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Foreword…………………………………………………… iv
Chapter I Fundamental Principles of Countertrade. 1
Countertrade in General……………………………………… 1
Benefits of Countertrade…………………………………….. 2
Forms of Countertrade………………………………………. 2
Counterpurchase…………………………………… … 2
Offsets……………………………………………… 3
Product Buy Back…………………….……………. 4
Debt For Goods……………………………………… 4
Build-Operate-Transfer (BOT)……………………… 4
Any Variation or Combination of the Above……….. 5
Adoption of Countertrade in Government Procurement…… 5
Sample Forms………………………………………………....
Countertrade Provisions in the Supply Contract……………….
Countertrade/Offset Agreement………………………………..
FOREWORD
To help meet the increasing challenge of globalization as well as to spur the country’s economic growth,
a national policy on Countertrade was adopted in 1993 as a supplemental trade tool with respect to the
Philippine Government’s importation of foreign capital equipment, machinery, products, goods and
services valued at US$1 Million and above. This policy is enunciated in Executive Order No. 120 s.
1993 and its Implementing Rules and Regulations.
By leveraging its own importations with reciprocal benefits to be provided by foreign suppliers/trader
under countertrade, the government hopes to fast-track the inflow of investments, technology, industrial
cooperation, specialized training and skills and other similar activities into the country including the
expansion of trade and exports to other countries.
Since 1989, the Philippine International Trading Corporation (PITC), a government-owned and
controlled corporation under the Office of the President, has been at the forefront of countertrade in
government foreign procurement programs. By virtue of E.O. 120 s. 1993, PITC was expressly
mandated to administer and manage the countertrade program of the government.
Over the last fifteen years, PITC has been instrumental in facilitating countertrade projects valued at over
US$ 358 million relative to several foreign procurements of the Armed Forces of the Philippines,
Philippine National Police, Philippine Coast Guard, Bureau of Fire & Protection and the National Food
Authority among others, including “Debt for Goods” arrangements with several creditor countries of the
Philippines. In addition to this, another US$ 189 million worth of projects are on-going implementation.
This has allowed the country not only to recoup and preserve its foreign exchange but also enabled key
industry sectors to develop and expand new markets and products for export, acquire sophisticated
technology, obtain foreign direct investments, and avail of specialized technical/specialized training.
This handbook intends to provide a basic understanding of countertrade and its application to foreign
procurements/importations of the Philippine Government, including its various agencies, bureaus and
offices.
A. COUNTERTRADE IN GENERAL
COUNTERTRADE is a general term for an international transaction that is premised on some form
of reciprocity.
B. BENEFITS OF COUNTERTRADE
• Gain access to advanced technology and training, new foreign investments, research and
development and related support for national development and modernization programs;
• Promote mutually beneficial collaborative business ventures between local industry sectors and
their foreign counterparts through joint ventures and industrial cooperation;
Many developing nations and even developed nations require countertrade in their capital-intensive
foreign procurement programs in order to fuel industrialization and sustain national development
programs. The Philippine position is no different.
1
The Countertrade Contract Guide & Lexicon – Second Edition, 1994
2
As cited in the Countertrade Contract Guide & Lexicon – Second Edition, 1994
C. FORMS OF COUNTERTRADE
Example: As a condition for the purchase of communication equipment by the buyer, the
seller commits to buy goods and services from the buyer’s country.
• Investments
• Technology transfer
• Training and skills upgrade
• Research and development
• Donations
Other forms of offsets may be projects that can contribute to the priority development
programs of the buyer and/or support the national development programs of the buying
country. These offsets may or may not be related to the equipment, machinery, products, or
services being purchased.
Direct Offsets – offset arrangements that are directly related to the purchased equipment.
Example: As a condition for the purchase of communication equipment by the buyer, the
seller/supplier commits to invest in maintenance facility for the said equipment in the buyer’s
country at no additional cost to the buyer.
Indirect Offsets – offset arrangements that are not related to the purchased equipment.
Example: As a condition for the purchase of communication equipment by the buyer, the
seller/supplier commits to invest in a furniture factory in the buyer’s country at no additional
cost to the buyer.
Example: The seller of a tomato processing machine agrees to be paid partially through the
export of canned tomato paste produced by the machine. The buyer of the processing machine
ensures that sufficient quantities of canned tomato paste are exported to the seller as partial
payment for the machine.
4. DEBT FOR GOODS -- A transaction whereby a debtor country offers its goods or services
for export to cover full or partial payment for an outstanding debt.
3
Ibid.
Example: Creditor country agrees to accept coconut oil and other commodities from the
debtor country as full payment of an outstanding debt. No foreign currency is paid/used to
pay the debt. Local commodity suppliers are paid in local currency by the debtor agency.
In countries that have adopted countertrade as a part of a government procurement policy, foreign
suppliers and contractors are usually advised of the countertrade requirements during the bidding
stage or supply negotiations stage to enable them to coordinate and gather information on such
program from the government’s designated countertrade office. These suppliers/contractors may be
required to execute a written document committing them to perform countertrade in relation to a
particular Supply Contract. The common practice is for suppliers to execute a
“Countertrade/Offset Agreement” or a similar agreement after being awarded a supply contract
which contains the countertrade/offset commitment of the supplier together with the manner and
period of performance of such countertrade obligations and other related conditions.
CHAPTER II
On August 19, 1993, former President Fidel V. Ramos issued Executive Order No. 120 which established
a national policy on countertrade in the Philippines.
• Directs the National Government, its departments, bureaus, agencies and offices, including
government-owned and controlled corporations, to adopt countertrade as a supplemental trade
tool in connection with transactions involving the importation or procurement of foreign
capital equipment, machinery, products, goods and services entailing the payment of at least
US DOLLARS: ONE MILLION (US$1,000,000.00) and above or its equivalent in other
foreign currency and to negotiate and conclude, on a best efforts basis, agreements or
arrangements on countertrade with respect to such importation.
• Mandates the formulation and adoption of implementing rules and regulations (IRR) for this
program by an inter-agency committee composed of the Department of Trade and Industry,
Department of Finance, National Economic and Development Authority, and the Philippine
International Trading Corporation.
On November 14, 1994, the aforesaid inter-agency committee issued the IRR of the E.O. 120 which
outlined the fundamental procedures and guidelines for the Program:
• Countertrade Integration: Government offices whose importations are covered by the IRR
will ensure that countertrade is required of their foreign suppliers.
• Countertrade Agreement: Within 90 days from the award and signing of a supply contract
with the Philippine government, the foreign supplier (or its designated assignee) signs a
Countertrade Agreement with PITC outlining the terms and conditions of its countertrade
performance.
• Countertrade Performance: The foreign suppliers are normally given two to three (2-3) years
within which to fulfill the countertrade obligation.
• Monitoring Fees (As per PITC BR No. 2002-01-06): The following fees are payable to PITC
upon fulfillment of the countertrade obligation:
¾ For capital goods imports: 1.5 % of the value of the countertrade obligation;
¾ For commodities: 0.25% of the value of the countertrade obligation.
C. Role of PITC
PITC established in 1973 and re-organized in 1977 as a full service and self-sustaining international
state trading organization under the Department of Trade and Industry, is the government office
responsible for the management and administration of the countertrade program of the Philippine
government with the following key responsibilities as provided in the IRR of E.O. s. 1993:
PITC’s Countertrade Group is administratively responsible for overseeing and carrying out the
aforementioned tasks under the over-all supervision of the PITC President.
MALACANANG
MANILA
WHEREAS, under Section 13, Article XII of the 1987 Constitution, the State is mandated to pursue
a trade policy that serves the general welfare and utilizes all forms and arrangements of exchange on the
basis of the equality and reciprocity;
WHEREAS, the adoption of the policy on countertrade is aimed at compensating the foreign
exchange expended for the importation or procurement of foreign capital equipment, machinery,
products, goods and services by the national government, its agencies or offices including government-
owned or controlled corporations, as well as to reciprocate for such importation or procurement through
arranged counter exports of Philippine traditional or non-traditional products to the country of the
supplier or any third country or through product buy back, offsets or investments;
WHEREAS, countertrade arrangements are expected to result in the opening of the new markets for
Philippine products and services, overcome quota and trade restrictions of other countries, and provide
for technology transfer and industrial growth, particularly in strategic industries, such as energy,
transport, infrastructure, telecommunications, and defense, as well as those listed under the Investments
Priorities Plan and the Industrialization Modernization Program; and
WHEREAS, the adoption of the policy on countertrade by the public sector will spur economic
development and help the Philippines achieve “newly-industrialized country” status by the year 2000.
NOW, THEREFORE, I, FIDEL V. RAMOS, President of the Republic of the Philippines, by virtue
of the powers vested in me by law, do hereby order;
Section 2. Definition of Terms. For purposes of the Executive Order, “Countertrade” shall refer to
any of the following arrangements:
(a) Counterpurchase -- also known as counter exports, parallel transactions or reciprocal trade,
whereby the foreign supplier reciprocally commits to purchase Philippine goods or services, to
be exported to the supplier’s country or a third country;
(b) Product Buy Back -- whereby the foreign supplier of the equipment or machinery is paid for
with the resultant product(s) or good(s) made or manufactured by such equipment or
machinery;
(c) Offset – whereby the foreign supplier commits to introduce investments or technology
transfer in the Philippines, or assist in establishing new industries or improving existing
industries to generate or save foreign exchange or create increased employment, which may or
may not related to the machinery, equipment, products or goods imported or services
procured;
(d) Trade-for-Debt Swap -- whereby a loan or credit accommodation obtained by a government
agency or government-owned or controlled corporation from a foreign government or creditor
which has remained outstanding and unpaid is arranged to be settled in full or partially by way
of sales of products, goods or services to be provided by a third party rather than by payment
in foreign currency; or
(e) Any form or combination or variation of the above arrangements that results in the inflow to
the country of foreign exchange, or savings thereof, investments, training and technology
transfer, grants for education, scientific, technological, environmental and related research
programs or projects, which will enhance Philippine industrial or export competitiveness or
contribute to the creation of new competitive industries, enhance existing industries or
utilization of Philippine services or expertise by foreign clients, or result in the reduction of
public debt.
