EIGHTEENTH CONGRESS OF THE 
REPUBLIC OF THE PHILIPPINES
First Regular Session
SENATE
S. B. NO. 
G09
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'19 
JUL 18 PI 26
RbCLiv
Introduced by SENATOR JOEL VILLANUEVA
AN ACT INSTITUTIONALIZING INDUSTRY CLUSTER-BASED 
PROGRAMS AND PROJECTS THROUGH INTER-LOCAL 
COOPERATION AND PEOPLE’S PARTICIPATION 
AND FOR OTHER PURPOSES
EXPLANATORY NOTE
The 1987 Constitution provides that “[l]ocal government units may 
group themselves, consolidate or coordinate their efforts, services, and 
resources for purposes commonly beneficial to them in accordance with law” 
(Art. X, Sec. 13). This Constitutional policy is given life in Section 33 of the 
Local Government Code of 1991 (or Republic Act No. 7160), which provides 
that “[l]ocal government units may, through appropriate ordinances, group 
themselves, consolidate, or coordinate their efforts, services, and resources 
for purposes commonly beneficial to them. In support of such undertakings, 
the local government units involved may, upon approval by the sanggunian 
concerned after a public hearing conducted for the purpose, contribute funds, 
real estate, equipment, and other kinds of property and appoint or assign 
personnel under such terms and conditions as may be agreed upon by the 
participating local units through Memoranda of Agreement." 
In addition, 
Section 35 of the Local Government Code also recognizes the establishment 
of linkages with people’s and non-governmental organizations for the delivery 
of basic services, capability-building and livelihood projects, among others.
An opportunity for collaborative work among local government units 
(LGUs) exists in the area of inclusive entrepreneurship. Building alliances 
among LGUs, civil society and business organizations can help integrate local 
production forces, create concerted effort to push their development and 
jointly provide programs, 
projects, and 
services to their respective 
constituencies.


In the past, inter-local cooperation has been especially valued because 
of its significant contribution to inclusive growth. Specifically, it has greatly 
influenced the success of government’s programs that pushed for micro, 
small, and medium enterprises (MSMEs) in the country such as the One 
Town, One Product (OTOP) Program, National Industry Cluster Capacity 
Enhancement Project (NICCEP), Shared Service Facilities (SSFs) Project, 
among others.
The OTOP Program offers a comprehensive assistance package such 
as business counseling, introduction of appropriate technologies, skills and 
entrepreneurial training, marketing, and product designs and development 
through a convergence of services from LCDs, national government agencies, 
and the private sector. Since its inception in 2004, local chief executives have 
been taking the lead in identifying, developing, and promoting a specific 
product or service, which has a competitive advantage.1
On the other hand, the NICCEP intensified industry stakeholders’ 
participation in the value chain. As of December 2014, the project has 
supported the creation of 174,072 jobs and 3,561 
new enterprises 
nationwide.2
Meanwhile, the SSF Project, a public-private partnership initiative, aims 
to address the bottlenecks in the value chain of priority industry clusters 
through the provision of processing equipment for the common use of MSMEs 
within those clusters. It is implemented through the collaboration of several 
partners 
including 
LCDs, 
industry 
associations, 
NGOs, 
people’s 
organizations, cooperatives, and state universities and colleges. As of 30 April 
2019, the Department of Trade and Industry (DTI) allocated an estimated 1.45 
billion pesos to establish 2,443 Shared Service Facilities economy-wide.3
In pursuit of inclusive growth, this bill seeks to institutionalize the 
industry cluster-based approach, under the supervision of the DTI, through 
collaboration or inter-local cooperation among LGUs and the private sector.
This bill also seeks to establish effective mechanisms that will promote 
unity among the constituencies of the member LGUs by encouraging them to 
work together in pursuing industry cluster-based programs and projects. The 
benefits for industry cluster entrepreneurs include preferential access to low- 
interest government credit and priority in government-initiated product 
marketing and promotion programs as well as tax exemptions, to name a few.
The immediate passage of this bill is earnestly sought.
SENATORy^OEL VILLANUEVA
DTI One Town One Product (OTOP) Philippines. Department of Trade and Industry. Retrieved from: 
http://industrv.Qov.ph/department-of-trade-and-industrv/ (date last accessed: June 23 2019)
^id
List 
of 
established 
SSF 
Project. 
Department 
of 
Trade 
and 
Industry. 
Retrieved 
https://www.dti.gov.ph/proqrams-proiects/shared-service-facilities (date last accessed: June 23, 2019).
from:


