FPI HISTORY

On 21 June 1974, Presidential Decree No. 488 was issued creating the Department of Industry, whose principal function was to promote and enhance the growth of the country's existing and thriving industries. The following year, the Department of Trade was created under Presidential Decree No. 721.

However, in the early 80s, President Marcos created the Ministry of Trade and Industry, which took over the functions of the subsequently abolished Departments of Trade and of Industry. In order to facilitate dialogues with the business sector, the Ministry succeeded in combining the then existing Philippine Chamber of Industries and the Philippine Chamber of Commerce into the Philippine Chamber of Commerce and Industry.

The seeming inherent incompatibility of merging the Industry and Trade in one department came into fore when President Aquino signed Executive Order No. 413 in 1990, arbitrarily lowering all the tariffs of all industrial and agricultural products by approximately half of the existing rates.

Due to its dire consequences on the viability of their respective local industries, multi-sectoral group consisting of heads of industrial firms, producers, and industry associations met to assess the effects of tariff restructuring to business operations and the legality of the Executive Order.

Local manufacturers and agricultural producers belonging to the Philippine Chamber of Commerce and Industry (PCCI) sought help from their organization to combat this government move to engage in a mindless trade liberalization program. However, the chamber couldn’t address their concern effectively since its membership consisted not only of industry, but also of business involved in trading, retailing and services, that have conflicting interests. Clearly, it also manifested that the merging of trade and industry would not result into congruity because of varied interests, nor able to define clearly and effectively the concerns of each sector.

Alarmed by such situation and knowing, after consultation with lawyers, that this is an illegal act, the multi-sectoral group after several meetings within the second semester of 1990, eventually grouped together and pooled their resources and decided to file a case in the Supreme Court questioning the constitutionality of the said E.O 413. Sensing that the EO is constitutionally flawed, as the President is only allowed under the law to raise the tariff on a selective basis but not across the board when Congress is in recess, Malacañang withdrew E.O. 413 and left it to Congress to study the tariffs. Hence, the case in the Supreme Court - became moot and academic.

It was a big boost for the multi-sectoral group.

However, when President Aquino replaced E.O. 413 with 470, and the group noted the set of fiscal policies being prepared to accelerate engagement in global free-trade, the multi-sectoral group which include members of the PCCI, who realized that they could not get a definitive stand from their organization on issues like this since it is composed of varied groups with conflicting interest, saw the importance of formal organization – this time, an entity which will readily address the exclusive concerns of the producers as well as the manufacturing sector.

In view of its laudable objective, the original group was subsequently joined by prominent organizations, which were similarly situated. They believe that as a singular voice, they would become a formidable force, more competent to negotiate with government prior to its commitments and enactments, and avert the unending fire fighting.

Hence, on 24 January 1991 the Federation of Philippine Industries (FPI) was formally organized and registered with the Securities and Exchange Commission (SEC) with fifteen (15) industry leaders as incorporators, namely, Jesus L. Arranza, Coconut Oil Refiners Association (CORA), Hermenegildo Zayco, Textile Mills Association of the Philippines (TMAP), Francisco Monge, Pulp and Paper Manufacturers Association (PULPAPEL), Rogelio Guadana, Philippine Association of Battery Manufacturers (PABMA), Felix Maramba, Jr., Philippine Flour Millers Association (PAFMIL), Jeremias Menico, Philippine Coconut Oil Producers Association (PCOPA), Maria Clara Lobregat (PCPF), Ernesto Cayetano, Philippine Electric Wires Manufacturers Association (PEWMA), David Bonney (PAPM), Linda Chai (PSPA), Greg Saguinsin, Confederation of Sugar Producers Association (CONFED), Manuel Serrano (PAHRI), Hector Quesada (PPOGA), Rustica Ignacio (FPFI), and Donald Dee (CGEPI). Mr. Jesus L. Arranza and Atty. Jose T. Baldonado were tasked to register the organization with the SEC. The first FPI President was Mr. Hermenegildo Zayco of the Textile Mills Association of the Philippines.

In 1991, three (3) new industries were added. The category of associate members was also opened for direct corporate membership. By year-end, eight (8) firms actually joined FPI.

Since its inception, the FPI has been a moving force in the industrial sector.

Under Mr. Zayco, FPI continued to speak against untimely opening of Philippine markets. It participated in deliberations on vital legislations, such as the Foreign Investment Act of 1991, the Local Autonomy Code, and many others.