Section 3. Implementing Agency. The Department of Trade and Industry, through the Philippine
International Trading Corporation, is hereby directed to coordinate with all government agencies and
government-owned or controlled corporations in formulating and implementing particular strategies on
countertrade or similar arrangements for any planned importation or procurement of foreign capital
goods, equipment, machinery, products, goods and services, with appropriate consultations to be made
with the private sector.
Section 5. Supply Base and Trading Network. To achieve maximum implementation and
dispersion of the benefits of Countertrade arrangements which may be concluded by government
agencies or government-owned or controlled corporations, the Philippine International Trading
Corporation shall maintain and enhance its supply base and trading network through constant and close
coordination with various industry and export sectors to ensure the availability of adequate and
acceptable products, goods and services which may be required under such countertrade arrangements.
Section 6. Implementing Rules and Regulations. The Department of Trade and Industry, National
Economic Development Authority, Department of Finance, and the Philippine International Trading
Corporation shall jointly promulgate the appropriate guidelines, rules and regulations to implement this
Executive Order.
(signed)
FIDEL V. RAMOS
President of the Philippines
By the President:
(signed)
TEOFISTO T. GUINGONA, JR.
Executive Secretary
Republic of the Philippines
DEPARTMENT OF TRADE AND INDUSTRY
1.0 PURPOSE
These rules and regulations are promulgated in compliance with section 6 of E.O. No. 120 dated 19
August 1993, mandating the Department of Trade and Industry, the Department of Finance, the
National Economic and Development Authority and the Philippine International Trading
Corporation to jointly formulate and issue the necessary guidelines and rules to implement the
provisions of said Executive Order.
For purposes of these rules and regulations, the following terms shall have the following meanings:
2.1 “Countertrade” -- is a general term for an international transaction that is premised on some
form of reciprocity which may be one (or a combination of) the transactions listed in this
Section.
2.2 “Counterpurchase” -- also known as counter exports, counter delivery, parallel transactions or
reciprocal trade – is a form of countertrade whereby the foreign supplier reciprocally commits
to accept/purchase Philippine products or services to be exported to the foreign supplier’s
country or to a third country.
2.3 “Offset” -- is a form of countertrade arrangement whereby the foreign supplier commits to
introduce investments or technology transfer in the Philippines or assist in the establishment
of new industries with export capacity and/or development and expansion of existing
manufacturing, technological and industrial capabilities of the Philippines to generate/save
foreign exchange and create/increase employment opportunities. These may or may not be
related to the equipment, machinery, products, goods or services imported by the Philippines.
If related, these are considered as Direct Offsets, and if not related, the same are considered
as Indirect Offsets. Activities qualified as either Direct Offsets or Indirect Offsets are listed
in Annex “A” hereof.
2.4 “Product Buy Back” -- is a form of countertrade whereby the foreign supplier of machinery,
equipment, or technology is paid for by the resultant product(s) or good(s) made or
manufactured from such equipment, machinery or technology. Some acceptable
forms/variations of Product Buy-Back are listed in Annex “B” hereof.
2.7 “Foreign Supplier” -- means the supplier of the imported capital equipment, machinery,
products, goods, technology or services including agents or representatives thereof in the
Philippines.
2.8 “Philippine Products” -- means any item produced, manufactured or assembled in the
Philippines which has a minimum local content of at least 51%. Mineral, aquatic, agricultural,
and forest resources derived from Philippine territory (not otherwise banned for exports by the
Philippine Government) are included in this definition.
2.9 “Philippine Services” -- means any legitimate service rendered utilizing Filipino labor and
skills.
3.0 COVERAGE
3.1 The provisions of E.O. No. 120 s. 1993 shall cover all importations or procurement of foreign
capital equipment, machinery, products, goods and services of departments, bureaus, agencies,
offices and instrumentalities of the National Government, including government-owned and
controlled corporations entailing the payment of at least United States Dollars: ONE
MILLION (US$1,000,000.00) or its equivalent in other foreign currency.
3.2 For purposes of determining the value of the government importations, the total contract price
for said importation, whether on CIF, FOB or otherwise as appearing in the pertinent
invoices/contracts, regardless of the delivery/shipment quantities (i.e. one-time shipment,
partial shipment or by installment, etc.) and/or the manner of payment (i.e. in installments
with or without down payments, in cash or credit, etc.) shall be considered in the
determination of whether the same are covered by these rules and regulations. No splitting of
purchase orders/contracts shall be allowed in circumvention of these guidelines.
4.0 EXEMPTIONS
4.1 The following importations are excluded from the coverage of these rules and regulations:
b) Those whose purchase or supply contracts were concluded prior to the signing of E.O.
No. 120.
d) Those which may be exempted by the Secretary of Trade and Industry, motu propio
upon the recommendation of PITC.
4.2 All exempted importations as enumerated in 4.1 above shall require the submission of an
Application for Exemption to PITC enumerating the grounds for exemption; Provided that:
PITC may issue a master exemption for recurring importations of the same kind by the same
entity valid for a period of one (1) year, subject to renewals as merited by the circumstances.
4.3 After receipt of said Application for Exemption, PITC shall review the same and if warranted,
approve the said application provided that in cases covered under Section 4.1 (d) hereof, PITC
shall endorse the same to the Secretary of Trade and Industry for review and approval.
5.1 Pursuant to Section 3 of E.O. No. 120, the Department of Trade and Industry through the
Philippine International Trading Corporation (PITC) shall be the government office
responsible for the implementation, management and administration of this Program.
c) Endorse or recommend approval of applications for exemptions under Section 4.1 (d)
hereof.
d) Provide advisory/consultative services to Philippine government departments, bureaus,
offices, agencies and government-owned and controlled corporations on policy matters
relating to countertrade.
g) Coordinate and assist all government departments, agencies, bureaus, offices and
instrumentalities including government-owned and controlled corporations in
formulating and implementing appropriate strategies on countertrade and similar
arrangements relative to any foreign procurement or importation of capital equipment,
machineries, products, goods and services covered by these rules.
k) Submit regular status reports to the Secretary of Trade and Industry and concerned
government agencies on the status of all countertrade transactions/projects in the
country.
5.3 In addition to the foregoing, PITC shall be the over-all coordinating and monitoring
office/agency of the Philippine Government for countertrade/offsets and shall act as the
Countertrade nominee of procuring departments, bureaus, offices and instrumentalities of the
National government including government-owned and controlled corporations with respect to
countertrade in foreign procurement/importations.
5.4 PITC’s Countertrade Department shall be administratively responsible for overseeing and
carrying out the functions enumerated above under the over-all supervision of the President of
PITC.
6.1 All departments, bureaus, agencies, offices and instrumentalities of the National government
including government-owned and controlled corporations must submit to the PITC no later
than the second week of November of every calendar year, a list of proposed importations
which are covered by these guidelines, together with their approximate values, product
information and foreign suppliers of the said importation. In case an importation was not
among those listed and submitted to the PITC during the previous year, the same must be
submitted to PITC at least one (1) month before the intended date of bidding (for bidded
purchases) or purchase (for negotiated purchases) of these items. This shall form a basis for
an Annual Government Countertrade Foreign Procurement List to be drawn up by PITC.
6.2 PITC shall review the list submitted and shall thereafter coordinate with the government
procuring offices concerned on (i) on the importations/procurements which are subject to
countertrade and (ii) to ensure that all efforts are exerted for the inclusion of countertrade
commitments of the foreign suppliers as one of the factors/criteria in the evaluation of the
bidding documents/tenders and/or selection of a foreign supplier.
To facilitate proper coordination, all government importing offices concerned shall designate
a countertrade officer or a countertrade desk within their respective organizations which shall
handle all countertrade matters relative to their foreign procurement and coordinate with PITC
on said matter.
6.3 In the evaluation of the bid tenders or sales offers submitted by the foreign supplier, the
government procuring agency/office concerned shall give preference/priority (product
specifications, quality considerations, pricing and related terms being equal) to the foreign
supplier offering the most favorable countertrade arrangement for the Philippines .
6.4 Within five (5) working days or earlier from selection of the foreign supplier of the capital
equipment, machinery, products, goods or services, the government importing office
concerned shall notify PITC in writing of the details of importations as well as the
countertrade proposal of the foreign supplier selected together with copies of the bid tender or
sales offer of the foreign supplier containing its countertrade commitments.
In case the winning foreign supplier has made no countertrade proposal/commitment, the
government agency/office concerned must present to PITC proof that all efforts were exerted
to solicit countertrade offers/proposals from said supplier; and PITC reserves the right to take
necessary initiatives towards securing countertrade commitments from said supplier.
6.5 PITC shall evaluate the countertrade proposals submitted by the foreign supplier in
accordance with the Evaluation Criteria established by PITC and thereafter coordinate with
the foreign supplier on the final countertrade arrangements and supplemental contracts to be
executed thereunder.
6.6 PITC shall keep the government importing office concerned appraised/updated on all
subsequent developments relative to the countertrade package developed for their respective
procurements/importations and solicit their cooperation/assistance in these matters as
necessary.
