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This web page features the full text of the
Rules and Regulations to Implement the Export Development Act of 1994.
 
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RULES AND REGULATIONS
TO IMPLEMENT THE EXPORT DEVELOPMENT ACT OF 1994
[Republic Act No. 7844]
 
[AN ACT TO DEVELOP EXPORTS AS A KEY TOWARDS THE ACHIEVEMENT
OF THE NATIONAL GOALS TOWARDS THE YEARS 2000]
 
PART I
GENERAL PROVISIONS

Pursuant to the provisions of Republic Act No. 7844, otherwise known as the "Export Development Act of 1994", the following rules and regulations are hereby adopted:

RULE I.  Declaration of policy. -

Section 1.  It is declared the policy of the State to evolve export development into a national effort. The Government shall champion exports as a focal strategy for a sustainable; agri-industrial development to achieve Philippine NIChood towards the Philippines 2000. The private sector shall take the lead in the collective effort to promote exports through discipline and hard work, as it confronts the challenge of winning international markets.

Section 2. The Government and the private sector shall jointly transform the Philippines into an exporting nation. The State shall instill in the Filipino people that exporting is not just a sectoral concern but the key to national survival and the means through which the economics goals of increased employment and enhanced incomes can most expeditiously be achieved.
 
RULE II.  Basic principles, policies and objectives. -

Sec. 1.  It is the goal and objective of the Export Development Act, hereinafter referred to as the Act, to provide a macroeconomic policy framework that supports export development, especially in the following key areas of concern:

RULE III.  Definition of terms. -

Sec. 1. For purposes of these rules, the terms used herein shall be construed to have the following meanings:

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PART II
THE PHILIPPINE EXPORT DEVELOPMENT PLAN [PEDP]

RULE IV.  Formulation and approval. -

Sec. 1.  The President of the Republic of the Philippines shall approve a rolling three-year Philippine Export Development Plan (PEDP) prepared by the Department of Trade and Industry (DTI) which shall form part of the Medium-Term Philippine Development Plan (MTPDP). It shall be formulated in consultation with the private sector, validated and updated semestrally.

Sec. 2.  The PEDP shall define the country's annual and medium-term export thrusts, strategies, programs and projects and shall be jointly implemented by the government, exporters and other concerned sectors.

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PART III
INSTITUTIONAL STRUCTURES

RULE V.  The Export Development Council [EDC]. -

Sec. 1.  Structure. - The existing Export Development Council, hereinafter referred to as the Council, which was created by Executive Order No. 110 (1993), and Executive Order No. 180 (1994), shall be strengthened and institutionalized for the purpose of overseeing the implementation of the PEDP and coordinating the formulation and implementation of policy reforms to support the said Plan.

Sec. 2. Power and functions. - The Council shall have the following powers and functions:

Sec. 3. Composition. - The Council shall be composed of the following: Other heads of executive agencies, private organizations or individuals can be called upon by the Council to resolve issues and problems that concern their respective offices.

Likewise, such heads of agencies, private organizations or individuals shall respond to the queries of the Council within two (2) weeks from the time such queries are received.

The President shall appoint the private sector representatives, who are not ex-officio members, upon nomination of the accredited organization, ensuring balanced representation from the Visayas and Mindanao and various sectors, such as the labor sector, agriculture and traditional export sectors and the like. The private sector representatives of the Council shall serve for a period of two (2) years. When a vacancy arises due to the resignation, death or incapacity of a member, a replacement who shall serve for the remainder of the member's term of office shall be appointed by the President.

Sec. 4. Executive Committee and the Secretariat. - There shall also be constituted an Executive Committee and a Secretariat to assist the Council.

The Executive Committee (ExCom) shall have the following powers and functions:

The ExCom shall be composed of the following: The Secretariat, as constituted under the old Export Development Council, shall serve as the support staff of the Council and the ExCom in the exercise of their functions.

Sec. 5. Meetings. - The Council shall meet once a month: Provided, That the President or the Chairman may convene the Council anytime whenever he deems it necessary. The President shall preside over meetings of the Council on a quarterly basis.

Sec. 6. Funding. - The activities and operational expenses of the Council shall be funded jointly by budgetary appropriations from the government and by private sector contributions as provided for in Executive Order No. 98.
 
RULE VI.  Accredited export organization. -

Sec. 1. Accreditation. - The Council shall accredit a single umbrella organization of exporters pursuant to Rule V, Sec.2(1) of these rules to represent the private sector concerns and interests for three (3) years, after which the Council shall undertake the review of the accreditation prior to the granting or re-granting of the said accreditation.

Sec. 2. Functions. - The accredited organization shall:

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PART IV
EXPORT INCENTIVES

RULE VII.  Availment of incentives. -

Sec. 1. Registration requirements. - The incentives under Article 3 of the Act shall only be granted upon fulfillment of the following requirements:

    [a]  an annual accreditation from the Bureau of Export Trade Promotion (BETP) of the Department of Trade and Industry or the appropriate deputized agency that the exporter satisfies the requisites provided for in Rule III, Sec. I(a) of these Rules;

    [b]  the submission of a sworn statement that the exporter complies with the requirements of the Minimum Wage and SSS laws; and

    [c]  payment of the corresponding fees, thereby satisfying the requirements for accreditation.

