Local Economic

Promotion
(Investment)
Local economic promotion (LEP)
- an endeavor to substantially create
economic activities in order to
improve the living conditions within
the LGU
The ultimate goals of local
economic promotion are poverty
eradication and continuous
improvement of quality of life in
a community.
To achieve its goals, local economic
promotion seeks to:
1. Accelerate economic growth
• By encouraging and helping community
members to improve the production and
marketing of their goods and services
• By enhancing the capability of
community members to establish and
manage their own business enterprises;
and
• By creating adequate job opportunities
2. Achieve economic equity
• Attracting appropriate investment
from abroad
• Giving priority to low-income families
as livelihood program beneficiaries
3. Ensure economic stability
• Enhancing the capability of
community members to produce
quality goods and services;
• Encouraging diversification of
industries within the community;
• Enhancing the capability of
community members to produce
quality goods and services;
• Encouraging diversification of
industries within the community;
• By providing for the current needs of
business and industry without
sacrificing the needs of future
generations; and
• By optimizing the use of local
resources without jeopardizing the
environment
Extent Laws and Rules Concerning
LEP in PH
1. RA 7160 – Local Government Code of
1991 (October 10, 1991), particularly Sec.
35, 36, and 109 (4)
2. Executive Order No. 133 – Reorganizing
the Department of Trade and Industry, Its
Attached Agencies and for Other
Purposes (February 22, 1987)
3. Executive Order No. 226 – the Omnibus
Investments Code of 1987 (July 17, 1987)
Extent Laws and Rules Concerning
LEP in PH
4. RA 6977 – Magna Carta for Small
Enterprises (January 24, 1991)
5. RA 7042 – Foreign Investments Act of
1991, as amended by RA 8179 – An Act to
Further Liberalize Foreign Investments,
Amending for the Purpose Republic Act No.
7042, and for Other purposes (march 28,
1996)
6. EO No. 362 – Second Regular Foreign
Investment Negative List (August 20, 1996)
Extent Laws and Rules Concerning
LEP in PH
7. RA 7844 – Export Development Act of 1994
(December 21, 1994)
8. Rules and Regulations to Implement the
Export Development Act of 1994 (April 21,
1995)
9. Supplemental Rules and Regulations to
Implement Sec. 16 (d), The Tax Credit for
Increase in Current Year’s Export Revenues
Under the Export Development Act of 1994
(May 9, 1996)
Extent Laws and Rules Concerning
LEP in PH
10. RA 7916 – The Special Economic Zone Act
of 1995 (February 24, 1995)
11. Rules and Regulations to Implement RA
7916 (March m26, 1996)
Four Major Phases of LEP in its
Management
1. Situation Analysis 3. Implementation
2. Planning 4. Evaluation and
Control
 Logical Sequences of the Major
Phases of LEP Management Cycle
The LEP Management Cycle
Phase 2
Phase 1 PLANNING
SITUATION Where should we go from
ANALYSIS here?
Where are we now? How should we get there?

Phase 4 Phase 3
EVALUATION & IMPLEMENTATIO
CONTROL N
Are we getting there?
Local Government and Economic
Promotion
Objectives of Economic Promotion
• Main Objective – Alleviation of
Poverty
Recent Role of LGUs Towards
Investment
• As an entrepreneurial enterprise,
engaged in economic activities
aimed at developing and
diversifying the local economic
structure
Recent Role of LGUs Towards
Investment
• As promoter of inward investment
and as an investor in enterprises
where private sector fails to come
in
• Active role in attracting more
investments to the local area
• Act as a “salesman” in advertising
the advantages and benefits to be
derived from and services
Legal Framework for Economic
Promotion
• The LGC of 1991 lays down the legal
framework for the LGU’s active
involvement and participation in
economic promotion
• Granted additional powers to make
them more financially developed to
make their participation in economic
development more meaningful
LGU-NGO Partnership

