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This page features the full text of
Republic Act No. 7103
"Iron
and Steel Industry Act"
AN
ACT TO STRENGTHEN THE IRON AND STEEL INDUSTRY AND PROMOTE PHILIPPINE
INDUSTRIALIZATION
AND FOR OTHER PURPOSES.
REPUBLIC
ACT NO. 7103AN
ACT TO STRENGTHEN THE IRON AND STEEL INDUSTRY AND PROMOTE PHILIPPINE
INDUSTRIALIZATION
AND FOR OTHER PURPOSES.
Section
1. Title. — This Act shall be
known and cited as the "Iron and Steel Industry Act."
.chan
robles
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Sec.
2. Declaration of Policy. — It
is hereby declared a policy of the State to promote industrialization
through
the immediate establishment of an integrated iron and steel industry
that
makes full and efficient use of the country's human and natural
resources
taking into consideration its critical impact on employment, indigenous
resources utilization, foreign exchange and balance of payments
position.
The State shall provide impetus to the growth, promotion, and
development
of the iron and steel industry as the springboard and basis for
launching
Philippine industrialization.chanrobles virtual law library
Sec.
3. Statement of Objectives. —
It is the purpose of this Act to: chanrobles virtuallaw libraryred
(a) Provide
a framework for a rational integrated iron and steel program consistent
with the requirements of the government environment protection
program; chan
robles
virtual law library(b) Establish
policy direction governing the rationalization of government
corporations
in the iron and steel industry taking into consideration the
requirements
of the iron and steel industry; the possible effect to the private
users
of iron an steel products manufactured by government corporations; and,
the strategic nature and vital role of this corporations in the
industry;
(c) Provide
measures to strengthen its demand and supply structures primarily
through
the establishment of an integrated iron and steel plant which is
technologically
and economically efficient, internationally competitive and
contributing
to industrialization and accelerated development of the country;
(d) Provide
stiffer penalties for smuggling of iron and steel products; and
(e) Provide
a set of quality and industry standards for iron and steel
products.
Sec.
4. Definitions of Terms. — Unless
otherwise provided for in this Act:
(a) "Iron
and steel industry" refers to the preparation, smelting, crushing,
soaking,
blooming, slabbing, melting, firing, rolling, casting, shaping,
plating,
galvanizing and all other processes involved in transforming raw
materials
(i.e. iron ore, coke, limestones, flourspar, dolomite and silica) into
semi-finished products (i.e. ingots, slabs, blooms and billets) and/or
semi-finished products into finished products (products in their final
physical state like hot-rolled coils and strips, plates and
sheets).chanrobles virtual law library chan
robles
virtual law library(b) "Backward
integration" refers to the process by which the development or
increased
production of a product or products in a certain stage in the industry
results into the development of increased production of products in
preceding
stages.
(c) "Forward
integration" refers to the process by which the development or
increased
production of a product or products in a certain stage in the industry
results into the development or increased production of products in
succeeding
stages.
(d) "Upstream
industries" refers to industries which produce and/or process raw
materials
for the manufacture of semi-finished products. chanrobles virtuallaw libraryred
(e) "Downstream
industries" refer to industries which process semi-finished products
for
the manufacture of finished products, or industries that use the
finished
products.
(f) "Less
developed areas" refers to those geographic areas included in the list
prepared by the Board of Investments after consultation with the
National
Economic and Development Authority and other appropriate government
agencies,
taking into consideration the following criteria; low per capita
domestic
product; low level of investments; high rate of unemployment and/or
underemployment;
and level of infrastructure development including its accessibility to
developed urban centers.
Sec.
