REPUBLIC ACT NO. 7368 - AN ACT TO
LAUNCH AND PROMOTE COUNTRYWIDE INDUSTRIALIZATION THROUGH THE
ESTABLISHMENT OF MANUFACTURING, PROCESSING AND RELATED INDUSTRIES BY
PROVIDING FINANCIAL ASSISTANCE TO ENTERPRISES IN EVERY TOWN AND CITY
NOT EXCEEDING P30 MILLION AND P40 MILLION, RESPECTIVELY, AUTHORIZING
THE APPROPRIATION THEREFORE IN THE AMOUNT OF P1 BILLION PER YEAR FOR
THE NEXT FIVE YEARS AS INITIAL CAPITAL, AND FOR OTHER PURPOSES
Section 1. Short Title. — This shall otherwise be known as
the "Countrywide Industrialization Act of 1992."
Sec. 2. Declaration of Policy. — It is hereby
declared the policy of the State to accelerate countrywide
industrialization through the establishment of manufacturing,
processing and related industries in all towns and cities of the
country which add value to domestic resources and farm products, create
employment and livelihood opportunities, enhance the well-being of the
rural areas, hasten the formation and the integration of
intra-provincial and regional trade and industry linkages thus
sustaining national economic growth.
Sec. 3. Creation of Countrywide Industrialization
Fund. — There is hereby created the Countrywide Industrialization Fund,
hereinafter referred to as either the Fund or CIF, as a source of
financial assistance to eligible countrywide industrialization projects
in the manner and under the terms and conditions prescribed by this Act
and the implementing rules and regulations.
The Fund shall be appropriated from the national budget, and
supplemented by funds bilateral and multilateral sources, which shall
be negotiated and arranged by the National Government to ensure
adequacy of the Fund.
The Fund shall be deposited with and managed by three (3) banks,
namely: Philippine National Bank (PNB), Development Bank of the
Philippines (DBP), and Land Bank of the Philippines (LBP),
disbursements from which shall be made solely for investments as
equity, grants or loans, in duly approved projects endorsed by the
Local Countrywide Industrialization Boards (LCIBs) in the amounts
authorized by the Countrywide Industrialization Office (CIO).
Sec. 4. Creation of the Countrywide
Industrialization Office (CIO). — The Countrywide Industrialization
Office, hereinafter referred to as CIO, is hereby created and attached
with the Department of Trade and Industry with the following functions:
a) to effectively facilitate the programmed
distribution of financial assistance to approved countrywide
industrialization projects endorsed by especially accredited LCIBs
referred to in Sec. 6 hereof; and to authorize disbursements by the
PNB, DBP and LDP from the CIF of the amount of financial assistance
approved by the CIO to the specified countrywide projects;
b) to provide such guidelines as may be necessary to
carry out the policies of this Act;
c) to monitor and evaluate on a regular basis the
status of all LCIBs and to help them achieve viability and success;
d) to pursue appropriate measures to increase the
corpus of the CIF such as the availment of foreign loans/grants;
e) to make representations and coordinate with
agencies of the National Government which provide advice and technical
assistance to private sector enterprises so that these may be made
accessible to countrywide industrialization projects as requested by
their LCIBs.
Sec. 5. Management of the Countrywide
Industrialization Office. — The Countrywide Industrialization Office
shall be governed by a Management Board composed of ten (10) members,
as follows:
a) six (6) from the Government, specifically: one (1)
from the Department of Trade and Industry; one (1) from the Department
of Science and Technology; one (1) from the Department of Finance; one
(1) from the Governor's League of the Philippines; one (1) from the
City Mayors' League of the Philippines; and one (1) from the Municipal
Mayors' League of the Philippines.
b) four (4) from the private sector, specifically:
two (2) from the trade and commerce groups; one (1) from the labor
groups; and one (1) from the socio-civic groups.
The Management Board shall have the representative from the Department
of Trade and Industry as its Chairman. All ten (10) members shall be
appointed by the President within thirty (30) days from approval of
this Act.
The table of organization for the CIO shall, after its adoption by the
Management Board, be submitted to the Department of Budget and
Management (DBM) for approval, and shall be acted upon the latter
within thirty (30) days upon its submission.
The Chairman is hereby vested with the authority to appoint personnel
to positions in the approved table of organization as may be necessary
to effectively implement the provisions of this Act, and in accordance
with applicable civil service rules and regulations. The appointment
shall take effect upon the approval by the Management Board.