7.1 Countertrade in its various forms shall be carried out/performed between PITC, as the
countertrade nominee of the government procuring office, and the foreign supplier concerned
or its designated countertrade nominee (hereinafter referred to as “Countertrader”). In this
regard, a foreign supplier is allowed to transfer/assign its countertrade obligations to PITC or
to any other Countertrader who shall fulfill its countertrade obligations, subject to prior
written approval of such transfer/assignment by the government procuring office concerned
and PITC. The selection of Countertrader, while being the prerogative of the foreign supplier,
must adequately demonstrate to the satisfaction of PITC that the designated Countertrader is
suitably capable of fulfilling the countertrade obligations in accordance with these rules.
7.2 PITC shall coordinate and negotiate directly with the foreign supplier or its Countertrader on
the requirements, processes and contracts/agreements necessary to implement the countertrade
component of government importations/procurement covered by these rules. PITC shall
execute the necessary countertrade contracts with the foreign supplier or its Countertrader.
Such countertrade contract or agreement must be finalized and signed by the parties not later
than ninety (90) days from the signing of the Supply or Sales Contract between the foreign
supplier and the government procuring agency/office.
7.3 The following standard terms and conditions, among others, shall be incorporated in the
countertrade agreements/contracts to be entered into by the foreign supplier or its
Countertrader:
a) The level of countertrade obligations of the foreign supplier or its Countertrader shall be
a minimum of 50% of the contract price for said importation/procurement.
b) The countertrade obligations must be carried out and fulfilled by the foreign supplier or
its Countertrader not later than three years (with a grace period of two years) from the
date of execution of the countertrade contract or agreement.
The laws of the Philippines shall be the governing law of all countertrade
contracts/agreements entered into pursuant to these rules.
8.1 PITC shall institute and maintain monitoring and crediting procedures and rules to ascertain
that countertrade obligations are performed in accordance with these rules and to credit the
foreign supplier or its Countertrader for due performance thereunder, on a per transaction
basis. In this regard, PITC is likewise authorized to impose and collect monitoring fees to
meet costs for the management and operation of countertrade.
8.2 The foreign supplier or its Countertrader shall be required to submit certified true copies of
supporting documents as may be required by PITC as evidence of each countertrade
transaction undertaken, including but not limited to, the following:
8.3 Failure to present required documents shall serve as sufficient basis to withhold or deny
crediting any transaction against the countertrade obligations of the foreign supplier or the
Countertrader.
8.4 The foreign supplier or its Countertrader shall be duly credited for performance of its
countertrade/offset obligations on the basis of the following:
a) For Counterpurchase -- the FOB Invoice Value of each transaction; or 95% of the CIF
Invoice Value if the CIF value is used; Provided that in either case, the local content
value is at least 51%.
b) For Philippine Services -- the labor/manpower costs for such services, excluding the
costs of equipment or materials used, as appearing in the invoice/contract.
c) For Offsets and related transactions -- the value of the investments, technology, grants,
research, training, and related activities (as listed in Annex “B” hereof) introduced by
the foreign supplier or its Countertrader as certified to by the direct Philippine
beneficiary thereof, inclusive of the multipliers granted, if any, for said transactions.
d) For Buy-Back and Debt-for-Goods/Services -- the FOB invoice value (or 95% of CIF
value) of the products or goods exported as a result of the buy-back or Debt for Goods,
inclusive of the multipliers granted, if any, for such transactions, as certified to by the
Philippine beneficiary of the plant or equipment (for buy-back) or the Philippine debtor
(for Debt-for-Goods).
8.5 Multipliers ranging from 2x to 5x shall be imputed to the value of certain desired activities
undertaken by the foreign supplier or its Countertrader in the final crediting of its
countertrade/offset obligations. The final multiplier to be used for a particular transaction shall
be agreed to by PITC and the foreign supplier or its Countertrader prior to undertaking said
transaction.
PITC shall accredited Philippine manufacturers/exporters and contractors nationwide who may wish
to participate in countertrade transactions as suppliers of the Philippine products or services.
10.1 The foreign supplier or its Countertrader shall submit quarterly and annual reports to PITC on
the progress of their countertrade performance with a summary of transactions undertaken
pursuant thereto.
10.2 PITC and the foreign supplier or its Countertrader shall hold midyear and yearly countertrade
performance reviews.
10.3 PITC shall submit to the Department of Trade and Industry and the government procuring
agency concerned a semi-annual status reports on the countertrade programs undertaken
hereunder.
PITC is hereby authorized to issue such circulars and guidelines as may be necessary to implement
and administer these rules and regulations, including those intended to clarify or interpret the
provisions hereof.
12.0 ADJUDICATION
12.1 Any dispute arising from the implementation of these rules shall be referred to PITC for initial
settlement/action. Should any of the parties concerned not be satisfied with the action/decision
of PITC, the matter may be referred to the Secretary of Trade and Industry for decision.
12.2 Where the dispute involves the countertrade contract/agreement itself, and a party thereto is
not satisfied with the decision of the Department of Trade and Industry, it may bring the same
for arbitration in accordance with the arbitration rules and procedures adopted by the parties
as contained in the countertrade contract/agreement.
14.1 Compliance with these rules shall be a condition sine qua non for importations of all
departments, bureaus, agencies, instrumentalities and offices of the National Government
including government-owned and controlled corporations. The heads of all government
departments, agencies, bureaus, offices and government-owned and controlled corporations
shall ensure strict compliance of these rules and any violations hereof shall be dealt with in
accordance with existing laws and regulations.
15.0 EFFECTIVITY
These rules and regulations shall take effect 30 days after its publication in two (2) newspapers of
general circulation.
(signed) (signed)
ROBERTO F. DE OCAMPO RIZALINO S. NAVARRO
Department of Finance Department of Trade and Industry
(signed) (signed)
CIELITO F. HABITO JOSE LUIS U. YULO, JR.
National Economic and Philippine International Trading Corporation
Development Authority
Annex “A”
OFFSETS
The following projects/activities in the Offset category, whether directly related (Direct Offsets) or not
related (Indirect Offsets) to the original importation/purchase of foreign equipment, machineries,
products, technology and services by the Philippine government, include, but shall not be limited to any
of the following:
1. Foreign direct investment in the local industries engaged in the manufacture of equipment,
machinery, spare parts or components for the export market.
2. Technology transfer and/or skills training resulting in the (a) capability to locally manufacture,
manage, design and/or produce the imported equipment, machinery, spare parts or components; (b)
ability to provide required local logistic and maintenance support of an imported machinery or
equipment.
3. Assistance in research and development activities which will enhance or improve the industrial,
technological, or scientific capabilities of the Philippines.
4. Assistance in opening up or diversifying foreign markets for the utilization of Philippine services.
5. Investments in Philippine industries covered by the Investment Priorities Plan of the Board of
Investment (BOI) and other eligible projects as may be prescribed/identified by the government
from time to time.
6. Donations or grants in educational, scientific, technological and related research and development
programs, public or private, which will enhance Philippine industrial/export competitiveness and
address environmental concerns in support of sustainable development.
8. Other transactions or activities similar to the above which will further enhance Philippine economic
or industrial interests and improve the country’s international balance of payments, as may be
approved by PITC.
Annex “B”
The following forms/variations of buy–back arrangements may be considered under these rules on a case-
to-case basis:
5. Arrangement whereby the foreign supplier of equipment or machinery is different from the foreign
supplier of the technology; in which case, the foreign supplier of the equipment or machinery shall
be the one to be linked with the buy-back commitment and the said supplier can also switch the
obligation to buy-back the resultant products to a third party, which can be a trading company or
another end-user.
CHAPTER III
Under existing Philippine laws on government procurement, particularly, Republic Act No. 9184 and its
IRR-A, all conditions, terms and requirements to be imposed on and complied with by government
suppliers to enable them to apply for eligibility and to bid for government contracts must be clearly stated
in the Bid Documents. For Non-bidded contracts, similar minimum requirements must be set by the
procuring government office for suppliers who wish to supply the said government office with goods or
services.
a) The Countertrade Undertaking Form per the format attached hereto as Annex “A” shall
be included as one of the eligibility form/document to be accomplished and submitted by
bidders applying for eligibility. Said form shall be considered as one of eligibility
documents to be submitted pursuant Section 23 of the Implementing Rules and
Regulations-A (IRR-A) of R.A. 9184 and shall be included in the Eligibility Envelope to
be submitted by all bidders. It shall contain the countertrade level of commitment of said
bidders as well as their commitment to sign a Countertrade Agreement with Philippine
International Trading Corporation (PITC) within 90 days from signing of the Supply
Contract with the Department.
b) Failure or refusal to accomplish and submit the Countertrade Undertaking Form shall be
sufficient basis for an applicant to be declared "ineligible" to participate in the bidding.
a) Within 90 days from the signing of the Supply Contract between the procuring
government office and the winning SUPPLIER, the latter shall proceed to negotiate and
sign a Countertrade Agreement with PITC in accordance with the provisions of the IRR
of E.O. 120 s. 1993.
b) Failure on the part of the winning supplier to sign a Countertrade Agreement with PITC
as herein required shall entitle the procuring government office to disqualify the winning
bidder from participating or submitting tenders for future procurements, without
prejudice to the right of the procuring government office to enforce such other penalties
and sanctions on said winning bidder as stipulated in the procurement contract or as
warranted under the circumstances.
2. Countertrade provision in the Supply Contract: To ensure that foreign suppliers or their
representatives in the Philippines are committed to perform countertrade, the following
provision on countertrade shall be included in the Supply Contract:
“Countertrade. Pursuant to the provisions of Executive Order No. 120 s. 1993 and its
implementing rules and regulations on the adoption of countertrade in government
foreign procurements, the Supplier binds itself to undertake countertrade arrangements
equivalent to at least 50% of the value of the supply contract (or the imported value of
the supply contract, as applicable) to be carried our in accordance with the terms and
conditions of the Countertrade Agreement to be signed between the Supplier and
Philippine International Trading Corporation (PITC), the government implementing
agency for countertrade. The said Countertrade Agreement shall be signed within
ninety (90) days from the signing of this Supply Contract.”
