Unlocking Opportunities: Setting Up Your Business in Clark Freeport Zone and New Clark City, Philippines

Clark is the driving force behind Pampanga and Central Luzon’s rapid growth, establishing it as the fastest-progressing region outside Metro Manila. Encompassing key districts like Clark Freeport Zone, Clark International Airport, Clark Global City, and New Clark City, it remains central to emerging Indo-Pacific economies. As a flagship project by the Philippine Government, Clark is a prime economic hub for foreign investors and a top tourism destination strategically located just 80 kilometers north of the National Capital Region.

• History of Clark
• What is the significance of being located in one of the four main districts in Clark?
• How does Clark serve as a major transportation hub on the island of Luzon, Philippines?
• What are the Tax Incentives and Requirements for Clark?
• How does the labor force in Clark and the Metro Clark Area uniquely contribute to the region’s growth and development?
• What is the purpose and significance of the National Administrative Government Center in New Clark City?
• Frequently Asked Questions

The History of Clark Pampanga

Clark has historically played a crucial role in enhancing the U.S. presence in the ASEAN and Indo-Pacific Region, serving as a military staging ground and logistical hub during the Vietnam War. It connected U.S. Pacific forces across East and Southeast Asia, and at its peak, Clark Air Base directly employed over 40,000 Filipinos and supported over 400,000 local jobs, contributing approximately $1 billion annually to the local economy. After the U.S. military left in 1991, the Philippine Government transformed former U.S. military bases, particularly Clark, into dynamic economic hubs that drive national development in the Philippines. 

Since the turnover to the Philippine Government through BCDA and its subsidiaries, Clark has evolved into a dynamic economic powerhouse in Luzon. It hosts diverse industries, including IT, electronics, renewable energy, and logistics. Key players like Texas Instruments and FedEx highlight its broad sectoral representation. As of March 2024, Clark exceeded investment targets, securing PHP 44.5 billion in the first quarter alone, managed by Clark Development Corporation. The area is home to over 1,000 companies, reinforcing its status as a crucial hub for economic growth and innovation.

Clark is recognized as a key driver of national economic growth and a vital link in the global supply chain. Since the 1990s, it has attracted significant investment from countries like the U.S., Japan, and Singapore. The recently enacted U.S. CHIPS Act highlights the Philippines’ essential role in semiconductor manufacturing. At the Trilateral Summit in Washington, the U.S., Japan, and the Philippines launched the Luzon Economic Corridor Infrastructure Initiative, focusing on enhancing connectivity from Subic and Clark to Metro Manila and Batangas. This initiative aims to modernize transport networks and increase renewable energy capacity, promoting seamless logistics across land, sea, and air. Additionally, BCDA plans to transform New Clark City into a Smart City, attracting further investment.

Four Main Districts in Clark Pampanga

Clark provides versatile leasing options for businesses, offering office spaces, commercial areas, and industrial warehouses across key locations such as:

• New Clark City: Planned as a sustainable and smart metropolis covering the Municipality of Bamban, Tarlac, and the City of Capas, Tarlac, the 9,450-hectare New Clark City provides modern and efficient office spaces, commercial areas, and industrial zones tailored to the needs of businesses. Forty percent of the New Clark City area is allocated for mixed-use development, including Regional and National Government Offices, Educational Institutions, Residential Zones, Business Districts, and Transit-Oriented Development Townships, with the remaining 60% allocated for green and eco-tourism activities. Additionally, Filinvest New Clark City, a 288-hectare mixed-use development located within New Clark City, caters to logistics and light manufacturing industries. New Clark City offers a conducive environment for businesses to thrive, with industrial warehouses and lots available to accommodate manufacturing and logistics operations.

• Clark Freeport Zone: The Clark International Airport Complex, covering 2,367 hectares with a 3,200-meter runway, is set for transformative developments. The Clark International Airport Corporation is spearheading aerotropolis-inspired infrastructure projects, including the CRK Direct Access Link to improve connectivity to major expressways. The 60-hectare Clark National Food Terminal will enhance food-related services, while the Clark Entertainment and Events Center will become a hub for sports, conventions, and shopping. Urban renewal initiatives will prioritize sustainability and smart city technologies, with plans for a second runway to cement Clark as a key aviation hub in the Indo-Pacific. Businesses can lease office, commercial, and industrial spaces to support aviation and logistics needs.