5. Certified Enterprises. — The
Board of Investments (hereinafter referred to as the "BOI") in
consultation
with other government agencies shall certify as eligible for incentives
under this Act enterprises that meet the following conditions:
(a) Nationality
— The enterprise shall be undertaken by a citizen of the Philippines or
a corporation, partnership, or other association organized under the
laws
of the Philippines at least thirty-five percent (35%) of the capital of
which is owned and controlled by citizens of the Philippines. As a
matter
of principle, and whenever possible, Filipino investors will be given
preference
in investing up to one hundred percent (100%) in the equity capital of
an enterprise.chan
robles
virtual law library(b) Manufacturing
Activity. — The enterprise shall engage in: (1) Production
of primary steel products in the form of refined iron ore, ingots,
slabs,
blooms, and billets; or intermediate steel products such as plates,
hot-rolled
or cold-rolled coils, or sheets, or their equivalents; or chan
robles
virtual law library(2) Manufacture
or processing of products or provision of infrastructure such as roads,
auxiliary facilities, such as ports and harbors; and, industrial
services,
primarily for the direct use of enterprises engaged in the activities
referred
to in (1) above; or chanrobles virtuallaw libraryred
(3) Refinement
or treatment of by-products or waste-products predominantly of the
enterprises
in (1) above;
(c) Technical
and Economic Capability. — The enterprise shall be capable of operating
and establishing on a technologically up-to-date, economically
efficient
and internationally competitive basis and of contributing to national
development,
taking into account the markets proposed to be addressed by the
enterprise; chan
robles
virtual law library(d) Separate
Accounts. — If the enterprise is engaged or proposes to engage in
undertakings
other than the manufacturing activity described in subsection (b)
above,
it has installed or undertakes to install an accounting system adequate
to record and identify the investments, revenues, costs, and profits
and
losses of such manufacturing activity separate from the other projects
undertaken by such enterprise; and
(e) Environmental
Protection. — The enterprise shall comply with laws and regulations on
environmental protection so as not to adversely affect the residents
and
ecological balance of the location(s) of the manufacturing
activity.
Sec.
6. Incentives. — All enterprises
certified by the BOI in accordance with the foregoing section of this
Act
shall be entitled to the following incentives:
(a) Power,
Infrastructure and Auxiliary Facilities. — Each enterprise so certified
shall be entitled to generate its own electricity, either directly or
through
co-generation, build-operate-and-transfer, and other contracts. Said
enterprise
may also provide infrastructures under BOT arrangement. Such
infrastructures
shall be allowed for negotiated contract; chan
robles
virtual law library(b) Financing.
— Subject to guidelines set by the donors and the Government of the
Philippines,
the National Economic and Development Authority shall include in its
list
for Official Development Assistance (ODA) financing, projects
undertaken
by certified enterprises, whether for capital and technical assistance,
training, procurement of machinery, equipment, commodities, and
services,
and for rehabilitation and expansion of existing facilities.
For
purposes of this Act and to facilitate financing from Official
Development
Assistance, the establishment and operation of the iron and steel plant
composed of iron-making, steel-making and continuous casting shall be
classified
as infrastructure activity.
In
financing manufacturing activity as herein defined, private sector
participation
shall be encouraged, certified enterprises shall tap other means of
financing
such as the build-operate-transfer scheme, and privatization in the
case
of case of government corporations. chanrobles virtuallaw libraryred
(c) Tax
and Duty Exemption on Imported Equipment. — All importations by
certified
enterprises of equipment, machinery and accompanying spare parts shall
be exempt from all customs duties payable upon the importation thereof,
subject to the following conditions:
(1) Equipment
and machinery of comparable quality are not manufactured domestically
and
available for delivery on a timely basis at equivalent costs; chan
robles
virtual law library(2) Equipment
and machinery to be imported will be used by the certified enterprise
exclusively
in the manufacturing, rolling or processing of primary iron and steel
products,
or for the power-generation requirements of its facility: Provided,
That
the equipment and machinery imported for the construction of blast
furnaces
must be those that will cause less pollution; and
(3) The
approval of the BOI is obtained for the importation of the desired
equipment,
machinery and spare parts: Provided, That if the certified enterprise
shall
within five (5) years form the date of acquisition, sell, transfer or
dispose
of the machinery, equipment, and spare parts imported hereunder without
prior approval of the BOI, said certified enterprise and the vendee,
transferee,
or assignee shall be solidarily liable to pay twice the amount of tax
exemption
given it.