Sometime in the third quarter, Mr. Wilson Tiu was assigned to supervise the FPI Secretariat. The office was set-up in Makati City within the premises of the Textile Mills Association of the Philippines (TMAP).

Towards the last quarter, the members started to discuss possibilities to work with government and create an atmosphere conducive to pursue business objectives and growth.

The shift in attitude from being reactive to pro-active led to a committee headed by Dir. Hector A. Quesada (PPOGA). It began work by identifying major areas critical to business growth. It noted that unless these are adequately resolved, foreign investments cannot be realized as expected.

Year 1992 was turned-over to President Jesus L. Arranza of CORA. He immediately tasked the Secretariat to prepare the "Seven Major Areas of Concern of Industry" position paper.

The paper was followed by the "Hamon ng Industriya: A Dialogue with the Presidential Candidates" convention on 28 April 1992.

Also in 1992, FPI moved to reduce bank rates and lending practices. With "High Lending Rates and Inaccessibility to Credit: the Need to Reform the Banking System" paper, FPI showed the cause-effect of uncontrolled rates. The research works were principally prepared by the office of EVP Manuel M. Serrano (PAHRI).

The members were highly encouraged when prime rates fell below 20% and hoped that it can become competitive in the global markets.

For year 1993, Mr. Raul T. Concepcion took over as president while Atty. Manuel M. Serrano served as the chairman of the Board of Directors. The office of the FPI Secretariat also transferred to the premises of Concepcion Industries Inc., in Makati City.

The composition of the Board was changed to eight (8) members coming from industrial associations and seven (7) from business corporations.

At year end, the total regular membership increased to twenty-five (25) industry sectors and twenty-seven (27) corporate members.

The year saw involvement to dampen the impact of the ASEAN Free Trade Area (AFTA), the related Common Economic Preferential Tariff (CEPT) rates, and the deepening of margins of preference (MOP).

Very early in the year, eight directors met in Antipolo to develop strategies to cope with AFTA. The convenors agreed that while globalization may be inevitable, government must first level the playing fields with similarly-situated countries.

Further, the body present agreed that FPI should immediately work to remove ASEAN rate distortions before mapping strategies for tackling firm-level problems.

Year 1993 experienced extremely severe electricity outages. With the Task Force on Power Scheduling, FPI provided members needed linkages to Meralco and NPC. Also, through its initiative, industry was given higher priority in terms of scheduling.

FPI supports government exports programs and designated Mr. Zayco as the official representative to the Export Development Council (EDC).

FPI supported some retail groups on regulating the operations of duty-free shops. A special task force under Mr. Jesus L. Arranza brought the issue to national attention.

End-1993 into early 1994, FPI led a multi-lateral group to seek withdrawal of gasoline price increase. After the rollback, it deliberated with government on how to generate the revenues needed.

On 9 February 1994, the FPI members unanimously elected the same set of Directors into office for the ensuing year. In turn, the Board re-elected Mr. Concepcion as President and designated Mr. Jesus L. Arranza as Chairman of the Board.

The Board also decided to hold regular meetings every other month and general membership meetings quarterly.

During this period, there were many confronting issues, including the AFTA-CEPT, negative list "C" of Foreign Investment Act, expanded-VAT, Anti-Dumping law, GATT-WTO, among others.

On labor, the Federation took the initiative of advocating a P20 daily wage hike in early 1996, acknowledging that labor is an important partner in the production of goods and services. FPI has also argued vigorously against the criminalization of labor-only-contracting, since this will jeopardize the competitiveness of industry. Also in 1996, the FPI General Assembly approved a resolution expressing concern for the observance of labor standards, and in building a stable labor-management partnership to meet the challenges of globalization. On 1 August 1996, FPI appointed Joseph H. Francia to head the FPI Secretariat.

Through the suggestion of the Federation, then President Fidel V. Ramos, organized a summit to address the issue of Food Security.

On fiscal measures, the FPI was at the forefront of organizing dialogues between business/industry and Congress/Executive branches regarding the Comprehensive Tax Reform Program (CTRP) of government, in order to come up with a tax reform which will be beneficial to all.

Together with other business organizations, FPI met with the Department of Interior and Local Government (DILG) to draw up measures to deal with criminality. On kidnapping, the FPI urged the government to install tougher measures against kidnappers, as it can erode the economic gains already made.

