QuestionsQuestions (DBM DEPARTMENT OF BUDGET AND MANAGEMENT AND DEPARTMENT OF TRADE AND INDUSTRY JOINT CIRCULAR NO. 2-95)
The CIF is provided for under Republic Act (RA) 7368, also known as the Countrywide Industrialization Act (CIA). The circular implements uniform guidelines on the release and utilization of CIF appropriations under the General Appropriations Act pursuant to RA 7368.
A qualified enterprise must be involved in manufacturing, processing, and related industries located in any municipality or city that is endorsed/approved by the Local Countrywide Industrialization Board (LCIB) of the respective municipality or city, consistent with the CIA eligibility criteria and the Countrywide Industrialization Office-Management Board IRR.
Qualified Proponents are the applicants/borrowers whose enterprise satisfies the seven (7) eligibility requirements described under Section 3.2 of the circular.
The conduit bank may be either the Land Bank of the Philippines, Development Bank of the Philippines, or Philippine National Bank.
It is the assessed value of existing tangible assets of the project and those to be acquired/constructed out of the proposed financial assistance, including land, building/improvements, and machineries/equipment.
CIF shall be used for projects/enterprises in manufacturing, processing, and related industries that add value to domestic resources and farm products, create employment and livelihood opportunities, enhance rural well-being, and support intra-provincial and regional trade/industry linkages to sustain national economic growth.
Total financial assistance shall not exceed eighty five percent (85%) of the value of the real physical assets of the project.
Up to 10% grants (maximum) for pre-operating expenses/technical assistance/feasibility/post-production marketing assistance/training/institution-building; 20% equity investment by CIF subject to a stock purchase agreement; and 55% soft or concessional loans.
The project sponsor must invest at least fifteen percent (15%) of the real assets of the project as equity.
Interest rate shall not be more than eleven percent (11%) per annum or seven percent (7%) above the CIF or the National Government’s actual borrowing rate from bilateral or multilateral lenders—whichever is lower.
Fund release to the DTI-CIO shall be based on the list of projects duly approved by LCIBs/DTI-CIO.
DTI-CIO gives written instruction to the conduit bank, which then releases the financial assistance directly to the qualified proponent.
Application and processing fees for credit investigation, collateral appraisal, and related expenses are paid by the proponent to the conduit bank. Service fees and bank charges related to release of the loan to individual proponents are charged against the borrower. Management fees for handling/managing CIF are charged against DTI’s regular budget, and conduit banks furnish DTI-CIO quarterly debit memos for replenishment.
Loan repayments are collected and remitted by the conduit bank to the National Treasury as income of the General Fund and shall not be available for relending.
For loans: funds are obligated based on approved projects and liquidated by DTI-CIO through issuance of MDS checks for deposit in the conduit bank’s account or DTI-CIO. For grants: funds are obligated per the grant agreement between DTI-CIO and the proponent and liquidated through issuance of MDS checks to the proponent.
The equity portion is released upon issuance of implementing rules and guidelines by DTI-CIO.
A grant agreement and/or loan contract is entered into between the beneficiary and DTI-CIO for each approved project; additionally, an MOA is entered into between DTI and the conduit bank, which includes management fees and other terms.
The conduit bank is responsible, if warranted, for the sale of foreclosed assets as agreed upon in the MOA. Proceeds from sale are treated as income of the General Fund, deposited following the same procedure as loan collections, and DTI-CIO adjusts/reduces its investment account accordingly.
Disbursement against the CIF that are not in accordance with RA 7368 and the procedures herein prescribed creates personal liability for the officers/employees directly responsible.
It takes effect immediately. It also contains a repealing/modifying clause stating that provisions of prior circulars/memoranda/issuances inconsistent with its CIF provisions are repealed and/or modified.