    For this purpose, BETP shall deputize the following appropriate agencies and monitor the effective issuance of the said certification:
     

      [i]    the Philippine Economic Zone Authority (PEZA), for companies registered within its zones;

      [ii]   the Board of Investments (BOI), for companies registered with it;

      [iii]  the Garments and Textile Export Board (GTEB), for companies accredited with it;

      [iv]  the Subic Bay Metropolitan Authority (SBMA) and the Clark Development Corporation (CDC), for companies situated within their areas;

      [v]  the Philippine Exporters Confederation, Inc. (Philexport) and/or the Philippine Chamber of Commerce and Industry (PCCI), for member-companies situated outside the areas;

      [vi]  BETP, for companies whose manufacturing or service operations do not fall under the supervisory or regulatory functions of the above-enumerated offices or authorities; and

      [vii]  such other offices or authorities with the same or similar function as the aforementioned: Provided, That they are so mandated by law: Provided, Further, That if there are two (2) or more offices or authorities exercising supervisory or regulatory functions over an exporter's manufacturing or service operation, any one (1) of such offices or authorities may issue the aforesaid certification.
       

    In case of importations, the exporter must submit a sworn statement that the items to be imported shall be used primarily for the production of export goods.
Sec. 2. Incentives. - Exporter registered under the Export Development Act shall be granted the following incentives: To be eligible for the tax credit, an exporter of non-traditional product must have used locally-produced raw materials, capital equipment and/or spare parts, or has substituted locally-produced raw materials, capital equipment and/or spare parts for similar articles previously imported.

Exporters may also enjoy the incentives under Executive Order No. 226, otherwise known as the Omnibus Investments Code, as amended, and other laws: Provided, That they are registered according to the rules and regulations of the office or authority concerned: Provided, Further, That in case of parallel incentives granted by the office or authority and the Act to exporters, a subsequent registration under the Act shall not entitle the exporter to the enjoyment of the same incentives provided herein. Any declaration to the contrary shall be dealt with in accordance with the provisions of Rule XV, without prejudice to the exporter's further criminal liability.

Sec. 3. Claims for tax credits. - All claims for tax credits, except for increases in export revenues which shall be filed with the appropriate office of the Bureau of Internal Revenue (BIR), shall be filed with the One-Stop Shop Inter-Agency Tax Credit and Duty Drawback Center, hereinafter referred to as the Center, pursuant to Administrative Order 226, as amended by AO 138. Tax credit claims shall be processed in accordance with the Center's existing rules and regulations.

The Center shall issue to the eligible exporter a corresponding Tax Credit Certificate (TCC), as evidence of the tax credit given to the claimant, containing the amount of tax credit granted as well as legal basis for the grant to be signed by the Center's Executive Director, as authorized by the Secretary of Finance. The TCC can only be utilized after securing a Tax Debit Memo (TDM) which is officially issued by the Center. Without such TDM, no TCC can be utilized nor honored as payment for duties and taxes to the national government.

The TCC issued can be utilized for payment of taxes and duties to the national government, except withholding taxes.

Sec. 4. Negotiability. -  The TCC for Sec. 3(a) shall be valid for five (5) years from the date of the issuance thereof. The TCC for Sec. 3(b) and (c) shall be valid for three (3) years from the date of the issuance thereof. Any TCC which is not utilized within the prescribed period shall be considered invalid and shall be subsequently canceled.  However, the negotiability or transferability thereof shall be limited to a maximum of three (3) transfers during its lifetime. The TCCs issued for the purpose shall be negotiable instruments and may be transferred to any person, natural or juridical, except to local government units. Within a period of (30) days from the date of transfer of the TCC, the holder thereof shall notify the Center of the transfer of the TCC for purposes of recording and monitoring.

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PART V
SUPPORT AND PROMOTIONAL ACTIVITIES

RULE VIII.  Export financing, guarantee and insurance. -

Sec. 1. Export financing institution. - Pursuant to Section 7(I) of the Act, the Council shall make the necessary legal and feasibility study/recommendation on the alignment and rationalization of government programs relative to export financing and existing organizations dealing primarily or exclusive with export financing, guarantee and insurance, likewise considering the creation of a private sector-led export financing institution whose services shall be primarily devoted towards supporting the operations of exporters and indirect exporters, particularly the SMEs.

The study shall include the powers, functions and operations of the proposed institution, and government equity contributions to the said institutions and, if and when necessary, the preparation of a bill creating the same which the Council will recommend to Congress within six (6) months after the effectivity of the Act.

