REPUBLIC ACT NO. 7844 - AN ACT TO
DEVELOP EXPORTS AS A KEY TOWARDS THE ACHIEVEMENT OF THE NATIONAL GOALS
TOWARDS THE YEAR 2000
ARTICLE I
BASIC PRINCIPLES AND POLICIES
SECTION 1. Short Title. — This Act shall otherwise be
known as the "Export Development Act of 1994."
Sec. 2. Declaration of Policy. — It shall be the
policy of the State to evolve export development into a national
effort. The government shall champion exports as a focal strategy
for a sustainable agri-industrial development to achieve Philippine
NIChood towards the year 2000. The private sector shall take the
lead in the collective effort to promote exports through discipline and
hard work, as it confronts the challenge of winning international
markets.
The government and the private sector shall jointly transform the
Philippines into an exporting nation. Toward this end, the State
shall instill in the Filipino people that exporting is not just a
sectoral concern, but the key to national survival and the means
through which the economic goals of increased employment and enhanced
incomes can most expeditiously be achieved.
Sec. 3. Key Operating Principles. — A
macroeconomic policy framework that supports export development shall
be provided, especially in key areas of concern to exporters:
(a) Monetary and foreign exchange policies shall
establish and maintain a competitive exchange rate, supported by
measures to provide safety nets for various sectors that may be
adversely affected by the implementation of such policies. Such
policies shall be consistent with the responsibility and primary
objectives of the Bangko Sentral ng Pilipinas pursuant to Sec. 3 of
Republic Act No. 7653.
(b) Fiscal and credit policies shall provide adequate
funds for public and private investments and business expansion, while
keeping the cost of credit comparable to international levels ensuring
access to loanable funds for SMEs as well as highly technical export
enterprises, especially those in the countryside.
(c) Agricultural policies shall build up viability
and competitiveness of the country's agriculture sectors and facilitate
their linkage with industry to strengthen the agri-industrial base of
the country's export thrust.
(d) Trade, tariff and customs policies shall engender
competitiveness of domestic industries and facilitate their
participation in international trade.
(e) Technical support policies to improve the quality
of export products shall be adopted, particularly those relating to
technology transfer, R & D, technical training and related
activities. As such, the Department of Science and Technology
(DOST) and the Department of Agriculture (DA) shall be supported by
state colleges and universities in the diffusion of technology,
information and training to the countryside for agri-industrial and
export development.
(f) Urgent attention must be given to policies
affecting infrastructure in order to ensure the adequate supply and
quality of power, water (e.g. for irrigation), transportation (e.g.
shipping and cargo handling), and communication to support the flow of
goods and services in the context of the national export drive.
(g) The link between export growth and countryside
development must be strengthened through policies favorable to SMEs,
regional industrial centers, and export processing zones to boost rural
and farm-based entrepreneurship in identified geographic economic
growth areas of the country.
(h) Labor and industrial relations policies must
recognize the inevitable industrial shifts that will occur in the
effort to achieve international competitiveness. Focus shall be
given to the formulation of accords between labor and management which
shall provide for sustained increase in productivity and
competitiveness. In line with this, dual training schemes shall
be integrated as a basic component to the country's primary and
secondary education program to ensure that the manpower needs of
agriculture and industry will be matched by the skills generated by the
educational system. Reasonable price and income policies shall
likewise be adopted in order to safeguard the interests of the labor
sector.
(i) All government agencies whose actions affect
exporters, such as the Board of Investments (BOI), Bureau of Customs
(BOC) and Bureau of Internal Revenue (BIR) shall simplify procedures to
minimize bureaucratic red tape.
(j) Provisions of existing laws deemed detrimental to
the export sector shall be repealed in subsequent acts.
Sec. 4. Definition of Terms. — For purposes of
this Act, the following definitions shall apply to the following terms:
(a) "Exporter" means any person, natural or
juridical, licensed to do business in the Philippines, engaged directly
or indirectly in the production, manufacture or trade of products or
services which earns at least fifty percent (50%) of its normal
operating revenues from the sale of its products or services abroad for
foreign currency: provided, that in the case of services, the same
shall be limited to information technology services, construction
services and other services as defined jointly by the Department of
Finance (DOF) and the Department of Trade and Industry (DTI).
Services rendered by overseas contract workers are not covered by the
definition.
(b) "Export promotion" shall refer to a range of
export activities which the public and private sectors undertake, such
as networking, especially in export support services and the provision
of trade/market information; organization of trade fairs and missions;
provision of advisory services; conduct of seminars, lectures,
workshops, conferences and training on export-related subjects;
publication of export-related documents; handling of quality standards,
product design and such other activities aimed at promoting existing
exports, especially those meant to reinforce and improve the position
of Philippine export products in specific foreign markets, principally
being those activities necessary for the implementation of the
Philippine Export Development Plan.
