E. Action Plan 7. Information and Communications Technology (ICT)
The Philippines faces a massive task of adjustment and catch-up to derive the most from ICT. Hence, the need to further develop and enlarge the ICT sector in order to take advantage of the skill level, availability and comparative costs of the country’s technical skilled manpower (Chapter 18 and Chapter 19). Developments in ICT offer vast opportunities for the country, especially in shared services or back-office operations, animation and software development and technical support.
McKinsey and Company recently identified 11 white-collar services — with an estimated demand worth US$180 billion by 2010 — that the mature economies can profitably outsource, and which the Philippines is well positioned to supply. Through the information highway, Filipinos can help reduce the overhead cost of service industry multinationals without their going overseas.
The possibility of generating wealth from high-end technology (Chapter 1) must be continuously explored, with new emphasis on biotechnology (Chapter 19), as part of the program to build a knowledge economy. Hence, for the Philippines to become an active player in the global knowledge economy, the government, in close partnership with the private sector, including civil society, shall harness the full potentials of information and communications technology (ICT), especially in bringing investments into the country. This can be done through the following:
a. Draw up a more competitive incentives package to further attract investors, more competitive incentives package with focus on ICT shall be made available. Existing or new investment incentives package will be rationalized to attract more ICT businesses and other long-term direct investors and locate their operations in the country.
b. Improve ICT manpower For the five priority areas for ICT services (Contact Centers, Animation and Software Development, Medical Transcription, Business Process Outsourcing, Engineering and Design Services), the industry shall establish a human resource development program to ensure a steady supply and adequate pool of qualified IT executives and workers.
Math and Science curriculum in the primary, secondary and tertiary levels shall be enhanced.
Industry-academe initiatives in increasing number of MS and PhD graduates in Math, Engineering and Computer Science courses shall be encouraged.
State universities and colleges, private universities and technical-vocational institutions shall offer specialized ICT degree programs and shall include specialized ICT courses in their curricula.
Internationally recognized ICT certification programs for individuals/professionals and organizations/ institutions shall also be implemented. Software enterprises will be encouraged to acquire Capability Maturity Model Integration (CMMI) certification to enhance marketability. (Chapter 6 and Chapter 18).
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DIGITAL INFRASTRUCTURE I. SITUATIONER
The liberalization of the telecommunications sector which started in 1989 provided impetus to the evolution of a multioperator environment in the country. By 2002, there were 74 local exchange operators, 14 inter-exchange operators, 11 international gateway facility companies, seven cellular mobile phone operators, 11 radio paging firms, 11 public trunk radio service providers, 19 satellite operators and 32 value-added service providers. In addition, there were 776 cable TV operators with 1,373 networks nationwide. To date, only four cable TV companies (SkyCable, Home Cable, Sun Cable and Destiny) control about 50 percent of the country’s total subscriber base. Majority of these cable TV operators, however, are willing to offer Internet and voice services but sorely lack thecapital for the purpose. These developments characterized the growth of the country’s digital infrastructure over the past years, as more and more Filipinos gained access not only to telephone lines but also to the Internet. Hence, by the end of 2002, total telephone density reached 28.06 per 100 population and stronger awareness of knowledge and information sharing among individuals and organizations through the Internet was realized. Despite these gains, major policy and regulatory reforms remain to be done to facilitate further growth of the sector. The absence of clear and concise policies allowing innovative and more efficient services at lower costs has discouraged the entry of new players and further investments in the sector. Moreover, the country’s connectivity rates are currently considered among the highest in Asia. This situation is highly noncompetitive, discourages investors, and limits the provision of services to benefit and empower the citizenry, especially the OFWs and their families. In the case of the country’s ICT manpower, the Information Technology and E-Commerce Council, the forerunner of the Commission on Information and Communications Technology (CICT), reported that as of 2003, the lack of well-trained and competent trainors/educators in information and communications technology (ICT) and ICT-related subjects has contributed to the declining quality of education in general and of the country’s ICT and knowledge workers. The existence of a non-formal training sector operating without adequate regulation further exacerbated the situation, resulting in wide variances in the quality of ICT training in the country. Moreover, the lack of accurate and comprehensive data on available ICT and ICT-enabled skills in the country has made ICT manpower planning and policy-making even more difficult. Clearly, there is need to sustain the momentum already gained toward the building of a digital infrastructure to interconnect the entire country and realize the goal of universal access. Hence, efforts in pursuit of this goal will be further accelerated, with the private sector playing a major role in these efforts. Policy and regulatory frameworks will be reviewed and rationalized to make them more responsive to technological and market changes, as an appropriate enabling environment, which is fair for both market players and consumers, will be put in place. ICT will be fully exploited to improve the knowledge and skills of Filipinos nationwide, and to provide opportunities for employment that will uplift the economy.
II. GOALS, STRATEGIES AND ACTION PLANS
A. Reduce Cost of Connectivity The government will push for the reduction of connectivity costs by allowing an enabling environment to permit new entrants of various telecom players, including but not limited to ISPs, to provide ICT and ICT-related services, thus, promoting market competition.
1. The government will continue to promote investments that support the provision of physical infrastructure for high-speed connectivity, high capacity and secured network services at low cost. The development of the country’s digital infrastructure will be accelerated through continuously optimizing the participation of/partnership with the private sector. Provision of high-speed connectivity at low cost will drive the usage of ICT in all sectors and more importantly, enable the country to transform itself into a knowledge and software development and e-services hub of Asia. Given the availability of domestic broadband network capacity with international connectivity, more access points will be offered both in the urban and rural areas, to provide the population with equal access to the global economy. Efforts will also be pursued toward achieving the “last mile connection” from the network backbone to the end-user. It will also include the optimal use of existing government networks for public data communication process (e.g. Transco fiber optic transmission lines, TelOf network, etc.). Moreover, possible business opportunities and creative ways to optimize existing or new network and bandwidth capacity will be explored.
2. The sustainability of these investments in physical infrastructure will depend heavily on market demand for broadband, which will be achieved by the provision of market attractive value-added features. The role that government will play is in the development and provision of e-government content. This will allow government service to be delivered directly to the citizens, both locally and internationally through web technologies.
3. A prime market attractive value-added feature of a progressive digital infrastructure is VoIP or Internet telephony. Issues relative to opening the market to VoIP will be resolved and a clear legal regime covering VOIP, convergence of web, email and voice services through Internet telephony will be provided. Simultaneously, VoIP services will be rolled out. This will immensely benefit overseas Filipino workers and their families and ensure the accessibility and affordability of these services for all. On the other hand, other prime public service value-added features that include distance education, e-health and the delivery of elearning to all public schools through the Internet will be pursued and supported through the establishment of community e-centers (CeCs) throughout the country.
4. The private sector will lead the deployment and expansion of digital infrastructure, especially to unserved and underserved areas, as well as the convergence of telecommunications, IP technology, broadcast media, cable TV, and other technologies to realize the full potentials of ICT as a tool for knowledge creation and diffusion. The government will encourage telecommunications carriers that provide cellular mobile telephone services to disperse new cell sites to make their services connect the entire country. Towards this, the government will ensure the interoperability and interconnectivity of all networks.
5. The digital divide within the country will be reduced by establishing more public access points such as CeCs for delivery of e-government and other services to provide universal access to information and communications services in unserved areas, link communities, facilitate trade and commerce, and empower rural communities socially,economically and politically. Seed funding will be provided for the development of public access points, which will support the provision of broadband services by the private sector to all municipalities and the connection of all secondary schools where computers will be provided. In unserved/underserved areas, public access points will be provided to schools, communities, scientific and research centers, health centers and government offices through the establishment of CeCs.
6. Gains already realized in the booming ICT and e-commerce industry will be further accelerated. The government will expand distribution points for ICT services utilizing all available and appropriate technologies like media, print, broadcast and mobile for faster access to and delivery of government information and services. With the ICT service boom in the country, the government will ensure that all authorized public network operators and other providers of telecommunications services will provide full interconnection at reasonable costs to all ICT service providers.
7. The requirements of major government ICT projects will be met. The efficiency of internal government processes will be improved through ICT. Existing government network infrastructure will be rationalized to enable sharing and interconnection of network resources among all branches of government to facilitate the seamless transfer of knowledge within the government. Where there are gaps between networks that cannot be addressed by sharing of government resources, the services of the private sector will be tapped to establish the necessary infrastructure “bridges” to close the gaps.
B. Develop ICT Human Resource The country is well positioned to become a globally competitive knowledge-based economy. However, the government should continue to support and develop the quality of its human capital especially in ICT by providing opportunities for skills development and training and by adopting a national standards certification system comparable with those of the rest of Asia to ensure the supply of quality ICT professionals and workers.
1. Fundamental to the development of a globally competitive human resource base is the advancement and modernization of education. The schools’ curricula will be consistently designed and updated to equip students with the requisite knowledge and ICT skills. The teaching of Science, Math and English as core subjects and the use of computers will be pursued. Toward this, e-learning programs and technologies will be accelerated to provide alternatives to traditional learning and training methods. Furthermore, wider access to the Internet as a tool for enhancing availability of knowledge will be provided. In addition, industry participation in the form of on-the-job training (OJT) programs will be strengthened in areas such as the restructuring of OJT learning objectives to enhance the training and skills development process (see also Chapter 18);
2. Increasing the quantity and quality of locally available ICT trainors/educators is necessary to meet the fast-growing requirements for quality ICT and knowledge workers. In addition, all trainors/teachers must have sufficient knowledge in the use of ICT as a tool for learning.
3. Internationally recognized certification programs will be implemented to enhance the competitiveness of the country’s ICT professionals and organizations. Likewise, new training courses and certification programs will be developed for the five priority areas for ICT services, which are Contact Centers, Animation and Software Development, Medical Transcription, Business Process Outsourcing, Engineering and Design Services (see also Chapter 18 and Chapter 1, Section 7).
4. The thriving ICT and e-commerce industries hold promising employment opportunities to Filipinos. In relation to this, a sustainable ICT manpower skills survey and tracking system that will provide accurate data on the status of ICT and ICT-enabled skills in the country will be conducted regularly for benchmarking and placement purposes.
C. Pursue Regulatory and Legislative Reforms (See also Part V) Regulatory and legal reforms will be implemented by promoting the independence of the regulator and separate operator and regulator functions and by setting/enforcement of safety, quality, environmental, and legal standards. Moreover, institutional reforms will be implemented to ensure transparency and accountability and to mitigate, if not eradicate, administrative impropriety of respective government agencies, and to resolve conflicting mandates among agencies involved in ICT planning and implementation.
1. The Department of Information and Communications Technology (DICT) will be established as a venue to achieve a web-based Philippines, capable of participating in – and contributing to – the global economy. It will also more effectively coordinate and implement the national ICT development agenda, policies, programs, projects to carry it out. Pending such, the President has issued EO 269 creating the Commission on Information and Communications Technology (CICT), which is not merely advisory in nature but serves as the primary policy, planning, coordinating, implementing, regulating and administrative entity of the Executive Branch on ICT and e-commerce initiatives.
2. The National Telecommunications Commission will be strengthened and its independence in performing its regulatory function will be ensured, particularly in carrying out decisions and imposing sanctions and penalties for regulatory noncompliance.
3. The passage of the Convergence Bill will be pursued to address current regulatory issues such as Cable Television Classification and Frequency Spectrum Management that will permit the infusion of much-needed investment capital into the industry and enable the development of cable technology for true convergence.
4. The Public Telecommunications Policy Act of the Philippines (RA 7925) will be reviewed and Congress will be asked to amend RA 7925, taking into consideration new technological developments, speeding up the realization of universal access goals, achieving adequate distribution of basic telephone services throughout the country and encompassing the needed institutional strengthening, sector reform and ICT expansion goals.
