The author graduated from the University of the Philippines, Diliman, Quezon City, with a degree in Political Science. His undergraduate thesis about poverty, the homeless, and squatting in the Philippines shows that such problems, which was present since the dawn of time, would require a change not only in laws and policies, but also the frame of mind of the Filipino, in order to solve them.
He has a degree in Law at UE Manila, and is now working at the Philippine Chamber of Commerce and Industry as Manager of the Advocacy Department. He spends most of his time writing speeches, novels, posting notes in his blogs, and managing and developing programs and projects for the business sector in the Philippines.
The author is also an avid computer geek who has started dismantling computers since he was young in the 1980s. He can install video cards and sound cards even if the computer is turned on. Fortunately, he has never been electrocuted or physically hurt or damaged. Sadly, we cannot say the same for the computers he "fixed." His adventurous whims gave him advanced knowledge in the intricacies of computer world.
His expertise in computers made him adept in handling cellphones because of the similarity in desktop framework. He has silently followed his hobby of pursuing technological breakthroughs by buying second hand cellphones in the outskirts of Quiapo and Caloocan where these gadgets abound.
While he may be fond of online computer games, the last he played them were during the earlier versions of Starcraft, Warcraft, and Diablo I, II, and III. He also likes to listen to Metallica, The Cranberries, Green Day, and several other songs, the singers of which he does not give a care about in the world.
Mr. Domingo was also a member of the call center industry for two years where he was able to master the art of calming and pacifying an irate subscriber.
Sunday, April 26, 2009
Great Speeches: Business Responds to the Crisis by Emmanuel T. Domingo
Never has the world seen, since the Great Depression of the 1930s, the global economy drastically slowing down and contracting, with both developed and developing countries greatly affected. Trade, which is considered to be one of the most important engines of global growth, has drastically been cut as a result of lower consumer demand and lack of access to credit.
With the advent of the crisis, business leaders and government managers are scrambling to develop and craft economic strategies and roadmaps responsive enough to save our ailing industries and generate more jobs for society’s most vulnerable sectors.
The two near- term challenges faced by the Philippines now are safeguarding the achievement of recent years (including stronger growth momentum and progress in fiscal management) and protecting society’s most exposed groups during the slowdown. The second means helping those who have lost, and are in danger of losing, their jobs due to company closures and retrenchments.
Needless to say, difficult times require innovative solutions and strategies which business must develop in these trying times. It is important for businesses to think proactively. Every businessman who wants to survive needs more than strategies for competitiveness. Business needs to create realizable, long-term plans to ensure our sustainability and survival. Faced with uncertainties, several businesses have to shape up and attain unparalleled efficiency to keep them above water. Businessmen need to show more resiliency and embrace change and innovation as key business strategies to survive.
No to Protectionism, Pursuing Multilateralism
PCCI remains supportive of efforts to push for the conclusion of the WTO Doha Development Round. Given the prevailing global economic realities, the private sector believes that the conclusion of the Doha Round has become a necessity that would help reinvigorate many distressed economies.
Studies show that global trade will decline by 9% this year, the biggest contraction since the World War Two. Both the developed and developing countries will be negatively affected, with exports from developed countries falling by 10% and 2-3% for developing countries.
As such, the PCCI strongly believes that a more open trading system, which is the main agenda of the Doha Round, is one of the best avenues to help address the ongoing global economic crisis. PCCI considers the principles of openness, transparency, non-discrimination, and fairness espoused by the Doha Round to be important drivers in stimulating the growth of a battered global economy.
The PCCI strongly opposes any calls for protectionism and isolationism. The experience of increasing tariff rates and reverting to other protectionist measures during the Great Depression showed that these kinds of policies only lead to the further depression of economies and thus, to global economic slump.
The Philippine business community believes that any form of protectionist measures will not, in anyway, help in the recovery of the global economy, but instead hamper global economic growth. While some countries have signified their intention to protect their domestic industries and sectors from the crisis, history has shown that this will only lead to retaliatory measures from others, which would only further undermine global trade.