(c) "Export incentives" shall refer to support
measures provided by the government to exporters to encourage
investment in the export sector, create a freer trade environment and
motivate exporters to increase export sales and perform competitively
in the export market. The overall objective is to increase the
country's export sales.
(d) "Accredited organization" shall refer to the
organization of exporters granted accreditation by the Export
Development Council, as provided in Sec. 7(l) of this Act.
ARTICLE II
INSTITUTIONAL STRUCTURE AND STRATEGIES
Sec. 5. Philippine Export Development Plan (PEDP).
— The President of the Republic of the Philippines shall approve a
rolling three-year Philippine Export Development Plan prepared by the
Department of Trade and Industry (DTI) which shall form part of the
Medium-term Philippine Development Plan (MTPDP). It shall be
formulated in consultation with the private sector, validated and
updated semestrally.
The PEDP shall define the country's annual and medium-term export
thrusts, strategies, programs and projects and shall be jointly
implemented by the government, exporters and other concerned sectors.
Sec. 6. Export Development Council. — The existing
Export Development Council, hereinafter referred to as the Council,
which was created by Executive Order No. 98 (1993) as modified by
Executive Order No. 110 (1993), and Executive Order No. 180 (1994),
shall be strengthened and institutionalized for the purpose of
overseeing the implementation of the PEDP and coordinating the
formulation and implementation of policy reforms to support the said
Plan.
Sec. 7. Powers and Functions. — The Council shall:
(a) Approve the PEDP; coordinate, monitor and assess
the implementation thereof, and, when necessary, institute appropriate
adjustments thereon in the light of changing conditions in both the
domestic and international environment;
(b) Periodically review and assess the country's
export performance, problems and prospects;
(c) Identify the main bottlenecks, problem areas and
constraints in all areas/sectors/activities which influence the
development of exports, including but not limited to, such matters as
policy framework, physical infrastructure, finance, technology,
production, promotions and marketing;
(d) Mandate specific departments and agencies to
attend to the bottlenecks and problems constraining the development of
exports in any of the areas mentioned in paragraph (c) above, and
require the concerned Secretaries to deliver a progress report(s) on
the actions/initiatives taken to resolve these areas of concern at the
next meeting(s);
(e) Ensure export quality control by overseeing the
formulation and implementation of quality control guidelines by
appropriate agencies to make Philippine exports at par with world-class
products;
(f) Impose sanctions on any government agency or
officer or employee thereof, or private sector entity that impedes
efficient exportation of Philippine goods;
(g) Recommend to Congress any proposed legislation
that would contribute to the development of exports;
(h) Submit quarterly reports to Congress;
(i) Formulate policies or recommend measures and draw
up a study within ninety (90) days from the approval of this Act,
relative to the rationalization of the government's export promotion
and development functions/activities and programs for the eventual
transfer of government export promotions and development activities to
the private sector within a period of two (2) years after the approval
of this Act;
(j) Formulate the policies for the granting of
incentives to exporters;
(k) Adopt such policies, rules, procedures and
administrative systems for the efficient and effective exercise of its
powers and functions, including the creation or adoption of an
executive committee or secretariat; and
(l) Grant and review the accreditation of the
organization of exporters, according to the guidelines which it shall
later promulgate for the said purpose: provided, that the organization
accredited shall be the dominant one among the other existing export
organizations as determined under the guidelines promulgated by the
Council hereof.
(m) Issue standards and policies to be observed by
Local Government Units (LGUs) in order to:
(1) Ensure that LGUs' plans and budgets are
supportive of agri-industrial growth and export competitiveness thrusts
of the national government; and
(2) Ensure optimal allocation of expenditures.
The DILG and the regional development councils shall be the channels
through which these standards and policies shall be coursed.
Sec. 8. Composition of the Council. — The Council
shall be composed of the following:
(a) Secretary of the Department of Trade and Industry
as chairman;
(b) Director-General of the National Economic and
Development Authority;
(c) Secretary of the Department of Finance;
(d) Governor of the Bangko Sentral ng Pilipinas;
(e) Secretary of the Department of Science and
Technology;
(f) Secretary of the Department of Agriculture;
(g) Secretary of the Department of Foreign Affairs;
(h) Secretary of the Department of Labor and
Employment;
(i) Nine (9) representatives from the private sector,
the majority of whom shall be recommendees of the accredited
organization, and one of whom shall be appointed as
vice-chairman.
