Republic Act No. 8289
AN ACT TO STRENGTHEN THE PROMOTION AND DEVELOPMENT
OF, AND ASSISTANCE TO SMALL AND MEDIUM SCALE ENTERPRISES, AMENDING FOR THAT
PURPOSE REPUBLIC ACT No. 6977, OTHERWISE KNOWN AS THE "MAGNA CARTA FOR
SMALL ENTERPRISES" AND FOR OTHER PURPOSES
Section 1
Section 3 of Republic Act No. 6977 is hereby amended to read as
follows:
Section
3
Small
and Medium Enterprise as Beneficiaries
Small and Medium Enterprise'
shall be defined as any business activity or enterprise engaged in industry,
agribusiness and/or services, whether single proprietorship, cooperative,
partnership or corporation whose total assets, inclusive of those arising from
loans butt exclusive of the land on which the particular business entity's
office, plant and equipment are situated, must have value falling under the
following categories:
Micro less than P
1,500,001
Small P1,500,001 – P15,000,000
Medium P15,000,001 – P60,000,000
The above definitions shall
be subject to review and adjustment by the said Council moto proprio or upon
recommendation of sectoral organization(s) taking into account inflation and
other economic indicators. The Council
may use as variables the number of employees, equity capital and asset size.
Section 2
Section 4 of Republic Act No. 6977 is hereby amended to read as
follows:
Section
4
Eligibility
for Government Assistance
To qualify for assistance,
counseling, incentives and promotion under this Act, businesses falling under
the above definition must be:
(a) Duly registered with the appropriate agencies as
presently provided by law:
Provided, That in the case of
micro enterprises as defined herein, registration with the office of the
municipal or city treasurer shall be deemed sufficient compliance with this
requirement;
(b) One hundred percent (100%) owned and capitalized by
Filipino citizens if single proprietorship or partnership. If the enterprise is a juridical entity, at
least sixty percent (60%) of its capital or outstanding stocks must be owned by
Filipino citizens.
(c) A business activity within the major sectors of the
economy, namely: industry, services,
including the practice of one's profession, the operation of tourism-related
establishments, and agri-business, which for
purposes of this Act refers to any business activity involving the
manufacturing, processing, and/or production of agricultural produce, excluding
farm level agriculture/crop production; and
(d) It must not be a branch, subsidiary or division of a
large scale enterprise nor may its policies be determined by a large scale
enterprise or by persons who are not owners or employees of the enterprise.
However, this requirement
shall not prelude a small and medium enterprise from accepting subcontracts
from large enterprise or firms joining in cooperative activities with other
small and medium enterprises.
Programs of the financing
corporation as provided in subsequent sections of this Act shall be exclusively
targeted to medium, small, and micro-sized enterprises.
Registered small enterprises
shall be entitled to a share of at least ten percent (10%) of total procurement
value of goods and services supplied to the Government, its bureaus, offices
and agencies annually: Provided, That
prices and quality of goods offered by the registered small enterprises are
competitive."
Section 3
Section 5 of Republic Act No. 6977 is hereby amended to read as
follows:
Section
5
Guiding
Principles
To set the pace for small
and medium enterprise development, the State shall be guided by the following
principles:
(a) Minimal set of rules and simplification of
procedures and requirements
All government agencies
having to do with small enterprises shall pursue stability of rules and to
encourage entrepreneurial spirit among the citizenry. The agencies shall see to it that procedural
rules and requirements, within their respective offices in coordination with
other agencies, are minimized in the act of registration, availment of
financing and accessing other government services and assistance.
(b) Role of the private sector
In order to hasten growth
and expansion of small and medium
enterprises, the private sector throughout the country shall be encouraged to
assist in the effective implementation of this Act by participating in
government programs for small and medium enterprises strictly in accordance
with the law, and consistent with the attainment of the purposes hereof. To encourage private sector participation,
the Council, in consultation with the concerned sector, may recommend
simplified procedure and localized incentives to small enterprises. The Government shall encourage the organization
and establishment of small and medium enterprise industry associations at the
local and regional levels preferably unified under a national
federation/association.
(c) Coordination of government efforts
Government efforts shall be
coordinated to achieve coherence in objectives.
All appropriate offices, particularly those under the Departments of
Trade and Industry, Finance, Budget and Management, Agriculture, Agrarian
Reform, Environment and Natural Resources, Labor and Employment, Transportation
and Communication, Public Works and Highways, Science and Technology, Local
Government and Tourism as well as the National Economic and Development
Authority and the Bangko Sentral ng Pilipinas, through their national, regional
and provincial offices, shall to the best of their effort and in coordination
with local government units, provide the necessary support and assistance to
small and medium enterprises.
(d) Decentralization
The State shall accelerate
the decentralization process by establishing regional and provincial offices in
order to enhance and attain greater efficiency in the provision of services to
the countryside and the implementation of this Act, in coordination with local
government units. To this end, the
government agencies shall effect a substantial delegation of authority to their
regional and provincial offices to make decisions, particularly in the
registration of beneficiaries of this law, qualification for availment of
benefits, accreditation of private voluntary organizations, industry
associations and cooperatives, and to resolve complaints for violation of
applicable laws."
