HOUSE °F REPRESENTATIVES

RECEIVED
- ni puts
Republic of the Philippines DATE: 5 i
HOUSE OF REPRESENTATIVES sive: _ Se OL
Quezon City ev: JUGL
SEVENTEENTH CONGRESS REGISTRATION UNIT
First Regular Session ILLS AND INDEX SERVICE

1166
HOUSE BILL NO.

Introduced by Representative Maria Lourdes Ac ysta-Alba

EXPLANATORY NOTE.

It is the policy of the state to recognize fully the role of the people in community
development. As early as 2004, the Government's Anti-Poverty Programs and Projects (APP)
initiated the One Town One Percent (OTOP) Philippines. This program was patterned after
Japan's "One Village One Product OVOP) program which was rated highly successful. While the
program's design was found effective, it could not be sustained due to lack of funding,

This Bill aims to institutionalize the Anti-Poverty measures through INTER-LOCAL
COOPERATION (ILC) measure with the cooperation of Local Government Units (LGUs) which
are contiguously located within a province or two adjacent provinces. This strategie move will

bring effective and efficient integration and cooperation among the stakeholders and main actors

of local production ‘forces such as manpower, matetials, machine, money, and methods to push
the National Government's agenda on socio-economic development countrywide,

The enactment of this Bill will address the desire of the provisions of Article X, Section
15 of the 1987 Constitution which provides that, "Local government units may group themselves.
consolidate or coordinate theiy, services, and resources for purposes commonly beneficial to

them in accordance with law.”

hc bctnlanl

ARTA LOURDES ACOSTA-ALBA
Ist District, Bukidnon



Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

SEVENTEENTH CONGR
First Regular Session

nouse BILLNO. 1166

Introduced by Representative Maria Lourdes Acosta-Alba

AN AC
‘
TUTIONALIZING INDUSTRY CLUSTER-BASED PROGRAMS = AND
OJECTS THROUGH INTER-LOCAL COOPERATION ,AND PEOPLE'S
PARTICIPATION

IN!

Be it enacted hy the Senate and the House of Representatives in Congress of the Philippines assembled;
SECTION |. 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) and their instrumentalities to
institutionalize a program to 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 the
local economic development through the inter-local cooperation (ILC) among LGUs;

b. _ To provide ay 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

d. To build and strengthen partnership with concerned agencies, LGUs, civil

society and business orgai
local products and services
‘ '

ations toward the development of globally competitive unique

SEC. 4. Definition of Terms, ~ For the purposes of this Act:

a. Industry cluster refers to 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;


b, Industry cluster-based programs and projects refer to those programs and
projects that promote convergence, job generation, and investment promotion through
production of competitive products and services to achieve inclusive growth,

 Inter-local cooperation (ILC) refers to an alliance of LGUs that are
geographically adjacent to each other within a province or two 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, People’s participation 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

SEC. 5. Inter-Local Cooperation and People’s Participation, ~ \nter-local
cooperation on industry cluster-based programs and projects is hereby institutionalized under
the supervision of the Department of the Interior and Local Government (DILG) and the
Department of Trade and Industry (DT1)

The LGUs shall provide a mechanism that will 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 reeds 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 following documents for
Provincial Director of the DTI

a Artjcles of Incorporation and by-laws,

Certificate of Registration with a government registering agency;
List of officers and members;

d. Nature of business or work of the civil society and business organizations; and

Annual accomplishment report for the immediately preceding year

All applications for accreditation shall be acted upon by the DTI, in consultation with
the local sanggunian within,a period of ten (10) working days from receipt thereof. Upon
approval, a certificate of accreditation valid for three (3) years shall be issued to the
organization. In case of disapproval, a notice of disapproval shall be sent to the applicant
Upon verified complaint, the DTI shall also have the power to cancel the certificate of
accreditation in consultation with the local sanggunian

The 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

reditation shall be submitted to the Office of the

‘ i
SEC. 7. Organization. ~ LGUs shall be organized into clusters based on the
following criteria:



a, Adjacent or contiguous location
b.  Commonality in interests, needs, and development requirements;
Agreement in the identification of products and services that shall be

developed; ‘ ‘ .

Willingness to commit and share local resources, facilities, and services for

local development; and

© 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 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 DILG to serve as proof of
membership in the industry cluster

SEC. 8. Industry Cluster Management Board, ~ Each industry cluster shall create an
Industry Cluster Management Board (ICMB) which shall be the primary body that shall
prepare, integrate, coordinate, supervise, and control industry cluster-based plans, programs,
projects, and activities of the cluster. ‘The ICMB shall be composed of the LCEs of the
member-LGUs of each cluster, the respective provincial directors of the DILG and the DTI or
their authorized representatives, one (1) representative each from accredited civil society
organizations of each member-LGU as voted from among them, and one (1) representative

from business organizations, as members.”

The members of the [CMB shall be entitled to one (1) vote each, ‘The ICMB shall
establish and provide the necessary technical, consultative, and secretariat support to
member-LGUs and shall also perform planning, monitoring, and coordinative functions, and
exercise supervisory authority over the implementation of industry cluster-based programs
and projects.