5. Security measures will be implemented to protect the integrity of digital infrastructure networks, as well as of information and communications. Such measures will protect personal privacy and consumer interest, accuracy and completeness of information and all other processing methods involved by enacting, among others, the Cybercrime and Cyberfraud Prevention Law.
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B. Improve the competitiveness of the country’s knowledge and S&T workers
Knowledge creation shall entail the improvement of the educational system and the system’s ability to meet industry requirements. The challenge of a knowledge-based society, which is reshaping the world with rapid change and growing uncertainty, is the creation and maintenance of qualified workforce with creativity and flexibility. Hence, training and capacity building shall be provided to its direct beneficiaries to ensure local support and program sustainability. Strategies to continuously create and maintain a highly skilled workforce shall be pursued to develop the competitiveness of the country’s knowledge and S&T workers and remain competitive in the globalized market. Efforts shall be directed towards the following:
3. Promote the use of ICT in all sectors of the society, as a tool for people empowerment
The establishment of CECs shall serve as public access points for distance learning, health, training, livelihood, entrepreneurship, market, communication, e-government, and other social programs. The CECs shall be tapped by the Tulay Program, as access facilities where OFWs can communicate with their families using e-mail, video conferencing, and instant massaging. These CECs shall be managed by local communities. Meanwhile, ICT shall be used as tool for teaching and diffusing technologies in all levels of
education. The boundaries between school, home and working life are diminishing. These require new
methods in teaching (e.g., use of ICT resources) in which collaboration and sharing are essential in
providing students with learning skills in net-based environments. Changing learning environments
requires combining educational expertise and collaborative methods in teaching. In this regard, the
following activities shall be undertaken: promote e-learning and information literacy; and establish
e-learning competency centers.
The government shall also continue to exploit the use of ICT as a tool to improve access to and delivery of government services and promote a culture of performance, results and accountability in public sector institutions. This effort shall be supported by enacting laws and policies such as the institutionalization of the e-Government Fund to meet the requirements of major information and communication technology projects of the government. The government shall enhance access to government information and services through electronically enabled government frontline services using various technologies. LGUs shall be ICT-enabled down to the barangay level by 2010. Knowledge management and productivity frameworks shall also be institutionalized in the bureaucracy.
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II. GOALS, STRATEGIES AND ACTION PLANS
To improve the quality and efficiency of public service, the government shall adopt institutional improvements in the bureaucracy, deactivating irrelevant functions, consolidating duplicated functions
while reinforcing the most vital functions. It shall establish a professional bureaucracy that maintains a
healthy independence from political influence. A bureaucracy that is relatively well-paid (which matches private sector initiatives) and has a strong sense of merit and integrity. This independent bureaucracy would ensure public services to flow continuously despite occasional political storms. It would allow merit-based promotion and other best practices to take root in the bureaucracy. Legislation will be passed on government reengineering with a silver parachute. The compensation package of those that will remain will be upgraded, together with the institution of a sustained capability building program and promotion of meritocracy through recruitment of the “best and the brightest.”
…
The government shall also continue to exploit the use of ICT as a tool to improve access to and delivery of government services and promote a culture of performance, results and accountability in public sector institutions. This effort shall be supported by enacting laws and policies such as the institutionalization of the e-Government Fund to meet the requirements of major information and communication technology projects of the government. The government shall enhance access to government information and services through electronically enabled government frontline services using various technologies. LGUs shall be ICT-enabled down to the barangay level by 2010. Knowledge management and productivity frameworks shall also be institutionalized in the bureaucracy.
1. The establishment of the Department of Information and Communications Technology (DICT) will more effectively coordinate and implement the national ICT agenda and strategy, as well as the needed policies, programs, projects to speed up the growth of the ICT industry. The President has recently issued Executive Order (EO) 269 creating the Commission on Information and Communications Technology (CICT), which is not merely advisory in nature. It will be the primary policy, planning, coordinating,
implementing, regulating and administrative entity of the Executive Branch on ICT and ecommerce initiatives. It will also be a venue to help achieve our vision of a web-enabled Philippines, capable of participating in and contributing to the global economy.
2. The institutional strengthening of the National Telecommunications Commission will include prescribing fixed terms for the members of the Commission, and ensuring its independence as a regulatory body in carrying out its decisions and imposing sanctions and penalties for regulatory noncompliance. Regulators must be equipped with clearly defined mandates and the necessary resources to carry out their responsibilities.
Monday, July 15, 2013
NOTES ON The Medium-Term Philippine Development Plan for the Period 2004-2010: Energy
Energy
Situationer Ways forward.
The 4 areas of infrastructure activities within the energy sector are:
(1) energy resource development;
(2) installation of power generating facilities;
(3) electrification, and
(4) downstream activities.
The country’s self-sufficiency level was expected to rise from 43.50 percent in 1999 to 49.40 percent in 2004 mainly through natural gas production in the Camago-Malampaya offshore field. Meantime, new and renewable energy (NRE) sources, geothermal and hydro will continue to account for the bulk of domestic energy production.
NREs are obtained from mostly traditional fuels: fuel wood, agriwaste, bagasse and charcoal.
There were 9 existing coal terminals in 1999.
Unconventional NRE sources are wind, solar, ocean and microhydro are to be used increasingly in remote off-grid areas.
By 2005, it was projected that natural gas would substitute the imported diesel, fuel oil and LPG demand of industries. In 2002 natural gas production started to fuel the combined cycle gas turbine power plants in Southern Luzon.
The non-renewable characteristic of energy and common traditional fuel sources has long stimulated the search and development of alternative materials as against fossil-based fuel sources. Together with circulation systems, energy has dominant ecological, resource and security impact. While government and industry are considered major actors in both technology development and utilization, users of energy and fuel among the citizen society count as either energy-savers or energy-wasters.
As of 1999, the Philippines had an electrification level of 75.92 percent.
All regions had levels of electrification above 50 percent, save for the Autonomous Region of Muslim Mindanao (ARMM), which then only had 20.0 percent.
The improvements in the energy situation since the power crisis of the early 1990s were achieved through the implementation of fast-track power generation projects through independent power producers (IPPs) and increased private sector participation in the development of the energy infrastructure. In addition, the restructuring of the power sector, the development of a natural gas utilization plan, and the deregulation of the downstream oil industry commenced. Energy Resource Development. E.O 462 and the Energy Resolution 1-94 enhanced the incentives for the utilization of NREs.
The Department of Energy, together with the Petroleum Association of the Philippines, has launched the Window of Opportunity package for foreign and local investors in petroleum exploration and development., offering additional incentives to exploration companies on top of the existing privileges under the service contract system.
Power Generation. Since the 1990s there has been more stability and reliability of power supply with the participation of the private sector in increasing the total generating capacity of power plants. The bulk of activities in power generation and development are expected to be undertaken by the private sector in a deregulated and market-oriented climate.
In the long-term, environmental safety and socio-cultural concerns and (hopefully) just pricing will be integrated into the planning and implementation of energy programs and projects, including power development.
Electrification. The full electrification of the country’s barangays was targeted by 2004. As of 1999, 32,281 barangays in the franchise areas of electric cooperatives, private investor- and LGU-owned utilities were provided electricity. That was about 77 percent of all barangays, 76 percent of households and 9.8 million household connections.
The total barangay electrification is on going mainly through line extension (including installation of sub-stations for areas within the grid), as well as installation of NRE systems and implementation of small island grid program for far-flung areas.
Downstream
The passage of R.A. 8479 in 1998 paved the way for the entry of new players in the industry such that by 1999 there were 56 new players engaged in such activities as bulk storage, LPG refilling and petroleum products retailing; more storage capacity, more gas stations, more depots, more independent LPG marketers and . more refilling plants.
To meet the projected rising demand for petroleum products, modernization, expansion and acquisition of handling and setting up of distribution facilities are on-going.
Situationer Ways forward.
The 4 areas of infrastructure activities within the energy sector are:
(1) energy resource development;
(2) installation of power generating facilities;
(3) electrification, and
(4) downstream activities.
The country’s self-sufficiency level was expected to rise from 43.50 percent in 1999 to 49.40 percent in 2004 mainly through natural gas production in the Camago-Malampaya offshore field. Meantime, new and renewable energy (NRE) sources, geothermal and hydro will continue to account for the bulk of domestic energy production.
NREs are obtained from mostly traditional fuels: fuel wood, agriwaste, bagasse and charcoal.
There were 9 existing coal terminals in 1999.
Unconventional NRE sources are wind, solar, ocean and microhydro are to be used increasingly in remote off-grid areas.
By 2005, it was projected that natural gas would substitute the imported diesel, fuel oil and LPG demand of industries. In 2002 natural gas production started to fuel the combined cycle gas turbine power plants in Southern Luzon.
The non-renewable characteristic of energy and common traditional fuel sources has long stimulated the search and development of alternative materials as against fossil-based fuel sources. Together with circulation systems, energy has dominant ecological, resource and security impact. While government and industry are considered major actors in both technology development and utilization, users of energy and fuel among the citizen society count as either energy-savers or energy-wasters.
As of 1999, the Philippines had an electrification level of 75.92 percent.
All regions had levels of electrification above 50 percent, save for the Autonomous Region of Muslim Mindanao (ARMM), which then only had 20.0 percent.
The improvements in the energy situation since the power crisis of the early 1990s were achieved through the implementation of fast-track power generation projects through independent power producers (IPPs) and increased private sector participation in the development of the energy infrastructure. In addition, the restructuring of the power sector, the development of a natural gas utilization plan, and the deregulation of the downstream oil industry commenced. Energy Resource Development. E.O 462 and the Energy Resolution 1-94 enhanced the incentives for the utilization of NREs.
The Department of Energy, together with the Petroleum Association of the Philippines, has launched the Window of Opportunity package for foreign and local investors in petroleum exploration and development., offering additional incentives to exploration companies on top of the existing privileges under the service contract system.
Power Generation. Since the 1990s there has been more stability and reliability of power supply with the participation of the private sector in increasing the total generating capacity of power plants. The bulk of activities in power generation and development are expected to be undertaken by the private sector in a deregulated and market-oriented climate.
In the long-term, environmental safety and socio-cultural concerns and (hopefully) just pricing will be integrated into the planning and implementation of energy programs and projects, including power development.
Electrification. The full electrification of the country’s barangays was targeted by 2004. As of 1999, 32,281 barangays in the franchise areas of electric cooperatives, private investor- and LGU-owned utilities were provided electricity. That was about 77 percent of all barangays, 76 percent of households and 9.8 million household connections.
The total barangay electrification is on going mainly through line extension (including installation of sub-stations for areas within the grid), as well as installation of NRE systems and implementation of small island grid program for far-flung areas.
Downstream
The passage of R.A. 8479 in 1998 paved the way for the entry of new players in the industry such that by 1999 there were 56 new players engaged in such activities as bulk storage, LPG refilling and petroleum products retailing; more storage capacity, more gas stations, more depots, more independent LPG marketers and . more refilling plants.
To meet the projected rising demand for petroleum products, modernization, expansion and acquisition of handling and setting up of distribution facilities are on-going.
NOTES ON The Medium-Term Philippine Development Plan for the Period 2004-2010: Unemployment and Manpower Issues
Unemployment and Manpower Issues
Situationer Ways forward.
From 1980 to 2001, “… the feeble economic growth and transformation, exacerbated by rapid population growth, have been responsible for the Philippines’ poor performance in human resource development and employment… “
“Demographic dividend” (as enjoyed by East Asia’s economic tigers)
High to low mortality and fertility [children have better chances for survival; working age population increases relative to dependent, younger and older population] > increase in nation’s productivity level > higher savings and investments {with parents having fewer children and investing more in their education and health services > national growth
The “demographic dividend” leads to economic growth only when the right kind of policy environment is provided and where the critical policy areas are public health, family planning, education and economic policies that promote labor-market flexibility (expansion), openness to trade and savings.
