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Republicoft`EePhilippines
HOUSE OF RHPRESENTATIVES
Quezon City, Metro Manila
NINETEENTH CONG RESS
First Regular Session
House Bill No. 80€3
Introduced by Representative Midy N. Cua
Lone District, Quirino
TIME-
BY-
AN ACT
INSTITUTIONALIZING INDUSTRY CLUSTER-BASHD PROGRAMS AND PROJECTS
THROUGH INTER-LOCAL COOPERATION AND PEOPLE 'S PARTICIPATION
EXPLANATORY NOTH
The  Constitution recognizes the  role of local  government units  (LGUs)  in  the  development t>f the
State and,  therefore, supports cooperative undertakings among them. As stated in Article X, Section
13,"local  government units may group themselves, consolidate or coordinate their efforts, services,
and resources for purposes commonly beneficial to them in accordance with law."
To support this constitutional policy, Section 33 of the Local Government Code of 1991  (or Re[iublic
Act  No.  7160)  was  created.  This  states  that  "local  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 scr#ggc¢#z.ci# concerned after a public hearing conducted ft]r 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
throuch Memoranda of Agreement." Moreover, in Section 35, establishment Of linkages with people's
and  non-governmental  organizations  for  the   delivery   of  basic  services,  capability-building  and
livelihood projects, among others, was also recognized.
Taking into account the already undeniable inclusive growth brought about by collaboration or inter-
1ocal cooperation among LGUs and the private sector and the potential development it can bring in
the future, this bill aims to institutionalize the industry cluster-based approach, under the supervision
of the DTI. The DTI shall accredit civil  society and business organizations in consultation with the
local scz#ggowz.a#. The DTI will act upon an application within ten working days, and the certificate of
accreditation  will be valid for three years unless revoked or canceled by the DTI.  Civil  societ:y and
business organizations must provide expertise, facilities, and financial support to ensure the succiess of
industry cluster-based programs and projects. Each industry cluster must have two (2) or more LGUs.
An  LGU  must adopt a Sc!rzggzi#j.cm  Resolution authorizing the provincial  governor,  city  mayor,  or
municipal mayor to commit resources for local development.
This   measure   previously   passed  the  third  reading   in  the   18th   Congress.   It  was   proposed  by
Representatives  Eduardo  "Bro.  Eddie"  C.  Villanueva,  Domingo  C.  Rivera,  Maria I.,ourdes Acosta-
Alba,  Florida  "Rida"  P.  Robes,  I,aurence  "Law"  H.  Fortun,  Manuel  Jose  "Manmix"  M.  Dalipe,
Henry  R.  Villarica,  John  Marvin  "Yul  Servo"  C.  Nieto,  Joy  Myra  Salvador-Tambunting,  Shirlyn


Bafias-Nograles,  Sandra  Y.  Eriguel,  MD.,  Solomon  R.  Chungalao,  Macnell  Lustoan,  Gabj[rl  H.
Bordado Jr.,  Sergio  C.  Dagooc,  Erie  G.  Yap, Evelina G.  Escudero,  Rose Marie  "Baby"  J.  Ajrenas,
Henry  S.  Oaminal, Pablo John F.  Garcia,  Deogracias Victor "DV"  Savellano, Rufus 8.  Rodriguez,
Strike 8.  Revilla, Christopher V.P.  De Venecia, Ruffy 8. Biazon, Peter John D.  Calderon, Luis N.
Campos Jr„ Junie E. Cua, Luisa Lloren Cuaresma, Paul Ruiz Daza, John Michael R. Dunvit, Vincent
Franco  "Duke" D.  Frasco,  Greg G.  Gasataya.  Ruwel  Peter  S.  Gonzaga,  Teodorico  T.  Haresco  Jr.,
Romeo  S. Mono, Manuel T.  Sngarbaria, Jose "Ping-Ping"  I.  Tejada, Micaela S. Violago, Aritorio
"Tonypey" T. Albano, Yasser Alonto Balindong, Alfil M. Bascug, Jose Francisco "Kiko" 8. Benitez,
Argel  Joseph T.  Cabatbat,  Wilfredo "Willy"  S.  Caminero, Carl Nicolas C.  Cari, Cheryl  P.  Deloso-
Montalla, Abdullah D. Dinaporo, Mohaman Khalid Q. Dimaporo, Alan "Aldu" R. Dujali, Faustino
"Inno" A. Dy V,  Ian Paul L.  Dy,  Michael 8.  Gorriceta, Eduardo "Eddie" R.  Gullas,  Godofredo N.