EIGHTEENTH CONGRESS OF THE 
REPUBLIC OF THE PHILIPPINES
First Regular Session
5,1 
ivH:
‘'  (© H iif cf
SENATE
S. B. NO.609
’19 JUL 18 PI :26
RECli' 
u E‘
Introduced by SENATOR JOEL VILLANUEVA
AN ACT INSTITUTIONALIZING INDUSTRY CLUSTER-BASED 
PROGRAMS AND PROJECTS THROUGH INTER-LOCAL 
COOPERATION AND PEOPLE’S PARTICIPATION 
AND FOR OTHER PURPOSES
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Be it enacted by the Senate and House of Representatives of the Philippines in 
Congress assembled:
SECTION 1. 
Short Title. -  This Act shall be known as “People’s 
Participation in Industry Cluster-based Programs and Projects Act.”
SEC. 2. Declaration of Policy. -  It is hereby declared the policy of the State 
to recognize the role of the people in community development. Toward this 
end, the State shall encourage cooperation among local government units 
(LGUS), business and civil society organizations to institutionalize a program 
that will strengthen people’s participation in local development and to enhance 
productivity and guarantee income opportunities for all.
SEC. 3. Objectives. -  This Act shall have the following objectives:
(a) 
To institutionalize the industry cluster approach as a means of pursuing 
local economic development through inter-local cooperation (ILC) among 
LGUs;
(b) 
To provide an effective mechanism to strengthen the participation of the 
people in community development through institutionalized industry 
cluster-based programs and projects;
(c) 
To promote unity among the people of the member LGUs by 
encouraging them to work together in pursuing industry cluster-based 
programs and projects; and


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(d) 
To build and strengthen partnership with concerned agencies, LCDs, 
civil society and business organizations toward the development of 
globally competitive unique local products and services.
SEC. 4. Definition of Terms. -  For the purposes of this Act, the following 
terms shall have the following meaning:
(a) 
Industry cluster refers to a concentration of competing but collaborating 
and independent businesses within a value chain of a broadly defined 
industry from suppliers to end products, including support services and 
specialized infrastructure and facilities;
(b) 
Industry cluster-based programs and projects refers to programs and 
projects that promote convergence, job generation, and investment 
promotion through production of competitive products and services to 
achieve inclusive growth;
(c) 
Inter-local cooperation (ILC) refers to an alliance of LCDs for the 
purpose of integrating local production forces like manpower, materials, 
money, machines or methods with a view to further enhancing their 
development by jointly providing programs, projects, and services to 
their respective constituencies; and
(d) 
People’s 
participation 
refers to the effective and 
meaningful 
involvement of civil society and business organizations at all levels of 
government operations for the pursuit of sustainable local economic 
development.
SEC. 5. Inter-Local Cooperation and People’s Participation. -  The inter­
local cooperation in industry cluster-based programs and projects shall be 
strengthened and institutionalized under the supervision of the Department of 
Trade and Industry (DTI).
Consistent with Section 35 of the Local Government Code, the LGUs shall 
provide a mechanism to encourage and facilitate the participation of 
accredited civil society and business organizations in all aspects of 
development work in industry cluster-based programs and projects to enliven 
the sense of community acceptance and ownership of products and to ensure 
the responsiveness of these programs and projects to the needs of the 
community.
SEC. 6. Accreditation. -  Civil society and business organizations shall be 
accredited by the DTI, in consultation with the local sanggunian, prior to their 
participation in industry cluster-based programs and projects.
The required documents for accreditation shall include, but not be limited to, 
the following:
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(a) 
Articles of Incorporation and by-laws;
(b) 
List of officers and members;
(c) 
Nature of business or work of the civil society and/or business 
organization; and
(d) 
Annual accomplishment report for the immediately preceding year.
All applications for accreditation shall be submitted to the Office of the 
Provincial Director of DTI. The DTI, in consultation with the local sanggunian 
concerned, shall act upon the application within a period of ten (10) working 
days from receipt thereof.
The certificate of accreditation shall be valid for a period of three (3) years, 
unless otherwise revoked or cancelled by the DTI, on its own or upon verified 
complaint, in consultation with the local sanggunian concerned.
In case an application is disapproved, a notice of disapproval shall be sent to 
the applicant.
Participating civil society and business organizations shall provide the 
appropriate expertise, facilities, and financial support to ensure the success of 
industry cluster-based programs and projects.
SEC. 7. Organization. -  LCDs shall be organized into clusters based on the 
following criteria:
(a) 
Commonality in interests, needs, and development requirements;
(b) 
Agreement in the identification of products and services that shall be 
developed;
(c) 
Willingness to commit and share local resources, facilities, and services 
for local development; and
(d) 
Economic viability.
Each industry cluster shall be composed of two (2) or more LGUs.
Prior to its inclusion into an industry cluster, each LGU shall adopt a resolution 
consistent with the requirements of the Local Government Code, authorizing 
the local chief executive (LCE) to enter into an agreement with other LGUs, 
indicating therein its willingness to commit resources for purposes of local 
development. The resolution, together with a letter of intent signed by the 
LCE, shall be submitted to the DTI as one of the requirements to become a 
member of a specific industry cluster.