Stimulating Local Economies, rebuilding confidence
Local economic development appears to be the vital engine for economic activity stimulation – given the strong potential for job creation leading to consumption activities. In order to address the global economic challenge, PCCI, on its part, proposed and government accepted to create a P100 billion (US$ 2 billion) stimulus package for infrastructure spending. The fund will be contributed 50/ 50 by GFIs and the private sector and the upside is, spending from this fund will not impact on the budget deficit. The mechanics and other details with respect to use, accountability and transparency, structure, sovereign guarantees, monitoring and control are now being worked out by PCCI with DOF, DBP, SSS, Landbank, GSIS, NEDA, and NDC.
In addition, the business sector would need to work together with government economic planners in putting our house in order and make our economy more resilient and globally competitive so that as the world turns for the better, we are ready to seize the opportunities.
On the tourism front, with the number of foreign visitors expected to decline this year, we would need to re-prioritize by promoting domestic tourism. We could encourage Filipinos to explore the Philippines instead of going abroad. We need to spend our travel money in the Philippines and give business to local entrepreneurs involved in the travel industry, i.e., food, transportation, souvenirs, handicrafts. We need to do our share in keeping local tourist places viable. It is possible that not too many foreign visitors will come around in the next two years, maybe even longer.
Another important immediate matter is rejuvenating people’s confidence in the banking system. The most immediate and critical intervention is to secure our banking sector by increasing maximum deposit insurance to 1 million pesos as depositor confidence is the point of maximum leverage in this context of uncertainty and competitive moves of our neighbors in this regard.
Improving Export Performance
We also need to find ways to improve our export performance. This would be addressed by finding other markets for our export products. We need to find other markets for Philippine products in order to boost exports. As of now, 8 of the top 10 economies which the Philippines exports to will be in recession while China and Malaysia will experience significant slowdown. The weaker the economies of our trading partners, the weaker the demand for Philippine goods.
Weaker exports affect not only the peso and the country’s ability to finance its imports and service its foreign debt. More worrisome is slowing exports’ impact on jobs. In turn, a slower export means more factory closures and layoffs. Pushed to its logical conclusion, this means worsening poverty and rising incidence of hunger.
PCCI Igniting the F.I.R.E.
In order to provide a roadmap for the business sector, PCCI has identified and will focus in the next 2 years on 4 key basic areas: namely: Food Security, Infrastructure, Re-engineered Education, and Energy (or F.I.R.E.).
First, we need to focus on investing on agricultural development and reform because agriculture employs a third of our country’s workforce.
Second, Infrastructure is a key factor that directly affects the country’s global competitiveness. An efficient transport network will reshape the country’s physical and economic configuration.
Third, to address our unemployment problem, we need to re-engineer our educational system in order to address the mismatch between skills of our graduates and the requirement of the industry.
It goes without saying that business leaders need to help address the issue of unemployment. The important focus now should be on job creation and job preservation. In order to preserve jobs and help establishments and companies survive, several adjustment measures may also need to be implemented like flexible work arrangements, compressed work week, forced leave, reduce work hours/ days, reduced number of shifts and job rotation.
The strong potentials of the business process outsourcing industry for job generation have given our country something to hold to keep our heads above water. We would need to diversify and focus on high value BPO services like animation, IT services, medical and legal transcription, engineering design, and software development, among others.
Fourth, on Energy, PCCI advocates a predictable energy policy to level the playing field. PCCI has drawn a roadmap to influence policy makers to achieve supply/ demand balance using the right and appropriate mix for our country’s power generation sector. This is aimed at promoting energy self- sufficiency at competitive cost.
Regional Cooperation against the Crisis
Strengthening regional domestic demand and increased intra-regional trading are key to the growth and productivity of the region, amid the global economic slowdown.
Trade and investment agreements and regional market integration have lowered the risks of investing abroad thereby fuelling outward investments. With fiscal and economic reforms in place, Asia-Pacific countries now have large foreign reserves which, according to studies by the UN-ESCAP, are invested outside the region.
Benefiting from growth in their home markets, the corporate sector has been increasingly investing in neighboring developing economies and in developed economies as strategy to secure access to global supply chain, markets, brands, scale economies, technologies, human capital. Leading the pack are Japan, Hong Kong, Singapore, South Korea, and Taiwan.
The financial turmoil is also offering prime investment opportunities for sovereign wealth from the region.