Guya,  Glona G.  Labadlabad, Edward Vera Perez Maceda,  Jose "Jun"  L.  Ong Jr., Pab]o C.  Ortega,
Allan Benedict S.  Reyes, Geraldine 8.  Roman, Alyssa Sheena P.  Tan, Angelina "Helen" D.L.  Tan,
MD.,  John  Reynald  M.  Tiangco,  Lucy  Torres-Gomez,  Kristine  Alexie  8.  Tutor,  Samantha Louise
Vargas  Alfonso,  Rosanna  "Ria"  Vergara,  Presley  Cheng  De  Jesus,  Lorenz  R.  Defensor,  Wilfrido
Mark  M.  Enverga,  Jonathan  Keith  T.  F]ores,  Dalilia  A.  Loyola,  Irene  Gay  F.  Saulog,  Joey  Sarte
Salceda, Estrellita 8. Suansing, Kristine Singson-Meehan, Horacio P. Suansing Jr., Faustino Mjichael
Carlos  T.  Dy  Ill,  Manuel  D.  Cabochan  Ill,  Adriano  A.  Ebcas,  Mark  0.  Go,  Joselito  "Joel"  S.
Sacdalan, Stella Lug A. Quimbo, Juan Miguel Macapagal Arroyo, and Maricel G. Natividad-Nagafio,
MD. as principal authors thereof.
In view of the foregoing, approval of this measure is earnestly sought.
Lone District, Quirino
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Republicoft`hephiHppines
HOUSE 0F REPRESENTATIVFS
Quezon City, Metro Manila
NINETHENTH CONGRESS
First Regular Session
HouseBi||No.80€3
Introduced by Representative Midy N. Cua
I/)ne District, Quirino
AN ACT
INSTITUTIONALIZING INDUSTRY CLUSTER-BASED PROGRAMS AND PROJECTS
THROUGH INTER-LOCAL COOPERATION AND PEOPLE'S PARTICIPATION
Be it enacted by the Senate and House Of Representatives Of the Philippines in Congress assembled:
SHCTI0N  I.  Sfeor/  rj.j/e.  -  This  Act  shall  be  known  as  the  "Pear/e's  Pc]r/I.c!P¢/i.o7!  z.#  /#c7ws/7);
Cluster-based Programs and Projects Act."
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4       SHC. 2. Dec/czrofz.o# o/Po/i.c);.  -It is hereby declared the policy of the state to recognize the role of
5       the people in community development. Towards this end, the state shall encourage cooperation among
6       local government units (LGUs) and their instrumentalities to institutionalize a program to strengthen
7       people's participation in local development, enhance productivity, and guarantee income opportunities
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SEC. 3. OC)y.ec/I.vcs. -This Act shall have the following objectives:
a)    To  institutionalize the  industry cluster approach  as  a means of pursuing  loct,al  economic
development through inter-local cooperation among I.GUs;
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 from different LGUs by encouraging them to work
together in pursuing industry cluster-based programs and projects; and
d)   To build and strengthen partnerships with concerned agencies,  LGUs,  civil  society,  and
business  organizations  towards  the  development  of globally  competitive  unique  local
products and services.
SHC. 4. De##i./i.o# o/re777Is. -As used in this Act:
a)    /7?c7c{Stry c/"S/er refers to the geographic 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;
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b)   Industry  cluster-based  programs  and  projects  refer  to  those  programs  and  prof]ects
undertaken within contiguous geographic area that promote convergence, job generation,
and  investment  promotion  through  production  of competitive  products  and  services  to
achieve inclusive growl;
c)   J#fcr-/occr/ coopercr/z.o# refers to an alliance of LGUs that are geographically adjacent to
each   other within a province or two (2) adjacent provinces to  integrate local production
forces like manpower, materials, money, machines, or methods to create a concerted effort
to  push  their development and jointly provide programs,  projects,  and  services  to their
respective constituencies; and
d)   Peop/e's pcrr/i.cz.pczr!'o# refers to effective and meaningful involvement of civil society and
business organizations at all levels of government operations for the pursuit of sustainable
local economic development.