The working age population of EA countries was 57% in 1965 and 65% in 1990.
Based on Philippine census data 1980-2000: the domestic working age population was below 60% (52% – 58.5%).
Flexible working arrangements have emerged in the wake of globalization. Companies adopt more flexible work arrangements to compete in the global economy. Employers are restructuring their companies, downsizing workforce and utilizing nontraditional employment practices like the hiring of part-time or temporary workers, subcontracting and business process outsourcing to remain more competitive.
Amidst these changes, labor relations were generally amicable. From 2001-2003, a total of 117 strikes were declared, equivalent to an average of 39 strikes per year, one of the lowest experienced in the country. Disposition rates of cases significantly improved, from 94 percent in 2001 to 100 percent in 2003. Settlement rates also improved. It is noteworthy that neither a reported establishment closed down nor an untoward incidence or violence occurred on the account of a strike.
Employment in the Philippines is largely labor-supply driven as persons who cannot find jobs in the formal labor market end up creating their own employment or land jobs overseas. Over the three year period, the share of own-account workers has been considerable at 37.7 percent and those who are unpaid family workers at 12.9 percent. Meanwhile, the country was able to generate 2.624 million job orders overseas or an average of 875,000 deployment per year, contributing approximately
US$20.1 billion worth of remittances to the country.
An analysis of the labor force will help to determine the predominant development sector in terms of employment benefits to the area. Areas with considerable unemployment may be determined and the data can guide planners in redirecting development towards the areas to create job opportunities for existing and projected population.
Labor policies shall be guided by the principles of providing decent and productive employment. Decent and productive employment means that adequate income is generated, rights at work are protected, social protection is provided for, and participation in the democratic process is guaran-teed through tripartism and social dialogues. It also means sufficient employment, where all workers have full access to income earning opportunities. Decent employment also entails the continuous improvement of workers’ personal capabilities through a build-up in competitive skills and positive work ethics to make him more productive. This will enable workers to fully participate in both economic and social activities, and maximize their human development potential even with the challenges posed by globalization. Government, committed in the pursuit of decent and productive employment, shall pursue more vigorously the four major employment-promoting strategies: employment generation, employment preservation, employment facilitation and employment enhancement.
Employment generation involves creating, directly or indirectly, new employment opportunities in the domestic labor market. To support the efforts in job creation, the government shall issue administrative guidelines and propose legislative amendments to the Labor Code to recognize flexible work arrange-ments (e.g. subcontracting, flexi-work, flexi-wage) especially in business process outsourcing and cooperatives. However, this shall take into consideration the promotion of decent work and respect for core labor standards.
Employment preservation involves enhancing harmonious worker-employer relationship and maintaining existing jobs with remunerative terms and conditions. Industrial peace, which significantly contribute to the preservation of employment, shall be achieved through freedom of association and free collective bargaining, continuing social dialogue, mediation and voluntary arbitration of conflict and shared decision making mechanisms at the firm, industry, sector and national levels. By developing mutual trust and confidence among the parties, the industrial relations paradigm will shift from one based on confrontation to one based on cooperation resulting to productivity and competitiveness.
To achieve these, government shall ensure 24 hours-7 days-a-week action on labor cases, promote alternative dispute settlement mechanisms at the workplace for both unionized and nonunionized
establishments, and continuously educate labor and management on workers’ rights, dispute prevention and settlement. To address work contingencies arising from unemployment or loss of livelihood, it shall promote efficiency-enhancing measures, including arrangements or human resource strategies, that minimize employment losses, pursue the establishment of Tripartite Assistance and Supervising Committee, and administer an “Industrial Peace and Stability Fund” to assist displaced workers on a tripartite basis. An electronic labor case tracking and management system shall be installed to support the overall efforts on improving case resolution. Finally, it shall sustain social dialogue as a central element of labor policies, and a means to secure sustainable decent work outcomes.
Employment enhancement involves improving workers’ competency, productivity and work values, work conditions and occupational safety and health, remuneration, and welfare. There is a need for coherent strategies that will ensure basic security and employment while enabling adaptation to rapidly changing circumstances in a highly competitive global market because decent work is not just concerned with the creation of employment, but also employment of acceptable quality. To enhance labor productivity and competitiveness, government shall showcase productivity improve- ment programs in micro, small and medium enterprises (MSMEs), including barangay micro business enterprises (BMBEs). It shall promote a culture of self-regulation and voluntary compliance to labor standards through the full implementation of the new labor standards framework, and continuously review its wage policy framework vis-à-vis emerging labor and industry requirements. Workers are the country’s comparative advantage. There is a continuing need to sustain this advantage by adopting educational, training, and technical/ vocational programs that will make labor supply more elastic. In this context, the technical/vocational and maritime training programs shall be continuously improved to meet the critical skills needed in a globalizing economy, as identified through industry signals. For skills training to be of any use, standards for skills certification and assessment of competencies shall be developed based on international standards. In addition to the strategic measures identified in education (Part IV, Chapter 18), effectively addressing the issue of youth unemployment shall be high in the agenda. Thus, youths shall also be provided with opportunities to acquire skills and competencies required by the market through training, expanded apprenticeship and learnership programs, special program for employment of deserving students, and emergency employment for the out-of-work/ out-of-school youths in Metro Manila. Assistance to other workers who are discriminated from work, such as persons with disabilities and occupationally disabled workers shall also be intensified to enhance their employability, whether in wage or self-employment.
To provide protection against vulnerabilities in work, government shall intensify its efforts in providing social assistance to working children, women, assets less/ landless rural workers, informal sector workers, and OFWs including their families or dependents. These measures shall include the implementation of focused, community-based and integrated interventions to reduce the incidence of child labor, particularly in hazardous occupations and abject conditions of work; training and capability building program for women under livelihood convergence strategies; and strengthening the capability of labor and management to jointly implement workplace family welfare programs that promote health, nutrition, responsible parenthood, balancing family and work life, among others. Government shall further intensify its advocacy and capability-building activities to increase the number of workers in the informal sector (WIS) covered by the DOLE Social Protection Program for WIS. The protection and welfare of OFWs is a shared responsibility of the sending as well as the host countries, and this will be a core principle in promoting markets and cultivating bilateral ties with labor receiving countries. For this purpose, government shall pursue forging of bilateral agreements in cooperation with the private sector to secure the employment, security and protection of OFWs (Part V, Chapter 24). It shall further sustain the implementation of a comprehensive social service package for OFWs onsite, expand the reintegration program for them including their families and dependents, and intensify country-specific predeparture orientation seminars. The fight against illegal recruitment shall be sustained through the Presidential Task Force on Illegal Recruitment, and by implementing performance appraisal system of all licensed recruitment agencies. Finally, Tripartite Consultative Councils will be set up to institutionalize OFW and private sector participation in overseas employment.
Employment facilitation involves facilitating access of Filipino workers to employment opportunities and alternatives, whether locally or abroad. Overseas employment remains to be a legitimate option for the country’s workforce. As such, government shall fully respect labor mobility, including the preference of workers for overseas employment. Protection shall be provided to Filipinos who choose to work abroad and programs for an effective reintegration into the domestic economy upon their return shall be put up.
To address the apparent mismatches in jobs and skills, the major Public Employment Service Offices (PESOs) shall be interconnected to strengthen the labor market information system. Alternative job search modes, such as the use of SMS technology shall also be set up to increase workers’ access to information on job vacancies. Policies and procedures on overseas employment shall continue to be streamlined. By electronically linking the 12 government agencies involved in OFW documentation, the documentation process cycle time, requirements, and cost shall be reduced by 50 percent. Changes in the socioeconomic, political, and global landscapes have significantly altered the world of work. These changes prompted the need to revise the 30-year old Labor Code to provide more flexibility at the workplace, and promote decent work and respect for core labor standards. Amendment of the Labor Code shall focus on the five major areas of social partnership; protection to labor through just and humane conditions of work and adequate social security protection; employment promotion; promotion of productivity; and promotion of shared responsibility and providing adequate machinery for negotiations, dispute settlement and prevention.
Specifically, the amendments should emphasize on innovation in the workplace, productivity and performance rather than simply governing employee-employer relations. There is a need to promote shared responsibility in resolving conflicts, as well as ways to simplify the settlement and resolution of labor disputes, with strong incentives for alternative dispute resolution and private sector participation. This way, employers and workers need not waste resources in costly litigation. Furthermore, the creation of a Local Employment Authority shall also be proposed to address the need for an integrated and more efficient employment policy and planning for the domestic labor market.
References:
1. Ateneo Press, Herrin, A.N. and Pernia, E.M. “Population, Human Resources and Employment”, The Philippine Economy: Development, Policies and Challenges, 2003
2. NEDA, Medium-Term Philippine Development Plan 2004-2010
Situationer Ways forward.
From 1980 to 2001, “… the feeble economic growth and transformation, exacerbated by rapid population growth, have been responsible for the Philippines’ poor performance in human resource development and employment… “
“Demographic dividend” (as enjoyed by East Asia’s economic tigers)
High to low mortality and fertility [children have better chances for survival; working age population increases relative to dependent, younger and older population] > increase in nation’s productivity level > higher savings and investments {with parents having fewer children and investing more in their education and health services > national growth
The “demographic dividend” leads to economic growth only when the right kind of policy environment is provided and where the critical policy areas are public health, family planning, education and economic policies that promote labor-market flexibility (expansion), openness to trade and savings.
The working age population of EA countries was 57% in 1965 and 65% in 1990.
Based on Philippine census data 1980-2000: the domestic working age population was below 60% (52% – 58.5%).
Flexible working arrangements have emerged in the wake of globalization. Companies adopt more flexible work arrangements to compete in the global economy. Employers are restructuring their companies, downsizing workforce and utilizing nontraditional employment practices like the hiring of part-time or temporary workers, subcontracting and business process outsourcing to remain more competitive.
Amidst these changes, labor relations were generally amicable. From 2001-2003, a total of 117 strikes were declared, equivalent to an average of 39 strikes per year, one of the lowest experienced in the country. Disposition rates of cases significantly improved, from 94 percent in 2001 to 100 percent in 2003. Settlement rates also improved. It is noteworthy that neither a reported establishment closed down nor an untoward incidence or violence occurred on the account of a strike.
Employment in the Philippines is largely labor-supply driven as persons who cannot find jobs in the formal labor market end up creating their own employment or land jobs overseas. Over the three year period, the share of own-account workers has been considerable at 37.7 percent and those who are unpaid family workers at 12.9 percent. Meanwhile, the country was able to generate 2.624 million job orders overseas or an average of 875,000 deployment per year, contributing approximately
US$20.1 billion worth of remittances to the country.
An analysis of the labor force will help to determine the predominant development sector in terms of employment benefits to the area. Areas with considerable unemployment may be determined and the data can guide planners in redirecting development towards the areas to create job opportunities for existing and projected population.
Labor policies shall be guided by the principles of providing decent and productive employment. Decent and productive employment means that adequate income is generated, rights at work are protected, social protection is provided for, and participation in the democratic process is guaran-teed through tripartism and social dialogues. It also means sufficient employment, where all workers have full access to income earning opportunities. Decent employment also entails the continuous improvement of workers’ personal capabilities through a build-up in competitive skills and positive work ethics to make him more productive. This will enable workers to fully participate in both economic and social activities, and maximize their human development potential even with the challenges posed by globalization. Government, committed in the pursuit of decent and productive employment, shall pursue more vigorously the four major employment-promoting strategies: employment generation, employment preservation, employment facilitation and employment enhancement.