Other heads of executive agencies, private organizations or individuals
can be called upon by the Council to attend any Council meeting and
assist the Council to resolve issues and problems that concern their
respective offices.
Likewise, such heads of executive agencies, private organizations or
individuals shall respond to the queries of the Council within two (2)
weeks from the time such queries were received.
Sec. 9. Mode of Selection and Tenure of Private
Sector Representatives. — The President shall appoint the private
sector representatives, who are not ex officio members, upon nomination
of the accredited organization, ensuring balanced representation from
the Visayas and Mindanao and various sectors, such as the labor sector,
agricultural and traditional export sectors as against the
non-agricultural and non-traditional export sectors and the like.
The private sector representatives of the Council shall serve for a
period of two (2) years. When a vacancy arises due to the
resignation, death or incapacity of a member, a replacement who shall
serve for the remainder of the member's term of office shall be
appointed by the President.
SECTION 10. Meetings of the Council. — The Council
shall meet once a month: provided, that the President or the chairman
may convene the Council anytime whenever he deems it necessary.
The President shall preside over meetings of the Council on a quarterly
basis.
SECTION 11. Funding. — The activities and operational
expenses of the Council shall be funded jointly by budgetary
appropriations from the government and by private sector contributions
as provided for in Executive Order No. 98.
SECTION 12. Accredited Export Organization. — The
Council shall accredit a single umbrella organization of exporters
pursuant to Sec. 7(l) of this Act to represent the export sector
concerns and interests for three (3) years, after which the Council
shall undertake a review of the accreditation prior to the granting or
regranting of the said accreditation.
The accredited organization shall:
(a) Recommend private sector representatives to the
Council, with consideration of balanced sectoral representation, as
provided in Sec. 9 hereof;
(b) Represent the interests of the export sector;
(c) Be responsible for coordinating, supporting and
assisting the DTI relative to the formulation and implementation of the
government's export promotion programs and policies: provided, that in
the event that some of the export promotion functions of the government
are privatized in accordance with this Act, it shall be responsible for
the performance of such privatized export promotion function; and
(d) Manage the Philippine Trade Center, which shall
include among others the authority to enter into contracts with
specific organizations or firms for the operation of certain promotion
facilities or functions.
SECTION 13. Export Financing, Guarantee and
Insurance. — Pursuant to Sec. 7(l) of this Act, the Council shall
make the necessary legal and feasibility study/recommendation on the
alignment and rationalization of government programs relative to export
financing and existing organizations dealing primarily or exclusively
with export financing, guarantee and insurance, likewise considering
the creation of a private sector-led export financing institution whose
services shall be primarily devoted towards supporting the operations
of exporters and indirect exporters, particularly the SMEs.
The study shall include the power, functions, and operations of the
proposed institution, and government equity contributions to this said
institution, and if and when necessary, the preparation of a bill
creating the same which the Council will recommend to Congress within
six (6) months after the effectivity of this Act.
The government counterpart funds shall come from direct budgetary
appropriations, from consolidated capital funds of government
institutions involved in export financing and guarantees, or from
equity contributions from government finance institutions.
SECTION 14. Export Promotion and Information. — As
provided in Sec. 7(i) of this Act, the Council through the DTI shall
prepare an export promotion privatization program within ninety (90)
days from the approval of this Act and shall subsequently identify the
appropriate funding mechanism for such a program. The
privatization process shall be completed within a period of two (2)
years.
While the appropriate funding mechanism is not yet in place, financial
and technical assistance to the accredited organization on a
project-to-project basis shall be granted. In this regard, the
national government shall appropriate such sums as may be necessary to
the Council to be exclusively earmarked for export promotion and
information until such time that the Council establishes the funding
mechanism. The Council shall formulate the criteria to avail of
this financial and technical assistance and the extent to which the
assistance shall be granted with the primary consideration of
encouraging the formation of a nationwide marketing cooperative for
export promotion.
SECTION 15. Philippine Trade Center. — The government
shall hereby assist the private sector in the establishment of
Philippine trade centers which shall house the trade promotion offices
and shall serve as permanent exhibit sites of the country's export
products. In this regard, the government shall provide the land
for the center, through a land grant or long-term lease to the
accredited organization, and shall arrange financing for the
construction of the trade complexes. Upon its establishment, the
centers shall be managed by the accredited organization.
ARTICLE III
OTHER INCENTIVES
SECTION 16. Incentives. — In addition to existing
incentives provided by the Board of Investments, the following
incentives shall likewise be granted to exporters:
(a) Exemption from Presidential Decree No. 1853,
provided that the importation shall be used for the production of goods
and services for export.