Within 90 days from the signing of the Supply Contract between the procuring government
office and the winning SUPPLIER, the latter shall proceed to negotiate and sign a
Countertrade Agreement with PITC in accordance with the provisions of the IRR of E.O. 120
s. 1993.
Flow chart showing the integration of countertrade in the procurement process:
COUNTERTRADE FLOW
start
If No Public Public
Bidding Bidding
end
Annex “A”
SAMPLE TEXT OF AN
UNDERTAKING TO PURSUE COUNTERTRADE
RELATIVE TO THE SUPPLY OF
(name of project)
(cite type of importation)
Pursuant to E.O. 120 s. 1993 relative to the adoption of COUNTERTRADE in government
procurement, and in order to assist in the economic progress of the Philippines, the undersigned bidder
hereby commits that should it be awarded the Supply Contract for the above-cited project by (Name of
Importing Government Office) it shall, directly or through a nominated third party, undertake
countertrade arrangements equivalent to ______% (not less than fifty percent (50%) of the value of the
total Contract Price of the Supply Contract, said countertrade arrangements to be concluded in writing
between the undersigned bidder and Philippine Government – within ninety (90) days from the signing of
the said Supply Contract.
Failure on the part of the undersigned bidder to comply with this Undertaking shall entitle (Name of
Importing Government Office) to rescind/cancel the Supply Contract and award the same to another party
and/or disqualify the undersigned from participating in future supply contracts with the said office
without liability on the part of the latter.
This Undertaking shall form part and parcel of the undersigned’s bid tender for the above project.
Issued this ______ day of ________ in ____________, Philippines.
________________________ __________________________
Name of Company Name of Representative
(Supplier/Bidder) Title:
__________________________
Signature
CHAPTER IV
Since its inception in 1989, the Countertrade Program has played a vital role in the foreign procurement
of various government agencies including government-owned and controlled corporations. From the
period of 1989 to October, 2004 over US$358 million worth of trade (exports), investments, debt for
goods and other offset activities have been generated. Moreover, US$189 million worth of countertrade
obligations have been committed by various suppliers and are undergoing implementation.
DoE/NPC
DoF/DILG
PCG/DOT C 0.79%
0.41%
3.17%
NFA
AFP
39.31%
40.13%
The Armed Forces of the Philippines (AFP), is the first government agency to adopt countertrade in its
foreign procurement, has been instrumental in generating US$144 million worth of completed
countertrade arrangements most of which have directly benefited the export and defense sectors. This
value represents 40% (the biggest share) of all completed transactions among all government agencies
which have adopted countertrade.
To further strengthen the adoption of countertrade in the Asp’s foreign procurement, former Secretary of
Defense Angelo T. Reyes signed last 20 July 2001 AFP Department Circular No. 4. It prescribed the
guidelines in the implementation of countertrade for procurement contracts under the Armed Forces of
the Philippines Modernization Program. Among the salient features of the department circular was the
setting of the minimum countertrade level of commitment depending on the range of value of the supply
contract. Please refer to Appendix “E”.
Another feature of the AFP’s adoption of countertrade is the emphasis on defense related offset as its
priority over other forms of countertrade.
It is anticipated that more countertrade transactions will be generated as the AFP implements its
modernization program.
Although the National Food Authority (NFA) started to adopt countertrade in its rice importation as a
matter of policy only in 2002, it ranks as the second largest agency with completed countertrade
transactions valued at US$140 million. This amount represents 39% of all completed transactions of all
government agencies. It is worth mentioning that majority of the completed counter-exports have been
agricultural products thereby benefiting the local agriculture sector.
Philippine National Police
Since 1996, the Philippine National Police (PNP) has adopted countertrade in its foreign procurement of
patrol cars and motorcycles, hand pistols, communication and other related equipment. To date,
completed countertrade transactions on all PNP procurement has contributed US $18 million or 5% of the
total amount of all countertrade transactions.
Inclusion of countertrade in PNP procurement was further strengthened by the signing of a Memorandum
of Agreement on Countertrade between PITC and the PNP represented by former PNP Chief Leandro R.
Mendoza last 04 May 2001.
In 14 January 2001, a Memorandum of Agreement on Countertrade between PITC and the Department
of Interior & Local Government (DILG) was signed by former DILG Secretary Jose D. Lina, Jr. DILG
Memorandum Circular No. 2002-05 dated 16 January 2002 was subsequently issued. The Circular
prescribed the adoption and integration of countertrade in the foreign procurement for all of the DILG
and its attached offices.
Todate, procurement of Fire trucks from Hyundai contributed US$1 million worth of countertrade
transactions.
The PCG/DOTC procurement of Australian Search and Rescue Vessels (Phase I) from Tenix Corporation
resulted in US$11 million worth of counter exports.
A summary of all Philippine government procurement with completed countertrade transactions from
1989 to 2004 and the benefits derived from the adoption of countertrade is hereinafter provided.
SUMMARY OF COMPLETED TRANSACTIONS
ARMED FORCES OF THE PHILIPPINES
Countertrade Value of
Foreign Supplier/ Equipment Commitment Products Exported/ Countertrade Total Amount Destination/
Contract Date Procured (in % & equivalent Offset Activities Transaction (US$) Beneficiary
amount in US$) (US$)
HARRIS CORP. Communication 100% ●Semi-processed Rubber 1,326,225.60 1,561,917.80 Germany, Italy, South
(USA) Equipment Africa, Czech Rep.,
CT*: Raiffeisen 1,525,521.60 New Zealand
Centrobank AG, Austria ●Assorted Bags 217,872.20 Japan, Ireland, USA
Feb. 2004 ●Desiccated Coconut 17,820.00 Germany
HARRIS CORP. Manpack 100% ●Software Upgrade 7,056,720.00 8,492,856.00 AFP
(USA) Communication ●Rechargeable Batteries 653,184.00
Dec. 2003 6,102,086.40 ●Spare Modules 542,952.00
●UFT-5800 Automated Test Set 240,000.00
FN HERSTAL S.A. Squad Automatic 100% ●Audit Inspection of the GA Facilities 225,000.00 326,250.00 AFP, Phil. Army &
(Belgium) Weapon ●Post Audit Report 60,000.00 Government Arsenal (GA)
June 2003 (SAW) 319,153.18 ●Minimi SAW Session 41,250.00
GREEK POWDER Ammunition 100% ●Semi -processed Rubber 483,638.40 760,733.40 New Zealand, Germany
(Greece) ●Desiccated Coconut 277,095.00 Italy & Czech Rep.
CT: Raiffeisen 760,000.00 Egypt, Germany &
Centrobank AG, Austria France
June 2003
*CT-Countertrader
A. INTRODUCTION
These guidelines are promulgated pursuant to the provisions of E.O. 120 dated August 19, 1993 and
its Implementing Rules and Regulations (IRR) signed on November 14, 1994, directing the
adoption of countertrade as a supplemental tool with respect to the importation or procurement of
foreign capital equipment, machinery, products, goods and services of the National Government, its
departments, bureaus, agencies and offices including government owned and controlled
corporations.
These guidelines shall govern the evaluation, review, approval and implementation of OFFSET
arrangements to be undertaken pursuant to E.O. 120 and its Implementing Rules and Regulations.
B. OBJECTIVES OF OFFSETS
Offsets in its various forms are generally intended to enhance the industrialization and technological
development of the country by encouraging investments, technology transfers, research and
development and related activities that would provide the appropriate environment and
infrastructure needed to assist Philippine companies in achieving global product competitiveness
and/or to correct imbalances in foreign exchange flows.
C. ELIGIBLE OFFSETS
As cited in Annex “A” of the IRR to E.O. 120, offsets may be Direct or Indirect. When the offsets
to be undertaken is directly related to the capital equipment, machinery, goods or services imported
by the Philippine government, the same is considered DIRECT. Otherwise, they are considered
INDIRECT. Subject to the provisions of E.O. 120 and its IRR, the following are eligible categories
of offset activities, to wit:
C.1.1 Definition
Foreign investments include original and additional investments. These may be in the
form of cash or assets/properties.
C.1.3 Exclusions
The following are excluded and shall not be considered as foreign investments within
the framework of these guidelines: (i) the receipt of stock dividends by all the
stockholders of a new corporation on a pro-rata basis; (ii) ownership of bonds
including income bonds, debentures, notes or other evidences of indebtedness; or (iii)
purchase of stock options or stock warrants until the holder exercises the option and
actually acquires stock from the corporation.
b) If the investments are made in the form of cash, the funds must not be sourced or
borrowed from the local Philippine banking system but from overseas;
c) Where the investments are made in the form of personal property (other than cash),
the same must be brand-new unless otherwise approved by PITC in writing;
e) The investment must comply with the requirements/provisions of E.O. 226 and the
current IPP, including the ownership requirements for registered enterprises.
C.2 TECHNOLOGY TRANSFER
C.2.1 Definition
b) Transfer of equipment and resources not available in the Philippines under normal
commercial terms.