Employment generation involves creating, directly or indirectly, new employment opportunities in the domestic labor market. To support the efforts in job creation, the government shall issue administrative guidelines and propose legislative amendments to the Labor Code to recognize flexible work arrange-ments (e.g. subcontracting, flexi-work, flexi-wage) especially in business process outsourcing and cooperatives. However, this shall take into consideration the promotion of decent work and respect for core labor standards.
Employment preservation involves enhancing harmonious worker-employer relationship and maintaining existing jobs with remunerative terms and conditions. Industrial peace, which significantly contribute to the preservation of employment, shall be achieved through freedom of association and free collective bargaining, continuing social dialogue, mediation and voluntary arbitration of conflict and shared decision making mechanisms at the firm, industry, sector and national levels. By developing mutual trust and confidence among the parties, the industrial relations paradigm will shift from one based on confrontation to one based on cooperation resulting to productivity and competitiveness.
To achieve these, government shall ensure 24 hours-7 days-a-week action on labor cases, promote alternative dispute settlement mechanisms at the workplace for both unionized and nonunionized
establishments, and continuously educate labor and management on workers’ rights, dispute prevention and settlement. To address work contingencies arising from unemployment or loss of livelihood, it shall promote efficiency-enhancing measures, including arrangements or human resource strategies, that minimize employment losses, pursue the establishment of Tripartite Assistance and Supervising Committee, and administer an “Industrial Peace and Stability Fund” to assist displaced workers on a tripartite basis. An electronic labor case tracking and management system shall be installed to support the overall efforts on improving case resolution. Finally, it shall sustain social dialogue as a central element of labor policies, and a means to secure sustainable decent work outcomes.
Employment enhancement involves improving workers’ competency, productivity and work values, work conditions and occupational safety and health, remuneration, and welfare. There is a need for coherent strategies that will ensure basic security and employment while enabling adaptation to rapidly changing circumstances in a highly competitive global market because decent work is not just concerned with the creation of employment, but also employment of acceptable quality. To enhance labor productivity and competitiveness, government shall showcase productivity improve- ment programs in micro, small and medium enterprises (MSMEs), including barangay micro business enterprises (BMBEs). It shall promote a culture of self-regulation and voluntary compliance to labor standards through the full implementation of the new labor standards framework, and continuously review its wage policy framework vis-à-vis emerging labor and industry requirements. Workers are the country’s comparative advantage. There is a continuing need to sustain this advantage by adopting educational, training, and technical/ vocational programs that will make labor supply more elastic. In this context, the technical/vocational and maritime training programs shall be continuously improved to meet the critical skills needed in a globalizing economy, as identified through industry signals. For skills training to be of any use, standards for skills certification and assessment of competencies shall be developed based on international standards. In addition to the strategic measures identified in education (Part IV, Chapter 18), effectively addressing the issue of youth unemployment shall be high in the agenda. Thus, youths shall also be provided with opportunities to acquire skills and competencies required by the market through training, expanded apprenticeship and learnership programs, special program for employment of deserving students, and emergency employment for the out-of-work/ out-of-school youths in Metro Manila. Assistance to other workers who are discriminated from work, such as persons with disabilities and occupationally disabled workers shall also be intensified to enhance their employability, whether in wage or self-employment.
To provide protection against vulnerabilities in work, government shall intensify its efforts in providing social assistance to working children, women, assets less/ landless rural workers, informal sector workers, and OFWs including their families or dependents. These measures shall include the implementation of focused, community-based and integrated interventions to reduce the incidence of child labor, particularly in hazardous occupations and abject conditions of work; training and capability building program for women under livelihood convergence strategies; and strengthening the capability of labor and management to jointly implement workplace family welfare programs that promote health, nutrition, responsible parenthood, balancing family and work life, among others. Government shall further intensify its advocacy and capability-building activities to increase the number of workers in the informal sector (WIS) covered by the DOLE Social Protection Program for WIS. The protection and welfare of OFWs is a shared responsibility of the sending as well as the host countries, and this will be a core principle in promoting markets and cultivating bilateral ties with labor receiving countries. For this purpose, government shall pursue forging of bilateral agreements in cooperation with the private sector to secure the employment, security and protection of OFWs (Part V, Chapter 24). It shall further sustain the implementation of a comprehensive social service package for OFWs onsite, expand the reintegration program for them including their families and dependents, and intensify country-specific predeparture orientation seminars. The fight against illegal recruitment shall be sustained through the Presidential Task Force on Illegal Recruitment, and by implementing performance appraisal system of all licensed recruitment agencies. Finally, Tripartite Consultative Councils will be set up to institutionalize OFW and private sector participation in overseas employment.
Employment facilitation involves facilitating access of Filipino workers to employment opportunities and alternatives, whether locally or abroad. Overseas employment remains to be a legitimate option for the country’s workforce. As such, government shall fully respect labor mobility, including the preference of workers for overseas employment. Protection shall be provided to Filipinos who choose to work abroad and programs for an effective reintegration into the domestic economy upon their return shall be put up.
To address the apparent mismatches in jobs and skills, the major Public Employment Service Offices (PESOs) shall be interconnected to strengthen the labor market information system. Alternative job search modes, such as the use of SMS technology shall also be set up to increase workers’ access to information on job vacancies. Policies and procedures on overseas employment shall continue to be streamlined. By electronically linking the 12 government agencies involved in OFW documentation, the documentation process cycle time, requirements, and cost shall be reduced by 50 percent. Changes in the socioeconomic, political, and global landscapes have significantly altered the world of work. These changes prompted the need to revise the 30-year old Labor Code to provide more flexibility at the workplace, and promote decent work and respect for core labor standards. Amendment of the Labor Code shall focus on the five major areas of social partnership; protection to labor through just and humane conditions of work and adequate social security protection; employment promotion; promotion of productivity; and promotion of shared responsibility and providing adequate machinery for negotiations, dispute settlement and prevention.
Specifically, the amendments should emphasize on innovation in the workplace, productivity and performance rather than simply governing employee-employer relations. There is a need to promote shared responsibility in resolving conflicts, as well as ways to simplify the settlement and resolution of labor disputes, with strong incentives for alternative dispute resolution and private sector participation. This way, employers and workers need not waste resources in costly litigation. Furthermore, the creation of a Local Employment Authority shall also be proposed to address the need for an integrated and more efficient employment policy and planning for the domestic labor market.
References:
1. Ateneo Press, Herrin, A.N. and Pernia, E.M. “Population, Human Resources and Employment”, The Philippine Economy: Development, Policies and Challenges, 2003
2. NEDA, Medium-Term Philippine Development Plan 2004-2010
NOTES ON The Medium-Term Philippine Development Plan for the Period 2004-2010: Monetary and Fiscal Policies
Monetary and Fiscal Policies
Situationer Ways forward.
Early 80s, Philippine government operating on a fiscal deficit (expenditures exceeding revenues).
From 1994-1997 GOP posted budget surpluses that are attributed mainly to the privatization proceeds raised during this period.
Rising deficit since then peaking in 2002 requiring government to implemented a number of measures: Revenue administrative reforms reduce its deficit to PhP199.9 billion in 2003, or 4.6 percent of gross domestic product (GDP), lower by PhP2.1 billion against the projection of PhP202 billion for the year.
While the decline in revenue effort became a phenomenon among members of the Association of Southeast Asian Nations (ASEAN) after 1997, other ASEAN countries have recovered beginning 2001 while the Philippines’ performance has yet to revert to the pre-1997 level.
Revenue effort (never higher than 20 percent of GDP in the past 18 years) dropped to 14.6 percent of GDP in 2004, the second lowest in Asia. While Thailand has only 17.1 percent revenue effort, it enjoys a slight surplus of 0.4 percent. Deterioration in tax collection effort attributed to nonindexation of specific taxes, poor implementation of the value-added tax or VAT that has led to excessive input VAT claims, tax underdeclaration or tax evasion (es- pecially on professional income), the proliferation of tax incentive laws (nonharmonized incentives of PEZA, BOI, SBMA, and CDC also resulted in extended incentives as firms shifted to various incentive-giving bodies), smuggling (underde-claration or misdeclaration of imports), and increasing requirements for nondiscretionary portions of the budget like personal services, interest payments and block grants to local government units (LGUs).
1992 to 2004, interest payments share increased from 30 percent to 32 percent.
Mandated internal revenue allotment (IRA) share accruing to LGUs has more than doubled in terms of the percentage share of the budget from 8 percent in 1992 to 16 percent in 2004 causing contraction in capital spending and other productive expenditures. The Philippines’ capital outlay performance vis-à-vis other Asian countries was lowest for 1998-2003,
averaging a mere 3 percent of GDP.
With the widening fiscal deficit, the national debt now amounts to PhP3.355 trillion, accounting for 78 percent of its GDP and more than five times the government revenues if creditors were to call the debts in. The government accumulated debt at a rate of 20.3 percent between 1999 and 2000, mainly due to high interest rates and the sudden depreciation of the peso from PhP40.25 to a dollar in 1999 to PhP49.95 to a dollar in 2000 - attributed to loss of investor confidence and the perception of political instability. As a percentage of GDP, debt stock increased from 56.1 percent in 1998 to 78 percent in 2003 and is expected to reach 79.4 percent by end-2004.
Large deficits of government-owned and -controlled corporations (GOCCs) also pushed up the consolidated public sector deficit (CPSD) to 5.5 percent in 2003. This is expected to rise to 6.7 percent of GDP by the end of 2004. With the overall unhealthy financial situation of some of these state enterprises, especially the NPC, public debt amounted to 137.5 percent of GDP, as of end-2003. Before the deficit becomes insurmountable, the government must take the necessary steps to reach a balanced budget position. This is why the administration is pushing for these expenditure and revenue reforms to be implemented as soon as practicable.
The Philippine Medium-Term Fiscal Program is a 6 -year plan to balance the budget and deliver institutional reforms for a more financially viable and progressive Philippines. Its 3 policy objectives:
1. Balance the national government budget in six years;
2. Reduce the ratio of CPSD-to-GDP from 6.7 percent in 2004 to 1.0 percent of GDP in
2010; and
3. Reduce the ratio of public sector debt-to-GDP from 136 percent in 2004 to 90 percent by
2010.
A. Revenue Program
The Action Plan for revenues consists of improving administrative efficiency and proposed
legislative measures.
1. Administrative Measures
Improving administrative machinery shall be achieved through:
a. Periodic adjustment in fees and charges to ensure cost-recovery. Fees and charges will be periodically adjusted on an average rate of 10 percent every year to ensure cost recovery. The government will encourage agencies to improve their revenue collection by allowing receipts from business-type activities (sale of products) and income from board and lodging. These will be used as revolving fund by agencies for the maintenance of their operations.
b. Tariff rate adjustments. An Executive Order (EO) has already been signed, increasing duty on petroleum products from 3 percent to 5 percent. The positive effect of this EO on our revenue-generating program is contingent, however, on the price increases of crude oil.
c. Innovative sources of wealth creation
• Privatization of the NPC
• Mobilization of investors for Mt. Diwalwal gold mine
• Exploration and development of more oil and gas wells
• Relaunching of massive reclamation projects
• Major nationwide reforestation program
• Creation of Hong Kong-type enclaves to capture long-term investors
d. Improved enforcement mechanisms to increase efficiency
Bureau of Internal Revenue (BIR):
• voluntary tax compliance shall be
encouraged and opportunities for tax evasion and graft removed through the conduct of raffles, industry benchmarking, electronic publication of company tax payment vis-à-vis companies in the industry, and use of third party information.