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SEC. 8. Philippine Industry Councils. -  Each industry cluster shall create 
an Industry Management Council that shall provide the over-all policy and 
program direction for the industry and all stakeholders.
SEC. 9. Composition of Philippine Industry Council. -  Each Philippine 
Industry Council shall be composed of a representative from the DTI as 
Chairperson; and as members, representatives from the Department of Labor 
and Employment (DOLE), Department of Interior and Local Government 
(DILG), Commission on Higher Education (CHED), Technical Education and 
Skills Development Authority (TESDA), Department of Agriculture (DA), 
Department of Agrarian Reform (DAR), Department of Education (DepEd), 
LCEs of the member-LGUs of each cluster, one (1) representative each from 
two (2) Private Industry Associations, one (1) representative each from DTI 
accredited civil society organizations and one (1) representative from a Higher 
Education Institution recognized or accredited by CHED; Provided, That the 
representatives from the member-government agencies shall have the rank of 
at least a Provincial or Regional Director; Provided further. That the 
chairperson of each industry council shall have discretion to add or remove 
any members thereof as may be necessary for the administration of the 
industry cluster, after consultation from all members of concerned industry 
cluster.
SEC. 10. Functions and Duties of the Philippine Industry Council. -  The
Philippine Industry Council shall exercise the following powers and functions:
(a) 
Provide overall policy guidance in the formulation of cluster plans and 
programs;
(b) 
Formulate the industry development roadmap;
(c) 
Identify, prioritize and recommend initial strategic interventions, research 
directions and critical data needs while the industry roadmap is being 
drawn up;
(d) 
Promulgate rules and regulations on the management, operation, and 
conduct of the affairs and businesses of the industry cluster;
(e) 
Enter into, make and execute contracts with government entities, private 
organizations, 
civil 
society 
organizations 
(CSOs), 
international 
organizations (lOs), and other parties, domestic or foreign, as may be 
necessary for the implementation of the industry cluster plan or project;
(f) 
Submit to the concerned local sanggunian any proposed plan, program, 
or project for adoption and approval;
(g) 
Recruit and designate personnel as may be deemed necessary to 
handle the projects and activities of the industry cluster;
(h) 
Provide leadership in the coordination and over-all management of the 
affairs of the industry cluster;


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(i) 
Review and approve project proposals of the industry cluster including 
their respective budgets;
(j) 
Assess, levy, and collect fees and charges for products and services 
rendered; and
(k) 
Perform such other functions as may be required by law.
SEC. 11. Chairperson of the Industrial Council. -  The Chairperson shall
exercise the following powers and functions:
(a) 
Call and preside over the meetings of the Industrial Council;
(b) 
Engage the services of experts or consultants either on full-time or part- 
time basis, as may be required in the performance of the functions and 
duties of the chairperson;
(c) 
Execute and administer the policies and decisions approved by the 
industrial council and be responsible for the effective day-to-day 
management of the operations of the Industrial council;
(d) 
Prepare, in coordination with the Secretariat, the annual budget for the 
operations, plans, programs, and projects of the industry cluster for 
submission and approval of the Industrial Council;
(e) 
Execute and administer the policies and decisions approved by the 
industrial council and be responsible for the effective day-to-day 
management of the operations of the industrial council;
(f) 
Prepare, in coordination with the Secretariat, the annual budget for the 
operations, plans, programs, and projects of the industry cluster for 
submission and approval of the industrial council;
(g) 
Present to the local sanggunian for approval the proposed policies and 
programs, revenue-raising measures, operations plan, draft rules and 
regulations, and such other plans, programs, and projects necessary to 
carry out its purpose;
(h) 
Submit for consideration of the industrial council such other policies and 
measures necessary to carry out the provisions of this Act;
(i) 
Prepare and submit to the industrial council and to the DTI annual 
reports and evaluation of programs and projects;
(j) 
Recommend to the national policy-making bodies the implementation of 
plans and programs of the industry cluster that conform to the regional 
development plan; and