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16        SIC. 5. /#fer-£oca/ Coapercr}j.ow cz7cd pear/e's pcrr/I.cz.pcrfl.o#. -The inter-local cooperation on industry
17       cluster-based programs and projects shall be strengthened and institutionalized under the supervision
18       of  the  Department  of  Trade  and  Industry  (DTI)  and  the  Department  of the  Interior  and  Local
19       Government(DILG).
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21                       Consistent with section 35 of Republic Act No. 7160. or the "Local Government code," the
22       LGUs shall provide a mechanism that will encourage and facilitate the participation of accredited civil
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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. .4ccredj./crfz.o#.  - Civil  society and business organizations  shall be  accredited by the DTI,  in
consultation with the local sc77®ggrt#7.c7#, prior to their participation in industry cluster-based programs
and projects.
The required documents for accreditation shall include the following:
a)   Articles of Incorporation or cooperation and by-laws;
b)   Certificate of Registration with a government registering agency;
c)    List ofofficers and members;
d)   Nature of business or work of the civil society and business organizations; and
e)    Annual accomplishment report for the immediately preceding year.
All applications for accreditation shall be submitted to the Office of the Provincial Director of
the DTl. The DTI, in consultation with the local sa#gg##jc7# 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 canceled by the DTI, on its own or upon a verified complaint, in consultation with the local
scng:gr¢#z.cz# concerned In case an application is disapproved,  a notice of disapproval  shall be sent to
the applicant.
SEC.  7.  Orgr#7.zczJi.o#.  ~  Local  government  units  shall  be  organized  into  clusters  based  on  the
following criteria:
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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 bel composed of two (2) or more LGUs. Prior to its inclusion in an
industry cluster, an LGU shall adopt a Saj7ggr#z.cz# Resolution authorizing the provincial governor, city
mayor,  or  municipal  mayor  to  enter  into  an  agreement  with  other  LGUs,  indicating  therein  its
willingness  to  commit  resources  for  purposes  of  local  development.  The  Scz#ggw#z.cz7t  Resolution,
together with letter of intent signed by the provincial governor, city mayor, or municipal mayor, shall
be submitted to the DTI as one of the requirements to become a member of a specific industry cluster.
SEC. 8. Pfez./;Zap;.#e Jndz4stry Co##c;./. - Each industry cluster shall create a Philippine Industry Council
(Plc) that shall provide the overall policy and program direction for the industry and all stakeholders.
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20       SEC.  9.  Co7"pasj.#.o#  o/ffoe  P/C.  -Each  Plc  shall  be  composed  of the  concerned  I)TI  Regional
21        Director as chaiiperson and the following as members: representatives from the DILG, Department of
22       Labor   and   Employment   (DOLE),   Department   of  Education   (DepEd),   Commission   on   Higher
23       Education (CHED), Technical Education and skills Development Authority (TESDA), Department of
24       Agriculture   (DA),   Deparment   of  Agrarian   Refom   (DAR),   Department   of  Tourism   (DOT),
25       Deparment of science and Technology (DOST); provincial governor, city mayor, or municipal mayor
26       of the  member-LGUs  of each  cluster;  one  (1)  representative  each  from  two  (2)  private  industry
27       associations;  one  (I)  representative  each  from  DTI-accredited  civil  society  organizations;  one  (I)
28       representative  from  the  sector of cooperatives;  and  one  (1)  representative  from  a  higher  education
29        institution recognized or accredited by CHED: Provi.c7ec7, That the representatives from.the member-
30       government  agencies   shall   have  the  rank  of  at  least  a  provincial  regional   director  except  the
31        Chairperson who shall be a regional director: Prow.dec7, givrffeer, That the chairperson of each industry
32       council  shall have the discretion to add or remove any member thereof as may be necessary for the
33        effective  administration  of the  industry  cluster,  after  consultation  from  all  lnembers  {>f concerned
34        industrycluster.