• expanding the large taxpayer services in
district offices and creating a tax fraud division will also strengthen tax audit and surveillance.
Bureau of Customs:
• controlling smuggling through the use of
container X-rays, computerized tracking of the filing and movement of cargo, and updating of the value reference data; face-to-face interaction will be minimized and customs procedures simplified through electronic filing and single window processing at a BOC virtual window linked to all agencies.
The fiscal consolidation program is anchored on steady increase of revenue stream in the next
six years through a combination of administrative and legislative measures. Over the medium term,
excluding new legislative measures and given favorable economic conditions, total revenues are
expected to grow at an average rate of 11.6 percent, with tax receipts growing more vigorously at 13.2
percent through a more rigorous implementation of administrative measures.With the proposed measures in Congress, revenue effort is estimated to climb steadily and reach as high as 18 percent of GDP in the medium term, with tax effort projected to reach 17.2 percent in 2010. The BOC’s collection to GDP ratio will moderately improve to 3.1 percent
by 2010, relying mainly on improved administrative efficiency.
2. Legislative Revenue Measures: 8 measures that are fair and equitable and would most affect the sectors that could afford to pay more:
a. Indexation of the excise tax on ‘sin’ products. The indexation of excise tax on alcohol and tobacco restores the real value of the excise tax since 1997. It will provide an estimated PhP9.06 billion annually.
b. General amnesty. The government-proposed version requires individuals/corporations to file a statement of assets and liabilities, which can be used as a verifiable benchmark for future tax assessment. It also grants tax amnesty at the rate of 3 percent for residents and 2 percent for nonresidents, based on net worth, with a corresponding declaration of the statement of assets and liabilities by the individual or entities concerned. It is estimated to yield about PhP25 billion.
c. Rationalization of fiscal incentives. The fiscal incentives system will be streamlined to make it an efficient and effective tool for investment promotion. Harmonizing incentives among incentive-giving bodies, namely the BOI, PEZA, SBMA, and CDC, will do this. This will lead to the adoption of a single fiscal incentives law and phasing out of incentives that are inconsistent with World Trade Organization (WTO) rules (e.g., tax credits). The government will also repeal numerous special incentives laws and certain exemptions from VAT such as medical and legal profession. The proposed fiscal incentives rationalization bill is estimated to generate at least PhP5 billion for the government.
d. Review of the VAT system. The government shall increase the VAT rate by two percentage points for two consecutive years (2006 and 2007) only if the VAT-to-GDP ratio does not reach 4 percent in 2005 and 5 percent in 2006. It will push taxpayers to fully comply with their VAT payments, or face a higher VAT rate. For its part, the BIR will be compelled to meet its corresponding VAT targets or face possible attrition. The estimated yield of this legislative measure is PhP30 billion.
e. Tax on telecommunication. The measure reimposes the franchise tax on telecommunication companies. Additional revenues, estimated at PhP9.1 billion, can be used on important social services such as health and education.
f. Excise tax on petroleum products. The measure increases the specific excise tax rates on petroleum products, except kerosene, by PhP0.50 to PhP2.45. Since 1997, the ratio of excise taxes vis-à-vis prices of petroleum has significantly decreased by almost 50 percent. The ratio further deteriorated at current prices. Given the deterioration, there is a need to adjust the excise taxes back to their previous levels to maintain their real value. The move will yield PhP28 billion in excise taxes.
g. Institutionalization of an attrition system. The measure institutionalizes a system of lateral attrition and a special reward-incentive system for exemplary performance among revenue-generating agencies of government. It allocates an appropriate amount as incentive for exceeding performance standards.
h. Adoption of Gross Income Taxation (GIT). The measure replaces the current net income taxation with GIT of corporations and self-employed individuals at a rate of 10 or 15 percent. It simplifies the income tax structure because taxpayers compute only their gross income. It also eases tax administration and allows a reduction of the tax rate due to a broadening of the tax base. This simple structure will encourage tax compliance. The government will generate some PhP16.76 billion in the process.
B. Disciplined, Efficient Public Spending
Hand-in-hand with revenue reforms is the need to maintain fiscal discipline in government spending. Focus of the expenditure reform measures:
(a) rationalizing the scope and function of
government agencies through voluntary separation and reengineering;
(b) improving budget allocation to focus
expenditures towards those areas with the greatest impact and benefit to the greatest number;
(c) reversing the decline in public investments to strengthen the economic capital and strictly prioritize capital expenditures for infrastructure to those with the greatest economic returns for the country, as a whole, in terms of ensuring transport and communication linkages, providing base power and water supply, and promoting agribusiness;
(d) rationalizing NG spending for devolved services;
(e) reducing debt service through debt management; and
(f) reducing GOCC deficits. The specific expenditure rationalization measures shall include both administrative and legislative measures.
1. Administrative Measures
a. Austerity programs. AO 1032 August 31, 2004, directing the continued adoption of austerity measures in government. The salient features of this order are the following: (a) suspension of all foreign travels, except for ministerial meetings and scholarship training that do not entail any cost to the government; (b) suspension of purchase of motor vehicles, except ambulances and patrol cars; (c) reduction of at least 10% in consumption of utilities; (d) suspension of all expenditure subsidies to GOCCs, OGCEs, and LGUs except those approved by FIRB; (e) conduct of training, seminars, and workshops, except if funded by grants or if the cost may be recovered through exaction of fees; (f) expansion of organizational units and/or creation of positions, except those following ‘scrap and build’ policy; (g) conduct of celebrations and cultural and sports activities.
b. Rationalization of Personal Services. Savings from the rationalization program will be used to fund salary adjustments and the 10-point agenda. After the rationalization program has been completed, hiring of new employees will be minimized except for frontline and core services and population-based positions (e.g., teachers, police and defense personnel).
c. Operationalization of the Medium-Term Public Investment Program (MTPIP). The MTPIP, 2005-2010 shall contain the priority programs, activities, and projects (PAPs) to be implemented by the NG in support of the MTPDP. It is an instrument to monitor NG targets, commitments and resources, in terms of
public investments, over the medium term. It serves as a critical input to the annual NG budget formulation, guided by the Medium-Term Expenditure Framework (MTEF) as facilitated through the Development Budget Coordination Committee (DBCC). The MTPIP also sets the tone in resource programming by the Investment Coordination Committee (ICC). Operationally, the MTPIP will be a three-year rolling list of priority PAPs, ongoing or proposed, regardless of financing source. The MTPIP currently being prepared shall contain the PAPs for implementation in 2005-2007 and shall be updated annually to roll out over the succeeding years until the end of the medium term. The MTPIP shall also be consistent with the fiscal program, for which the PAPs shall be prioritized through the Efficiency and Effectiveness Review
Criteria approved by the planning committees. The Organizational Performance Indicator Framework (OPIF) is being implemented as a mechanism to shift budget allocation from one based on inputs
to one focused more on the consideration of outputs and outcomes. The measurement and reporting of the output and outcome indicators of PAPs will greatly enhance the transparency and accountability for public spending. For the medium term, a three-year budget and an OPIF-based budget will be introduced to Congress. Initially, the 2005 budgets of the 11-piloted departments with harmonized major final outputs (MFOs), for which performance indicators have been developed, will be submitted to Congress. Formulation of MFOs and public investment programs (PIPs) for the rest of the departments/agencies will be done prospectively up to 2007.
d. Strengthen the ICC process of the National Economic and Development Authority (NEDA) Board. Specifically, this entails:
Timeliness of ICC review and approval process.
Responsiveness to the MTPDP of public investments for ICC action; and
Greater transparency of ICC actions.
e. Moratorium on the establishment of GOCCs, except for the Philippine Infrastructure Corporation (PIC), the infrastructure fund to jump-start the strategic infrastructure projects crucial to our development program.
f. LGU autonomy. It is proposed that the IRA be treated as an automatic appropriation to provide predictability in resources to LGUs. The latter shall be encouraged to build their own infrastructure and provide for basic services rather than depend on the national government agencies (NGAs). Projects directly assisting LGUs shall be transferred to the Municipal Finance Corporation (MFC), which will be established to serve as a primary conduit of funds for LGUs. Excludes projects like the Countryside Bridge program, agriculture and agrarian reform projects, and the Kapit-Bisig Laban sa Kahirapan- Comprehensive and Integrated Delivery of Social Services (KALAHICIDSS), which shall continue to be administered by their respective implementing agencies. The MFC, replacing the Municipal Development Fund, will undertake project implementation at the city, province or municipal level. The idea is for foreign assisted projects undertaken by NGAs, which directly benefit LGUs, and which constitute assistance in the form of subsidies and relending by the NG, to be
transferred to the newly created MFC. Thus, existing loans and grants, or similar assistance to LGUs, shall be transferred or assigned to the MFC. With local autonomy comes the challenge for LGUs to maximize resources and manage expenditures prudently. LGUs will thus be encouraged to devote 20 percent of their development funds to investment projects and not to consumption based expenditures.
g. Transfer to the General Fund of all Dormant Accounts. All dormant accounts (except those earmarked for specific projects) of government agencies in servicing banks of the government shall be transferred to the General Fund.
2. Legislative Measures
a. Fiscal Responsibility Bill that aims to reduce public debt to a more manageable and sustainable level through the imposition of debt cap and the more transparent management and monitoring of public sector debt; involves the policy of no new expenditures without new revenue measures. If enacted, this will impose discipline in the legislation of new expenditure policies and prevent the proliferation of unfunded laws.
b. Rationalization/Reorganization program The legislation of the omnibus reengineering law will be pursued to rationalize the structure of the government machinery and review and refocus the mandate of the departments to support the 10-point agenda. Pending the passage of this proposal, the scope and functions of government agencies shall be rationalized through administrative means to focus the resources of government on vital/core
functions, minimize overlaps and duplications, and improve delivery and support systems.
c. Rationalization of Retirement and Pension Benefits. The retirement and pension schemes will be revisited to ensure their sustainability and rein in their claims on the budget. This includes the review of RA 1616, which allows retiring government employees to avail of retirement gratuity paid by the NG.
d. Improvement of government corporate performance. GOCCs with negative retained earnings shall be rationalized and shall be limited and all GOCCs shall perform their mandates in the most efficient, effective, and economical manner. Legislative measures limiting GOCCs’ capacity to enter into debts shall reduce the losses they incur. Pending the passage of this law, administrative measures have been passed phasing out redundant and non performing GOCCs to cut down on their losses. To reduce GOCC deficits, four major measures will be pursued:
Improve collection efficiency and reduce system losses through:
❖ Construction of power substations and rehabilitation of distribution lines in support of National Electrification Administration’s system loss reduction program;
❖ Increase of National Home Mortgage and Finance Corporation’s (NHMFC) cash collection, improvement of quality of portfolio, design and development of updating/restructuring schemes to increase borrower affordability and undertake selective foreclosure of accounts;
❖ Rationalization of licensing and registration fees of National Housing Authority (NHA) by increasing rates of licensing fees to levels adequate to defray the cost to sustain the program;
❖ Implementation of a Unified Ticketing System for Light Rail Transportation Authority (LRTA); and
❖ Resumption of the implementation of approved domestic vessel and cargo tariff increase and review of port investment expenditures to provide basis for setting cost-based tariff structure;
Dispose non performing loans and real and other properties owned or acquired through:
❖ Divestment of shareholdings and dissolution of NDC companies as well as improvement of lease terms; and
❖ Increase of HGC’s disposition of retail and developmental accounts by 50 percent and 10 percent, respectively;
Enhance other revenue generating efforts through:
❖ Securitization of low and moderately delinquent loans accounts of NHMFC;
❖ Maximization of interest and dividend incomes of NDC from fund investment and sourcing; and
❖ Implementation of LRTA’s business property and other nonrail development programs; and
Rationalize GOCC expenditures through:
❖ Implementation of streamlining program among GOCCs;
❖ Reduction in the maintenance and operating expenditures of Metropolitan Waterworks and Sewerage System (MWSS), Philippine National Oil Company (PNOC), Philippine Ports Authority (PPA); and
❖ Limiting of investment outlay of PNOC to BatMan 1 and NRES projects and no provision for its land and land improvement for 2006-2010 and additional/replacement of vehicles.