Section 4
Section 6 of Republic Act No. 6977 is hereby amended to read as
follows:
Section
6
Creation
of a Small and Medium Enterprise Development Council
To effectively spur the
growth and development of small and medium enterprises throughout the country,
and to carry out the policy declared in this Act, a Small and Medium Enterprise
Development (SMED) Council is hereby created.
The Council shall be attached to the Department of Trade and Industry
and shall be constituted within sixty (60) days after the approval of this Act.
The Council shall be the
primary agency responsible for the promotion, growth and development of small
and medium enterprises in the country by way of facilitating and closely coordinating national efforts to promote the
viability and growth of small and medium enterprises, including assisting
relevant agencies in the tapping of local and foreign funds for small and
medium enterprise development, as well as promoting the use of existing
programs, as well as seeking ways to maximize the use of our labor resources.
Section 5
Section 7 of Republic Act No. 6977 is hereby amended to read as
follows:
Section
7
Composition
The Council shall be headed
by the Secretary of Trade and Industry as Chairman, and may elect from among
themselves a Vice-Chairman to preside over the Council meetings in the absence
of the Chairman. The members shall be
the following:
(a) Director General of the National Economic and
Development Authority;
(b) Secretary of Agriculture;
(c) Secretary of Labor and Employment;
(d) Secretary of Environment and Natural Resources;
(e) Secretary of Science and Technology;
(f) Secretary of Tourism;
(g) The Chairman of the Monetary Board;
(h) Chairman of Small Business Guarantee and Finance
Corporation;
(i) Chairman of the small and medium enterprises
promotion body which the President shall undertake to establish under this Act;
and
(j) Three (3) representatives from the private sector at
large, all Filipino citizens, to represent Luzon, Visayas and Mindanao, and one
representative from the small and medium enterprises sector to be appointed by
the President; and
(k) A representative from the private banking sector to
serve alternately among the Chamber of Thrift Bank; the Rural Bankers'
Association of the Philippines (RBAP); and the Bankers' Association of the
Philippines (BAP).
Cabinet-rank ex officio
members of the Council shall designate an undersecretary or assistant
secretary, and the chairman of the Monetary Board or his representative, as
their permanent representative in case they fail to attend meetings of the
Council.
The private sector members
of the shall initially receive per diem of One Thousand pesos (P1,000) per
meeting, for a maximum of twenty-four (24) meetings per year, which per diem
may be adjusted by the Council: Provided, that may such adjustment shall take
effect upon approval of the President.
The Department of Trade and
Industry shall allocate Five million pesos (P5,000,000) out of its savings for the initial operating expenses of
the Council, after which, the Council's budget shall be included in the annual appropriation of the
Department of Trade and Industry.
The Council may, from time
to time, call upon the participation of any government agency or association of
local government officials in its deliberations especially when such agency is
directly or indirectly concerned with and/or affecting the growth and
development of small and medium enterprises in any particular area or manner.
The Council may create an Executive Committee of five (5) members
elected by the Council from among themselves or their designated permanent
representatives, with at least two (2) members representing the private sector,
and with authority to act for and on behalf of the Council during intervals of
council meetings representing the private sector, and with authority to act for
and on behalf of the Council during intervals of council meetings, and within
the specific authority granted by the Council."
Section 6
Section 9 of Republic Act No. 6977 is hereby amended to read as
follows:
Section
9
Designation
of the Bureau of Small and Medium Business Development as a Council Secretariat
The Bureau of Small and
Medium Business Development are hereby designated to act as the Council
Secretariat and shall have the following duties and functions:
(1)
To prepare, in coordination with local government
units and/or associations of local government officials, and recommend annual
as well as medium-term small and medium enterprises development plans for
approval of the Council;
(2)
To coordinate the preparation of position papers and
background materials for discussion or approval during Council meetings;
(3)
To assist the Council in coordinating and monitoring
small and medium enterprise policies and programs and activities of all
government agencies with respect to small and medium enterprises;
(4)
To prepare, collate and integrate all inputs to the
Council's yearly report on the status of small and medium enterprises in the
country;
(5)
To submit periodic reports to the Council on the
progress and accomplishment of its work programs; and
(6)
To perform ad hoc functions as authorized by the
Council."
Section 7
Section 10 of Republic Act No. 6977 is hereby amended to read as
follows:
Section
10
Rationalization
of Existing Small and Medium Enterprise Programs and Agencies
The Council shall conduct continuing
review of government programs for small and medium enterprises and submit to
Congress and the President a report thereon together with its policy
recommendations.
The President is hereby also
empowered to establish a small a and medium enterprise promotion body which
shall be the principal government agency that will formulate, implement,
coordinate and monitor all non-financing government programs, including
fee-based services, to support and promote micro, small and medium
enterprises. It shall be attached to the
Department of Trade and Industry and shall be under the policy, program and administrative
supervision of the SMED Council. The
said office shall receive no less than fifty percent (50%) of the assets, and
budgetary allocations of the agencies for promotion, development and financing
of small and medium enterprises that may be henceforth dissolved and/or
abolished and absorbed, incorporated and integrated into the SMED Council.