The areas specified in items C.1.4 above, as eligible for foreign investments under
these guidelines, shall likewise be eligible areas for R & D activities. Other areas for
R & D activities not otherwise specified therein shall be subject to PITC written
approval on case-to-case basis.
c) R & D supplier/contractor must ensure that the results of the R & D are turned over
to and owned by the Philippine beneficiary and if commercially viable, to be
exploited under normal commercial terms for the benefit of the Philippines, such
terms to be incorporated in appropriate contracts/documents to be submitted to
PITC;
e) The R & D must be undertaken in accordance with the guidelines set forth by the
DOST.
a) Training and skills upgrade programs must not be available in the Philippines;
c) Training and skills upgrade must assist in the dissemination of scarce, new or
advanced technological or scientific knowledge or processes, particularly in the
areas listed in Annex “A” hereof;
C.5 DONATIONS/GRANTS
b) If donations/grants are in the form of foreign currency (cash), the same must be
sourced from outside the Philippines and inwardly remitted to the Philippines. If
in the form of property, the same must be appraised, evaluated and approved by the
Philippine beneficiary thereof;
C.6.1 Definition
“Environmental Projects” – as used herein shall refer to the projects directed towards
the preservation, rehabilitation or development of the country’s ecological balance and
the national use of resource to attain sustainable development as approved/endorsed by
the Department of Environment and Natural Resources (DENR).
c) Air, water and soil quality management projects including air and water pollution
control projects;
c) Said project shall be undertaken in close coordination with the DENR and local
authorities of the targeted areas; and
C.7 OTHERS
Other activities or transactions similar to those previously enumerated above may be eligible
as offsets PROVIDED: that all proposals relative thereto are submitted to PITC for proper
evaluation and approval prior to implementation.
D.1 GUIDELINES
a) Eligible offsets shall be valued based on the set criteria herein below established.
b) Basic Multipliers shall be applied to the offset values as incentives for pursuing these
offsets. Certain categories of offsets, when undertaken under certain conditions, will be
granted an Incremental multiplier to be added to the Basic multiplier. These conditions
and their corresponding multipliers are enumerated in Annex “B” and made integral parts
hereof.
To Compute: In the case cited above, if the investment is US$20,000, then the
computation of offsets will be as follows:
c) In cases where the eligible Offsets falls within two or more categories of offsets, the Basic
multiplier to be applied to such activity shall be HIGHER multiplier without considering
any Incremental multiplier, if applicable.
The following are the criteria for valuation and application of multipliers for specified offset
activities/projects:
b) Basic Multiplier
Technology Transfer arrangements are valued based on the actual US$ (or
equivalent in other foreign currency) costs of the transfer or transaction value.
b) Basic Multiplier
R & D is valued based on the actual US$ (or equivalent in other foreign currency)
costs incurred for the R & D undertaken.
b) Basic Multiplier
The basis for valuation for training and skills upgrade shall be the actual costs of
training/skills upgrade, including travel and living expenses incurred by the
overseas supplier.
b) Basic Multiplier
A multiplier of 3x the actual costs of the training and skills upgrade program shall
be applied.
Donations or grants shall be based on the US$ value (or its equivalent in other
foreign currency) of the donation or grant. If in property, the appraised market
value thereof shall be used as basis.
b) Basic Multiplier
Environmental projects shall be valued based on the actual US$ (or its equivalent
in other foreign currency) costs of the projects.
b) Basic Multiplier
D.2.7 OTHERS
Pursuant to the provisions of E.O. 120 and its IRR, all offset proposals of foreign suppliers of the
government agencies or offices covered by IRR, shall be submitted to PITC for evaluation and
approval no later than five (5) working days after the selection of the said foreign supplier, unless
the said period is extended by PITC.
F. SUPPLETORY DOCUMENT
The provisions of E.O. 120 and its IRR shall be deemed incorporated and adopted by reference to
this Circular and this Circular shall be considered as a binding supplement to the IRR.
G. EFFECTIVITY
(signed)
JOSE LUIS U. YULO, JR.
President
ANNEX “A”
1. Archipelagic Geography
• Mariculture
• Aquaculture
• Maritime Industries
2. Natural Resources
• Ecosystem Farming
• Geothermal Technology
• Renewable Energy Technologies
• Jewelry
3. Applied Sciences
• Biotechnology
• Medical/Health Professionals
• Agribusiness
• Management
4. Ethno linguistic and Religious Diversity
• Plural Development Processes
• Tourism
• Cross-cultural Communications
5. Educational Infrastructure
• Soft or Behavioral Technologies
• HRD Tools
• Group Dynamic Techniques
• Computer Software
• Entertainment
6. Population
• Conflict Management
• Community Development Tools
ANNEX “B”
INCREMENTAL MULTIPLIERS
A. Incremental Multipliers (mentioned in Item D.1 (b) of these Guidelines) may be applied/added to
the Basic Multiplier of any of the following offset categories, to wit:
• Foreign Investment
• Technology Transfer
• Donations or Grants
B. The following Incremental Multipliers are applicable only if the offsets listed in (A) above are
undertaken or pursued in any one or more of the preferred areas enumerated below:
C. Where the said offsets are undertaken or pursued in more than one of the preferred areas listed in
(B) above, the total multipliers (basic + incremental) to be applied to such offset shall not exceed
6x.
APPENDIX B
A. INTRODUCTION
This Memorandum Circular is being issued for the purpose of amending certain provisions of
Memorandum Circular No. CT-95.1/01 dated January 10, 1995 (“Circular CT-95.01/01”) entitled
“Guidelines For the Evaluation and Approval of Offsets Arrangements to be Undertaken Pursuant
to E.O. 120 and its Implementing Rules and Regulations”.
B. AMENDMENTS/SUPPLEMENTS
.
B.1 A new provision is inserted at the beginning of Item C (ELIGIBLE OFFSETS), to read as
follows:
All offset activities, regardless of their types/categories, which are to be undertaken pursuant
to E.O. 120 and its Implementing Rules and Regulations must, first and foremost, meet the
test of ‘causality’, as defined hereunder.
Causality – as the term is used herein shall mean that the proposed offset
activities/transactions were initiated by the foreign supplier as a result of a countertrade
obligation/commitment of said foreign supplier pursuant to a particular Supply/Sales Contract
with the Philippine government.
As a general rule, any offset activity/transaction undertaken after the effectivity date of a
Specific Countertrade Agreement between the foreign supplier and PITC is presumed to have
been undertaken as a result of said Specific Countertrade Agreement.
As cited in Annex “A” of the IRR to E.O. 120, offsets may be Direct or Indirect. When the
offset to be undertaken is directly related to the capital equipment, machinery, goods or
services imported by the Philippine government, the same is considered DIRECT. Otherwise,
they are considered INDIRECT.
Subject to the causality provisions hereof and the provisions of E.O. 120 and its IRR, the
following are eligible categories of offset activities, to wit:
x x x x x x x x x
x x x x x x x x x
C. INTEGRATED DOCUMENT
From and after effectivity date hereof, all references to Circular CT-95.01/01 shall be deemed to
refer to Circular CT-95.01/01 as amended by this Circular CT-95.4/01. Except as expressly
amended/modified hereby, all terms and provisions set forth in Circular CT-95.1/91 shall remain
unchanged and in full and force and effect and Circular CT-95.01/01 shall, from hereon, be read as
a single integrated document incorporating the amendments/modifications effected hereby.
D. EFFECTIVITY
(signed)
JOSE LUIS U. YULO, JR.
President
APPENDIX C
A. INTRODUCTION
To ensure that “best efforts” are exerted by Government procuring offices to adopt countertrade as a
supplemental trade tool with respect to their procurement/importation of foreign capital equipment,
machinery, products, goods and services as mandated under E.O. 120 dated August 19, 1993 and its
Implementing Rules and Regulations (“IRR”) dated January 10, 1995, the following measures shall
be complied with.
B.1 It shall be the responsibility of all Government procuring offices, whose foreign procurement
or importations are covered by E.O. 120 and its IRR, to require its foreign suppliers to submit,
together with their bid tender (in case of bidded purchases) or product/sales offer (in case of
negotiated purchases) a written Undertaking to pursue countertrade in the Philippines in the
event that said supplier is awarded the subject contract.
The text of said written Undertaking is hereto attached as Annex “A” and made integral parts
hereof.
B.2 The aforesaid Undertaking shall be signed by the duly authorized representative of the foreign
supplier and shall be submitted to the Government procuring office together with, and at the
time as, the bid tender or product/sales offer for the particular equipment, machinery, product,
goods or services being offered to the government.
B.3 The Government procuring office concerned shall take all necessary steps to integrate the
above-mentioned requirement in its bidding or related procurement procedures for
importations covered by E.O. 120 and its Implementing Rules and Regulations.
To this end, said office shall ensure that its foreign suppliers are duly informed of such a
requirement PRIOR to submission of their respective formal bid or related offers.
B.4 Pursuant to Section 6.3 of the IRR, the Government procuring office shall, in the evaluation of
bid tenders/offers of foreign suppliers, give preference/priority (product specifications, quality
considerations, pricing and related terms being equal) to the foreign supplier offering the most
favorable countertrade arrangement for the Philippines.
B.5 Following Section 6.4 of the IRR, the Government procuring office shall, within five (5)
working days from the selection of their foreign supplier, notify PITC in writing of the details
of the importation/purchase together with the countertrade Undertaking of the selected foreign
supplier.
C. COMPLIANCE
C.1 Compliance of the above-mentioned requirements shall be prima facie proof that “best
efforts” were exerted by the concerned Government procuring office to ensure compliance
with E.O. 120 and its IRR.
C.2 Foreign suppliers who fail or refuse to submit such written Undertaking, as imposed by the
Government procuring office concerned, may be disqualified by said procuring office, at its
sole option/discretion.
D. SUPPLETORY DOCUMENT
This circular shall be considered as a binding supplement to the IRR and shall form integral parts
hereof.
E. EFFECTIVITY
(signed)
JOSE LUIS U. YULO, JR.
President
Annex “A”
Pursuant to the national policy on countertrade as enunciated in E.O. 120 S. 1993 relative to the adoption of countertrade
in government procurement; and in order to assist in the economic progress of the Philippines, the undersigned bidder
hereby commits that should it be awarded the Supply Contract for the above-cited project by the (name of government
office) it shall, directly or through a nominated third party, undertake Countertrade Arrangements such as but not limited
to the export of Philippine products, the usage of Philippine services, offsets, and/or investments and technology
transfers for Philippine industrial development, equivalent to not less that fifty percent (50%) of the total contract price
of the Supply Contract, said Countertrade Arrangements to be concluded in writing between the undersigned (or its duly
designated nominee) and PITC within ninety (90) days from the signing of the Supply Contract.