• Clark International Airport: The Clark International Airport Complex spans 2,367 hectares with a 3,200-meter-long runway and associated taxiways, aircraft parking apron, a passenger terminal building, and other related support facilities. Adjacent to the Clark International Airport, the Clark International Airport Corporation is embarking on carefully planned infrastructure projects to provide aerotropolis-inspired development. At least seven flagship projects are in the works, such as the CRK Direct Access Link that will connect the Subic-Clark-Tarlac Expressway and the North Luzon Expressway directly to the world-class Clark International Airport (IATA Code: CRK) for ease of travel, convenience, affordability, sustainability, and safety.

• Clark Global City: Covering 177 hectares, Clark Global City is a premier business district within the Clark area. It offers upscale office spaces, commercial areas, a hospital complex, and mixed-use developments explicitly designed to meet the requirements of multinational corporations. Boasting modern infrastructure, a vibrant atmosphere, and integrated urban planning, Clark Global City provides an ideal environment for businesses seeking premium leasing options in a strategic location.

Clark as a Major Transportation Hub on the Island of Luzon, Philippines

1. Air Connectivity

Clark International Airport (CRK) serves as a vital air gateway for Luzon and the Philippines, strategically positioned to become a logistics powerhouse in the Indo-Pacific. Offering a wide range of domestic and international flights, CRK connects to major cities across Asia, enhancing regional tourism, trade, and investment. It provides a convenient alternative to the congested Ninoy Aquino International Airport in Manila, serving a local population of 23 million across several regions. With modern facilities and a strategic location, CRK facilitates business and attracts investors, offering connections to destinations like Taipei, Tokyo, Bangkok, and Dubai, as well as popular Philippine islands. Airlines such as Philippine Airlines, Qatar Airways, Emirates, and Cebu Pacific operate here alongside cargo giants FedEx and UPS, both expanding their presence to strengthen global supply chains.

2. Land Connectivity:

Clark boasts strategic accessibility at the heart of Luzon’s key highways, connected via the North Luzon Expressway (NLEX) and Subic-Clark-Tarlac Expressway (SCTEX). These well-maintained expressways ensure smooth travel to Manila and other major cities, including Baguio, Subic Bay, and La Union, facilitating the efficient movement of goods and passengers. As a vital transportation hub, Clark supports diverse land transport options like buses, taxis, and private vehicles, offering easy access to nearby towns. In addition to the existing road networks, Clark stands to benefit from upcoming railway projects that will further enhance its land connectivity: 

• North-South Commuter Railway (NSCR). A flagship railway project aimed at improving connectivity between Metro Manila and provinces in the north and south. The NSCR Phase 2, known as the Clark Phase, will extend the railway line from Metro Manila to Clark, offering a swift and efficient mode of transportation for commuters and travelers between the two regions. Financed by both the Japan International Cooperation Agency (JICA) and the Asian Development Bank (ADB), this project underscores international support for enhancing transportation infrastructure in the Philippines.
• Subic-Clark-Manila-Batangas (SCMB) Railway. This project, a significant component of the Luzon Economic Corridor, aims to enhance connectivity, promote economic growth, and improve logistics efficiency across Luzon. It further solidifies Clark’s position as a transportation hub.

3. Seaport Connectivity:

Although Clark is not directly connected to the sea, it is close to major seaports in Luzon. The Port of Subic, located approximately 70 kilometers west of Clark, and the Port of Manila, about 90 kilometers south of Clark, are significant regional maritime hubs.

These seaports facilitate the efficient movement of goods through international shipping routes, serving as crucial gateways for imports and exports. Clark, connected to these seaports through efficient land transportation networks, enables seamless intermodal logistics operations, thereby supporting the region’s trade and commerce.

Taxation Requirements and Incentives

One of the most enticing aspects of establishing your business in Clark Freeport Zone and New Clark City is the favorable tax incentives offered by the Philippine government. Companies operating within these zones enjoy income tax holidays, reduced corporate income tax rates, and exemptions from various local taxes and duties. This advantageous fiscal environment is designed to attract foreign investment and stimulate economic growth.

