Republic Act No. 7844
AN ACT TO DEVELOP EXPORTS AS A KEY TOWARDS THE
ACHIEVEMENT OF THE NATIONAL GOALS TOWARDS THE YEARS 2000
Section 1
Short title
This Act shall otherwise be known as the "Export Development Act of 1994"
Section 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. Towards 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.
Section 3
Key operating principles
A macro-economic 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 Section 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 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 interest 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.
Section 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 standard, 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 Section
7[1] of this Act.
Section 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, export and other concerned sectors.
Section 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.
Section 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 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 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. library
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.
Section 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 are received.
Section 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 representations 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 occurs 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
Meeting 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.chanrobles virtual law
library
Section 12
Accredited export
organization
The Council shall accredit a single umbrella organization of exporters
pursuant to section 7[1] 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 re-granting 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
Section 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
the 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 promotion
facilities or functions.
Section 13
Export financing guarantee
and insurance
Pursuant to Section 7[1] 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 and exclusively with export financing
guarantee and insurance and 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 powers , functions, and operations of the
proposed institution, and government contributions to the said institution, and
if and when necessary the preparation of a bill creating the same which the
Council may recommend to Congress within six (6) months after the effectivity
of this Act.
The government counterpart funds shall come from direct budgetary
appropriations and from consolidated capital funds of government institutions
involved in export financing and guarantees, or from equity contributions from
government financial institutions.
Section 14
Export promotion and information
As provided in Section 7[1] 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 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.
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's 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 to 10%.
Such tax credit is only
granted for the years 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 rulers 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
incentives would be available for a period of three [3] years upon effectively
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 incentives: 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
importation, 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 shall extend 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 credit herein provided shall be negotiable.
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 for a term of two [2] years thereafter, the
determination of the private sector representatives shall be governed by
Section 9 of this Act.
Section 19
Funding of the Council
Upon the effectively of this Act, the budget granted to the old Export
Development Council shall be transferred to the new Council created under this
Act. Thereafter, such sums as may be necessary for its operation and
maintenance shall be included in the annual General Appropriations Act.
Section 20
Operation of the Council
The Council shall immediately function one [1] month after the approval
of this Act.
Section 21
Non-compliance of the mandatory
provisions of 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 least two [2] years.
Section 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.
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.
Section 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.
Section 25
Effectivity
This Act shall take effect two [2] weeks after its publication in the
Official Gazette or in at least two [2] national newspapers of general
circulation in the Philippines, whichever comes earlier.
This Act which is a consolidation of House Bill No. 12073 and Senate
Bill No. 1863 was finally passed by the House of Representatives and the Senate
on December 20, 1994.
Approved:
21 December 1994
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