Failure on the part of the undersigned to comply with this commitment to enter into Countertrade Arrangements (directly
or through its nominee) with PITC within the 90-day period prescribed herein shall entitle the (name of government
office) to rescind/cancel the Supply Contract and award the same to another party and/or disqualify the undersigned
from participating in future supply contracts with this office, without liability on the part of (name of government
office).
This Undertaking/Agreement shall form part and parcel of the undersigned’s bid tender for the above project.
________________________ _____________________________
NAME OF COMPANY REPRESENTATIVE
(SUPPLIER/BIDDER) TITLE: ______________________
______________________________
SIGNATURE
APPENDIX D
I. INTRODUCTION
In the interest of facilitating investment projects, technology transfer, training, research and other
projects that are deemed vital to the Philippine economy, the banking of offset credits awarded to a
foreign supplier (or its designated countertrader), for offset activities undertaken pursuant to E.O.
120 s. 1993 and its Implementing Rules and Regulations (IRR) shall be allowed subject to the
guidelines prescribed hereunder. Counterpurchase activities are not eligible for banking of credits.
2.1.1 “Bankable or Eligible Offset Credits” mean the offset credits referred to in Section 3.1.1
hereof.
2.1.2 “Banking Approval Certificate” mean the clearance issued by PITC to a foreign
supplier (or countertrader) to proceed with the implementation of the proposed offset
project.
2.1.3 “Certificate of Banked (Forward) Credits” mean the certification issued by PITC
accrediting completed offset project to be applied against future offset obligations with
the Philippine Government.
2.1.4 “Forward Credits” mean offset credits held by a foreign supplier or its designated
countertrader which are accredited by PITC (as the Philippine Government’s
countertrade crediting office under the IRR) and substantiated by a Certificate/s of
Banked Credits issued by PITC to be used/applied, subject to the conditions
hereinafter outlined, against future offset obligations with the Philippine government.
2.1.5 “Offset Priorities” mean the Offset Priorities listing drawn up by procuring
government departments, agencies or offices as part of their respective development or
modernization programs and/or those investment activities that are contained/listed in
the current Investment Priorities Plan (IPP) of the Board of Investment.
2.1.6 “Offset Credits” mean the value claimed by and awarded to a foreign supplier (or its
designated countertrade) once said foreign supplier or countertrade
discharges/performs the amount of its offset obligation /commitment in accordance
with the Offset Priorities pursuant to E.O. 120 s. 1993 and its IRR or other pertinent
Philippine laws or regulations on countertrade in government procurement.
2.2 Unless otherwise modified by or defined in the next preceding paragraph, the terms used in
this circular shall have the same meaning attributed to them in E.O. 120 s. 1993, its IRR and
pertinent countertrade-related circulars or issuances issued by this office.
3.1.1 Subject to the conditions and procedures outlined in this circular, banking of credits or
forward credits under E.O. 120 S. 1993 and its IRR shall refer only to the following
offset credits:
3.1.2 The foreign supplier or countertrader is given only one (1) year from date of issue of
the Banking Approval Certificate granted by PITC within which to start
implementation of the Offset Project. Failure to implement the said project within the
herein period shall automatically nullify the said Certificate and PITC shall be
authorized to grant approval to another foreign supplier or countertrader to pursue the
same project.
3.1.3 Only the holder of a Certificate of Banked Credits is entitled to use/apply said credits
against future offset obligations with the Philippine Government under the guidelines
herein established.
3.1.4 Bankable Offset Credits may be applied/used against future offset obligations with the
Philippine government only within three (3) years from the date of the Certificate of
Banked Offset Credits. Said Certificate shall only be used after evaluation and
approval of the completed offset project/activity.
3.1.5 An original holder of Certificate of Banked Credits (whether a foreign supplier or its
designated countertrade) may assign or transfer unapplied or unused banked credits,
either wholly or partially, to another firm or entity, for purposes of allowing the
assignee/transferee to apply said credits against the latter’s existing offset obligation
with the Philippine government subject, however, to all of the following conditions:
a) Formal written notification of a proposed transfer or assignment is given to PITC
by the holder of Certificate of Banked Credits PRIOR to the transfer/assignment,
providing PITC with the full details of the prospective assignee/ transferee (i.e.
company name and profile, etc) including the latter’s existing offset obligations
with the Philippine government to which such assigned/ transferred credits are
intended to be applied/used;
c) The said credits can only be applied against the said assignee’s/transferee’s
existing offset obligations with the Philippine government only if the importing
government agency/office concerned approves such application of credits;
e) The said credits must be used by said assignee/transferee within the three (3) year
period stated in Section 3.1.4 above.
Transfer or assignment of bankable offset credits not complaint with the foregoing
conditions shall no legal or binding effect on the Philippine government.
3.1.6 The foreign supplier or countertrader shall be given three (3) years from date of
Banking Approval Certificate to complete implementation of the proposed offset
project. A grace period of two (2) or more years may be granted on a case-to-case
basis subject to PITC approval/assessment of the offset project.
3.1.7 In the event the foreign supplier or countertrader fails to complete the offset project
within the periods given in 3.1.6, the Banking Approval Certificate previously granted
shall be revoked and no offset credit shall accrue to the foreign supplier or
countertrader.
3.1.8 If the foreign supplier or countertrader fails to win a Supply Contract with any
Philippine government agency or office within the validity period of the banked offset
credit, as established in 3.1.4 above, there shall be no obligation to refund any of the
fees paid to PITC in connection with the banking of offset credits and no obligation
whatsoever on the part of PITC or the Philippine government shall arise relative to the
credits banked under these guidelines.
For an offset project to qualify as eligible for banking under this circular, the foreign
supplier or countertrader shall secure pre-approval to proceed with the said offset
project and earn bankable offset credits and submit the following
documents/requirements to PITC:
b) Offset Project Profile detailing the offset activity to be undertaken, with a Project
Feasibility Study or similar document, which provides a technical description of
project, benefits to be derived from the project, company or people behind the
project (and their track record), resources required, and other information relevant
to the project that will enable PITC to assess the viability and acceptability of the
proposed project in collaboration with concerned government and industry sectors.
PITC shall review and, if acceptable, approve the proposed offset project submitted by
the foreign supplier or countertrader (for implementation) within at least thirty (30)
days from date of submission of complete data/documents enumerated under 3.2.1
above. Said period may be extended depending on the complexities of the project and
the feedback process hereinafter outlined. The review/approval process shall entail the
following:
b) Consultations with the government office or agency where the foreign supplier or
countertrader expects to win a supply contract and where the offset credit is
initially expected to be applied.
a.2) Should the investment project entail a joint venture with a Philippine firm,
the foreign supplier/countertrader has six (6) months, from submission of the
said Business Plan to identify, negotiate and finalize the terms of the Joint
Venture Agreement with the Philippine joint venture partner. The list of
prospective partners shall be furnished PITC who shall conduct its own
assessment of the proposed partners. In this regard, the foreign supplier may,
if it so desires, request the assistance of PITC to package the joint venture,
subject to payment of appropriate service fees. PITC shall act as witness to
the Joint Venture Agreement and shall likewise be furnished a copy of the
JVA.
a.3) If the investment project will not entail the formation of a Joint Venture with
a Philippine partner, but merely an investment in an existing firm/ project, the
foreign supplier has six (6) months from submission of the Business Plan to
submit the nature/details of said firm/project and the extent of investment
therein.
a.4) The foreign supplier/ countertrader has ninety (90) days from date of signing
of the Joint Venture Agreement (for joint ventures) or Investment Agreement
(for non-joint ventures) to register the business venture with the Securities
and Exchange Commission and the Board of Investments, furnishing PITC
with copies of the pertinent Certificates of Registration within five (5) days
from release thereof.
a.5) The foreign supplier shall submit a report of the remittance of its equity
investments in the new joint venture or business venture within sixty (60)
days from release of Certificates of Registration with the SEC and BOI.
a.6) The foreign supplier/ countertrader shall submit to PITC a Quarterly Report
of operations of the venture/ activity for the first two (2) years of operation
within 60 days from the end of the quarter and a Semi-Annual Report for the
succeeding three (3) years thereafter within ninety 90 days from the end of
the semester. These reports shall contain, among other, the following:
b.3) The pertinent agreement(s) with the Philippine beneficiary/ company of the
offset project shall be witnessed by PITC who shall likewise be furnished
with a copy of said agreement(s).
b.4) The foreign supplier/ countertrader shall submit a Quarterly Progress Report
for the first two (2) years of operation reckoned from the date of the pertinent
agreement(s) with the Philippine beneficiary/ company within 60 days from
the end of the quarter, and a Semi-Annual Report for the succeeding three (3)
years thereafter within 90 days from the end of the semester. These reports
must likewise be accompanied by the Acceptance Certificate of the offset
project recipient/ beneficiary.
c) PITC shall have at least thirty (30) days within which to review and process the
above Request for Accreditation and all the supporting documents hereto. PITC
shall also compute multipliers (where applicable) for the offset project and discuss
the same with the foreign supplier/Countertrader.
d) Upon approval of the accreditation, PITC shall issue the following in the name of
the foreign supplier/Countertrader:
Debit Note for PITC monitoring fees per the schedule outlined in (e) below
==========================================
OFFSET VALUE FEES
(in US$) (in US$)
==========================================
1M - 50 M 1.5%
Said fees shall be paid directly to PITC (Attn: Treasury Department) either in bank draft
or through telegraphic transfer to a PITC designated account within fifteen (15) banking
days from the receipt of PITC’s debit note and Certificate of Banked (Forward) Credits.
