I normally attend the Economic Briefing sponsored by the Investor Relations Office of the Philippines (www.iro.ph). Although, this year, I didn’t get to attend and witness the exchange of words of MVP and Ms. Gina Lopez. But, of course, the highlight of gathering was the updates on the economy of the Philippines and action plans of the government. Please see the uploaded copy of the slides:

030612 ROP Presentation

Slides are from: http://www.iro.ph/

For this year, the stress was on good governance. Here’s the Press Release on this:

Philippines Stresses Good Governance As Growth Driver – Better economic performance expected in 2012 as the economy begins to reap the benefits of governance reforms

(Manila, March 6, 2012) – Good governance is a potent driver for growth, the Philippine Economic Team and the Bangko Sentral ng Pilipinas (BSP) Governor reported during the Philippine Economic Briefing held at the Philippine International Convention Center (PICC).

At the forum, the economic managers and BSP Governor Amando Tetangco, Jr. discussed the benefits the country has started to reap from the governance reforms so far implemented by the Aquino Administration as well as the comprehensive direction set by the government to achieve inclusive economic growth in the medium-term. They also provided an overview of their respective agency’s performance and thrusts for this year. The Philippine economic team is comprised of Department of Finance (DOF) Secretary Cesar Purisima, National Economic Development Authority (NEDA) Secretary Cayetano Paderanga, Jr., Department of Budget and Management (DBM) Secretary Florencio Abad, Department
of Trade and Indus try (DTI) Secretary Gregory Domingo, Department of Public Works and Highways (DPWH) Secretary Rogelio Singson, Department of Agriculture (DA) Secretary Proceso Alcala, Department of Energy (DOE) Secretary Jose Rene Almendras and Department of Transportation, Department of Tourism Secretary Ramon Jimenez, Jr. and Communications Secretary Manuel Roxas who was represented by Undersecretary Rene Limcaoco.

Finance Secretary Purisima said the commitment to good governance of the Aquino Administration is bearing fruit as reflected in the 13% increase in government revenues last year which was the highest ever in 10 years and which was achieved without new taxes or the sale of government assets. He added that interest expenses on government debt was P42 billion lower than the 2012 program due to the low interest rate environment and the confidence among investors built up by the governance agenda of President Aquino. The reduction in interest payments had resulted in a substantial cut in debt servicing to two% of GDP in 2011 against the three percent of GDP program last year. The amount, Purisima added, was more than enough to pay for the conditional cash transfer program for the poorest of Filipino families.

The hefty increase in revenues and the savings generated from debt service in 2011 enabled the government to post a fiscal deficit of P197.8 billion, equivalent to 2% of gross domestic product (GDP), compared with the P300 billion program for the year. Purisima added that the Aquino administration had charted the path towards fiscal consolidation which is aimed at maintaining a 2.0% deficit/GDP from 2013 to 2016. Governor Tetangco, Jr. remarked “the government’s renewed commitment to good governance has helped improve trust and build confidence among investors to do business
in the Philippines.”

He added, that the Philippine economy pushed forward on all fronts in 2011, despite the hostile external operating environment. The economy continued to grow, inflation was kept well-within target, domestic liquidity remained supportive of growth, external sector dynamics stayed robust, and the banking system remained sound.

On the part of the BSP, Tetangco said that the BSP’s calibrated and well-communicated monetary policy, timely reforms in the banking sector, an appropriate external sector policy, and the strengthened financial inclusion efforts that encouraged banks to boost lending to small and medium enterprises enabled the country to mitigate the effects on the
economy of the European debt crisis and the still weak US economy. “We were able to manage the volatilities in the financial markets brought about by surges in capital flows through the judicious use of our enhanced policy toolkit. We encouraged our banks to continue to clean-up their balance sheets and increase their capitalization.”

Going forward, Tetangco said that the BSP will continue to focus on its primary mandate of ensuring price and financial stability to keep the economy s table this year. “We will continue to assess the domestic and global operating environment to assure that our monetary, banking and external policies are appropriate and responsive. We will also continue to develop a more inclusive financial system by using our three-pronged approach of creating a
responsive regulatory framework where market-based solutions will thrive, broadening our financial literacy programs, and deepening our consumer protection efforts,” he added.

Agriculture Secretary Alcala, for his part, cited that one of the most significant achievements of the Department in 2011 was “restoring the trust of the farmers and other agriculture stakeholders in government. Making farmers believe in government means showing them that the DA serves their interest.” Secretary Alcala further added that among the major accomplishments of the Department of Agriculture (DA) last year was the reduction of rice imports to 860,000 metric tons which was just one-third of the previous importation of about 2.4 million metric tons in 2010. These resulted in savings for government and served the interest of Filipino people. Secretary Alcala also bared that “We plan to import a lesser volume in 2012,” he added.

