QuestionsQuestions (Republic Act No. 7844)
RA No. 7844 is titled the “Export Development Act of 1994.” It takes effect two (2) days after publication in the Official Gazette or in at least two (2) national newspapers of general circulation, whichever comes earlier.
The State shall evolve export development into a national effort, champion exports as a focal strategy for sustainable agri-industrial development, and transform the Philippines into an exporting nation through joint government and private sector efforts.
An exporter is any person or juridical entity licensed to do business in the Philippines that is directly or indirectly engaged in producing, manufacturing, or trading products/services earning at least 50% of its normal operating revenues from sales abroad for foreign currency. For services, coverage is limited to IT services, construction services, and other services as jointly defined by DOF and DTI; overseas contract workers’ services are not covered.
Export promotion refers to activities undertaken by public and private sectors such as networking, trade/market information, organizing trade fairs and missions, advisory services, seminars/workshops/training, publication of export documents, and handling quality standards and product design to support the Philippine Export Development Plan and reinforce/improve Philippine products in foreign markets.
The Act requires a framework supporting export development: competitive exchange rate with safety nets; fiscal and credit policies providing adequate funds and credit comparable to international levels with access for SMEs; agricultural policies improving viability and linking agriculture to industry; trade/tariff/custom policies to engender competitiveness; technical support for product quality and technology transfer; attention to infrastructure (power, water, transportation, communication); strengthened link between export growth and countryside development via favorable SME policies, regional industrial centers, and EPZs; labor/industrial relations focused on productivity/competitiveness; simplifying procedures by agencies affecting exporters (BOI, BOC, BIR); and repealing provisions of existing laws detrimental to the export sector.
The PEDP is a rolling three-year plan prepared by the Department of Trade and Industry (DTI) in consultation with the private sector, validated and updated semestrally. It is approved by the President and forms part of the Medium-term Philippine Development Plan (MTPDP).
The Council oversees implementation of the PEDP, coordinates policy reforms to support it, reviews export performance and prospects, identifies bottlenecks and constraints affecting exports, mandates agencies to address them and requires progress reports, oversees export quality control guidelines, imposes sanctions on impediments to efficient exportation, recommends legislation to Congress, and submits quarterly reports to Congress.
Examples include: (1) approving the PEDP and coordinating/monitoring implementation; (2) periodically reviewing export performance/problems/prospects; (3) identifying bottlenecks/constraints (policy, infrastructure, finance, technology, production, promotions/marketing); (4) ensuring export quality control via guidelines; (5) imposing sanctions on agencies/officers/private entities impeding exportation; (6) granting/reviewing accreditation of exporters’ organizations; (7) submitting quarterly reports to Congress.
It includes the: Secretary of DTI (chairman); Director-General of NEDA; Secretary of DOF; Governor of BSP; Secretaries of DOST, DA, DFA; Secretary of DOLE; plus nine (9) private sector representatives (majority recommendees of the accredited organization) with one as vice-chairman.
The President appoints private sector representatives (not ex officio) upon nomination of the accredited organization, ensuring balanced representation from Visayas and Mindanao and across sectors (including labor and agricultural/traditional vs non-agricultural/non-traditional exports). Their term is two (2) years; replacements serve only for the remainder of the term.
It meets once a month, and the President or chairman may convene it anytime when deemed necessary. The President shall preside over meetings on a quarterly basis.
Any person/entity/government instrumentality/institution found to be willfully violating or grossly negligent in executing the Act may be expelled from office of its chief executive and operating officers and responsible officers, and prohibited from holding any government position for at least two (2) years.
Examples include: (1) exemption from Presidential Decree No. 1853 for importation used for production of goods/services for export; (2) importation of machinery/equipment and spare parts used in manufacture of exported products at 0% duty for three (3) years until 1997; (3) tax credits for imported inputs/raw materials primarily used for production/packaging of export goods not readily available locally (valid five years); (4) tax credits for increases in current year export revenue based on a graduated percentage scale; (5) tax credits for exporters of non-traditional products using/substituting locally produced raw materials/capital equipment/spare parts.
Incentives are granted only upon (1) presentation of a Bureau of Export Trade Promotion (BETP) certification of eligibility in compliance with minimum wage and SSS laws; and (2) for importations, the imported items must be used exclusively for production of export goods.
All tax credits provided in the Act are negotiable.
The government assists in establishing trade centers housing trade promotion offices and serving as permanent exhibit sites for Philippine export products. The government provides land and arranges financing for construction; once established, the centers are managed by the accredited organization.
The Secretaries of Trade and Industry and Finance, in consultation with the Council, must formulate the Implementing Rules and Regulations to implement the Act.