Sec. 2. Interim Export Financing Program. - In the interim, while the Eximbank is not yet established, the Council, through the Networking Committee on Financing Costs, and government financial institutions (GFIs) such as the Bureau of Small and Medium Business Development (BSMBD), the Guarantee Fund for Small and Medium Enterprises (GFSME), the Philippine Export and Foreign Guarantee Corporation (Philguarantee), the Small Business Guarantee Finance Corporation (SBGFC), the Development Bank of the Philippines (DBP), the Land Bank of the Philippines (LBP), and the Philippine National Bank (PNB), shall formulate within one year short-term, medium-term and long-term credit program for exporters. Further, the Committee shall provide standardized terms and conditions for the greater accessibility of credit through simplified procedures and technical assistance at globally competitive rates.

The Heads of DBP, LBP and PNB shall report the progress of the above programs during the quarterly meetings of the Council with the President.

The GFIs involved in guarantee facilities such as BSMBD, GFSME, Philguarantee, and SBGFC shall activate their facilities based on the viability and the quality of loan applications from both local and foreign banks.

The government counterpart funds shall come from direct budgetary appropriations from consolidated capital funds of the government institution involved in export financing and guarantees, as mentioned above, or from equity contributions of government finance institutions.

RULE IX.  The Export Promotion Privatization Program. -

Sec. 1. The Council, through the DTI, shall commence a privatization program that shall embody the rationalization of the government's export promotion and development functions/activities and programs for the eventual transfer of the same to the private sector within two (2) years from the approval of the Act.

Sec. 2. The EDC shall create a Task Force that will draw up a study on the aforementioned, the same to be concluded within ninety (90) days from the approval of the Act.

Sec. 3. The Task Force shall likewise identify the appropriate funding mechanism for the said program. While the appropriate funding mechanism is not yet in place, financial and technical assistance to the accredited organization on a project-to-project basis shall be granted.  In this regard, the national government shall appropriate such sums as may be necessary to the Council to be exclusively earmarked for export promotion and information until such time that the Council establishes the funding mechanism. The Council shall formulate the criteria to avail of this financial and technical assistance and the extent to which the assistance shall be granted with the primary consideration of encouraging the information of a nationwide marketing cooperative for export promotion.

Sec. 4. The accredited export organization shall be responsible for the performance of such privatized export promotion functions.

RULE X.  The Philippine Trade Centers [DBM].  -

Sec. 1. The government shall hereby assist the private sector in the establishment of Philippine Trade Centers which shall house the trade promotion offices and shall serve as the permanent exhibit sites of the country's export products. In this regard, the government shall provide the land for the centers, through a land grant or long-term lease to the accredited organization or its successor-in-interest, and shall arrange the financing for the construction of the trade complexes. The accredited export organization shall manage the centers and shall be authorized to enter into contracts with other firms for the centers' operation.

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PART VI
TRANSITORY PROVISIONS

RULE XI.  Appointment of private sector representatives. -

Sec. 1. Upon the effectivity of the Act., the President of the Republic of the Philippines shall appoint the nine (9) private sector representatives to the Council who shall serve for a term of two (2) years. Thereafter, the determination of the private sector representatives shall be governed by Section 9 of the Act.

RULE XII.  Transitional operations. -

Sec. 1. The Council shall immediately function one (1) month after the approval of the Act.  In the interim, the old Council, as constituted, shall continue to exercise the functions and powers provided in the Act.

RULE XIII.  Funding. -

Sec. 1. Upon the effectivity of the Act, the budget granted to the old Export Development Council shall be transferred to the new Council created in the Act. Thereafter, such sums as may be necessary for its operation and maintenance shall be included in the annual General Appropriations Act.

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 PART VII
VIOLATIONS OF THE PROVISIONS OF THE ACT
AND/OR ITS RULES AND REGULATIONS

RULE XIV.  Criminal offenses and penalties. -

Sec. 1.  Any person, entity, government instrumentality or institution found to be willfully violating or grossly negligent in executing the mandates of the Act shall result in the expulsion from office of its chief executive and operating officers, as well as the responsible officers thereof.  Notwithstanding any provision of law to the contrary, they shall likewise be prohibited from holding any government position for at least two (2) years.

RULE XV.  Suspension and cancellation. -

Sec. 1. The Council may cancel an exporter's registration for any of the following grounds:

Sec. 2. For the same grounds enumerated in the immediately preceding section, the Council may suspend the enjoyment of one or more incentives enjoyed by an exporter defending upon the gravity of the offense committed.

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PART IX
FINAL PROVISIONS

RULE XVI.  Repealing clause. -

Sec. 1.  All laws, decrees, executive orders, administrative orders, rules and regulations or parts thereof which are inconsistent with the provisions of the Act are hereby repealed, amended or modified accordingly.

RULE XVII.  Effectivity. -

Sec. 1. These implementing rules and regulations shall have retroactive effect to 30 December 1994, the date when Republic Act No. 7844 took effect.

Done in Manila, Republic of the Philippines, this 21st day of April 1995.
 
 

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