Over the last year, the DA has demons trated its capacity to respond quickly after a calamity as shown in the aftermath of typhoons Pedring and Quiel. Consequently, the agriculture and fisheries sector proved resilient in the face of severe natural disasters. Both palay and corn recorded 15.9% growth in volume. For the full year, the agriculture sector grew by 2.34 percent in 2011, bannered by the crops, live stock and poultry subsectors, he said.

For 2012, Alcala stressed DA will continue to pursue the goals set in the Philippine Development Plan 2011-2016. Specifically, the DA’s programs are: 1) improved food security and increased rural incomes; 2) increased sector resilience to climate change impacts; and 3) enhanced policy environment governance. For 2012, the DA’s budget
amounting to P61.73 billion, inclusive of attached corporations, will be spent mainly to pursue the Food Staples Sufficiency Program, which is the centerpiece program of the Aquino administration. Meanwhile, Budget and Management Secretary Abad said the Aquino administration had made sure that all government expenditures followed closely the priorities set forth by the President in his social contract with the people, especially in the areas of good governance, poverty reduction, economic expansion, the promotion of peace and the rule of law, and the integrity of the environment.

He added that the administration had put into place a budgeting approach that eliminated wasteful graft-prone and unnecessary projects. “We closely monitored the releases of obligations and disbursement of the different agencies to make sure that were able to provide enough cash support to those projects and programs that needed cash,” he said.
Abad added that the government’s current budget process induced greater transparency from the budget preparation all the way down to the exercise of oversight over projects and programs that have been funded.

“Because of the adjustments and reforms that we introduced at the Department of Budget and Management (DBM) last year, we will be seeing dramatic improvements in budget executions and government spending this year. For example, at the end of January this year, about 91% of all the allotments of the departments in the government have already been
released. In particular, we have already released about 71% or P150 billion of the total capital outlays budgets of the departments. In comparison, only about 4% or P7 billion had been released as of end-January last year,” Abad added.

Abad said the main target of the administration as a means to fuel economic growth would be the acceleration of the flagship Private-Public Partnership (PPP) projects. “We are hoping that the partnership with the private sector in the areas, not only in the strategic infrastructures, roads, ports and airports, but also in the fields of education and health services, will also begin to be implemented. With that, we are hoping for greater investments to come in,” he said.

Public Works and Highways Secretary Singson for his part said that in 2011, “we focused on good governance and policies that effectively reduce corruption. First, we tried our best to be objective as much as possible in the selection of projects that we will be funding. Second, we ensured open competitive and transparent bidding for DPWH projects. By addressing collusion in the bidding of public works projects through transparency reforms and strict
adherence to public bidding rules, DPWH generated savings over P6 billion thru competitive transparent bidding in 2011. Third, we engaged the civil society to make sure that the projects that we implement are known to them and also that they get involved in the quality of our projects.” Secretary Singson added that through good governance, “we were able to improve significantly for the same project cos ts the quality of our national roads.”

In 2012, Singson stressed that DPWH will continue to focus on upgrading the quality and safety of the national roads and bridges. It is strengthening its convergence program with other departments and these principally will include giving access to tourism destinations, airports, seaports and major food production areas. The agency is also looking at river basins to be able to optimize utilization of water and reduced flooding in urban centers. In addition, Singson said that the agency is also prioritizing Mindanao such that for the 1st time “DPWH is devoting as much as 26% of our general appropriations to Mindanao.

Trade and Industry Secretary Domingo reported that committed investments with the Board of Investments and the Philippine economic zones grew by 30% “from an already very large base in 2010. From P500 billion in 2010, committed inves tments reached P650 billion in 2011, a P150 billion jump in investment registrations last year.”

He added that while overall exports declined by 6.9% due to the weakness in the electronic sector as a result of the problems in the US and Europe, the country’s non-electronic exports grew by 10% last year. “In terms of the competitiveness, we also did very well such as in the World Economic Forum (WEF) survey, which showed an improvement from 85th to the 75th place in the country’s global competitive ranking. A 10-notch improvement of the country’s ranking was the best in the survey,” Domingo said.

Domingo also cited a recent Japan External Trade Organization (JETRO) survey comparing eight Asian countries including China, Indonesia, India and a couple of other countries in the region that showed the Philippines on top of most of the categories. He added, we have seen a deluge of investments in 2011 and we expect to continue to see that deluge of
investments and even growing this 2012 and beyond.

On key investment areas, Domingo explained that tourism and agriculture in particular are really the top most priorities because these are the sectors that can provide a lot of jobs throughout the countryside. But we will continue as well to push for the sectors that are big such as the BPO Call Centers as well as the electronic industries. The creative industry, while it doesn’t have the scale of the other sectors , but because of our creative people this is really an industry that has to be pushed.

