The Tourism Infrastructure and Enterprise Zone Authority (TIEZA) is entering 2027 under precarious financial circumstances. Despite the government's emphasis on tourism as a pivotal sector for economic growth and job creation, TIEZA’s proposed budget stands at zero, putting numerous infrastructure projects at risk.
Moreover, the potential abolition of the travel tax, which funds a significant portion of TIEZA's operations, compounds the issue. A bill to abolish the travel tax has made it through the House of Representatives, posing the threat of a substantial revenue loss for TIEZA.
According to inside sources, TIEZA initially sought around P5.2 billion from the national government for 2027. This request was specifically aimed at addressing ongoing infrastructure projects and did not cover personnel expenses. Budget Secretary Kim Robert de Leon reportedly advised TIEZA that its proposal could not be favorably considered due to the government's constrained fiscal circumstances, leading to a stark contrast in allocations: a total funding of zero for TIEZA in 2027 compared to P248 million for general administration in 2026.
The Department of Budget and Management (DBM) echoed this sentiment during a recent budget hearing. DBM Assistant Director Lulu Vispo explained that TIEZA’s 2027 subsidy was not accounted for due to uncertainties surrounding the pending legislation regarding the travel tax.
The Implications of Zero Funding
TIEZA's CEO Mark Lapid has expressed concerns over the impact of this budget cut on ongoing projects. Most of TIEZA's initiatives are multi-year undertakings, and without the requested P5.2 billion for 2027, many might stall or be abandoned entirely. The DBM indicated that TIEZA could draw from existing funds, claiming approximately P2.355 billion in available resources, comprising both unobligated allotments and unreleased appropriations from previous years.
However, Lapid clarified that much of this funding is already allocated to personnel services, leaving insufficient resources for new infrastructure commitments. “The existing funds are tied to payroll and operational costs,” he stated, indicating a funding crunch that could undermine TIEZA's operational integrity.
The Travel Tax Dilemma
The travel tax, currently pegged at P1,620 per traveler, has become a contentious issue as Congress pushes toward its repeal. The distribution of tax revenue traditionally allocates 50% to TIEZA, which forms about 95% of its operational funding. While the bill to revoke the tax includes provisions for the national government to replace lost revenue through the annual budget, the timing remains uncertain, leaving TIEZA in financial limbo.
A key concern is the potential fallout for the agency's workforce. Preliminary estimates suggest that around 300 employees might be displaced if the travel tax is abolished, with some facing difficulties in securing new employment due to age and other factors. As Lapid highlighted, TIEZA lacks the capacity to reassign these workers to other positions within the agency, leading to potential terminations and separations.
Potential Lifelines for Essential Projects
Despite the bleak outlook, there are glimmers of hope for specific projects that TIEZA advocates are pushing to keep alive. During the budget discussions, the Department of Tourism proposed a minimum allocation of P1.3 billion for five strategic projects of TIEZA, including:
- P328.9 million for the Banaue Hotel and Youth Hostel complex in Ifugao. This property, which overlooks the iconic Banaue Rice Terraces, necessitates rehabilitation after years of deterioration.
- P301.07 million for the CBDC River Water System in San Vicente, Palawan. This project aims to secure long-term clean water for local communities and tourism establishments.
- P400 million for iLIPAD, TIEZA’s airport development program. This initiative focuses on enhancing provincial airports, catering to night operations and increased flight capacities.
- P212.2 million for a wastewater treatment facility in Coron. Aimed at lessening the environmental impact of tourism in this busy destination, this facility is critical for sustainability.
- P63.7 million for the Sky Garden in Alaminos City. Envisioned as a new attraction, this feature will enhance the visitor experience near the Hundred Islands.
Though Congress is still finalizing the 2027 budget, there’s observable support for enhancing tourism funding. Lawmakers recognize the dire need for better infrastructure, especially given the adverse effects of years of underfunding, as exemplified by issues at crucial international gateways like NAIA. Without fresh investments, the ramifications for TIEZA’s projects and the broader tourism sector could be significant.
