Law Summary

Introduction

• Legal Document Type: Executive Order
• Date Issued: July 25, 1987
• Promulgator: Corazon C. Aquino, President of the Philippines
• Purpose: To rationalize the soap and detergent surfactant industry and promote the utilization of coconut oil.

Policy Statements

• The State's policies emphasize:
  • Encouragement of commercial activities using indigenous raw materials.
  • Assurance of a clean and safe environment.
  • Rationalization of industries capable of utilizing local resources.
• The extensive use of coconut oil is intended to support local coconut farms.
• An amendment to Presidential Decree 1863 is necessary to dismantle the monopoly held by United Coconut Chemicals, Inc. (UNICHEM).

Title of the Act

• Title: "An Act to Rationalize the Soap and Detergent Surfactant Industry and thereby promote and expand the utilization of coconut oil."

Rationalization Program

• Explanation: A program designed to increase local content in raw materials used in the soap and detergent surfactant industry.
• Requirements:
  • Local content must be a minimum of:
    • 20% in the first year
    • 40% in the second year
    • 60% in the third year and thereafter
• Consequences: Failure to comply with local content requirements could lead to restrictions on importation.

Importation Regulations

• Overview: Importation of raw materials and finished products may be restricted.
• Guidelines: The Board of Investments (BOI) will issue necessary guidelines for implementation.

Empowerment of the Board of Investments

• Authority: The BOI is empowered to formulate and issue guidelines to ensure the successful implementation of the Executive Order.

Repeal of Previous Decree

• Repealed Legislation: Presidential Decree No. 1863, as amended, is officially repealed, thereby eliminating the previous monopoly.

Effectivity

• Immediate Effect: The Executive Order shall take effect immediately upon issuance.

Key Takeaways

• The Executive Order aims to promote the soap and detergent surfactant industry through increased local material utilization, enhancing support for coconut farmers while ensuring environmental safety.
• A structured local content requirement is set over three years, ultimately reaching a minimum of 60%.
• The BOI will play a crucial role in regulating importation and providing implementation guidelines.
• The repeal of the monopoly held by UNICHEM is a significant shift towards a more competitive industry landscape.