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36                      If member-LGUs of the plc come from more than one (1 ) region, the chairperson shall be the
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DTI director of the region with the most number of member LGUs in the pertinent industry cluster.
However,  if a  to  be  the  DTI  director  is  qualified  Chairperson  of two  (2)  or  more  PICs,  the  DTI
Secretary shall designate the Chairperson of the Plc.
41        SIC.10.  Fw#c/I.our  cI;CCJ  Dw/I.es  o/ ffoe  PJC'.  -The  Plc  shall  exercise  the  following  powers  and
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a)    Provide overall policy guidance in the fomulation 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;
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e)    Enter into and execute contracts with government entities, private organizations, civil society
organizations (CSOs), intemational organizations (IOs), and other parties, domestic or foreign,
as may be necessary for the implementation of the industry cluster plan or project;
f)    Submit to the respective local Scz#ggr¢#j.a# 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 overall management of the affairs of the industry
cluster;
i)    Review and approve project proposals of the industry cluster including the budgets therefor;
j)     Assess, levy, and collect fees and charges for products and services rendered; and
k)   Perfom such  other functions as may be required by law.
SEC.   11.  Cfooz.rperso#  o/ ffoc  P/C.  -  The  Chairperson  shall  exercise  the  following  powers  and
functions:
a)    Call and preside over the meetings of the plc;
b)    Engage the services of experts or consultants either on a full-time or part-tjine 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   Plc,  and  be
responsible for the effective day-to-day management of the operations of the Plc;
d)   Prepare, in coordination with the Secretariat, the annual budget for the operations, plans,
programs, and projects of the industry cluster, for submission to and approval of the Plc;
e)    Present  to  the  local  scz#g:gri#;.cz#,  for  its  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;
f)    Submit for consideration of the Plc such other policies and measures necessary to carry
out the provisions of this Act;
g)   Prepare  and  submit to the  Plc  and to the  Secretaries  of the  DTI  and the  DILG  annual
reports and evaluation of programs and projects;
h)   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
i)    Perform such other functions as may be required by law or by the Plc.
SHC.  12. Es/czb/z.sfo"e#/ o/¢ Sccreftzrz.a/. -Each Plc shall have a Secretariat to be headed by the DTI
Assistant  Regional  Director  of the  designated  chaiiperson  of the  concerned  Plc,  in  an  ex  officio
capacity.  The  head  of the  Secretariat  shall  be  assisted  by  a  Provincial  Director,  also  in  ex  officio
capacity, who shall be designated by the Plc Chairperson.
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SEC.   13.  Djvz.sj.o#s   a/  rfre  Secre/czr!.a/.   -  The   Secretariat   shall   consist  of  a  technical   and   an
administrative division. The composition of the two (2) divisions shall be determined by the Executive
Director of the concerned Plc  Secretariat and approved by the Plc.  The personnel complement of
these divisions shall be handled  by the organic personnel of the concerned DTI Regional Office.
SEC. 14. Fw#c#.o#s o/ffoe Secre/crrz.cI/. ~ The Secretariat shall have the following functions:
a)   Formulate an industry plan for the approval of the Plc;
b)   Establish and manage data and infomation systems 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 Plc the appointment of secretariat persormel;
I)    Accept  g.rants,  donations,  and  contributions  from  local  or  foreign  sources  to  finance  its
programs and projects, within the limitations provided by law: Provz.cJec7, 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,  subjeet to the ap|)roval of the
Plc;
h)   Conduct continuing research and development of irmovative and indigenous technologies that
will enha.nee the productivity of each industry cluster; and
i)    Perform such other functions as may be assigned to it.
SEC.15. J{ndwstry P/cr#. -Each industry cluster shall formulate an industry plan which shall include:
a)   List of products to be produced and services to be offered;
b)   Activities involved towards the development of such products or services;
c)   Role of each LGu in the product development process;
d)   Assistance needed from other agencies and institutions;
e)    Sources offund support;
f)    Projected income;
g)   List of the areas Of 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.