C. Debt Management. The Action Plan for Debt Management entails the implementation of a debt reduction plan through: (a) bond exchange to lengthen debt maturity and to manage refinancing risk; (b) maximizing the use of official development assistance (ODA); (c) limiting guarantees for GOCCs; and (e) limiting borrowings to high priority projects. The development of a risk management system within the DOF will support these initiatives to identify, quantify, monitor, and manage NG’s exposure to contingent liabilities. ODA is the preferred source for financing large infrastructure projects that require huge funds, as it is relatively soft with its lower interest rates and longer maturity period. However, unless it is a grant, ODA is usually a loan and increases the budget deficit as other loans do, only with better terms of payment. The government has therefore carefully chosen its ODA-funded projects in the past three years. But to minimize borrowing and lower the deficit in these times of fiscal constraints, the government must be even more selective of the projects to be funded by ODA. The programs prioritized for ODA funding are those that will directly contribute to the 10-point development agenda and the MTPDP 2004-2010.
A major concern that emerged in the wake of the 1997 Asian crisis is the country’s slow reduction in the level of nonperforming loans (NPLs) compared with other Asian countries. The latter have strong fiscal positions and were therefore able to set up asset management companies that were able to absorb the nonperforming assets using public funds. As of June 2004, the Philippine banking system ratio of NPLs to total loans stood at 13.97 percent, higher than Thailand’s 12.4 percent, Malaysia’s 7.7 percent, Indonesia’s 7.6 percent, and Korea’s 2.2 percent. To encourage banks to unload their NPLs, the Special Purpose Vehicle Act was passed in 2002. However, only a few banks have consummated deals to dispose of their assets, as banks have not been willing to sell their assets at steep discounts offered by buyers. The banking system continued to be saddled with its pool of nonperforming assets. Nonperforming assets as a share to total assets amounted to 12.85 percent as of end 2003, slightly unchanged from 14.31 percent in 2001. Another major concern, which impinges on fiscal sustainability, is the poor financial health of the
public pension system. If not rectified, this will eventually translate to a national government bailout, with serious repercussions on fiscal consolidation efforts.
The primary goal of reforms in the domestic financial system is to mobilize savings to achieve a
savings to GDP rate of 25 percent to 30 percent. This will support an increase in investment ratio to
28 percent of GDP, with an increasing amount of resources channeled to support the development of
agribusiness, including lending to micro, small and medium enterprises. Key reforms in the financial market shall focus on:
(a) ensuring macroeconomic stability through prudent monetary and fiscal policy;
Prudent monetary policy is important for price stability. However, inflationary pressures, especially those which arise from supply cost factors cannot be addressed by monetary policy alone since controlling supply and cost shocks through tight monetary policy can undermine growth and
ultimately affect inflation itself. Thus, inflation management will necessitate pursuing both monetary policy and measures to ease supply constraints and cost build-up.
(b) promoting a stronger, stable, and deeper financial system;
1. Accelerate reduction of nonperforming assets
The Bangko Sentral ng Pilipinas (BSP) will accelerate financial sector restructuring by pushing for the intensified implementation of the SPV law to facilitate the offloading of idle assets from the books of banks and other financial institutions. This will significantly pare down the banks’ nonperforming assets.
2. Prevent and minimize systemic risks by strengthening regulations in accordance with
international standards for greater transparency and accountability
a. Amend the BSP charter to include immunity of supervisors from law suits, authority to compel banks to implement prompt corrective action and higher capital build-up, shift away from the strategy of forbearance and liquidity assistance, and stronger criminal and administrative penalties for violations of
banking laws;
b. Amend the Insurance Code to empower the Insurance Commission to preempt financial distress or intervene to help resolve financial problems of an insurance company;
c. Provide the SEC with adequate legal protection, access to bank records in an investigation, ability to obtain freeze orders, and visitorial powers over regulated companies and their auditors. Also, SEC’s enforcement actions shall be strengthened through effective coordination with the Department of Justice, the Supreme Court, the National Bureau of Investigation and the Philippine Judicial Academy by means of enhancing its law enforcements partners’ capability to investigate and prosecute securities fraud cases;
d. Strengthen the framework for quick resolution of financially-distressed enterprises through the passage of the Corporate Recovery Act; e. Enhance and rationalize the regulatory framework on investment companies and the sale of preneed plans through the government’s support on the passage of the Revised Investment Company Act and the Preneed Code;
f. Restructure the Cooperative Development Authority into a regulatory body through the amendment of the CDA charter to provide the regulatory framework for the development of cooperatives nationwide. In addition, capacity building for CDA and other stakeholders shall be pushed in order to implement an effective regulation and supervision of credit cooperatives;
g. Introduce the risk-based capital adequacy framework for providers of financial services and products under SEC regulation and supervision;
h. Strengthen consolidated supervision mechanisms via closer cooperation and coordination among financial services regulatory agencies. This is to rationalize the incentive structure for the financial sector and achieve competitive parity across bank and nonbank sectors. The government shall also ensure consistency of rules and regulations intended for promoting a level playing field and that overlaps/gaps in supervision are minimized;
i. Intensify coordination and consultation among government agencies, market participants and private sector groups. This includes the creation of a Financial Governance Council, establishment of an organized forum to facilitate coordination activities and consultations, and conduct of consultation meetings, trainings, symposia and related activities on a periodic basis;
j. Implement a coordinated disaster recovery plan to ensure undisrupted operations or timely reopening of financial sector institutions in the aftermath of a catastrophic event; and k. Implement a long-term development plan or blueprint for the Nonbank Financial Sector to promote growth and expand contributions to the economy.
(c) reforming the pension system; and
1. Allow increase of members’ contribution to pension fund to narrow the funding gap. This will require the updating of actuarial study that shall be the basis for determining the increase in members’ contribution to ensure that the financial condition of pension funds is actuarially sound.
2. Introduce a clear set of credentials or qualifications that will become the basis for the appointments to the boards of main pension providers, namely SSS and GSIS.
3. Designate an appropriate agency as the regulator to supervise the activities of pension funds and ensure their viability.
(d) providing easier access to funds by SMEs to achieve the target of tripling lending to SMEs and support their development.
a. Provide credit, technology and marketing support for three million MSMEs; and
b. Empower existing SMEs to generate additional employment through increased lending and
promotion of Big Brother-Small Brother program.
Situationer Ways forward.
Early 80s, Philippine government operating on a fiscal deficit (expenditures exceeding revenues).
From 1994-1997 GOP posted budget surpluses that are attributed mainly to the privatization proceeds raised during this period.
Rising deficit since then peaking in 2002 requiring government to implemented a number of measures: Revenue administrative reforms reduce its deficit to PhP199.9 billion in 2003, or 4.6 percent of gross domestic product (GDP), lower by PhP2.1 billion against the projection of PhP202 billion for the year.
While the decline in revenue effort became a phenomenon among members of the Association of Southeast Asian Nations (ASEAN) after 1997, other ASEAN countries have recovered beginning 2001 while the Philippines’ performance has yet to revert to the pre-1997 level.
Revenue effort (never higher than 20 percent of GDP in the past 18 years) dropped to 14.6 percent of GDP in 2004, the second lowest in Asia. While Thailand has only 17.1 percent revenue effort, it enjoys a slight surplus of 0.4 percent. Deterioration in tax collection effort attributed to nonindexation of specific taxes, poor implementation of the value-added tax or VAT that has led to excessive input VAT claims, tax underdeclaration or tax evasion (es- pecially on professional income), the proliferation of tax incentive laws (nonharmonized incentives of PEZA, BOI, SBMA, and CDC also resulted in extended incentives as firms shifted to various incentive-giving bodies), smuggling (underde-claration or misdeclaration of imports), and increasing requirements for nondiscretionary portions of the budget like personal services, interest payments and block grants to local government units (LGUs).
1992 to 2004, interest payments share increased from 30 percent to 32 percent.
Mandated internal revenue allotment (IRA) share accruing to LGUs has more than doubled in terms of the percentage share of the budget from 8 percent in 1992 to 16 percent in 2004 causing contraction in capital spending and other productive expenditures. The Philippines’ capital outlay performance vis-à-vis other Asian countries was lowest for 1998-2003,
averaging a mere 3 percent of GDP.
With the widening fiscal deficit, the national debt now amounts to PhP3.355 trillion, accounting for 78 percent of its GDP and more than five times the government revenues if creditors were to call the debts in. The government accumulated debt at a rate of 20.3 percent between 1999 and 2000, mainly due to high interest rates and the sudden depreciation of the peso from PhP40.25 to a dollar in 1999 to PhP49.95 to a dollar in 2000 - attributed to loss of investor confidence and the perception of political instability. As a percentage of GDP, debt stock increased from 56.1 percent in 1998 to 78 percent in 2003 and is expected to reach 79.4 percent by end-2004.
Large deficits of government-owned and -controlled corporations (GOCCs) also pushed up the consolidated public sector deficit (CPSD) to 5.5 percent in 2003. This is expected to rise to 6.7 percent of GDP by the end of 2004. With the overall unhealthy financial situation of some of these state enterprises, especially the NPC, public debt amounted to 137.5 percent of GDP, as of end-2003. Before the deficit becomes insurmountable, the government must take the necessary steps to reach a balanced budget position. This is why the administration is pushing for these expenditure and revenue reforms to be implemented as soon as practicable.
The Philippine Medium-Term Fiscal Program is a 6 -year plan to balance the budget and deliver institutional reforms for a more financially viable and progressive Philippines. Its 3 policy objectives:
1. Balance the national government budget in six years;
2. Reduce the ratio of CPSD-to-GDP from 6.7 percent in 2004 to 1.0 percent of GDP in
2010; and
3. Reduce the ratio of public sector debt-to-GDP from 136 percent in 2004 to 90 percent by
2010.
A. Revenue Program
The Action Plan for revenues consists of improving administrative efficiency and proposed
legislative measures.
1. Administrative Measures
Improving administrative machinery shall be achieved through:
a. Periodic adjustment in fees and charges to ensure cost-recovery. Fees and charges will be periodically adjusted on an average rate of 10 percent every year to ensure cost recovery. The government will encourage agencies to improve their revenue collection by allowing receipts from business-type activities (sale of products) and income from board and lodging. These will be used as revolving fund by agencies for the maintenance of their operations.
b. Tariff rate adjustments. An Executive Order (EO) has already been signed, increasing duty on petroleum products from 3 percent to 5 percent. The positive effect of this EO on our revenue-generating program is contingent, however, on the price increases of crude oil.
c. Innovative sources of wealth creation
• Privatization of the NPC
• Mobilization of investors for Mt. Diwalwal gold mine
• Exploration and development of more oil and gas wells
• Relaunching of massive reclamation projects
• Major nationwide reforestation program
• Creation of Hong Kong-type enclaves to capture long-term investors
d. Improved enforcement mechanisms to increase efficiency
Bureau of Internal Revenue (BIR):
• voluntary tax compliance shall be
encouraged and opportunities for tax evasion and graft removed through the conduct of raffles, industry benchmarking, electronic publication of company tax payment vis-à-vis companies in the industry, and use of third party information.
• expanding the large taxpayer services in
district offices and creating a tax fraud division will also strengthen tax audit and surveillance.
