provinces like , through economic leverage that contrasts with U.S. military-focused engagements. Security risks in CSEZ stem from dual-use infrastructure vulnerabilities and espionage concerns, exemplified by a Chinese-owned dredger, An Da Kang 3689, inspected by the in December 2024 near for potential surveillance of U.S. exercises. Analysts note that unchecked Chinese investments could enable intelligence gathering or logistical footholds in a Taiwan contingency, given CSEZ's ports and airstrips capable of supporting military operations. Philippine authorities initiated probes into Chinese student visas in April 2024 amid fears of non-educational motives, while broader U.S.-Philippines pacts aim to counterbalance these risks through joint patrols and base access, though local economic dependencies complicate enforcement.

Recent Developments

Response to National POGO Ban

In response to President Ferdinand Marcos Jr.'s announcement on July 22, 2024, during his State of the Nation Address, directing the Philippine Amusement and Gaming Corporation (PAGCOR) to shut down all Philippine Offshore Gaming Operator (POGO) operations by December 31, 2024, the Cagayan Economic Zone Authority (CEZA) initially denied hosting any POGOs within its jurisdiction. CEZA Administrator and CEO Katrina Ponce Enrile stated on July 31, 2024, that "there are no POGOs in CEZA," asserting that the zone's gaming licensees operated exclusively as Internet Gaming Licensees (IGLs), which CEZA defined as distinct from POGOs due to their focus on overseas markets and compliance with special economic zone regulations. This position echoed CEZA's long-standing claim of exemption from national PAGCOR oversight, as the authority issues its own licenses under Republic Act No. 7922, potentially creating a regulatory gray area absent explicit inclusion in the ban order. CEZA's IGL framework, however, had faced prior allegations of facilitating similar illicit activities as PAGCOR-licensed POGOs, including , , and cyber fraud, with reports of over 100 IGL firms operating in as of mid-2024. Despite these concerns, CEZA maintained that its licensees adhered to stricter anti-crime measures and contributed significantly to local revenue, estimated at billions of pesos annually before the ban. Ponce Enrile reiterated on multiple occasions that CEZA would not permit POGO-style operations, framing the zone's gaming as a legitimate economic driver rather than the banned entities. The executive order formalizing the ban, signed on November 5, 2024, and publicized on November 8, explicitly directed to revoke all offshore gaming licenses and ensure cessation of operations, closing the perceived loophole. Malacañang clarified that the prohibition applied to "all forms of offshore gaming," including IGLs, prompting to initiate license revocations while facing internal economic fallout, such as job losses for thousands of foreign workers and reduced locators in Santa Ana, Cagayan. By early 2025, persisted in arguing for partial exemption based on legal interpretations of its charter, though Senate hearings highlighted enforcement gaps, leading to the passage of Senate Bill No. 2868 on June 9, 2025, institutionalizing the ban nationwide without special zone carve-outs. Local officials reported acute shortfalls in affected municipalities, underscoring 's pivot toward non-gaming investments amid compliance pressures.

2024-2025 Investment and Infrastructure Push

In 2024, the Cagayan Economic Zone Authority () recorded total capital investments of ₱19.17 billion, reflecting growth from prior years amid renewed promotional efforts. Projections for 2025 anticipate at least ₱21.34 billion in capital investments, supported by approved budgets for key implementation projects. These figures underscore CEZA's strategy to diversify beyond prior gaming dependencies, emphasizing sectors such as , , , , and eco-tourism. CEZA actively showcased opportunities at events including the Arangkada Philippines Investment Forum on September 25–26, 2025, and the Cagayan Valley Investment Promotion Network (CVIPN) inaugural meeting in March 2025, positioning the Cagayan Special Economic Zone and Freeport as a hub for trade, technology, and . Participation in the Philippine Investment Promotion Plan Technical (PIPP-TWG) further advanced investor outreach. By October 2025, these initiatives had generated 3,601 jobs, with 71.31% benefiting local Cagayanos. Infrastructure enhancements formed a core component of the push, including expansions at Port Irene, upgrades to , and construction of industrial parks alongside a modern business district equipped with utilities and smart facilities. Additional priorities encompassed seaport and airport modernization, developments, and low-density projects leveraging the zone's natural and ecological assets. These efforts align with national directives post-2024 Philippine Offshore Gaming Operator (POGO) ban, aiming to bolster regional productivity through agricultural machinery, farm facilities, and resource-based industries.

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