Republic Act 7844

(Export Development Act of 1994)

An Act to Develop Exports as a Key Towards the Achievement of the
National Goals Towards the Year 2000
Republic Act 7844, otherwise known as the Export Development Act of
1994, is a law that enjoins the government and private sectors to come
together and integrate efforts to promote exports and expand the countrys
share in international markets. As stated in Section 2 thereof, the State seeks
to evolve export development into a national effort through the collective
action and cooperation of the two sectors. In jointly transforming the
Philippines into an exporting nation, the State aims for the expeditious
fulfillment of the economic goals of increased employment and enhanced
incomes.
The law provides for a macroeconomic policy framework that supports
export development, especially in key areas of concern to exporters such as
monetary and foreign exchange policies, fiscal and credit policies, trade tariff
and customs policies, agricultural policies, technical support policies,
infrastructure-related policies, and labor and industrial relations policies. To
further support this cause, government agencies whose actions affect
exporters such as the Board of Investments (BOI), Bureau of Customs (BOC),
and Bureau of Internal Revenue (BIR) are tasked to simplify procedures to
minimize bureaucratical red tape or excessive regulations.
As defined in Section 4, an Exporter is any person, natural or juridical,
licensed to do business in the Philippines, engaged directly or indirectly in
the production, manufacture or trade of products or services which earns at
least fifty percent (50%) of its normal operating revenues from the sale of its
products or services abroad for foreign currency. In the case of services,
however, the same shall be limited to information technology services,
construction services and other services as defined jointly by the
Department of Finance (DOF) and the Department of Trade and Industry
(DTI). Services rendered by overseas contract workers are not covered by the
definition.
Export Promotion refers to a range of export-related activities
undertaken by the public and private sectors which include networking, trade
fairs and missions, advisory services, publications, handling of quality
standards and product design, and the conduct of seminars, lectures,

workshops, conferences, and training. These activities are deemed necessary

for the implementation of the Philippine Export Development Plan.

R.A. 7844 likewise mandated the preparation of a rolling three-year

Philippine Export Development Plan by the Department of Trade and Industry
(DTI) to be formulated in consultation with the private sector, approved by
the President of the Philippines, and validated and updated semestrally. The
said plan shall define the countrys annual and medium-term export thrusts,
strategies, programs and projects.
The existing Export Development Council, is tasked with overseeing
the implementation of the PEDP as well as coordinating the formulation and
implementation of policy reforms to support the Plan and enhance Philippine
exports. The law provides powers and functions to be exercised by the
council in relation to these objectives. The Council is composed of the
Secretary of the DTI as Chairman, seven department heads from various
government offices (e.g. the Banko Sentral, NEDA, Department of Finance,
Etc.) and nine representatives from the private sector.
Under Section 12, the Council shall also accredit a single umbrella
organization of exporters to represent the export sector concerns and
interests for 3 years, after which the Council shall undertake a review of the
accreditation prior to granting or re-granting of the said accreditation.
In general, the development of the export sector is facilitated by the
granting of incentives such as tax credits and exemption from duties for
imported inputs and raw materials used in the production of goods for
export. Export incentives are support measures provided by the government
to exporters to encourage investment in the export trade sector, create a
freer trade environment, and motivate exporters to increase export sales and
perform competitively in the export market. Section 16 of R.A. 7844 provides
for other incentives to be enjoyed by exporters.
Section 16. Incentives. In addition to existing incentives provided by
the Board of Investments, the following incentives shall likewise be
granted to exporters:
(a) Exemption from Presidential Decree No. 1853 (Requiring Deposits of
Duties at the Time of Opening of Letters of Credit Covering Imports and

for Other Purposes), provided that the importation shall be used for the
production of goods and services for export.
(b) Importation of machinery and equipment and accompanying spare
parts which are used in the manufacture of exported products at zero
percent (0%) duty for a period of three (3) years, until 1997.
(c) Tax credit for imported inputs and raw materials primarily used for
the production and packaging of export goods, which are not readily
available locally, shall be valid for five (5) years: provided, that the tax
credit shall be issued within thirty (30) days from exportation.
(d) Tax credit for increase in current year export revenue computed as
follows:
The first 5% increase in annual export revenue over the previous year
would mean a credit of 2.5% to be applied on the incremental export
revenue converted to pesos at the current rate;
The next 5% increase would be entitled to a credit of 5.0%;
The next 5% increase would be entitled to a credit of 7.5%;
In excess of 15% would be entitled to a credit of 10%.
Such tax credit is only granted for the year when the performance is
achieved. Export revenues used in the calculation of such tax credits
shall be subject to verification as prescribed under the implementing
rules and regulations.
(e) For exporters of non-traditional products who use or substitute
locally produced raw materials, capital equipment and/or spare parts,
tax credits equivalent to twenty-five percent (25%) of the duties that
would have been paid had these inputs been imported: provided, that
this incentive would be available for a period of three (3) years upon
effectivity of this Act and can be extended for another three (3) years
by the President upon the recommendation of the Secretary of Finance:
provided, further, that the Secretary of Finance, in consultation with
the Export Development Council, shall prepare a list of non-traditional
exports which are entitled to avail of this incentive.

Provided, that these incentives shall be granted only upon: (1) the
presentation of a Bureau of Export Trade Promotion (BETP) certification
of the exporters eligibility, in compliance with the minimum wage and
SSS laws; and that (2) in the case of importations, the items imported
shall be used exclusively for production of export goods.
(f) In the interim, while the Eximbank is not yet established
government financial institutions (GFIs) including the Development
Bank of the Philippines (DBP), the Philippine National Bank (PNB) and
the Land Bank of the Philippines (LBP) shall develop within one year,
long-term peso and dollar credit facilities to be used for plant and
equipment expansion purposes, among others. These credit facilities
shall offer preferential and simplified credit schemes to exporters.