State-owned firms such as Singapore’s Temasek Holdings pumped in USD$6.2 billion into Merrill Lynch's coffers. Other firms buying equity investments in financial institutions in the United States and Europe include the Government of Singapore Investment Corporation in Citigroup and UBS, the China Investment Corporation in Morgan Stanley and Temasek Holdings in Barclays.
Due to the region’s relatively strong growth projections, the subprime crisis has potentially increased interest in Asia-Pacific’s assets. While not immune to the volatility in the global market, the ability of the region to be insulated from the subprime crisis would depend on the policy responses Asian economies would initiate to address the new challenges
ASEAN Regional Integration for Competitiveness
ASEAN’s response to the challenge of competitiveness has been regional integration to create scale economies through such measures as the ASEAN Industrial Cooperation Scheme (AICO), the Comprehensive Preferential Tariff of the ASEAN Free Trade Area (AFTA- CEPT), and the Framework Agreement on Trade in Services (AFAS), the Investment Area Agreement (AIA), and the priority integration project. These measures have facilitated joint ventures and branching out within the region as companies endeavor to secure access to a competitive supply chain, markets, scale economies, technologies and human capital.
Enhancing ASEAN’s Competitiveness
Key factors at play in ASEAN’s competitiveness are continuing government support, government- private sector dialogue, regional policy framework for corporate governance and competition, policy support to SMEs and infrastructure development.
Governments must continue to play a facilitating role in enabling regional champions, local players and ASEAN SMEs to compete and thrive in the global economy.
To further maintain its competitive edge amidst the global economic slowdown, ASEAN must leverage on key fundamental issues such as corporate governance, and competition.
Considering their sizable contribution to the ASEAN economies, strong support should be given to SMEs in terms of access to technology, finance and information, and upgrade of industrial and management skills.
On the announcement that ASEAN plans to have an infrastructure finance mechanism, there is also a need to urge policymakers to seriously consider immediately putting up regional mechanism to bolster infrastructure development.
Sailing the Rough Seas: Economic Resiliency Plan
In the face of the global meltdown, the government intends to stay afloat and avoid negative growth through a stimulus package called the “Economic Resiliency Plan (ERP)”. The ERP will minimize the impact of the global economic downturn through measures aimed at stimulating positive performance in all sectors of society.
The ERP is being put in place as two-thirds of the world are in recession due to the global economic crunch. The Philippines has managed to sustain its growth because of past and ongoing reforms to ensure soundness of its macroeconomic fundamentals.
Government is aware that it is critical that government agencies “hit the ground running” and that fiscal and monetary policy adjustment be enforced alongside implementation of pump-priming programs and vital projects and activities (PPAs).
The ERP entails ensuring resources through better revenue collection; enhancement of cash liquidity, access to credit and low interest rates; and more effective spending. It seeks to ensure stable growth, save and create jobs, provide assistance to the most vulnerable sectors, ensure low and stable prices, and improve competitiveness in preparation for the global economic rebound.
Fiscal Stimulus
Simply put, the government intends to battle the present crisis by increasing spending. To do so, it proposes a PhP330 billion stimulus package broken down as follows:
First, PhP160 billion is the increase in the 2009 budget over that of 2008. Secretary Ralph Recto of NEDA said the fund would be used to hire needed personnel such as teachers, policemen, soldiers and doctors. He added that this is an opportune time to step up repair and rehabilitation of government buildings and fast-track purchases of supplies and equipment such as patrol cars and ambulances.
This fund would also strengthen government agriculture support though the FIELDS program. Initiated last year, FIELDS includes: (a) the provision of cheaper fertilizer and micronutrients; (b) rehabilitation and restoration of irrigation facilities; (c) extension, education and training; (d) loans for inputs, shallow tube wells, and surface water pumps; (e) the provision of dryers and other post harvest facilities; and (f) subsidy for seeds and adoption of quality genetic materials.
Government emphasized that agencies responsible for infrastructure development should implement and scale up quick-disbursing high impact projects. These projects, which are labor intensive and have high local value added, include accessibility facilities for the disabled; the construction, repair, or rehabilitation of irrigation systems; and the construction of local roads and asphalt overlay, among others. He said agencies should work with LGUs in implementing such projects and make sure that project implementation is closely monitored.
