Objectives of the Act
- Provide a framework for a rational integrated iron and steel program aligned with environmental policies.
- Rationalize government corporations involved in iron and steel considering strategic and economic aspects.
- Strengthen iron and steel demand and supply through efficient, competitive integrated plants.
- Impose stricter penalties for smuggling related to iron and steel.
- Set quality and industry standards for iron and steel products.
Definitions of Key Terms
- "Iron and steel industry": Processes transforming raw materials to semi-finished or finished iron and steel products.
- "Backward integration": Development of earlier production stages triggered by existing product development.
- "Forward integration": Development of succeeding production stages fueled by current products.
- "Upstream industries": Producers/processors of raw materials for semi-finished products.
- "Downstream industries": Processors of semi-finished products into final goods or users of finished products.
- "Less Developed Areas": Areas designated by the Board of Investments based on socioeconomic and infrastructure criteria.
Certification of Enterprises
- BOI certifies enterprises eligible for incentives.
- Requirements include Filipino ownership/control (minimum 35%), focus on specific manufacturing activities.
- Enterprises must use modern, competitive technology, comply with environmental laws.
- Separate accounting required if involved in other activities.
Incentives for Certified Enterprises
- Rights to generate own electricity and develop infrastructure under BOT or other schemes.
- Access to Official Development Assistance for capital, training, equipment, etc.; iron and steel plant treated as infrastructure.
- Customs duty and tax exemptions on importation of necessary equipment and parts under conditions.
- Tax credit on purchases of domestically manufactured capital equipment with BOI approval.
- Authorization to contract foreign currency loans subject to Central Bank approval.
- Priority support from Central Bank and government encouragement for private financing.
- Rational tariff incentives recommended to NEDA, especially for raw materials not sourced domestically.
Additional Incentives
- Certified enterprises entitled to benefits under other laws such as the Omnibus Investments Code and export zone laws.
- Eligibility for future incentives similar to those granted.
Duration of Incentives
- Fiscal incentives accorded for periods consistent with the Omnibus Investments Code.
- Extended period of 15 years for incentives in less developed areas.
- Other incentives also applicable for 15 years from the Act's effectivity.
Encouragement of Filipino Participation
- Enterprises with foreign equity encouraged to increase Filipino ownership and control.
- Promote technology transfer, employment generation, and skill enhancement among Filipinos.
Penalties for Smuggling of Iron and Steel Products
- Penalties tiered based on appraised landed value including taxes:
- P100,000 fine and 1 to 6 years imprisonment for value ≤ P50,000.
- P200,000 fine and 6 to 12 years imprisonment for value > P50,000 up to P150,000.
- P300,000 fine and 12 to 24 years imprisonment for value > P150,000.
- Penalties apply to persons involved in smuggling, receiving, concealing, or selling illegally imported products.
- Juridical entity officials responsible subject to same penalties.
- Alien offenders subject to deportation or denaturalization.
Mandated Preference for Local Iron and Steel
- Government and government-owned entities required to use locally manufactured iron and steel products where comparable quality, price, and terms exist.
- Applies to projects funded or guaranteed by foreign loans or assistance.
Promotion of Industry Linkages
- NEDA's Investment Coordinating Committee to develop plans for upstream and downstream iron and steel industries.
- Encourage uses of intermediate products in producing household tools, engines, shipbuilding, etc.
- Enterprises using integrated mill products receive benefits similar to certified iron and steel mills, subject to BOI approval.
Technology and Manpower Development
- DTI and DOST to initiate technology dissemination and research programs.
- Training support to be provided through agencies such as MIRDC and NMYC.
Community Development Requirements
- Certified enterprises must implement community programs in their localities.
- Establish centers to promote steel-related enterprises nationwide.
- Provide grants to schools to enhance teaching and technical courses related to the steel industry.
Implementation and Guidelines
- BOI required to issue implementing guidelines within 60 days from Act approval for incentive administration.
Separability Clause
- Invalidation of any provision does not affect the remainder of the Act.
Repealing Clause
- Laws or parts inconsistent with this Act are repealed or modified.
Effectivity
- The Act takes effect upon publication in two newspapers of general circulation or the Official Gazette.