The initial secretariat and the technical staff shall be provided by
detailed personnel from the Department of Trade and Industry (DTI) and
supplemented by detailed personnel as may be necessary from other
departments and agencies of the Government including the Congress of
the Philippines.
Sec. 6. Executive Committee of Local Development
Council as the Local Countrywide Industrialization Board. — The
Executive Committee of the municipal, city and provincial development
councils shall serve as the Local Countrywide Industrialization Board
(LCIB) which shall be directed towards the development of technology
and skills, assist all enterprises in the utilization of indigenous raw
materials for livelihood programs and in the delivery of credit
organizations and marketing services.
In addition to the functions of the local development councils as
mandated in the Local Government Code of 1991 (Republic Act No. 7160),
they shall perform the following functions:
a) receive all applications for countrywide
industrialization projects within its area of jurisdiction; evaluate
and approve or disapprove all project applications within thirty (30)
days from receipt thereof; and endorse projects to the Countrywide
Industrialization Office (CIO) for funding;
b) in coordination with the conduit banks, monitor
the status of approved projects, help enterprises obtain marketing,
technical training and other forms of non-financial assistance as they
may require from agencies of the National and Local Governments;
c) review the industrialization plan for the
province, city or municipality as prepared by the municipal, city or
provincial development officer if the funding required for the proposed
project is to be sourced from CIF;
d) disseminate pertinent information; and
e) submit quarterly reports to the CIO on the
amounts of financial assistance received by the countrywide
industrialization projects within its jurisdiction, and a status report
on each countrywide industrialization project. Copy of the report shall
be furnished the Sangguniang Bayan or Sangguniang Panlungsod concerned.
Sec. 7. Conditions of Financial Assistance. — The
following criteria and guidelines shall be applied by the LCIB and
others in determining eligibility of proposed enterprise:
a) Labor generation — It must generate new employment
opportunities within the proposing city and/or municipality, with
preference to labor intensive projects.
b) Market-oriented — The products must have
identified reliable markets, within and/or outside the province, which
have growth potential to ensure viability of the project in the long
term.
c) Foreign exchange contribution — The enterprise
must desirably contribute towards the generation of, or savings in
foreign exchange through exportation and/or import substitution.
d) Use of local resources — The enterprise shall give
priority to the utilization of raw material inputs indigenous to the
municipality, city or province and its environs, with emphasis on
agricultural projects and those with high forward and backward
linkages.
e) Import of material inputs — Where indigenous raw
materials are not readily available, the importation of inputs from
other provinces or regions and/or other countries shall be allowed,
without prejudice to availment of the Board of Investments and other
government incentives. The enterprise shall be entitled to tax free
importation of raw materials and machineries: provided, that in the
case of tax free raw material importations, the end products must be
totally re-exported.
f) Agreements — The enterprise may enter into joint
venture and/or management and marketing agreements with any company
capable and willing to provide management, technical and marketing
expertise as well as capital.
g) Municipal development plan — The economic activity
in which the enterprise is engaged or will engage shall be among those
included in the priority projects list adopted by the local development
council.
Sec. 8. Financial Conduits. — Remittance of the
financial assistance to the countrywide industrialization projects
authorized by the Countrywide Industrialization Office from the CIF
shall be coursed to the accredited conduit bank branch selected by the
LCIB for the projects.
a) The three (3) depository/managing banks shall also
serve as financial conduits for the CIF, namely: PNB, DBP, and LBP, and
any private commercial or rural banks accredited by the CIO including
private financial lending institutions authorized by the Central Bank.
In cities and municipalities where the nearest PNB, DBP, and LBP branch
is deemed not accessible, or for other reasons would not be available
to satisfactorily service the countrywide industrialization projects
therein, the LCIB may appoint as financial conduit a branch in the area
of any private commercial or rural bank and other private financial
lending institution, or in the absence thereof, in the adjacent
municipality or city upon the recommendation of the LCIB.
b) The fees to a conduit bank or private financial
lending institution for its services shall be set percentage of
outstanding loan amounts to the client countrywide industrialization
enterprise served by such bank. The fee rate shall be uniform for all
conduit banks and shall be established by the CIO in consultation with
government conduit banks (PNB, DBP and LBP).
c) The conduit banks shall perform the following
functions:
1) ensure completeness of the submitted loan
applications and corresponding requirements;
2) release the funding assistance to its client
countrywide industrialization projects;
3) collect the loan amortization and interest
payments of borrower enterprises/project proponents;
4) monitor and report to the LCIB the progress of
local countrywide industrialization client enterprise and declare any
loan in default based on specific criteria to be set by the CIO;
5) in conjunction with the LCIB, plan and supervise
rehabilitation of distressed client enterprises; and
6) in behalf of the CIO, foreclose the assets of
unsavable client projects, and assist the LCIB to auction the
foreclosed assets.