Furthermore, this fund would expand social protection. Government would (a) realign resources to increase social welfare programs like conditional cash transfers; (b) ensure full national government contribution to the National Health Insurance Program (support program for the indigent); (c) increase scholarship/training allocation; and (d) augment funds for upgrading primary and secondary hospitals. In addition, government would also match grants to LGUs and make more educational loans available.
The expansion in social protection would not only provide essential services but also create jobs with the hiring of teachers, doctors, and nurses, among others.
For this portion of the ERP to be fully effective, Secretary Recto emphasized that 60 percent of the budget should be spent by the first semester of 2009 and resources should be shifted from slow to fast-moving projects. He added that, in implementing these PPAs, government should take advantage of the “window of opportunity” as presented by the declining inflation and interest rates and good weather conditions in the first hallf of the year.
Second, income tax adjustments during the year would circulate around PhP40 billion in the market. The scheduled reduction of corporate income taxes from 35 to 30 percent would allow firms to spend about PhP20 billion more in investments while the increase in tax exemption in personal income tax empowers individuals with an estimated PhP20 billion.
Third, the government will ask the Government Service Insurance System (GSIS), the Social Security System (SSS), and the government owned and controlled corporations (GOCCs) to use their investible funds and work with the private sector to invest in needed infrastructure. Recto said this PhP100 billion package would not only generate jobs, increase money in the market but also prepare the country for “the good times ahead.”
Fourth, the government also looks at pumping around PhP30 billion by improving the fund disbursement of SSS, GSIS and PhilHealth. Secretary Recto said he sees a very big gap between individuals’ mandatory contributions and their claims and benefits. For example, he said PhilHealth has annual contributions roughly amounting to PhP24-25 billion while yearly claims and benefits only total about PhP15 billion. He said this may not only expand peoples’ access to health services but also provide business to private hospitals. In this light, he concludes that PhilHealth, GSIS and SSS can contribute PhP10 billion each for additional benefits to its members.
Other Measures
The government, business and labor sector are now working to implement coping mechanisms to prevent job and business closures. At present, some businesses and industries have already implemented (a) shortened work shifts and work weeks; (b) maximized vacation leaves; and (c) adopted rotating forced leaves, among others.
NEDA said that OFWs abroad and those returning would be assisted through enhanced reintegration services and livelihood assistance. There would be a “payback package” for OFWs which include the setting up of a PhP250 million support fund, skills training to avail of in-demand jobs in other parts of the world, and setting up of Department of Labor and Employment (DOLE) and Overseas Workers Welfare Administrations (OWWA) desks in the provinces to match OFWs’ skills with available jobs.
Also, government would expand trade, investment and tourism and accelerate lending to small and medium enterprises (SMEs).On the other hand, exporting firms are encouraged to diversify, innovate and technologically upgrade their products.
PCCI believes that government and the private sector, including, local chambers, business organizations, business councils and all stakeholders must work together in perfect unity to endure and overcome the global economic turmoil.
With the advent of the crisis, business leaders and government managers are scrambling to develop and craft economic strategies and roadmaps responsive enough to save our ailing industries and generate more jobs for society’s most vulnerable sectors.
The two near- term challenges faced by the Philippines now are safeguarding the achievement of recent years (including stronger growth momentum and progress in fiscal management) and protecting society’s most exposed groups during the slowdown. The second means helping those who have lost, and are in danger of losing, their jobs due to company closures and retrenchments.
Needless to say, difficult times require innovative solutions and strategies which business must develop in these trying times. It is important for businesses to think proactively. Every businessman who wants to survive needs more than strategies for competitiveness. Business needs to create realizable, long-term plans to ensure our sustainability and survival. Faced with uncertainties, several businesses have to shape up and attain unparalleled efficiency to keep them above water. Businessmen need to show more resiliency and embrace change and innovation as key business strategies to survive.
No to Protectionism, Pursuing Multilateralism
PCCI remains supportive of efforts to push for the conclusion of the WTO Doha Development Round. Given the prevailing global economic realities, the private sector believes that the conclusion of the Doha Round has become a necessity that would help reinvigorate many distressed economies.