• The code encourages active

partnership between the local
government and the non-
governmental organizations or
people’s organizations in economic
development.
Financial Development

• Granting additional taxing powers

• Increased share from the national
government collection of nationally
imposed taxes or the internal
revenue allotments (IRA
• Sharing schemes have also been
altered among levels of local
governments
Central Government Policies, Rules and
Regulations on Economic Promotion
Legal Issuances and Laws with
Significant bearing on national policy
directions:
1. Executive Order No. 133
2. EO No. 226 (The Ombudsman
Investment Code of 1987)
3. RA 6810 (Kalakalan 20)
4. RA 6977 (Magna Carta for Small
Enterprises)
5. RA 7042 (Foreign Investment Act of 1991)
Executive Order No. 133
• Signed by President Corazon C. Aquino
on Feb. 22, 1987, it laid down the
general policy guidelines or principles
on national and local economic
promotion
• Provided for the reorganization of DTI
• DTI – primary coordinating,
promoting, facilitating, and regulating
gov’t body responsible for the
country’s trade, industry and
investment activities
Executive Order No. 226 (The Omnibus
Investment Code)
• Signed by President Corazon C. Aquino
on July 17, 1987
• Encourage private Filipino and foreign
investment in industry, agriculture,
forestry, mining, tourism and other
sectors of the economy
Certain Incentives Provided
1. Income Tax exemption
2. Additional deduction for labor
expenses
3. Tax and duty exemption on
imported capital equipment
4. Tax credit on domestic capital
equipment
5. Exemption from contractors’
procedures
6. Simplification of customs
procedures
7. Unrestricted use of consigned
equipment
8. Employment of foreign nationals
9. Exemption on breeding stocks and
genetic materials
10. Tax credit for taxes and duties on raw
materials
11. Access to bonded
manufacturing/trading warehouse
system
12. Exemption from wharfage dues and
any export tax, duty, impost and fees
RA 6810 or Kalakalan 20
• Signed into law by Pres. Corazon S. Aquino
on Dec. 14, 1989
• Established the Charter for Countryside
and Barangay Business Enterprises
(CBBEs)
• Patterned after “Italian Law of 20” – grants
CBBEs exemptions, incentives and other
benefits
• Exemptions from all taxes and fees
imposed by the national and local
government for a period of 5 years from the
date of registration
1. Building permit fees
2. Specific Tax
3. Value-added tax
4. Income tax
5. Other taxes or fees
• These exemptions shall not
embrace the payment of RPT,
imported articles and other taxes
on imported articles
• Income receipts derived from the
business operations of the CBBEs
shall be excluded from the
computation of gross incme fpr the
purpose of computing the
individual income tax
• Granting of exceptions from
government rules and regulations.
i.e. bureaucratic restrictions
RA 6977 or Magna Carta for Small
Enterprises
• Accompanying a piece of legislation
• embodies the state policy of
“promoting, strengthening, and
encouraging the growth and
development of small and medium
enterprises in all productive sectors of
the economy, particularly of
rural/agri-based enterprise”.
RA 7042 or Foreign Investment Act of
1991
• Repealed Book II of the Omnibus
Investment Code
• lays down procedures and conditions
under w/c non-Philippine nationals
may invest and do business PH
• Board of Investment (BOI) authority is
no longer needed for enterprises
which want to invest
RA 7042 or Foreign Investment Act of
1991
• Businesses consult and comply with
Foreign Investment Negative List
• Allows export enterprises to sell to the
domestic market up to 40% of their
output
• Ad hoc bodies are organized to
supplement the functions of the LDC.
i.e. Committee on Economic
Development
RA 7042 or Foreign Investment Act of
1991
• Form is the task force which utilizes
the multisectoral approach (public
and private sectors)
• The utilization of these ad hoc bodies
appears to be more appealing to many
LGUs because of their non-
bureaucratic development at local
level
• DTI, DOF, RDC, and DBP
Institutional Linkages for Local Economic
Promotion
National Agencies DTI
DOF