Socioeconomic Planning Secretary Paderanga “while the country’s GDP growth of 3.7% in 2011 may not be as high as those of neighboring countries, the country’s economic performance in 2011 however, continues to be respectable in the light of negative external challenges that we have experienced and governance reforms that we have ins tituted. And
this would serve as a base for a jump off for a higher growth. Secretary Paderanga s tressed that “we continue to be guided by our economic blueprint for inclusive growth, which is the Philippine Development Plan for 2011-2016. We in NEDA will ensure that all approved projects do not only meet the feasibility criteria, but more importantly be resis tant to climate change and disasters , to protect the poor from such vulnerabilities and ensure that money does not get wasted by having to make up and rehabilitate from disasters and keep on re-investing in certain projects. We expect that this acceleration of public expenditures will continue well into 2012 and beyond.

Paderanga added that the country’s GDP for this year could be higher than five percent. This is on the back of more spending in infrastructure. Moreover, he also said that budget spending this year will be much more efficient than last year. To boost spending this year, the Aquino administration has already allocated P19.6 billion in counterpart funds for the government’s Public-Private Partnership (PPP) program. This is higher than las t year’s P12.5- billion counterpart budget. Of the P19.6-billion allocation, P8.6 billion will be given to the Department of Transportation and Communications (DOTC) to shore up PPP initiatives under its wing.

In addition, the Secretary also said that “private construction is expected to remain robust, particularly in the property sector, given the upward momentum in the office sector, and the relatively high BPO office demand in strategic areas across the country. We also expect the residential sector to remain supported by the demand from families of overseas Filipinos . There will also be expansion of inves tments in energy; and the indus tries in the
priority areas – agribusiness, consumer durables, information technology (IT), health and wellness, transport, telecommunications, and especially tourism to contribute positively to the country’s economic growth in 2012. He stressed however, that while NEDA is optimistic that 2012 will be subs tantially better than 2011, it remains vigilant and continue to closely monitor external developments that continue to pose significant risk to the country’s growth.

Meanwhile, Energy Secretary Almendras said 2011 was a good year for the energy sector, but at the same time, cited the many challenges that still faced the government. Almendras said the Department of Energy laid down the groundwork for an even playing field and good governance structure for the sector.

“On energy resource development, we had to encourage and attract many international and local investors into the area of energy exploration and development. In 2011, we launched the PECR 4 for oil and gas, which attracted over a hundred and four companies all over the world. Over this time, we had fifty companies that paid for data, which signals they are very serious about bidding for the service contract for oil and gas we have offered,” Almendras added.

The country was able to have stabilized supplies of electricity for Luzon and Visayas, and even in Mindanao, there were less brownouts and a better supply of power compared to the previous year, he said. Luzon and Visayas have significant reserves, mainly as a result of enhancing the efficiency of the nation’s power grid by putting together a very tight operating and maintenance protocol with the private sector playing a key role, he said. “One of the other things we achieved last year was an improvement in the electricity spot market, which resolved in a lower spot rate for the whole country. We were able to implement WESM, or the Whole Sale Electricity Spot Market in the Visayas, which helped bring down electricity prices, and which also encouraged more inves tors in the power sectors of that region,” he said.

“We were able to push our agenda and encourage energy efficiency in all aspects, whether in transport fuels, in buildings, or even in industrial electricity use”, Almendras added. The Finance Secretary concluded added that the Philippines will have the opportunity to showcase the improvements in the economy that have happened, since President Aquino took over the reins of government, through the Philippine hosting of the 45th annual meeting of the Asian Development Bank (ADB) board of governors. The theme of the ADB conference is inclusive growth through good governance and partnerships, which agrees with President Aquino’s agenda.

“We are looking forward to hos ting the ADB meeting, and we also want to prove to all the participants that it’s more fun to have ADB meetings in the Philippines,” Purisima said. On the nation’s hos ting of the ADB event through Manila 2012, Department of Tourism Secretary Jimenez said, as the theme of the gathering suggests, the event presents a
tremendous opportunity for people to see the new Philippines in action.

“They will see an incredible country which beauty is not just out of the incredible natural vistas, but out of the incredible spirit of the Filipino people,” Jimenez said. “It is often said a visitor is never a stranger in the Philippines for more than 24 hours. I strongly believe that is going to happen to all our visitors from the ADB member states as they begin to experience governance and hospitality, Filipino style,” he added.

About Manila 2012
Manila 2012 refers to the Philippine hosting of the 45th Annual Meeting of the ADB Board of Governors which will be held on 2 to 5 May 2012 at the PICC and SMX.

The Annual Meeting of the ADB Board of Governors is a globally anticipated and attended event, calling over the finance and economic planning ministers from 67 ADB member countries, who also serve as ADB Governors. The ADB Governors are joined by key policymakers such as Central Bank executives and other top-ranking government officials,
representatives of multilateral development community and civil society, investment bankers, business leaders, and the academe. This year, about 4,000 delegates from various countries are expected to come to Manila and participate in the event.

ADB annual meetings are statutory occasions for Governors of ADB members to provide guidance on ADB administrative, financial, and operational directions. For more information, visit: www.manila2012.ph

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