Sec. 9. Selection of Countrywide Industrialization
Projects. — In addition to the criteria set forth in Sec. 7 hereof,
preference in awards shall be given to projects with any of the
following features:
a) whose equity is owned by residents of the city or
municipality; and then of adjacent municipalities and province;
b) owned by an established cooperative or
non-governmental organization;
c) whose proponents have previous experience in
successful ventures, have no unfavorable credit record and are reputed
to be of good character; or
d) whose proponents have experience in an undertaking
related to the project.
SECTION 10. Financial Assistance. — The financial
assistance under this Act shall be awarded to deserving projects in a
total amount not exceeding eighty-five percent (85%) of the value of
the real physical assets of the project. The project sponsors must
invest as equity at least fifteen percent (15%) of the real assets of
the project, supplemented by financial assistance from the CIF in the
following maximum proportions to real physical assets of the project:
a) ten percent (10%) — grants (maximum) for
pre-operating expenses, technical assistance, feasibility studies,
post-production marketing assistance, training and
institution-building.
b) twenty percent (20%) — investment in equity by the
CIF in the enterprise. This shall be subject to a stock purchase
agreement within a ten-year period at book value, in which the project
owners will be the priority buyers.
c) fifty-five percent (55%) — soft or concessional
loans with:
1) loan terms allowing for reasonable grace periods;
2) interest rate of not more than eleven percent
(11%), or seven percent (7%) above the CIF's or the National
Government's true borrowing rate from bilateral or multilateral
lenders, whichever is lower; and
3) collateral requirement not to exceed the total
assets of the project per se, inclusive of the real estate where the
factory or industry is located.
SECTION 11. Implementing Rules and Regulations. — The
Management Board of the CIO shall issue the necessary rules and
regulations within forty-five (45) days from its appointment, and shall
promulgate such other measures as may be necessary to effectively
implement the provisions of this Act, in consultation with the
Congress.
SECTION 12. Annual Report of the Commission on Audit
and the Management Board. — The availment and use of a financial
assistance under this Act shall be subject to regular audit by the
Commission on Audit which shall render an annual report of its findings
to the President and the Congress. The Management Board shall likewise
submit an annual report of its operations to the President.
SECTION 13. Penalties. — Any person who shall
unlawfully and maliciously divert the financial assistance allocated
under this Act or violate the provisions of Sec. 6 hereof shall, in
addition to the penalties imposed under existing laws, be punished with
imprisonment ranging from six (6) years to twelve (12) years and a fine
of Fifty thousand pesos (P50,000.00).
Any public officer or employee who shall, on his own or in connivance
with others, commit the acts mentioned under the preceding paragraph
shall be punished with the maximum penalty imposed under this Section in addition to perpetual disqualification from public office.
If the commission of this Act is attributed to a corporation,
association, cooperative, or any other judicial person, the penalty
shall be imposed on the president, treasurer, secretary or any other
responsible officer thereof.
Finally, if the offender is an alien, he shall de deported immediately
without further proceedings, after service of sentence.
SECTION 14. Appropriations. — There is hereby
authorized to be appropriated the amount of One billion pesos
(P1,000,000,000.00) per year for the next five (5) years as counterpart
fund and initial capital of the Countrywide Industrialization Fund:
provided, that the allocation in loans and grants in each town and city
shall not exceed Thirty million pesos (P30,000,000.00) and Forty
million pesos (P40,000,000.00), respectively.
The Management Board of the CIO shall submit to the Office of the
President the budget needed for its operations for inclusion in the
annual General Appropriations Act.
Initial operations of the CIO, from the time the Management Board is
constituted and organized until the first release to the CIO of funds
from the national budget, shall be funded by the Department of Trade
and Industry.
SECTION 15. Repealing Clause. — All laws, decrees,
orders, rules and regulations, or parts thereof, inconsistent with the
provisions of this Act are hereby repealed or modified accordingly.
SECTION 16. Separability Clause. — In case any
provision or part of this Act is declared invalid or unconstitutional,
all other portions not affected thereby shall remain valid.
SECTION 17. Effectivity. — This Act shall take effect
immediately upon its approval without prejudice to its publication in
at least two (2) newspapers of general circulation.
Approved: April 10, 1992
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