The ICMB shall be organized thirty (30) days after the DILG has identified an
industry cluster and shall convene not more than fifteen (15) days following its organization

There shall be established an Industry Cluster Management Office (ICMO) in
industry cluster which shall. house the Project and Management Development Staff (PMDS),
the location of which shall be determined by the ICMB fifteen (15) days after the ICMB
shall have been organized. ‘The PDMS shall come from the existing personnel of the
participating LGUs.

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SEC. 9. Powers and Functions of the Board. — The 1CMB shall exercise the
following powers and functions

a Provide policy guidance in the formulation of cluster plans and programs,

b. _Promulgate rules and regulations on the management, operation, and conduct
of the affairs and businesses of the industry cluster,

Enter into, make and execute contracts with government entities, private

organizations, civil society organizations (CSOs) , international organizations (10s), and
other parties, domestic or foreign, as may be necessary for the implementation of the industry
cluster plan or project;


Submit to the respective local sanggunian any proposed plan, program, or
project for adoption and approval;

ec. _ Recruit and designate personnel as may be deemed necessary to handle the
projects and activities of the industry cluster,

f Provide leadership in the coordination and over-all management of the aflairs
of the industry cluster, F

g. Conduct continuing research and development of innovative and indigenous
technologies that will enhance the productivity of each industry cluster;

h. Review and approve project proposals of the industry cluster including the
budget, .

i Accept grants, donations and contributions from local or foreign sources to
finance its programs and projects, within the limitation provided by law. Donations from
foreign sources shall be subject to the approval of the Department of Foreign Affai

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. 10. Chairperson of the ICMB. The ICMB. shall be headed by a chairperson
who shall be one of the local chief executives of the member-LGUs, The chairperson shall
be elected annuallf by a majority of the ICMB mémbers, The chairperson shall exercise the
following powers and functions

a, Call and preside over the meetings of the ICMB,

b. Engage the services of experts or consultants either on full-time or part-time
basis, as may be required in the performartce of the functions and duties of the chairperson;

Execute and administer the policies and decisions approved by the ICMB and
be responsible for the effective day-to-day management of the operations of the ICMB:

d. Prepare, in coordination with the PMDS, the annual budget for the operations,
plans, programs, and projects of the industry cluster for submission and approval of the
ICMB,

e 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;

f Sukmit for consideration of the CMB such other policies and measures
necessary to carry out the provisions of this Act;

8 Prepare and submit to the ICMB and to the Secretaries of the DILG and the
DTT annual reports and evaluation of programs and projects;

bh. 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 the ICMB.

SEC. 11, Industry Plan, ~ Each inter-local cooperation (ILC), 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 produets 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; and (1) the projected income.

The ICMB shall present the industry plan to the respective local sanggunians, which
shall in turn pass a resolution approving a plan for implementation. Thereafter, such approved
industry plan shall be implemented within sixty (60) days after its adoption

SEC. 12. Cluster Advisory Committee. — Every industry cluster shall create a Cluster
Advisory Committee (CAC), which shall be the primary body to give advice, technical
assistance, and policy guidance to the ICMB, particularly in the formulation of cluster plans
and programs and in enterprise and livelihood development. The CAC shall be composed of
representatives from the Department of Agriculture (DA), the Department of Labor and
Employment- Technical Education and Skills Development Authority (DOLE-TESDA), the
Department of Science and Technology (DOST), the Department of Tourism (DOT), the
National Economic and Development Authority (NEDA), financing institutions, and other
concerned agencies as identified by the CAC. The CAC shall also include representatives
from accredited civil society and business organizations as members. mo

Accredited organizations shall nominate a representative each, who will in turn elect
among themselves two (2) CSO representatives and two (2) private sector representatives to
the CAC

Sec. 13. 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 ot 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.

Industry clusters shall be given incentives if they can innovate and share these with
other clusters, Incentives shall be limited to training programs for the cluster entrepreneur,
special credit program, and shared service facilities such as machinery or equipment

SEC. 14. Cluster Common Fund. — Each industry cluster shall establish a Cluster
Common Fund which shall comprise of the amount of contribution agreed upon by the
members of the industry cluster through a cluster resolution and any local or foreign
donation obtained by the ICMB to finance industry cluster-based programs and projects.



The proceeds from the revenue-raising powers stipulated under this Act shall accrue
to the ICMB, for exclusive use in the implementation of industry cluster-based programs and
projects. z

The ICMB shall be authorized to directly utilize a portion of the income generated
from fees and other collections in the performance of its functions to defray operating
expenses

SEC. 15, Institutional Linkages. — In carrying out its functions, the ICMB shall
consult, coordinate, and work closely with the LGUs, the DA, the DILG, the DOLE-TESDA,
the DTI, the DOST, the DOT, the National Economic and Development Authority,
Commission on Higher Education, and accredited civil society and business organizations
operating within the cluster ‘

SEC. 16. Monitoring and Evaluation, — The respective offices of the Secretaries of
the DTI and of the DILG, in coordination with the regional offices 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

C17. Implementing Rules and Regulations. ~ The Secretary of the Trade and
Industry shall, in coordination with the Secretary of the Interior and Local Government, issue
the rules and regulations necessary for the effective implementation of this Act

SEC. 18, 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. 19. Repeating Clause. ~ Ail 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

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,

Approved