Non-payment of the said fees shall be a ground to revoke/cancel Certificate of Banked
(Forward) Credits issued by PITC to the foreign supplier/countertrader concerned.
The above-mentioned monitoring fees shall in lieu of the monitoring fees due PITC for the
same accredited offset activity in the event the same is applied to an existing offset
obligation with the Philippine government.
3.3.2 For Technology Transfers, Research and Development, Donations, Training and other
offset projects:
Justification for the proposed offset value being claimed for crediting/banking;
and
Certified copy of the Final Report submitted for the offset project, i.e. Research
& Development Studies (for R & D projects); Post-Training Reports (for
training projects); Technology Transfer Report, duly certified by the
Intellectual Property Office and DOST Registration of technology transfer
projects, etc.
c) PITC shall have at least thirty (30) days within which to review and process the
above Request for Accreditation and all the supporting documents thereto. PITC
shall also compute multipliers (where applicable) for the offset project and discuss
the same with the foreign supplier/countertrader.
d) Upon approval of the accreditation, PITC shall issue the following in the name of
the foreign supplier/countertrader:
Debit Note for PITC monitoring fees per the schedule outlined in (e) below:
e) Upon filing of the Request for Accreditation and Transaction Summary, the foreign
supplier/countertrader shall pay PITC’s monitoring/accreditation fees per the
following rates based on the offset value being submitted for accreditation:
==========================================
OFFSET VALUE FEES
(in US$) (in US$)
==========================================
1M - 50 M 1.5%
Said fees shall be paid directly to PITC (Attn: Treasury Department) either in bank draft
or through telegraphic transfer to a PITC designated account within fifteen (15) banking
days from the receipt of PITC’s debit note and Certificate of Banked (Forward) Credits.
Non-payment of the said fees shall be a ground to revoke/cancel Certificate of Banked
(Forward) Credits issued by PITC to the foreign supplier/countertrader concerned.
The above-mentioned monitoring fees shall in lieu of the monitoring fees due PITC for the
same accredited offset activity in the event the same is applied to an existing offset
obligation with the Philippine government.
PITC shall maintain records/reports of all transactions covered by this circular, as follows:
4.1 Monitoring Logbook for individual foreign suppliers/countertraders containing records of all
approved applications for banking of offset credits and progress of accomplishments of the
same.
4.2 Record of all Certificates of Banked Credits released/approved for both forward and excess
credits including its utilization, applications and approved transfer/assignments thereof.
4.3 For completed offset projects, a Statement of Outstanding Offset Credits reflecting all
unused/unapplied offset credits shall be submitted by PITC to the foreign
supplier/countertrader every six (6) months from date of release of the Certificate of Banked
Credits.
4.4 For on-going offset projects, a Performance Report Summary shall be furnished by PITC to
the foreign supplier/countertrader every six (6) months from date of release of the Certificate
of Banked Credits, reflecting progress of accomplishments and expected completion dates.
4.5 The concerned government procuring agency or office through their respective Heads shall be
furnished a copy of the reports listed in 4.3 and 4.4 above.
V. SUPPLETORY DOCUMENT
This circular shall be considered as a binding supplement to the IRR and shall form an integral part
thereof.
PITC Memorandum Circular No. CT-98.4/01 dated April 1, 1998 and all prior issuances
inconsistent herewith are hereby repealed.
VII. APPLICATION
The provisions hereof shall not apply retroactively to offset transactions already completed,
undertaken or approved for implementation PRIOR to June 15, 2000.
VIII. EFFECTIVITY
(signed)
SYLVIA R. VELOSO
President
Annex “A”
Applicant: __________________________________________________
(Name of Company who implemented/facilitated offset project)
Address : __________________________________________________
Tel. No. : ___________________ Fax No.: ______________________
E-Mail : ___________________ Telex : ______________________
Offset Project Title: __________________________________________
PITC Approval No. / ________________________________________
Date (PITC Approval of Letter of Intent/Application to Offset Project)
Offset Project Timeline:
Started: _________________ Completed: ___________________
Offset Project Details/Particulars: (Please attach Transaction Summary together with supporting documents
required under Sub-Section 3.3.3 (b) of PITC M.C. # CT-00.6/01)
Offset Value for Accreditation : (in words and figures)
US DOLLARS: _________________________________
US$ : _________________________________
We hereby attest to the truth, accuracy and authenticity of the information and documentation herein provided in
support of this request for accreditation of our Offset Project for banking purposes pursuant to existing
regulations. We understand that any false statements or misrepresentations made hereon will entitle PITC to
disapprove this request without any liability or obligation on the part of the Philippine Government.
Submitted By : ___________________________________________
(Name and Title of Authorized Company Representative)
_______________________
(Signature)
Date _____________________
Annex “B”
Republic of the Philippines
Office of the President
PHILIPPINE INTERNATIONAL TRADING CORPORATION
Pursuant to its Request for Accreditation dated ________________, and after due evaluation of all supporting
documents thereto, this Certificate of Banked Credits is issued if favor of:
The value of the offset credit awarded for this project and hereunder banked is:
US DOLLARS : ________________________________________
(in words)
US$ : ________________________________________ (in figures)
Subject to pertinent provisions of PITC Memorandum Circular No. CT-00.6/01 dated June 15, 2000, this Certificate
shall entitle the holder to apply the credits herein awarded against future offset obligations with the Philippine
Government within three (3) years from the date hereof.
The transfer/assignment of this Certificate shall likewise be subject to the pertinent provision of the aforementioned
circular.
By: ___________________________
President
APPENDIX E
1.1.1 Applicability of Executive Order No. 120 (s. 1993) and its Implementing Rules and
Regulations. - Executive Order No. 120 (series of 1993) and its Implementing Rules and
Regulations (IRR) directs the Philippine government, its departments, bureaus, agencies including
government owned and controlled corporations to adopt countertrade as a supplemental trade tool
with respect to the importation of foreign capital equipment, machinery, products, goods, and
services, equivalent to at least US$ 1 Million and above. The provisions of E.O. 120 (series of
1993) and its IRR shall apply to all countertrade arrangements covered by this Circular unless
otherwise expressly provided herein.
1.1.2 Republic Act No. 7898, otherwise known as the "AFP Modernization Act" states in
Section 10(b) that "In order to reduce foreign exchange outflow, generate local employment
opportunities and enhance technology transfer to the Philippines, the Secretary of National Defense
shall, as far as feasible, incorporate in each contract/agreement special foreign exchange reduction
schemes such as countertrade, in country manufacture, co-production, or other innovative
arrangements or combinations thereof."
1.1.3. DND Department Circular No. 01 dated March 6, 2000 prescribing the "Implementing
Rules and Regulations of the Armed Forces of the Philippines Modernization Program," particularly
Section 3.2.11 thereof, states "In contracts worth US One Million Dollar ($ 1 M) or more involving
the acquisition or upgrade of equipment or weapons systems from foreign suppliers, the provisions
of Executive Order No. 120 (1993) and its Implementing Rules and Regulations shall apply."
Article 1.2 Coverage. - This Department Circular shall cover all procurements including
acquisitions and upgrades of equipment and weapon systems, under the AFP Modernization Program
approved by Congress through Joint Resolutions No. 28 from foreign suppliers valued at least US$ 1
Million and above or its equivalent in other convertible foreign currency and hereby further prescribes the
minimum countertrade requirements and procedures to be adopted pursuant thereto.
2.1.1 For procurement contracts involving US$ 1 Million and above of its equivalent in
other foreign currency, the minimum commitment to be required of the foreign
supplier/manufacturer shall be as follows:
VALUE OF SUPPLY MINIMUM COUNTERTRADE
CONTRACTS (IN US$) COMMITMENT/OBLIGATIONS
$1 Million - $20 Million 100% of the value of Supply Contract
2.1.2 Notwithstanding the foregoing, the Secretary of National Defense may revise or
modify the minimum countertrade obligation on a case-to-case basis upon determination by him
that the same is for the best interest of the government and such other factors that would strengthen
the defense cooperation between the Philippines and a foreign state.
2.1.3 The "value" of the Supply Contract, for purposes of this Circular, shall mean the
FOB CIF value (whichever is applicable) of the Supply Contract, excluding Philippine taxes and
duties.
a). The Countertrade Undertaking Form per the format attached hereto as Appendix I, shall be
included in the eligibility forms/documents to be accomplished by parties applying for eligibility.
Said form shall be considered as one of the eligibility documents to be submitted pursuant to
Section 4.3 and 4.4 of the Implementing Rules and Regulations of E.O. 302 (series of 1996), as
amended. It shall contain the countertrade level of commitment of said bidders as well as their
commitment to sign a Countertrade Agreement with Philippine International Trading Corporation
(PITC) when awarded the Supply Contract by the AFP.
b) Failure or refusal to accomplish and submit the Countertrade Undertaking Form shall be
sufficient basis for an applicant to be deemed "ineligible" to participate in the bidding.