Bureau of Customs:
• controlling smuggling through the use of
container X-rays, computerized tracking of the filing and movement of cargo, and updating of the value reference data; face-to-face interaction will be minimized and customs procedures simplified through electronic filing and single window processing at a BOC virtual window linked to all agencies.
The fiscal consolidation program is anchored on steady increase of revenue stream in the next
six years through a combination of administrative and legislative measures. Over the medium term,
excluding new legislative measures and given favorable economic conditions, total revenues are
expected to grow at an average rate of 11.6 percent, with tax receipts growing more vigorously at 13.2
percent through a more rigorous implementation of administrative measures.With the proposed measures in Congress, revenue effort is estimated to climb steadily and reach as high as 18 percent of GDP in the medium term, with tax effort projected to reach 17.2 percent in 2010. The BOC’s collection to GDP ratio will moderately improve to 3.1 percent
by 2010, relying mainly on improved administrative efficiency.
2. Legislative Revenue Measures: 8 measures that are fair and equitable and would most affect the sectors that could afford to pay more:
a. Indexation of the excise tax on ‘sin’ products. The indexation of excise tax on alcohol and tobacco restores the real value of the excise tax since 1997. It will provide an estimated PhP9.06 billion annually.
b. General amnesty. The government-proposed version requires individuals/corporations to file a statement of assets and liabilities, which can be used as a verifiable benchmark for future tax assessment. It also grants tax amnesty at the rate of 3 percent for residents and 2 percent for nonresidents, based on net worth, with a corresponding declaration of the statement of assets and liabilities by the individual or entities concerned. It is estimated to yield about PhP25 billion.
c. Rationalization of fiscal incentives. The fiscal incentives system will be streamlined to make it an efficient and effective tool for investment promotion. Harmonizing incentives among incentive-giving bodies, namely the BOI, PEZA, SBMA, and CDC, will do this. This will lead to the adoption of a single fiscal incentives law and phasing out of incentives that are inconsistent with World Trade Organization (WTO) rules (e.g., tax credits). The government will also repeal numerous special incentives laws and certain exemptions from VAT such as medical and legal profession. The proposed fiscal incentives rationalization bill is estimated to generate at least PhP5 billion for the government.
d. Review of the VAT system. The government shall increase the VAT rate by two percentage points for two consecutive years (2006 and 2007) only if the VAT-to-GDP ratio does not reach 4 percent in 2005 and 5 percent in 2006. It will push taxpayers to fully comply with their VAT payments, or face a higher VAT rate. For its part, the BIR will be compelled to meet its corresponding VAT targets or face possible attrition. The estimated yield of this legislative measure is PhP30 billion.
e. Tax on telecommunication. The measure reimposes the franchise tax on telecommunication companies. Additional revenues, estimated at PhP9.1 billion, can be used on important social services such as health and education.
f. Excise tax on petroleum products. The measure increases the specific excise tax rates on petroleum products, except kerosene, by PhP0.50 to PhP2.45. Since 1997, the ratio of excise taxes vis-à-vis prices of petroleum has significantly decreased by almost 50 percent. The ratio further deteriorated at current prices. Given the deterioration, there is a need to adjust the excise taxes back to their previous levels to maintain their real value. The move will yield PhP28 billion in excise taxes.
g. Institutionalization of an attrition system. The measure institutionalizes a system of lateral attrition and a special reward-incentive system for exemplary performance among revenue-generating agencies of government. It allocates an appropriate amount as incentive for exceeding performance standards.
h. Adoption of Gross Income Taxation (GIT). The measure replaces the current net income taxation with GIT of corporations and self-employed individuals at a rate of 10 or 15 percent. It simplifies the income tax structure because taxpayers compute only their gross income. It also eases tax administration and allows a reduction of the tax rate due to a broadening of the tax base. This simple structure will encourage tax compliance. The government will generate some PhP16.76 billion in the process.
B. Disciplined, Efficient Public Spending
Hand-in-hand with revenue reforms is the need to maintain fiscal discipline in government spending. Focus of the expenditure reform measures:
(a) rationalizing the scope and function of
government agencies through voluntary separation and reengineering;
(b) improving budget allocation to focus
expenditures towards those areas with the greatest impact and benefit to the greatest number;
(c) reversing the decline in public investments to strengthen the economic capital and strictly prioritize capital expenditures for infrastructure to those with the greatest economic returns for the country, as a whole, in terms of ensuring transport and communication linkages, providing base power and water supply, and promoting agribusiness;
(d) rationalizing NG spending for devolved services;
(e) reducing debt service through debt management; and
(f) reducing GOCC deficits. The specific expenditure rationalization measures shall include both administrative and legislative measures.
1. Administrative Measures
a. Austerity programs. AO 1032 August 31, 2004, directing the continued adoption of austerity measures in government. The salient features of this order are the following: (a) suspension of all foreign travels, except for ministerial meetings and scholarship training that do not entail any cost to the government; (b) suspension of purchase of motor vehicles, except ambulances and patrol cars; (c) reduction of at least 10% in consumption of utilities; (d) suspension of all expenditure subsidies to GOCCs, OGCEs, and LGUs except those approved by FIRB; (e) conduct of training, seminars, and workshops, except if funded by grants or if the cost may be recovered through exaction of fees; (f) expansion of organizational units and/or creation of positions, except those following ‘scrap and build’ policy; (g) conduct of celebrations and cultural and sports activities.
b. Rationalization of Personal Services. Savings from the rationalization program will be used to fund salary adjustments and the 10-point agenda. After the rationalization program has been completed, hiring of new employees will be minimized except for frontline and core services and population-based positions (e.g., teachers, police and defense personnel).
c. Operationalization of the Medium-Term Public Investment Program (MTPIP). The MTPIP, 2005-2010 shall contain the priority programs, activities, and projects (PAPs) to be implemented by the NG in support of the MTPDP. It is an instrument to monitor NG targets, commitments and resources, in terms of
public investments, over the medium term. It serves as a critical input to the annual NG budget formulation, guided by the Medium-Term Expenditure Framework (MTEF) as facilitated through the Development Budget Coordination Committee (DBCC). The MTPIP also sets the tone in resource programming by the Investment Coordination Committee (ICC). Operationally, the MTPIP will be a three-year rolling list of priority PAPs, ongoing or proposed, regardless of financing source. The MTPIP currently being prepared shall contain the PAPs for implementation in 2005-2007 and shall be updated annually to roll out over the succeeding years until the end of the medium term. The MTPIP shall also be consistent with the fiscal program, for which the PAPs shall be prioritized through the Efficiency and Effectiveness Review
Criteria approved by the planning committees. The Organizational Performance Indicator Framework (OPIF) is being implemented as a mechanism to shift budget allocation from one based on inputs
to one focused more on the consideration of outputs and outcomes. The measurement and reporting of the output and outcome indicators of PAPs will greatly enhance the transparency and accountability for public spending. For the medium term, a three-year budget and an OPIF-based budget will be introduced to Congress. Initially, the 2005 budgets of the 11-piloted departments with harmonized major final outputs (MFOs), for which performance indicators have been developed, will be submitted to Congress. Formulation of MFOs and public investment programs (PIPs) for the rest of the departments/agencies will be done prospectively up to 2007.
d. Strengthen the ICC process of the National Economic and Development Authority (NEDA) Board. Specifically, this entails:
Timeliness of ICC review and approval process.
Responsiveness to the MTPDP of public investments for ICC action; and
Greater transparency of ICC actions.
e. Moratorium on the establishment of GOCCs, except for the Philippine Infrastructure Corporation (PIC), the infrastructure fund to jump-start the strategic infrastructure projects crucial to our development program.
f. LGU autonomy. It is proposed that the IRA be treated as an automatic appropriation to provide predictability in resources to LGUs. The latter shall be encouraged to build their own infrastructure and provide for basic services rather than depend on the national government agencies (NGAs). Projects directly assisting LGUs shall be transferred to the Municipal Finance Corporation (MFC), which will be established to serve as a primary conduit of funds for LGUs. Excludes projects like the Countryside Bridge program, agriculture and agrarian reform projects, and the Kapit-Bisig Laban sa Kahirapan- Comprehensive and Integrated Delivery of Social Services (KALAHICIDSS), which shall continue to be administered by their respective implementing agencies. The MFC, replacing the Municipal Development Fund, will undertake project implementation at the city, province or municipal level. The idea is for foreign assisted projects undertaken by NGAs, which directly benefit LGUs, and which constitute assistance in the form of subsidies and relending by the NG, to be
transferred to the newly created MFC. Thus, existing loans and grants, or similar assistance to LGUs, shall be transferred or assigned to the MFC. With local autonomy comes the challenge for LGUs to maximize resources and manage expenditures prudently. LGUs will thus be encouraged to devote 20 percent of their development funds to investment projects and not to consumption based expenditures.
g. Transfer to the General Fund of all Dormant Accounts. All dormant accounts (except those earmarked for specific projects) of government agencies in servicing banks of the government shall be transferred to the General Fund.
2. Legislative Measures
a. Fiscal Responsibility Bill that aims to reduce public debt to a more manageable and sustainable level through the imposition of debt cap and the more transparent management and monitoring of public sector debt; involves the policy of no new expenditures without new revenue measures. If enacted, this will impose discipline in the legislation of new expenditure policies and prevent the proliferation of unfunded laws.
b. Rationalization/Reorganization program The legislation of the omnibus reengineering law will be pursued to rationalize the structure of the government machinery and review and refocus the mandate of the departments to support the 10-point agenda. Pending the passage of this proposal, the scope and functions of government agencies shall be rationalized through administrative means to focus the resources of government on vital/core
functions, minimize overlaps and duplications, and improve delivery and support systems.
c. Rationalization of Retirement and Pension Benefits. The retirement and pension schemes will be revisited to ensure their sustainability and rein in their claims on the budget. This includes the review of RA 1616, which allows retiring government employees to avail of retirement gratuity paid by the NG.
d. Improvement of government corporate performance. GOCCs with negative retained earnings shall be rationalized and shall be limited and all GOCCs shall perform their mandates in the most efficient, effective, and economical manner. Legislative measures limiting GOCCs’ capacity to enter into debts shall reduce the losses they incur. Pending the passage of this law, administrative measures have been passed phasing out redundant and non performing GOCCs to cut down on their losses. To reduce GOCC deficits, four major measures will be pursued:
Improve collection efficiency and reduce system losses through:
❖ Construction of power substations and rehabilitation of distribution lines in support of National Electrification Administration’s system loss reduction program;
❖ Increase of National Home Mortgage and Finance Corporation’s (NHMFC) cash collection, improvement of quality of portfolio, design and development of updating/restructuring schemes to increase borrower affordability and undertake selective foreclosure of accounts;
❖ Rationalization of licensing and registration fees of National Housing Authority (NHA) by increasing rates of licensing fees to levels adequate to defray the cost to sustain the program;
❖ Implementation of a Unified Ticketing System for Light Rail Transportation Authority (LRTA); and
❖ Resumption of the implementation of approved domestic vessel and cargo tariff increase and review of port investment expenditures to provide basis for setting cost-based tariff structure;
Dispose non performing loans and real and other properties owned or acquired through:
❖ Divestment of shareholdings and dissolution of NDC companies as well as improvement of lease terms; and
❖ Increase of HGC’s disposition of retail and developmental accounts by 50 percent and 10 percent, respectively;
Enhance other revenue generating efforts through:
❖ Securitization of low and moderately delinquent loans accounts of NHMFC;
❖ Maximization of interest and dividend incomes of NDC from fund investment and sourcing; and
❖ Implementation of LRTA’s business property and other nonrail development programs; and
Rationalize GOCC expenditures through:
❖ Implementation of streamlining program among GOCCs;
❖ Reduction in the maintenance and operating expenditures of Metropolitan Waterworks and Sewerage System (MWSS), Philippine National Oil Company (PNOC), Philippine Ports Authority (PPA); and
❖ Limiting of investment outlay of PNOC to BatMan 1 and NRES projects and no provision for its land and land improvement for 2006-2010 and additional/replacement of vehicles.