Another milestone is the signing of the Memorandum of Understanding with the Bureau of Customs in March 1997, to strengthen common efforts in combating technical smuggling. Eight working groups were formed to monitor the implementation of these commitments. It paved the way for the establishment of a data link up system, which transfers import data of specific products for monitoring purposes particularly on undervaluation and misclassification of imports.

In pursuing the drive against smuggling, the FPI has held monthly dialogues with the BOC Commissioner and other Customs officials, where action points are agreed upon and followed through.

In 2002, with the continued support of its members FPI, created an Anti-Smuggling Help Desk to ensure that a proper coordination of all efforts in the Federation’s drive against smuggling is maintained at all times. A full-time staff was therefore hired in this regard.

FPI signed a memorandum of agreement with the Anti-Smuggling Intelligence and Investigation Center (ASIIC) and with the National Press Club (NPC) to undertake joint efforts against smuggling on a large scale or by criminal syndicates. The ASIIC was created by E.O. 155 in December 2002. Thereafter, E.O. 297 created the Office of the Anti-Smuggling Presidential Adviser under the Office of the President. Subsequently the National Anti-Smuggling Task Force (NASTAF) was formed under the leadership of Sec. Angelo Reyes. Overseeing this function is the Cabinet Oversight Committee on Anti-Smuggling (COCAS).

On 21 September 2003, FPI brought to the attention of President Gloria Macapagal-Arroyo about the use of bonded warehouses as conduits to smuggling, providing her with concrete evidence to substantiate our claims, FPI observed that this problem remained unresolved and had cost the government no less than one hundred billion pesos (Php100-billion) annually in unpaid duties and taxes. They, at the same time, posed unfair competition to local industries that resulted in business closures and thousands of jobless Filipinos. The President ordered the Bureau of Customs their closure.

In terms of legislation, FPI has taken its stand on various bills concerning industry such as the Customs Modernization Program, Safeguard and Countervailing Measures, Anti-Dumping, amendments to the Labour Code and the Anti-Smuggling Bill.

In 2005, FPI took the initiative of drafting an anti-smuggling bill, which in essence, amends certain provisions of the Tariff and Customs Code of the Philippines. Committee hearings were assiduously attended by FPI defended certain key provisions of the Bill, which ensures that smuggling, is effectively discouraged. President Gloria Macapagal Arroyo certified the Bill as urgent. Also in the same year, FPI recommended doable provisions for possible incorporation in the Fiscal Incentives Bill. This includes the harmonization and coordination of all tax incentives even when these are being applied by several government agencies such as the Board of Investments (BOI), Philippine Export Zone Authority (PEZA), the Export Processing Zone Authority (EPZA) and Special Economic Zones (SEZs); and, provision for export tax incentives to all export-oriented industries and export processing zones to provide a level playing field against foreign competitors who normally enjoy such privileges, among others.

On Trade liberalization, the Federation has consistently lobbied against a too rapid reduction of tariffs in the absence of better infrastructure, lower power and interest rates, reduced labour costs and bureaucratic red tape, and other costs of doing business.

On 30 April 2005, Joseph H. Francia retired. On July 1, 2005, the FPI Board appointed Atty. Rufino M. Margate, Jr., as the new FPI Secretary General.

In 2006 FPI spearheaded and successfully worked for the indefinite suspension of the Mandatory Environmental Insurance Coverage (MEIC) as well as in holding in abeyance the implementation of the Continuous Emission Monitoring Systems (CEMS) and Continuous Opacity Monitoring System (COMS) – which are all unreasonable added burdens to the industry.

FPI also openly and vigorously supported the early passage of the bill scrapping the 70% cap on creditable input value-added tax (VAT) that would allow companies to again charge 100% of input VAT to output VAT per quarter, and the passage of the Bio-fuel Bill thereby boosting the Sugar Industry (Ethanol) as well as the Coconut Industry (Bio-Diesel) - which directly and indirectly employs millions of Filipino workers.

At the height of the 2006 labor sector’s clamor for a legislated wage hike, FPI reiterated its position against minimum wage legislation since it is not only inflationary but creates wage distortion and affects existing collective bargaining agreement voluntarily agreed upon and carefully crafted between the employer and employee. As an alternative, FPI recommended, among others, that the Regional Tripartite Wages and Productivity Boards should decide as to whether or not a wage increase should be made and, that all employees receiving PhP110,000.00 and below should be exempted from withholding tax.

In November 2006, FPI signed the Joint Communiqué with labor and the academe at the historic Hall of Gabaldon, Club Filipino in San Juan, Greenhills, Metro Manila to address productivity, competitiveness and decent work towards industrial peace and economic development. It eventually gave birth to the Philippine Employer-Labor Social Partners Inc (PELSPI).