Section 8
Section 11 of Republic Act No. 6977 is hereby amended to read as
follows:
Section
11
Creation
of Small Business Guarantee and Finance Corporation
There is hereby created a
body corporate to be known as the Small Business Guarantee and Finance
Corporation, hereinafter referred to as SBGFC, which shall source and adopt
development initiatives for globally competitive small and medium enterprises
in terms of finance, technology, production, management and business linkages,
and provide, promote, develop and widen in both scope and service reach various
alternative modes of financing for small
and medium enterprises, including but not limited to, direct and indirect
project lending, venture capital, financial leasing, secondary mortgage and/or
rediscounting of loan papers to small business, secondary/regional stock
markets: Provided, That crop production
financing shall not be serviced by the Corporation.
The Corporation shall
guarantee loans obtained by qualified small and medium enterprises, local
and/or regional associations' small enterprises and industries, private
voluntary organizations and/or cooperatives, under such terms and conditions
adopted by its Board. It may guarantee
loans up to one hundred percent (100%).
It may also provide second level guarantee (i.e., reinsurance) on the
credit and/or investment guarantees made by credit guarantee associations and
other institutions in support of small entrepreneurs.
The Corporation shall become
liable under its guarantees upon proof that the loan has become past due under
such terms and guidelines adopted by its Board and printed on the contract of
guarantee.
The Small Business Guarantee
and Finance Corporation shall:
(a) Be attached to the Department of Trade and Industry
and shall be under the policy, program and administrative supervision of the
SMED Council;
(b) Have its principal place of business in Metro Manila
and endeavor to have one or more branch offices in every province of the
country;
(c) Exercise all the general powers conferred by law
upon corporation under the Corporation Code as are incidental or conducive to
the attainment of the objectives of this Act;
(d) Have a board of directors upon to which the powers
of the Corporation shall be vested, to be composed of nine (9) members
including:
(1) Three (3) members of the private sector appointed by
the President upon recommendation of the SMED Council and from among whom the
Chairman of the Board shall be appointed by the President to serve on a
full-time basis;
(2) The Secretary of Trade and Industry or his
Undersecretary; and
(3) A representative from each of the five (5)
government financial institutions mandated in this Act to provide the initial
capital of the Corporation, who shall be designated, under guidelines agreed
upon by the Board Chairmen of said institutions;
(e)
Notwithstanding the provisions of Republic Act No.
6758, and Compensation Circular No. 10, series of 1989 issued by the Department
of Budget and Management, the Board of Directors of SBGFC shall have the
authority to extend to the employees and personnel thereof the allowance and
fringe similar to those extended to and currently enjoyed by the employees and
personnel of other government financial institutions.
Section 9
Section 13 of Republic Act No. 6977 is hereby amended to read as
follows:
Section
13
Mandatory
Allocation of Credit Resource to Small and Medium Enterprises
For the period of ten (10)
years from the date of the effectivity of this Act, all lending institutions as
defined under Bangko Sentral ng Pilipinas rules, whether public of private,
shall set aside at least six (6%) and at least two percent (2%) for small and
medium enterprises, respectively, of their total loan portfolio based on their
balance sheet as of the end of the previous quarter, and make it available for
small and medium enterprises credit as herein contemplated.
The Bangko Sentral ng
Pilipinas, in consultation with the Council, shall formulate rules for the
effective implementation of this provision:
Provided, That the purchase of
government notes, securities and other negotiable
instruments, with the exemptions of such instruments as may be offered by the
SBGFC which do not pay market rates, shall not be deemed compliance with the
foregoing provision: Provided, further,
That the Bangko Sentral ng Pilipinas shall establish an incentive program to
encourage lending to small and medium industries beyond mandatory credit
allocation to said enterprises, such as possible reduction in bank's reserve
requirement.
The SMED Council shall set
up the appropriate systems to monitor all loan applications of small and medium
enterprises in order to account for the absorptive capacity of the small and
medium enterprises sector.
The Bangko Sentral ng
Pilipinas shall require lending institutions covered by this Act to furnish to
the Small and Medium Enterprise Development Council on quarterly basis regular
reports on their compliance with the above provisions on the mandatory credit
allocations for small and medium enterprises and expeditiously act on the
Council's reports of non-compliance therewith."
Section 10
Section 14 of Republic Act No, 6977 is hereby amended to read follows:
Section
14
Penalty
Clause
The Bangko Sentral ng
Pilipinas shall impose administrative sanctions and other penalties on the
lending institutions for non-compliance with provision of this Act including a
fine of not less than Five hundred thousand pesos (P500,000).
Section 11
Separability Clause
The provision of this Act is hereby declared to be separable. If any provision of this Act shall be held
unconstitutional, the remainder of the Act not otherwise affected shall remain
in full force and effect.
Section 12
Repealing Clause
All laws, executive orders, rules and regulations, or parts thereof,
inconsistent herewith are hereby repealed or modified accordingly.
Section 13
Effectivity
This Act shall take effect upon its approval.
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