Regional Agencies RDC

LG
U
Government-owned DBP
Financing Institution LBP
The Department of Trade
- main agency tasked with promoting and
coordinating the trade, industry and
investment activities
The Small and Medium-Sized Enterprise
Development Council (SMEDC)
- attached agency of the DTI which is
primarily responsible for the promotion,
growth and enterprises in the country
- approve financial
arrangements/operations funded by the
MDF
SMEDC
- provide technical and consultation
services to review and evaluate local
government activities project funded by
MDF
Projects Eligible for MDF
- physical and social infrastructure,
economic enterprises, training programs,
commodity support, beneficiary initiated
programs authorized by the Project
Steering Committee (PSC)
Inter-Local/Regional Linkages
- basic structure provides linkages among
levels of LGUs up to regional level
The Regional Development Council
- has an important bearing on the
integration of economic plans among
provinces, independent component and
highly urbanized cities in the region
Private Sector/NGO Networks
- networking with NGOs and private sector
is made possible through LDC membership
and other special bodies, i.e. local health
board, the school board, BAC
- DTI's establishment at the local level of
People's Economic Council (PEC)
PEC- community-based, multi-sectoral,
composed of representatives from trade,
industry, and service sectors and other
groups in the community, i.e. labor, civic,
religious, academic, youth, professional
Policies and Strategies - LGUs to lay down
policies and strategies, create proper
working environment for enterprising
activities
Local Economic/Physical Planning
- economic plan containing investment
programs to be implemented within the
community to attract business investment
should include:
• physical plan/land use plan of locality
• physical infrastructures
• bacis social services like health care
and environmental protection
• stable peace and order
• basic information about the local area
to prospective investors
• available resources such as water,
power and transport, skilled labor, etc.
• LGU conduct economic surveys and
data gathering activities to establish
own data bank
- Organizing trade fairs would assist and
encourage business to settle in area
Human Resource Development
- holding of training programs or
orientation seminars for all local gov't
officials and employees
- to infuse dynamism into the whole local
government structure
- LGU can help organize the community
into cooperatives which can be an effective
mechanism for initiating livelihood
projects
Private Sector Participation
- partnership scheme with the NGOs or
private sector thru:
1. Build-Operate-Transfer (BOT)
2. Build-and Transfer (BT)
3. Build-Own-and-Operate (BOO)
4. Build-Lease-and-Transfer (BLT)
5. Rehabilitate-Operate-and
Transfer (ROT)
6. Rehabilitate-Own-and Operate
(ROO)
Private Sector Participation
- LGU may provide financial assistance to
the cooperatives in the form of loans and
grants, either interest free or low interest
Setting-Up Economic Promotion
Structure
- structure established purposely for
economic promotion
-organizational unit should be set up for
promoting economic activities in the
locality
Three organizational approaches to
establish economic promotion structure:

1st - incorporating the unit into organized

structure of LGU
2nd - an organization created by LGU for
economic promotion activities but its
management is lodged with group of
private persons
3rd - creates a team organization whose
members are drawn from different
departments w/n LGU
Non-fiscal Incentive Schemes
1. Grant preferential treatment to certain
business organizations whose
investments are in priority plan
2. receive support from the LGU in terms of
loan financing or providing access to
credit facilities
3. business management and assitance
through cooperative marketing schemes
4. putting up one-stop action or investment
center considered an incentive scheme
for enterpreneurs
Reasons why LGUs can not cope with the
requirements of local economic
development

1. lack competent and qualified personnel

to undertake the various tasks of
economic promotion
2. not enough financial resources to
conduct promotional and marketing
activities to attract inward investments
3. lack of political will and commitment
Reasons why LGUs can not cope with the
requirements of local economic
development

4. Many local chief executives do not view

the local unit as an “entrepreneur”
5. assistance in the preparation of project
feasibility studies, baseline studies,
marketing, promotion of products, and
managerial/entrepreneurial skills
development is lacking