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The Plc shall present the industry plan to the respective local sa#ggw#!.a„ of member-LGUs of
each  industry  cluster.  The concerned  local  Sa#ggrt#7.CZH  shall  pass  a  resolution  approving  a plan  for
implementation, which shall be implemented not later than sixty (60) days from its adoption.
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5        SHC.16. /#ce#fj.veg. -Industry cluster entrepreneurs shall be granted preferential access low-interest
6       credit in government fmancing institutions and priority in government-initiated product marketing and
7       promotionprograms.
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9                      The DTI shall also develop a system of incentives for innovative industry clusters that share
their  experiences  and  innovations  with  other clusters:  Prov!.dec7,  That  incentives  shall  be  limited  to
training programs for the cluster entrepreneur, a special credit program, and shared service facilities
such as machinery or equipment.
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14       SEC.16-A. roe fxenp/;.on. -All grants, bequests, endowments, donations and contributions made to
15        the industry cluster-based program, project, or activity to be used actually, directly, and exclusively by
16       the industry cluster-based program, project or activity shall be exempt from donor's tax and the same
17       shall  be  considered  as  allowable  deduction  from  the  gross  income  of the  donor  for  purposes  of
18       computing the taxable  income  of donor in  accordance  with  the  provisions  of the National  lnternal
19       Revenue code of l997, as amended: Prov!.ded, That the donations are made to, or are for the use of an
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LGU  or  any  political  subdivision  of the  government,  or  in  favor  of an  accredited  civil  society
organization: Prow.decJ, Arlfoer, That not more than thirty percent (30%) of said donation shall be used
by  such civil  society organization  for  administrative purposes: Provj.c7ec7, givrjfoe7.more,  That the civil
society  organization  is  incorporated  as  a non-stock  entity,  pays  no  dividends to  its  membership,  is
governed  by  trustees  who  receive  no  compensation,  and  devote  all  of its  income,  including  gifts,
donations, subsidies, or other foms of philanthropic support to the accomplishment and promotion of
the purposes enumerated in its Articles of Incorporation.
SEC.  17. /usf;.f#tr.o#cr/ £z.„tczge,T. -In carrying out its functions, the Plc shall consult, coordinate, and
work closely with the LGUs, DA, DAR, DepEd, CHED, TESDA, DILG, DOLE, DOST, DOT, DTI,
the National Economic and Development Authority (NEDA), and other relevant government agencies,
and accredited civil society and business organizations operating within the cluster.
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33        SEC.18. Mo#j./orz.7?g c}rocJ Evo/#cz/I.o#.  -The DTI,  in consultation with relevant government agencies
34       and accredited civil society and business organizations, shall monitor and evaluate the implementation
35       of  industry  cluster-based  programs  and  projects  and  recommend  necessary  measures  to  support
3 6        cluster-related activities.
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38        SEC.19. Jmp/e#!e#/I.#g R2t/es cz7cc7 Regc¢/a/z.o#s.  -Within sixty (60) days  from the effectivity of this
39       Act, the secretary of the Department of Trade and Industry shall, in coordination with the secretaries
40       of the DILG, DOLE, DepEd, CHED, TESDA, DA, DAR, and other relevant government agencies and
41        stakeholders  issue the rules and regulations necessary for the effeetive implementation of this Act.
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43        SEC.  20. Sepczrc7bz./z'fy C'/azfse.  -If any  provision  of this  Act  is held  unconstitutional  or  invalid,  all
44       other provisions not affected thereby shall remain valid.
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SEC.  21.  Repca/j.j®g  C/crwse.  -  All  laws,  decrees,  executive  orders,  rules  and  regulations  or  parts
thereof. which are inconsistent with this Act, are hereby repealed, amended or modified accordingly.
SEC. 22. Ejorec/I.w`ty. -This Ac,t shall take effect fifteen (15) days after its publication  in the OJffc!.cr/
Gc]ze#e or in a newspaper of general circulation.
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