(d) Tax
Credit on Domestic Capital Equipment. — A certified enterprise
purchases
machinery, equipment, and spare parts from a domestic manufacturer
shall
be entitled to a tax credit equivalent to the national internal revenue
taxes and customs duties that would have been waived had the machinery,
equipment and spare parts been imported from abroad pursuant to the
foregoing
subsection (c), provided that the prior approval of the BOI is obtained
for the purchase of such equipment, machinery and spare parts.
chanrobles virtuallaw libraryred(e) Other
Loans — The certified enterprise shall be authorized to contract;
subject
to the prior approval of the Central Bank of the Philippines, such
loans,
credits and indebtedness, from time to time and in any convertible
foreign
currency or capital goods, from foreign private financial institutions
or fund sources as may be necessary to undertake the manufacturing
activity
described in Section 5 (b) above. The Central Bank of the Philippines
shall
give priority to the applications made by certified enterprises to
foreign
currency loans; debt-assets and debt-equity conversion and such other
transactions
as may receive the approval of the Central Bank of the Philippines. The
Government shall likewise encourage private financial institutions,
whether
domestic or foreign, to extend loans for equity investments of
Philippine
nationals in a certified enterprise. The interest income from loans
with
maturity of five (5) years or more extend by financial institutions
shall
be exempt from all national internal revenue taxes.chanrobles virtual law library
(f) Rational
Tariff Incentives and Protection Scheme — The National Economic and
Development
Authority shall recommend to the appropriate authority a rational
tariff
incentive and protection scheme that shall enhance viability of the
iron
and steel industry. Specifically, tariff rates on imported raw
materials
not indigenously sourced or are not available in sufficient amounts or
at the required grade or quality such as iron ore, coking coal, scrap
and
manganese ore shall be reviewed taking into consideration the
requirements
of the iron and steel industry.
Sec.
7. Other Incentives. — The foregoing,
incentives shall be in addition to such other incentives as may be
available
to the certified enterprise under the Omnibus Investments Code, laws
creating
export processing zones, and other laws. The enterprises certified
under
this Act shall be eligible for all other incentives that may be given
in
the future to similar enterprises.chanrobles virtual law library
chan robles
virtual law library
Sec.
8. Time Frame. — All fiscal incentives
in this Act shall apply for a duration consistent with the provisions
of
the Omnibus Investments Code: Provided, That in less developed areas,
the
duration shall be for fifteen (15) years. All other incentives embodied
in this Act shall apply for a period of fifteen (15) years from the
effectivity
of this Act.
Sec.
9. Divestment. — All enterprises
in the iron and steel industry with foreign equity shall be encouraged
to undertake measures that will gradually increase Filipino
participation
in their businesses by taking in Filipino partners, electing Filipinos
to the board of directors, implementing transfer of technology to the
Filipinos,
generating more employment for the economy and enhancing skills of
Filipino
workers.cralaw:red
Sec.
10. Penalties for Smuggling.
— Upon the operation of the smelting plants, the following penalties
shall
be imposed upon any person who shall smuggle, fraudulently import or
bring
goods into the Philippines that constitute the intermediate or final
product
of the manufacturing activity described in Section 5 (b) of this Act,
such
as pig iron and steel, whether in the form of ingots, slabs, blooms,
billets,
bars, rods, wires, coils, strips, plates, sheets or otherwise, and
whether
in raw form or galvanized, painted, treated, recast, rolled, finished
or
processed by any other means, or who shall receive, conceal, buy or in
a manner facilitate the transportation, concealment, or sale after
importation
of such products:
(a) A
fine of not less than One hundred thousand pesos (P100,000.00) and
imprisonment
of not less than one (1) year and one (1) day or more than six (6)
years,
if appraised landed value, determined in accordance with the Tariff and
Customs Code, including duties and taxes, of the article unlawfully
imported
is not more than Fifty thousand pesos (P50,000.00); chan
robles
virtual law library(b) A
fine of not less than Two hundred thousand pesos (P200,000.00) and
imprisonment
of not less than six (6) years, and one (1) day or more than twelve
(12)
years, if the appraised landed, value, determined as aforesaid,
including
duties and taxes, of the article unlawfully imported is more than Fifty
thousand pesos (P50,000.00) but does not exceed One hundred and fifty
thousand
pesos (P150,000.00); or
(c) A
fine of not less than Three hundred thousand pesos (P300,000.00) and
imprisonment
of not less than twelve (12) years and one (1) day or more than
twenty-four
(24) years, if the appraised landed value, determined as aforesaid,
including
duties and taxes, of the article unlawfully imported exceeds One
hundred
and fifty thousand pesos (P150,000.00).