Studies show that global trade will decline by 9% this year, the biggest contraction since the World War Two. Both the developed and developing countries will be negatively affected, with exports from developed countries falling by 10% and 2-3% for developing countries.
As such, the PCCI strongly believes that a more open trading system, which is the main agenda of the Doha Round, is one of the best avenues to help address the ongoing global economic crisis. PCCI considers the principles of openness, transparency, non-discrimination, and fairness espoused by the Doha Round to be important drivers in stimulating the growth of a battered global economy.
The PCCI strongly opposes any calls for protectionism and isolationism. The experience of increasing tariff rates and reverting to other protectionist measures during the Great Depression showed that these kinds of policies only lead to the further depression of economies and thus, to global economic slump.
The Philippine business community believes that any form of protectionist measures will not, in anyway, help in the recovery of the global economy, but instead hamper global economic growth. While some countries have signified their intention to protect their domestic industries and sectors from the crisis, history has shown that this will only lead to retaliatory measures from others, which would only further undermine global trade.
Stimulating Local Economies, rebuilding confidence
Local economic development appears to be the vital engine for economic activity stimulation – given the strong potential for job creation leading to consumption activities. In order to address the global economic challenge, PCCI, on its part, proposed and government accepted to create a P100 billion (US$ 2 billion) stimulus package for infrastructure spending. The fund will be contributed 50/ 50 by GFIs and the private sector and the upside is, spending from this fund will not impact on the budget deficit. The mechanics and other details with respect to use, accountability and transparency, structure, sovereign guarantees, monitoring and control are now being worked out by PCCI with DOF, DBP, SSS, Landbank, GSIS, NEDA, and NDC.
In addition, the business sector would need to work together with government economic planners in putting our house in order and make our economy more resilient and globally competitive so that as the world turns for the better, we are ready to seize the opportunities.
On the tourism front, with the number of foreign visitors expected to decline this year, we would need to re-prioritize by promoting domestic tourism. We could encourage Filipinos to explore the Philippines instead of going abroad. We need to spend our travel money in the Philippines and give business to local entrepreneurs involved in the travel industry, i.e., food, transportation, souvenirs, handicrafts. We need to do our share in keeping local tourist places viable. It is possible that not too many foreign visitors will come around in the next two years, maybe even longer.
Another important immediate matter is rejuvenating people’s confidence in the banking system. The most immediate and critical intervention is to secure our banking sector by increasing maximum deposit insurance to 1 million pesos as depositor confidence is the point of maximum leverage in this context of uncertainty and competitive moves of our neighbors in this regard.
Improving Export Performance
We also need to find ways to improve our export performance. This would be addressed by finding other markets for our export products. We need to find other markets for Philippine products in order to boost exports. As of now, 8 of the top 10 economies which the Philippines exports to will be in recession while China and Malaysia will experience significant slowdown. The weaker the economies of our trading partners, the weaker the demand for Philippine goods.
Weaker exports affect not only the peso and the country’s ability to finance its imports and service its foreign debt. More worrisome is slowing exports’ impact on jobs. In turn, a slower export means more factory closures and layoffs. Pushed to its logical conclusion, this means worsening poverty and rising incidence of hunger.
PCCI Igniting the F.I.R.E.
In order to provide a roadmap for the business sector, PCCI has identified and will focus in the next 2 years on 4 key basic areas: namely: Food Security, Infrastructure, Re-engineered Education, and Energy (or F.I.R.E.).
First, we need to focus on investing on agricultural development and reform because agriculture employs a third of our country’s workforce.
Second, Infrastructure is a key factor that directly affects the country’s global competitiveness. An efficient transport network will reshape the country’s physical and economic configuration.
Third, to address our unemployment problem, we need to re-engineer our educational system in order to address the mismatch between skills of our graduates and the requirement of the industry.
It goes without saying that business leaders need to help address the issue of unemployment. The important focus now should be on job creation and job preservation. In order to preserve jobs and help establishments and companies survive, several adjustment measures may also need to be implemented like flexible work arrangements, compressed work week, forced leave, reduce work hours/ days, reduced number of shifts and job rotation.
