DBM DEPARTMENT OF BUDGET AND MANAGEMENT AND DEPARTMENT OF TRADE AND INDUSTRY JOINT CIRCULAR NO. 2-95

Law Summary

1.0 Purpose

This section establishes the objective of the Circular, which is to provide uniform guidelines for the release and utilization of funds appropriated under the Countrywide Industrialization Fund (CIF) as stated in the General Appropriations Act, in accordance with Republic Act No. 7368.

Key Purpose: Standardize procedures for managing the CIF.

2.0 Rationale

The rationale outlines the foundation of the CIF under Republic Act No. 7368, which aims to support industrialization projects through financial assistance from the national budget and additional sources.

CIF Establishment: Created to provide financial assistance for projects promoting industrialization.
Project Limits: Funding for projects in municipalities capped at P30M and in cities at P40M.
Funding Duration: Authorized for a period of five (5) years.

3.0 Definition of Terms

This section defines key terms relevant to the CIF and its implementation.

Countrywide Industrialization Fund (CIF): Financial source for industrialization projects.
Qualified Enterprise: Manufacturing and processing businesses endorsed by the Local Countrywide Industrialization Board (LCIB).
Qualified Proponents: Applicants meeting specific eligibility criteria for financial assistance.
Conduit Bank: Designated banks (Land Bank, Development Bank, Philippine National Bank) responsible for fund disbursement.
Value of Real Physical Assets: Assessed value of tangible assets related to the project.

4.0 General Guidelines

This section provides guidelines on the use of CIF funds and the conditions for financial assistance.

Project Eligibility: CIF funds can support manufacturing and processing projects that create jobs and enhance rural well-being.
Financial Assistance Structure:
- Up to 85% of the value of real physical assets.
- Grants (10%) for pre-operating expenses.
- Equity investment (20%) with a stock purchase agreement.
- Soft loans (55%) requiring 15% equity from sponsors.
Interest Rate: Maximum interest for loans set at 11% per annum.

5.0 Procedural Guidelines

This section outlines the procedural steps for acquiring financial assistance from the CIF.

Project Evaluation: LCIBs evaluate and endorse projects to the Management Board (MB) for final approval.
Budget Submission: Approved projects lead to a Special Budget request to the Department of Budget and Management (DBM).
SARO Issuance: DBM reviews and issues Special Allotment Release Orders (SARO) accordingly.

6.0 Accounting Entries

The Commission on Audit is tasked with issuing accounting guidelines to implement the provisions of this Circular.

7.0 Penal Clause

Officers and employees responsible for improper disbursement of CIF funds that violate RA 7368 will be held personally liable.

8.0 Repealing Clause

Inconsistent provisions in previous issuances concerning the CIF are repealed or modified.

9.0 Effectivity

This Circular took effect immediately upon adoption on December 29, 1995.

Key Takeaways

The CIF was established to support industrialization projects across the Philippines, with specific funding limits and eligibility criteria.
Financial assistance can take various forms, including grants, equity investments, and loans, with defined caps on the amounts.
The procedural framework for accessing CIF funds involves evaluations by LCIBs and approvals from the MB and DBM.
Personal liability is imposed on officials for non-compliance with the guidelines, ensuring accountability in fund management.