Also in 2006, through the initiative of President Jesus L. Arranza, FPI collaborated with the Department of Trade and Industry (DTI), Department of Interior and Local Government (DILG), League of Cities of the Philippines (LCP), League of Municipalities of the Philippines (LMP), and the Philippine Product Safety and Quality Foundation (PPSQF), to launch a nationwide information campaign on mandatory product standards aimed at tapping the vast manpower resources of the local government units particularly those involved in the issuance of building permits. The idea is that by educating and enlisting these local government building engineers and inspectors, it will tremendously solve the manpower requirements of BPS in monitoring construction materials covered by mandatory product standards nationwide, without added cost to the government.

In the same year, FPI reached out to the academe to discuss the possible changes in the curricula that would match the needs of the industry. FPI initially signed a Memorandum of Understanding (MOU) with the University of the East, while similar MOU’s will subsequently be entered with the other schools.

As part of its continued networking with the Bureau of Customs (BoC), FPI conducted an Industry Orientation Program for the BoC’s key operating personnel and officers in the different ports nationwide. Similar orientation programs were likewise conducted for the Prosecutors of the Department of Justice, who are handling smuggling and customs related cases, as well as in the Philippine Coast Guard. Subic Bay Metropolitan Authority (SBMA) is likewise requesting for a similar orientation for its personnel.

In the later part of 2006, FPI registered its vehement opposition when the supervision of the Task Force on Anti-Smuggling (TFAS) was turned over to the Bureau of Customs (BOC) and reiterated its stand that TFAS must be handled by an agency independent of the BOC.

FPI and the Bureau of Internal Revenue formally forged an alliance to countercheck and put a stop to undervaluation - the most rampant form of technical smuggling. Under the arrangement, FPI will supply the BIR with import documents of unscrupulous importers, whom it suspects may have undervalued the products they are importing, which BIR will use as basis in conducting investigations of possible tax evasion. The import documents will serve as a paper trail and would tremendously help the BIR in building cases against smugglers and tax evaders.

The Federation likewise unveiled its new website: www.fpi.ph which serves as the portal for the Philippine Industries, and will connect our members to various prospective clienteles both local and abroad - who will now have the opportunity to glimpse at the world class product lines being manufactured and produced by FPI members. The FPI website also provide features on current industry developments, events, position papers on various issues ranging from trade, labor, and environment, on Customs matters, power/energy sector and finance, to name a few.

To further showcase the Philippine manufactured products and materials, the FPI will institutionalize and hold a yearly exposition coined as Philippine Industries Expo (Philindex) starting in 2007.

Thus, the FPI has been a major advocate of concerns of Philippine industry. With the vision of globally competitive and highly industrialized Philippines, the FPI has become the "Voice of Industry".

Verily, this stature evolved in view of the concerted, relentless and unselfish effort - greatly exemplified by its members who are bonded by a common cause, which was judiciously nurtured by its leaders starting from its first President Mr. Hermenegildo Zayco, followed by Mr. Jesus Arranza, Mr. Raul Concepcion, Mr. Antonio Garcia, Mr. V. Francisco Varua, and currently Mr. Jesus L. Arranza once more, with Mr. Meneleo Carlos Jr., as Chairman.

It is also due to this unwavering and unique camaraderie in the FPI that in 2006 the Federation moved to its new home at Suite 701 Atlanta Centre Condominium, Annapolis St., Greenhills, San Juan, Metro Manila, where the FPI Secretariat is now permanently housed. This monumental achievement was realized during the term of the following FPI Directors and Officers, namely: Chairman Meneleo J. Carlos, Jr., President Jesus L. Arranza, Executive Vice-President Edison T. Co Seteng?, VP for Manufacturing Renato R. Ermita, VP for Agriculture V Francisco Varua, Treasurer Capt. George S. Chua, Asst. Treasurer Ramon C. Agustines, Corporate Secretary Atty. Jose T. Baldonado?, Directors Jose Ch Alvarez, Luna S. Go, Ernesto M. Ordoñez, Henry A. Tañedo, Arsenio N. Tanco, Edwin Ll Umali, Abeto A. Uy, and Secretary General Atty. Rufino M. Margate, Jr.

Indeed, FPI has traveled a long way and is still becoming bigger and stronger. With the unwavering and solid backing of its members, FPI will continuously be the "Voice of Industry".