The strong potentials of the business process outsourcing industry for job generation have given our country something to hold to keep our heads above water. We would need to diversify and focus on high value BPO services like animation, IT services, medical and legal transcription, engineering design, and software development, among others.
Fourth, on Energy, PCCI advocates a predictable energy policy to level the playing field. PCCI has drawn a roadmap to influence policy makers to achieve supply/ demand balance using the right and appropriate mix for our country’s power generation sector. This is aimed at promoting energy self- sufficiency at competitive cost.
Regional Cooperation against the Crisis
Strengthening regional domestic demand and increased intra-regional trading are key to the growth and productivity of the region, amid the global economic slowdown.
Trade and investment agreements and regional market integration have lowered the risks of investing abroad thereby fuelling outward investments. With fiscal and economic reforms in place, Asia-Pacific countries now have large foreign reserves which, according to studies by the UN-ESCAP, are invested outside the region.
Benefiting from growth in their home markets, the corporate sector has been increasingly investing in neighboring developing economies and in developed economies as strategy to secure access to global supply chain, markets, brands, scale economies, technologies, human capital. Leading the pack are Japan, Hong Kong, Singapore, South Korea, and Taiwan.
The financial turmoil is also offering prime investment opportunities for sovereign wealth from the region.
State-owned firms such as Singapore’s Temasek Holdings pumped in USD$6.2 billion into Merrill Lynch's coffers. Other firms buying equity investments in financial institutions in the United States and Europe include the Government of Singapore Investment Corporation in Citigroup and UBS, the China Investment Corporation in Morgan Stanley and Temasek Holdings in Barclays.
Due to the region’s relatively strong growth projections, the subprime crisis has potentially increased interest in Asia-Pacific’s assets. While not immune to the volatility in the global market, the ability of the region to be insulated from the subprime crisis would depend on the policy responses Asian economies would initiate to address the new challenges
ASEAN Regional Integration for Competitiveness
ASEAN’s response to the challenge of competitiveness has been regional integration to create scale economies through such measures as the ASEAN Industrial Cooperation Scheme (AICO), the Comprehensive Preferential Tariff of the ASEAN Free Trade Area (AFTA- CEPT), and the Framework Agreement on Trade in Services (AFAS), the Investment Area Agreement (AIA), and the priority integration project. These measures have facilitated joint ventures and branching out within the region as companies endeavor to secure access to a competitive supply chain, markets, scale economies, technologies and human capital.
Enhancing ASEAN’s Competitiveness
Key factors at play in ASEAN’s competitiveness are continuing government support, government- private sector dialogue, regional policy framework for corporate governance and competition, policy support to SMEs and infrastructure development.
Governments must continue to play a facilitating role in enabling regional champions, local players and ASEAN SMEs to compete and thrive in the global economy.
To further maintain its competitive edge amidst the global economic slowdown, ASEAN must leverage on key fundamental issues such as corporate governance, and competition.
Considering their sizable contribution to the ASEAN economies, strong support should be given to SMEs in terms of access to technology, finance and information, and upgrade of industrial and management skills.
On the announcement that ASEAN plans to have an infrastructure finance mechanism, there is also a need to urge policymakers to seriously consider immediately putting up regional mechanism to bolster infrastructure development.
Sailing the Rough Seas: Economic Resiliency Plan
In the face of the global meltdown, the government intends to stay afloat and avoid negative growth through a stimulus package called the “Economic Resiliency Plan (ERP)”. The ERP will minimize the impact of the global economic downturn through measures aimed at stimulating positive performance in all sectors of society.
The ERP is being put in place as two-thirds of the world are in recession due to the global economic crunch. The Philippines has managed to sustain its growth because of past and ongoing reforms to ensure soundness of its macroeconomic fundamentals.
Government is aware that it is critical that government agencies “hit the ground running” and that fiscal and monetary policy adjustment be enforced alongside implementation of pump-priming programs and vital projects and activities (PPAs).
The ERP entails ensuring resources through better revenue collection; enhancement of cash liquidity, access to credit and low interest rates; and more effective spending. It seeks to ensure stable growth, save and create jobs, provide assistance to the most vulnerable sectors, ensure low and stable prices, and improve competitiveness in preparation for the global economic rebound.