If
the offense is committed by a juridical entity, its president and/or
other
officials responsible therefore shall be subject to the penalty
prescribed
above.
If the offender, or the president/official in cases where the offense
was
committed by the juridical entity, is an alien, he shall be deported
without
further proceedings in addition to the penalty herein prescribed and
shall,
if naturalized, be automatically denaturalized from the date his
sentence
becomes final.chanrobles virtual law library
chan robles
virtual law library
Sec.
11. Preferred Use. — Subject
to the availability of the locally manufactured products of comparable
quality, price and terms of delivery, the use of iron and steel
products
manufactured in the Philippines shall be specified for use in all
infrastructure,
industrial and other construction projects: (a) undertaken by the
Government,
including all agencies and subdivisions thereof, and all
government-owned
and controlled corporations; or (b) financed in whole or part by loans
denominated in foreign currency or secured by guarantees issued by
non-Philippine
nationals; and (c) benefiting from loans, grants, or other form of
official
development assistance extended by foreign government or multilateral
agencies.chanrobles virtual law library
Sec.
12. Promotion of Steel Industry
Linkages. — The Investment Coordinating Committee of the NEDA Board
shall
formulate a plan for the development and establishment of upstream and
downstream industries identified with the iron and steel industry
within
one (1) year from the effectivity of this Act. It shall also encourage
and promote other uses of intermediate iron and steel products,
especially
those that will engage in the production of basic household tools,
precision
tools, engines, ship buildings and those produced by domestic
enterprises
enjoying benefits under this Act.cralaw:red
In
addition, enterprises utilizing the products produced by integrated
iron
and steel mills in the Philippines shall likewise enjoy the benefits
granted
to said iron and steel mills, provided that the BOI approval is
previously
obtained.chanrobles virtuallaw libraryred
Sec.
13. Technology and Manpower Development.
— The Department of Trade and Industry, and Science and Technology
shall
initiate technology dissemination programs and studies in order to
advance
the levels of technology used in domestic enterprises. The training
systems
and specific expertise and skills shall be made available in agencies
like
the Metals Industry Research and Development Center (MIRDC), the
National
Manpower and Youth Council (NMYC) and other appropriate agencies to
support
and service the iron and steel industry.cralaw:red
Sec.
14. Community Programs. — The
certified enterprise shall undertake community programs in the locality
where it operates. These programs shall include the establishment of a
center that would promote steel industry-related enterprises nationwide
and grants to schools that would develop their teaching capability and
upgrade technical courses relevant to the steel industry.cralaw:red
Sec.
15. Implementing Guidelines.
— Within sixty (60) days from the approval of this Act, the BOI shall
issue
implementing guidelines for purposes of the incentives provided above.
Sec.
16. Separability Clause. — Should
any provision under this Act be deemed invalid, the remainder of this
Act
not otherwise affected thereby shall remain in full force and
effect.cralaw:red
Sec.
17. Repealing Clause. — All laws,
orders, issuances, rules and regulations or parts thereof inconsistent
with this Act are hereby repealed or modified accordingly.
Sec.
18. Effectivity Clause. — This
Act shall take effect upon its publication in two (2) newspapers of
general
circulation or in the Official Gazette. chanrobles virtuallaw libraryred
Approved:
August
8, 1991
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