3.1.2 Bidding Documents: Countertrade Proposal Sheet
a). Eligible bidders shall also be required to accomplish and submit a Countertrade Proposal
Sheet, per the form attached hereto as Appendix 2, together with a brief summary of the
countertrade program to be undertaken in support thereof.
b) The duty accomplished Countertrade Proposal Sheet and its attachments shall be part of
the bid documents to be submitted by the bidders concerned on the bidding date.
c). In case of tie where there are two or more lowest Calculated Bids/Offers, post-
qualification will be done at the same time to determine the responsive bid/offer. If still two or more
bidders pass in the post qualification, countertrade proposal will be used as tiebreaker in accordance
with IRR's of E.O. 120 (1993). However, due consideration shall be given to offers with higher
percentage of offsets that directly benefit the AFP and/or the Government Arsenal.
d) The Countertrade Proposal Sheet and its attachments shall serve as the countertrade
program commitment of suppliers/manufacturers/contractors. They shall be incorporated in the
Countertrade Agreement and in the Supply Contract to be signed pursuant to this Circular, as
applicable.
a). Within 90 days from the signing of the procurement contract between the Secretary of
National Defense (SND) and the winning bidder, the latter shall execute the corresponding
Countertrade Agreement with PITC in accordance with existing laws and regulations.
b) Failure on the part of the winning bidder to sign a Countertrade Agreement with PITC as
herein required shall entitle the DND/AFP to disqualify the winning bidder from participating in or
submitting bids for future procurements of the AFP, without prejudice on the part of the DND/AFP
to enforce such other penalties and sanctions, or such other relief for damages as may be warranted
under existing laws, rules and regulations.
Article 4.1 Separability Clause - If any provision of this circular is declared invalid by a
competent court or tribunal the remaining provisions hereof, unaffected thereby, shall remain valid and
binding.
Article 4.2 Effectivity - This circular will take effect fifteen (15) days from the date of its
submission for publication with the Office of the National Administrative Register, University of the
Philippine Law Center.
(signed)
ANGELO T. REYES
Secretary
Office of the Secretary, DND
Doc Ref: Memo 20010025
APPENDIX 1
Republic of the Philippines
DEPARTMENT OF NATIONAL DEFENSE
Camp Emilio Aguinaldo, Quezon City
This Undertaking and proposal are hereby submitted pursuant to the eligibility requirements for the procurement project
of ______________________________ by the Armed Forces of the Philippine (AFP).
We hereby commit that should we be awarded the Contract for the ________________________, we shall directly or
through a nominated third party, undertake Countertrade arrangements equivalent to not less than _____ % of the value of the
Contract, excluding Philippine taxes and duties, as per the schedule provided for under Article 2.1 of DND Department
Circular No. 04 dated July 20, 2001 (Please refer to Legend below).
We submit the following Countertrade Proposals (with attachments) outlining our basic Countertrade Program should
we be awarded the Contract, which constitutes our total Countertrade Obligation equivalent to ____ % of the value of the
Contract, to wit:
We further commit that should we be awarded the Contract, we will negotiate and sign a Countertrade Agreement with
the Philippine International Trading Corporation (PITC) within ninety (90) days from approval of the Contract with the AFP.
Failure on the part of the undersigned Bidder to comply with this Undertaking shall entitle the Purchaser to
rescind/cancel the Supply Contract and award the same to another party and/or disqualify the undersigned from participating in
future supply contracts with the AFP/DND without liability on the part of the latter.
This Undertaking and proposal shall form part of the undersigned eligibility documents and failure on our part to submit
the same shall render us "ineligible" to participate in the bidding for the above project.
Furthermore, we hereby acknowledge that the countertrade proposal will still be subject for negotiations taking into
consideration the current requirements of the AFP.
Signature of Representative
___________________________________
LEGEND:
SUBSCRIBED AND SWORN TO before me this ___ day of _______________ 200__ in ____________________
affiant exhibiting to me his/her: (for Philippine residents) Community Tax Certificate No. ___________ issued in
__________________ on _____________________ (for non-Philippine residents) Passport No.___________________ issued
in _________________on _____________________.
Notary Public
Until 31 December 20 _____
PTR No. ________________
Issued at : _______________
Issued on : ______________
LIST OF PHILIPPINE PRODUCTS AND SERVICES
APPAREL
1. LADIES WEAR
• Knitted pullovers & cardigans in acrylic wool & other blends
• Blouses, skirts & coordinates, woven or knitted fabrics
• Jogging suits in polycotton interlock fleece
• Denim jeans, skirts & jackets
• T-shirts with fancy designs, prints, beadwork & appliqué
• Panties in nylon or polycotton knit/underwear & foundation garments
• Swimsuits
• Hand crochet blouses, vest, coordinates
• Bridal wear/formal wear
2. MENS WEAR
• Knitted pullover & cardigans in acrylic & wool
• Polo’s, t-shirts in polycotton knit
• Jogging suits in polycotton interlock fleece
• Athletic t-shirts, shorts & pants
• Denim, jeans, jackets & overalls
• Industrial uniforms (overalls, jacket & pants)
• Swimming trunks & beach shorts
• Woven shirts
• Jackets, parkas, windbreaker
3. CHILDRENS WEAR
• Denim jeans, jackets, dresses & overalls
• Infant's short sets, rompers & overalls
• Pajamas/sleepwear
• Jogging suits
• Short or pullover & pants coordinates
• Trousers & shorts
• Knitted sweaters, cardigans & pullover
• Snowsuits & jackets
• Socks
• Swimsuits
5. FOOTWEAR
• Men's ladies' & children's athletic shoes
• Children's school shoes
• Men's casual leather shoes with rubber soles
• Rubber & plastic beach sandals
• Parts of footwear
• Other footwear
8. PROMOTIONAL ITEMS/GIVEAWAYS
• T-shirts, sweatshirts, parka
• Caps & hats
• Hanky & pocket chief with embroidery
• Nylon bags, pouches
• Corporate pins
• Coin purses, key chains, cosmetic cases
9. APPAREL ACCESSORIES/COMPONENTS
• Beaded, embroidered laces & appliqués
• Embroidered collars
• Buttons in shell, wood
• Bridal accessories
CONSUMER PRODUCTS
4. TOYS
• Baby pianos
• Dolls & stuff toys
• Educational items & games
• Puzzle
• Hobby kits & crafts, DIY kits
• Fabrics
• Novelties
9. TOBACCO PRODUCTS
• Cigars/cigarettes
11. PHARMACEUTICALS
• Local brands
• Generics
• Herbal medicine
1. COCONUT PRODUCTS
• Crude coconut oil
• "Cochin" coconut oil
• RBD coconut oil
• Copra meal
• Desiccated coconut
• Coconut shell charcoal
• Glycerin, crude & refined
• Soap noodles
• Fresh young coconut/fresh matured coconuts
• Fatty acids & alcohol
• Molasses
• Olco chemicals
• Activated carbon
2. FERTILIZERS
• DAP, 16-20-0, 16-16-S- 13S
• Organic fertilizers
• Merchant Grade Phosphoric Acid
3. STEEL PRODUCTS
• Wire rods
• Galvanized iron (G.I.) sheets
• Prefab metal structures
4. MINERALS
• Feldspar
• Limestone
• Nickel
• Manganese ore
• Copper concentrate/copper cathodes
• Copper wires & cables
• Metallurgical & refractory chromites
• Coal briquettes
• Nickel
5. AUTOMOTIVE
• Asian utility vehicles (AUV), Jeepney
• Motorcycles (local content of at least 51%)
• Bicycles (local content of at least 51%)
• SKD Engines
6. CONSTRUCTION MATERIALS
• Building wires & cables
• Float glasses
• Roofing materials ( color roof)
• KD falcatta boards/Core/Lumber
• Solid Wooden Panel Door
• KD Parquet flooring
7. CORDAGE
• Manila rope
• Synthetic rope
1. COMPUTER SOFTWARE
• Application software development
• System software development
• Turnkey system development
• Consulting services
• System integration
• Multimedia products (All platforms for presentation, games, training, education, entertainment,
CD-ROM applications)
6. TOURISM
7. FILM ANIMATION
9. CALL CENTERS
Investment/Joint venture, technology transfer, skills training, research and development, donations and
other related activities in the following, but not limited to, are considered as eligible offsets:
2. INDUSTRIES SECTOR
• Iron & Steel
• Cement
• Mining
• Petrochemical Processing
• Sucrochemicals
• Refine Petroleum Products
• Chemical/Natural Fibers and Filament Yarns
• Aluminum Fabrication
• Polymers
• Semiconductors and computers
• Superconductors
• Advanced Ceramics
• Engines
• Motors
• Turbines
• Machine Tools
• Lasers
• Microprocessors
• Robotics
• Micro motors
• Power Plant Design and Construction
• Coal, oil, steam power, hydroelectric power, geothermal
• Solar Cells, Nuclear Fission, Nuclear Fusion
• Telephone, Radio, Television, Computers, CD ROM, Artificial Intelligence, Fiber optic
Communication
• Other Consumer Electronics, Industrial Electronics, Electronic components and parts
3. ENGINEERING INDUSTRIES
• Engineering Products
¾ Machinery Equipment, Parts and Accessories
¾ Aluminum Rods
o Electrical Equipment
o Transport Equipment
o Information Handling Equipment
o Instrumentations
o Tools, Dies, and Fixtures
o Telecommunications
• Metalworking
¾ Metal Casting
¾ Heat Treatment
¾ Welding
¾ Electroplating
¾ Machine Building
¾ Forging
• Car manufacturing
• Stamping/press working
• Assembly of motor vehicles
• Manufacture of vehicle parts and components
• Automotive grade castings, high-alloy steel for machine building
• Modernization of precision engineering sub sector, including automotive and machinery parts
manufacturing
• Ship building, ship repair, ship breaking
• Other ocean-going and aircraft
4. HEALTH
• Herbal medicines
• Diagnostic center
• Specialized medical centers
¾ Kidney dialysis
¾ Ophthalmologic
¾ Dental surgery
• Mobile hospital/clinic
¾ Joint venture/kit manufacturing
¾ Equipment installed
¾ Modular system
• Medical lasers
• Pharmaceuticals – antibiotic, acetylsalicylic
• Vaccine
• Laser surgery
• Imaging technologies
• Portable water purifications system
• Disaster communication system
• Optical fiber sensors and laser microscopes
5. ENVIRONMENTAL INDUSTRIES
• Environmental support facilities
• Material recovery facilities
• Bio-remediation factory