Question & AnswerQ&A (Republic Act No. 7103)
The official title is the 'Iron and Steel Industry Act.'
The State declares its policy to promote industrialization through the establishment of an integrated iron and steel industry that makes full and efficient use of the country's human and natural resources with consideration to employment, indigenous resources, foreign exchange, and balance of payments position.
It covers all processes involved in transforming raw materials like iron ore and coke into semi-finished products (ingots, slabs, blooms, billets) and converting semi-finished products into finished products like hot rolled coils, sheets, plates, and sheets.
It refers to the process by which developing or increasing production at a certain stage leads to development or increased production at preceding stages in the industry.
Enterprises must be Filipino-owned or have at least 35% Filipino ownership, engage in certain manufacturing or processing activities related to iron and steel, be technically and economically capable, maintain separate accounting for their manufacturing activities, and comply with environmental laws.
Certified enterprises can generate their own power, build infrastructure under BOT arrangements, access Official Development Assistance financing, enjoy tax and duty exemptions on imported equipment, obtain tax credits on domestic purchases, and receive assistance in obtaining foreign loans. They also benefit from a rational tariff incentive and protection scheme.
Penalties range from fines of P100,000 with imprisonment of 1 year and 1 day to 6 years, up to fines of P300,000 with imprisonment of 12 years and 1 day to 24 years, depending on the appraised value of the smuggled goods. Corporate officials may also be penalized, and alien offenders may be deported and denaturalized if naturalized.
Locally manufactured iron and steel products of comparable quality and price are to be specified for use in all government infrastructure and construction projects, projects financed by foreign currency loans, and those benefiting from foreign official development assistance.
The BOI certifies enterprises eligible for incentives, approves importation of equipment and machinery, and issues implementing guidelines for the incentives and provisions of the Act.
Enterprises with foreign equity are encouraged to gradually increase Filipino participation by taking in Filipino partners, appointing Filipinos to the board of directors, transferring technology, generating employment, and enhancing Filipino workers' skills.
Fiscal incentives apply for a duration consistent with the Omnibus Investments Code, but in less developed areas, the duration is for 15 years. All other incentives under the Act apply for 15 years from its effectivity.
They must undertake programs in their localities including establishing centers to promote steel industry enterprises nationwide and grants to schools for developing teaching capabilities and upgrading technical courses related to the steel industry.
The invalidity of any provision does not affect the remainder of the Act, which shall remain in full force and effect as per the Separability Clause.
Incentives include power generation rights, access to government and Official Development Assistance financing, customs duty and tax exemptions on imported and domestic equipment, authorization to contract foreign loans, and protection schemes for tariffs relevant to raw materials.
Certified enterprises must comply with environmental protection laws and regulations to avoid adversely affecting residents and ecological balance at their manufacturing locations.