(b) Importation of machinery and equipment and
accompanying spare parts which are used in the manufacture of exported
products at zero percent (0%) duty for a period of three (3) years,
until 1997.
(c) Tax credit for imported inputs and raw materials
primarily used for the production and packaging of export goods, which
are not readily available locally, shall be valid for five (5) years:
provided, that the tax credit shall be issued within thirty (30) days
from exportation.
(d) Tax credit for increase in current year export
revenue computed as follows:
The first 5% increase in annual export revenue over the previous year
would mean a credit of 2.5% to be applied on the incremental export
revenue converted to pesos at the current rate;
The next 5% increase would be entitled to a credit of 5.0%;
The next 5% increase would be entitled to a credit of 7.5%;
In excess of 15% would be entitled to a credit of 10%.
Such tax credit is only granted for the year when the performance is
achieved. Export revenues used in the calculation of such tax
credits shall be subject to verification as prescribed under the
implementing rules and regulations.
(e) For exporters of non-traditional products who use
or substitute locally produced raw materials, capital equipment and/or
spare parts, tax credits equivalent to twenty-five percent (25%) of the
duties that would have been paid had these inputs been imported:
provided, that this incentive would be available for a period of three
(3) years upon effectivity of this Act and can be extended for another
three (3) years by the President upon the recommendation of the
Secretary of Finance: provided, further, that the Secretary of Finance,
in consultation with the Export Development Council, shall prepare a
list of non-traditional exports which are entitled to avail of this
incentive.
Provided, that these incentives shall be granted only upon: (1)
the presentation of a Bureau of Export Trade Promotion (BETP)
certification of the exporter's eligibility, in compliance with the
minimum wage and SSS laws; and that (2) in the case of importations,
the items imported shall be used exclusively for production of export
goods.
(f) In the interim, while the Eximbank is not yet
established government financial institutions (GFIs) including the
Development Bank of the Philippines (DBP), the Philippine National Bank
(PNB) and the Land Bank of the Philippines (LBP) shall develop within
one year, long-term peso and dollar credit facilities to be used for
plant and equipment expansion purposes, among others. These
credit facilities shall offer preferential and simplified credit
schemes to exporters.
SECTION 17. Negotiability. — All tax credits herein
provided shall be negotiable.
ARTICLE IV
TRANSITORY PROVISIONS
SECTION 18. Appointment of Private Sector
Representatives. — Upon the effectivity of this Act the President of
the Republic of the Philippines shall appoint the nine (9) private
sector representatives to the Council who shall serve a term of two (2)
years. Thereafter, the determination of the private sector
representatives shall be governed by Sec. 9 of this Act.
SECTION 19. Funding of the Council. — Upon the
effectivity of this Act, the budget granted to the old Export
Development Council shall be transferred to the new Council created in
this Act. Thereafter, such sums as may be necessary for its
operation and maintenance shall be included in the annual General
Appropriations Act.
Sec. 20. Operation of the Council. — The Council
shall immediately function one (1) month after the approval of this
Act.
ARTICLE V
CRIMINAL OFFENSES AND PENALTIES
Sec. 21. Non-compliance of the Mandatory
Provisions in this Act. — Any person, entity, government
instrumentality or institution, found to be willfully violating or
grossly negligent in executing the mandates of this Act shall result in
the expulsion from office of its chief executive and operating
officers, as well as the responsible officers thereof.
Notwithstanding any provision of law to the contrary, they shall
likewise be prohibited from holding any government position for at
least two (2) years.
ARTICLE VI
ADMINISTRATIVE PROCEDURES AND SPECIAL CLAUSES
Sec. 22. Implementing Rules and Regulations. — The
Secretaries of Trade and Industry and Finance, in consultation with the
Council, shall formulate the rules and regulations to implement the
provisions of this Act.
Sec. 23. Separability Clause. — The provisions of
this Act are hereby declared separable and in the event any of such
provisions is declared unconstitutional, the other provisions which are
not affected thereby shall remain in force and effect.
Sec. 24. Repealing Clause. — All other laws,
decrees, executive orders, administrative orders, rules and regulations
or parts thereof which are inconsistent with the provisions of this Act
are hereby repealed, amended or modified accordingly.
Sec. 25. Effectivity. — This Act shall take effect
two (2) days after its publication in the Official Gazette or in at
least two (2) national newspapers of general circulation in the
Philippines, whichever comes earlier.
Approved: December 21, 1994
|