Fiscal Stimulus
Simply put, the government intends to battle the present crisis by increasing spending. To do so, it proposes a PhP330 billion stimulus package broken down as follows:
First, PhP160 billion is the increase in the 2009 budget over that of 2008. Secretary Ralph Recto of NEDA said the fund would be used to hire needed personnel such as teachers, policemen, soldiers and doctors. He added that this is an opportune time to step up repair and rehabilitation of government buildings and fast-track purchases of supplies and equipment such as patrol cars and ambulances.
This fund would also strengthen government agriculture support though the FIELDS program. Initiated last year, FIELDS includes: (a) the provision of cheaper fertilizer and micronutrients; (b) rehabilitation and restoration of irrigation facilities; (c) extension, education and training; (d) loans for inputs, shallow tube wells, and surface water pumps; (e) the provision of dryers and other post harvest facilities; and (f) subsidy for seeds and adoption of quality genetic materials.
Government emphasized that agencies responsible for infrastructure development should implement and scale up quick-disbursing high impact projects. These projects, which are labor intensive and have high local value added, include accessibility facilities for the disabled; the construction, repair, or rehabilitation of irrigation systems; and the construction of local roads and asphalt overlay, among others. He said agencies should work with LGUs in implementing such projects and make sure that project implementation is closely monitored.
Furthermore, this fund would expand social protection. Government would (a) realign resources to increase social welfare programs like conditional cash transfers; (b) ensure full national government contribution to the National Health Insurance Program (support program for the indigent); (c) increase scholarship/training allocation; and (d) augment funds for upgrading primary and secondary hospitals. In addition, government would also match grants to LGUs and make more educational loans available.
The expansion in social protection would not only provide essential services but also create jobs with the hiring of teachers, doctors, and nurses, among others.
For this portion of the ERP to be fully effective, Secretary Recto emphasized that 60 percent of the budget should be spent by the first semester of 2009 and resources should be shifted from slow to fast-moving projects. He added that, in implementing these PPAs, government should take advantage of the “window of opportunity” as presented by the declining inflation and interest rates and good weather conditions in the first hallf of the year.
Second, income tax adjustments during the year would circulate around PhP40 billion in the market. The scheduled reduction of corporate income taxes from 35 to 30 percent would allow firms to spend about PhP20 billion more in investments while the increase in tax exemption in personal income tax empowers individuals with an estimated PhP20 billion.
Third, the government will ask the Government Service Insurance System (GSIS), the Social Security System (SSS), and the government owned and controlled corporations (GOCCs) to use their investible funds and work with the private sector to invest in needed infrastructure. Recto said this PhP100 billion package would not only generate jobs, increase money in the market but also prepare the country for “the good times ahead.”
Fourth, the government also looks at pumping around PhP30 billion by improving the fund disbursement of SSS, GSIS and PhilHealth. Secretary Recto said he sees a very big gap between individuals’ mandatory contributions and their claims and benefits. For example, he said PhilHealth has annual contributions roughly amounting to PhP24-25 billion while yearly claims and benefits only total about PhP15 billion. He said this may not only expand peoples’ access to health services but also provide business to private hospitals. In this light, he concludes that PhilHealth, GSIS and SSS can contribute PhP10 billion each for additional benefits to its members.
Other Measures
The government, business and labor sector are now working to implement coping mechanisms to prevent job and business closures. At present, some businesses and industries have already implemented (a) shortened work shifts and work weeks; (b) maximized vacation leaves; and (c) adopted rotating forced leaves, among others.
NEDA said that OFWs abroad and those returning would be assisted through enhanced reintegration services and livelihood assistance. There would be a “payback package” for OFWs which include the setting up of a PhP250 million support fund, skills training to avail of in-demand jobs in other parts of the world, and setting up of Department of Labor and Employment (DOLE) and Overseas Workers Welfare Administrations (OWWA) desks in the provinces to match OFWs’ skills with available jobs.
Also, government would expand trade, investment and tourism and accelerate lending to small and medium enterprises (SMEs).On the other hand, exporting firms are encouraged to diversify, innovate and technologically upgrade their products.
PCCI believes that government and the private sector, including, local chambers, business organizations, business councils and all stakeholders must work together in perfect unity to endure and overcome the global economic turmoil.
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