Here’s a breakdown of the tax incentives available to businesses setting up in Clark Freeport Zone and New Clark City in Pampanga:

Fiscal Incentives offered in Clark

• Income Tax Holiday (ITH): Qualified enterprises can enjoy a period of income tax exemption for a specified number of years, ranging from 4 to 7 years, depending on their line of business and location within the zone. This incentive provides significant savings and allows businesses to reinvest their profits for further expansion. After the expiration of the income tax holiday, businesses operating as export-oriented enterprises in Clark Freeport Zone and New Clark City may opt to have either Special Corporate Income Tax (SCIT) or Enhanced Deductions for up to ten (10) years.
• Special Corporate Income Tax (SCIT): After the expiration of the income tax holiday, exporter businesses operating in Clark Freeport Zone and New Clark City are eligible for a reduced corporate income tax rate of 5% on gross income earned within the zone for a period of up to 10 years. This preferential rate is considerably lower than the standard corporate income tax rate in the Philippines, which is either 20% or 25% on the taxable income of the corporation.
• Enhanced Deductions (ED): After the expiration of the income tax holiday, domestic market activities and exporter businesses operating in Clark Freeport Zone and New Clark City are eligible for Enhanced Deductions with the following breakdown:
  • 10% Additional Depreciation Allowance of Assets for Buildings;
  • 20% Additional Depreciation Allowance for Machineries and Equipment;
  • 50% Deduction for Reinvestment Allowance to Manufacturing Industry;
  • Additional Deduction on Labor Expense;
  • Additional Deduction on Input Expense;
  • Additional Deduction on Power Expense;
  • 100% Additional Deduction on Research and Development;
  • 100% Additional Deduction on Training Expense given to Filipino Employees.
  • Enhanced Net Operating Loss Carry Over.

Non-Fiscal Incentives offered in Clark

• Free flow or movement of goods and capital equipment;
• Special Visa for Foreign Nationals;
• Up to 100% Foreign Ownership.

Exemption from Local Taxes and Duties:

Businesses located in the zones are exempt from duties related to the importation of capital equipment, raw materials, spare parts, and other related items.

Tax Credits and Incentives for Investments in Priority Areas:

Certain priority industries and activities may qualify for additional tax credits and incentives, particularly those related to research and development, environmental protection, and infrastructure development. These incentives aim to encourage investment in key sectors and promote sustainable economic growth.

Additional Incentives for Registered Enterprises:

Registered enterprises in Clark Freeport Zone and New Clark City may be eligible for further incentives. These may include duty-free importation of capital equipment and raw materials, as well as simplified customs procedures to expedite import and export activities. These tax incentives, combined with the strategic location, robust infrastructure, and skilled labor force available in Clark Freeport Zone and New Clark City, render it an attractive destination for businesses seeking to expand or establish their presence in the Philippines. By leveraging these incentives effectively, businesses can maximize their profitability and contribute to the growth and development of the region.

Labor Force in Clark and the Metro Clark Area

Pampanga, the province housing Clark Freeport Zone, and New Clark City, boasts a skilled and diverse labor force. Known for adaptability, proficiency in English, Tagalog, and Capampangan, and a strong work ethic, the population offers a talent pool suitable for various industries. Recent data indicates that the labor force of the entire Central Luzon Region exceeds 8 million individuals. The new daily minimum wage rates in Central Luzon range from PHP 449 to PHP 500 in the non-agriculture sector, PHP 422 to PHP 470 in the agriculture sector, and PHP 384 to PHP 489 for retail and service establishments.

In Central Luzon, Philippines, which includes Pampanga, the average daily wage is competitive, providing cost-effective labor solutions for businesses while ensuring fair compensation for employees. This balance creates a conducive environment for sustainable growth and mutually beneficial employment relationships.

National Administrative Government Center in New Clark City

New Clark City, situated within the Clark Special Economic Zone in Pampanga, Philippines, is envisioned as a modern and sustainable metropolis driving economic growth and development in the region. A prominent feature is the National Government Administrative Center (NGAC), intended to decentralize government functions from Metro Manila and establish a new hub for national government offices.

As the future home of the NGAC, New Clark City will accommodate permanent offices for several government agencies, bringing key government functions closer to the heart of the country.

Set Up Your Business in Clark Today

Clark offers exceptional opportunities for businesses aiming to expand in the Philippines. It offers strategic location advantages, favorable tax policies, robust infrastructure, and a skilled workforce. Ideal for sectors such as BPO, IT, renewable energy, manufacturing, and more, Clark Freeport Zone and New Clark City provide unique benefits and resources.

If you seek to set up and register your business in Clark, Pampanga, our team of dedicated consultants is here to provide expert guidance and support to ensure your venture’s success.