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(k) 
Perform such other functions as may be required by law or the Industrial 
Council.
SEC. 12. Establishment of a Secretariat. -  Each industry council shall have 
a Secretariat to be headed by the Undersecretary for Regional Operations 
and Development Group (RODG) of the DTI). The Undersecretary for RODG 
shall be the ex-officio Executive Director of the Secretariat of the Council. The 
Head of the Secretariat shall be assisted by a Deputy Executive Director who 
shall be appointed by the Chairman of the Council upon the recommendation 
of the Executive Director.
SEC. 13. Divisions of the Secretariat. -The Secretariat shall consist a 
Technical Division and an Administrative Division. The composition of the two 
divisions shall be determined by the Executive Director and approved by the 
Council. The personnel complement of these divisions shall follow the Civil 
Service rules and regulations and the Salary Standardization Law.
SEC. 14. Functions of the Secretariat.
following functions:
The Secretariat shall have the
(a) 
Formulate an industry plan for the approval of the Council;
(b) 
Establish and manage a data and information system on the relevant 
industry and provide such data and information upon request by the 
stakeholders;
(c) 
Generate and manage funds and resources for the implementation of 
the industry plan and for other purposes that will promote the industry 
cluster;
(d) 
Prepare programs and projects of the industry cluster;
(e) 
Recommend to the Council the appointment of Secretariat personnel;
(f) 
Accept grants, donations and contributions from local or foreign sources 
to finance its programs and projects, within the limitation provided by 
law; Provided, That donations from foreign sources shall be subject to 
the approval of the Department of Foreign Affairs;
(g) 
Prepare the annual budget of the Secretariat and the Council, subject to 
the approval of the Council;
(h) 
Conduct continuing research and development of innovative and 
indigenous technologies that will enhance the productivity of each 
industry cluster; and
(i) 
Perform such other functions as may be assigned to it.


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SEC. 15. Industry Plan. -  Each industry cluster shall formulate an industry 
plan which shall include: (a) a list of products to be produced and services to 
be offered; 
(b) the activities involved towards the development of such 
products or services; (c) the role of each LGU in the product development 
process; (d) the assistance needed from other agencies and institutions; (e) 
the sources of fund support; (f) the projected income; (g) a list of the areas or 
gaps that must be addressed in the industry; (h) labor market study for the 
development of the products or services in the industry; and (i) identification of 
research or studies from academic institutions that may be relevant to the 
development of such products or services.
The Industry Council shall present the industry plan to the local sanggunians 
of member-LGUs of each industry cluster. The concered local sanggunian 
shall pass a resolution approving a plan for implementation, which shall be 
implemented not later than sixty (60) days from its adoption.
SEC. 16. 
Incentives. -  Industry cluster entrepreneurs shall be granted 
preferential access to low-interest credit in government financing institutions 
and priority in government-initiated product marketing and promotion 
programs.
A donation or bequest made under the industry cluster- based program, 
project, or activity shall be exempt from donor’s tax; Provided, That the 
donations are made to or for the use of an LGU or any political subdivision of 
the government or in favor of an accredited civil society organization: 
Provided further, That not more than thirty percent (30%) of said donation 
shall be used by such civil society organization for administration purposes: 
Provided, furthermore, That the civil society organization is incorporated as a 
non-stock entity, pays no dividends, governed by trustees who receive no 
compensation, and devotes all of its income, including gifts, donations, 
subsidies, or other forms of philanthropy, for the accomplishment and 
promotion of the purposes enumerated in its articles of incorporation.
The abovementioned donation or bequest shall be considered as allowable 
deduction from the gross income in the computation of the income tax of the 
donor, in accordance with the provisions of the National Internal Revenue 
Code of 1997, as amended.
The DTI shall also develop a system of incentives for innovative industry 
clusters that share their experiences and innovations to other clusters; 
Provided, That incentives shall be limited to training programs for the cluster 
entrepreneur, special credit program, and shared service facilities such as 
machinery or equipment.
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SEC. 17. Institutional Linkages. -  In carrying out its functions, the industry 
council shall consult, coordinate, and work closely with the LGUs, DA, DILG, 
DOLE, TESDA, DTI, DOST, DOT, National Economic and Development 
Authority, CHED, and other relevant government agencies, and accredited 
civil society and business organizations operating within the cluster.
SEC. 18. Monitoring and Evaluation. -  DTI, in coordination with relevant 
government agencies and accredited civil society and business organizations, 
shall monitor and evaluate the implementation of industry cluster-based 
programs and projects and recommend necessary measures to support 
cluster-related activities.
SEC. 19. 
Implementing Rules and Regulations. -  Within sixty (60) days 
from the effectivity of this Act, the Secretary of the Trade and Industry, in 
coordination with the Secretaries of DILG, DOLE, CHED, TESDA, DA, DAR, 
DepEd, TESDA and other relevant government agencies and stakeholders, 
shall 
issue the 
rules 
and 
regulations 
necessary for the 
effective 
implementation of this Act.
SEC. 20. Separability Clause. -  If for any reason, any part or provision of 
this Act is declared invalid or unconstitutional, the remaining parts or 
provisions not affected thereby shall remain in full force and effect.
SEC. 21. 
Repealing Clause. -  All laws, executive orders, presidential 
decrees, rules and regulations or parts thereof contrary to or inconsistent with 
any provisions of this Act are hereby repealed, amended or modified 
accordingly.
SEC. 22. 
Effectivity. -  This Act shall take effect fifteen (15) days after its 
publication in the Official Gazette or in two (2) national newspapers of general 
circulation.
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Approved,
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