C. Debt Management. The Action Plan for Debt Management entails the implementation of a debt reduction plan through: (a) bond exchange to lengthen debt maturity and to manage refinancing risk; (b) maximizing the use of official development assistance (ODA); (c) limiting guarantees for GOCCs; and (e) limiting borrowings to high priority projects. The development of a risk management system within the DOF will support these initiatives to identify, quantify, monitor, and manage NG’s exposure to contingent liabilities. ODA is the preferred source for financing large infrastructure projects that require huge funds, as it is relatively soft with its lower interest rates and longer maturity period. However, unless it is a grant, ODA is usually a loan and increases the budget deficit as other loans do, only with better terms of payment. The government has therefore carefully chosen its ODA-funded projects in the past three years. But to minimize borrowing and lower the deficit in these times of fiscal constraints, the government must be even more selective of the projects to be funded by ODA. The programs prioritized for ODA funding are those that will directly contribute to the 10-point development agenda and the MTPDP 2004-2010.
A major concern that emerged in the wake of the 1997 Asian crisis is the country’s slow reduction in the level of nonperforming loans (NPLs) compared with other Asian countries. The latter have strong fiscal positions and were therefore able to set up asset management companies that were able to absorb the nonperforming assets using public funds. As of June 2004, the Philippine banking system ratio of NPLs to total loans stood at 13.97 percent, higher than Thailand’s 12.4 percent, Malaysia’s 7.7 percent, Indonesia’s 7.6 percent, and Korea’s 2.2 percent. To encourage banks to unload their NPLs, the Special Purpose Vehicle Act was passed in 2002. However, only a few banks have consummated deals to dispose of their assets, as banks have not been willing to sell their assets at steep discounts offered by buyers. The banking system continued to be saddled with its pool of nonperforming assets. Nonperforming assets as a share to total assets amounted to 12.85 percent as of end 2003, slightly unchanged from 14.31 percent in 2001. Another major concern, which impinges on fiscal sustainability, is the poor financial health of the
public pension system. If not rectified, this will eventually translate to a national government bailout, with serious repercussions on fiscal consolidation efforts.
The primary goal of reforms in the domestic financial system is to mobilize savings to achieve a
savings to GDP rate of 25 percent to 30 percent. This will support an increase in investment ratio to
28 percent of GDP, with an increasing amount of resources channeled to support the development of
agribusiness, including lending to micro, small and medium enterprises. Key reforms in the financial market shall focus on:
(a) ensuring macroeconomic stability through prudent monetary and fiscal policy;
Prudent monetary policy is important for price stability. However, inflationary pressures, especially those which arise from supply cost factors cannot be addressed by monetary policy alone since controlling supply and cost shocks through tight monetary policy can undermine growth and
ultimately affect inflation itself. Thus, inflation management will necessitate pursuing both monetary policy and measures to ease supply constraints and cost build-up.
(b) promoting a stronger, stable, and deeper financial system;
1. Accelerate reduction of nonperforming assets
The Bangko Sentral ng Pilipinas (BSP) will accelerate financial sector restructuring by pushing for the intensified implementation of the SPV law to facilitate the offloading of idle assets from the books of banks and other financial institutions. This will significantly pare down the banks’ nonperforming assets.
2. Prevent and minimize systemic risks by strengthening regulations in accordance with
international standards for greater transparency and accountability
a. Amend the BSP charter to include immunity of supervisors from law suits, authority to compel banks to implement prompt corrective action and higher capital build-up, shift away from the strategy of forbearance and liquidity assistance, and stronger criminal and administrative penalties for violations of
banking laws;
b. Amend the Insurance Code to empower the Insurance Commission to preempt financial distress or intervene to help resolve financial problems of an insurance company;
c. Provide the SEC with adequate legal protection, access to bank records in an investigation, ability to obtain freeze orders, and visitorial powers over regulated companies and their auditors. Also, SEC’s enforcement actions shall be strengthened through effective coordination with the Department of Justice, the Supreme Court, the National Bureau of Investigation and the Philippine Judicial Academy by means of enhancing its law enforcements partners’ capability to investigate and prosecute securities fraud cases;
d. Strengthen the framework for quick resolution of financially-distressed enterprises through the passage of the Corporate Recovery Act; e. Enhance and rationalize the regulatory framework on investment companies and the sale of preneed plans through the government’s support on the passage of the Revised Investment Company Act and the Preneed Code;
f. Restructure the Cooperative Development Authority into a regulatory body through the amendment of the CDA charter to provide the regulatory framework for the development of cooperatives nationwide. In addition, capacity building for CDA and other stakeholders shall be pushed in order to implement an effective regulation and supervision of credit cooperatives;
g. Introduce the risk-based capital adequacy framework for providers of financial services and products under SEC regulation and supervision;
h. Strengthen consolidated supervision mechanisms via closer cooperation and coordination among financial services regulatory agencies. This is to rationalize the incentive structure for the financial sector and achieve competitive parity across bank and nonbank sectors. The government shall also ensure consistency of rules and regulations intended for promoting a level playing field and that overlaps/gaps in supervision are minimized;
i. Intensify coordination and consultation among government agencies, market participants and private sector groups. This includes the creation of a Financial Governance Council, establishment of an organized forum to facilitate coordination activities and consultations, and conduct of consultation meetings, trainings, symposia and related activities on a periodic basis;
j. Implement a coordinated disaster recovery plan to ensure undisrupted operations or timely reopening of financial sector institutions in the aftermath of a catastrophic event; and k. Implement a long-term development plan or blueprint for the Nonbank Financial Sector to promote growth and expand contributions to the economy.
(c) reforming the pension system; and
1. Allow increase of members’ contribution to pension fund to narrow the funding gap. This will require the updating of actuarial study that shall be the basis for determining the increase in members’ contribution to ensure that the financial condition of pension funds is actuarially sound.
2. Introduce a clear set of credentials or qualifications that will become the basis for the appointments to the boards of main pension providers, namely SSS and GSIS.
3. Designate an appropriate agency as the regulator to supervise the activities of pension funds and ensure their viability.
(d) providing easier access to funds by SMEs to achieve the target of tripling lending to SMEs and support their development.
a. Provide credit, technology and marketing support for three million MSMEs; and
b. Empower existing SMEs to generate additional employment through increased lending and
promotion of Big Brother-Small Brother program.
NOTES ON The Medium-Term Philippine Development Plan for the Period 2004-2010: Health
Health
Situationer Ways forward.
“ … we are faced not only with large regional differentials in infant mortality rates and unhealthy children who are nutrient-deficient, but also with basic health services that are inadequate, not just on family planning dimension but even in terms of environmental sanitation and childhood healthcare (immunization). Families are unable to provide adequately for their health needs, and government is equally unable to generate sufficient per capita spending for the health needs of its population. Healthcare accounts for the largest component of out of pocket spending for Filipinos and their families. Aggravating the existing problems are fertility rates that are the highest in the region on one hand, and the unmet needs of families desiring a smaller family size on the other.
Population growth will necessarily take into account the changing demographic structure of the country so as to best provide the health care services most needed by each sector.” The Philippine health care delivery system is made up of the public facilities and personnel – hospitals, rural and urban health centers, and barangay health stations (distributed across the country according to population criteria and therefore more accessible) – and private hospitals and clinics that tend to concentrate in large urban centers.
Health care utilization is dependent on the capacity of the health sector to deliver basic services as against the effective demand by the population for such services. Demand, in turn, demands on knowledge of key services, as well as the availability of financial means to access them.
In 2000, the Department of Health formulated the Health Sector Reform Agenda consisting of 5 major reforms to improve the delivery, regulation and financing of health care. These reforms are:
(1) providing government hospitals fiscal
Life expectancy at birth for males: 57 in 1970, 63 in 1995; for females: 62 in 1970 to 68 in 1995 but we lag behind other Asian countries, including South Korea and Thailand
Infant mortality for males: 93.8/1000 live births in 1970 to 65.2 in 1980, to 58.9 in 1990, and 53.2 in 1995. (Regional infant mortality) In NCR, 37.5 infant deaths per 1,000 live births in 1995 to 71.3 per 1,000 in the ARMM. (Provincial) 42.8 per 1,000 live births in Bulacan to a high 73.4 infant deaths per 1,000 live births in Sulo.
Maternal mortality (number of maternal deaths per 100,000 births
1980-1986 213
1987-1993 209
1991-1997 172
Causes of death (mortality) : data limited to re \
pored cases of which a large number are not “medically attended” but trends are consistent
with international patterns from reliable data.
1. diseases of the heart
2. diseases of the vascular system
3. pneumonia
4. malignant neoplasms
5. TB, in all forms
6. accidents
7. chronic obstructive pulmonary diseases
8. diabetes mellitus
9. nephritis, nephritic syndrome
10. other diseases of the respiratory system.
Causes of infant mortality (1996):
1. respiratory diseases (pneumonia, diarrhea, measles
2. birth injury, difficult labor (41 percent of all births in 1998 were attended to by hilot; 66 percent of all births were delivered at home) autonomy, allowing them to collect socialized user fees to reduce their dependence on government subsidy so that freed government resources can be used to fund critical health programs;
(2) securing funding for priority public health agencies through multi-year budgets;
(3) developing local health systems to ensure effective and efficient delivery of basic services under the devolved arrangement;
[The Local Government Code Section 447 (Municipal Governments), section 458 (City Governments) and section 468 (Provincial Governments) define the functions and powers of the different local authorities. Functions of local governments or their so-called traditional responsibilities include construction and maintenance of city/municipal or provincial roads, provision of health services and agricultural extension work; “… approve measures and adopt quarantine regulations to prevent the introduction and spread of diseases within its territorial jurisdiction”.]
(4) strengthening the capacity of health regulatory agencies to ensure safe, quality, accessible, and affordable health services and products; and
(5) expanding the coverage of the National Health Insurance Program, especially for the poor. The leadership of the DOH must remain steadfast in overcoming such barriers as “bureaucratic inertia” and pressure from various interest groups.
Causes of morbidity (1996)
1. diarrheal diseases
2. pneumonias
3. bronchitis
4. influenza
5. TB, respiratory
6. malaria
7. diseases of the heart At the macro level, (1) A slowdown on population growth will put less stress on the ecology, less stress on the fragile economy and less stress on the overburdened public health sector; and (2) real economic growth will allow households and government to generate more resources for health.
8. measles
9. chicken pox
10. dengue fever
Among malnourished children, females tend to be more underweight than males; males tend to be more stunted or wasted than children. There remain large provincial and regional differentials in child malnutrition up to 1998.
Child nutrition, prevalence rates (percentages)
1990, underweight ages 0-5
9.8
1993, underweight ages 0-5
8.2
1990, stunted,
ages 0-5
6.5
1993, stunted,
ages 0-5
5.4
1990, wasted,
ages 0-5
4.6
1993, wasted,
ages 0-5
5.9
1993, underweight 8.2
1998, underweight 5.9
1993, stunted 5.4
1998, stunted 5.4
1993, wasted 5.9
1998, wasted 7.2
Micronutrient deficiencies, particularly iron and iodine, remain high among children and among lactating and pregnant women.
Environmental sanitation and surface water pollution and lack of potable water supply brought about by inadequate sanitation – deteriorating sewerage and on-site sanitation facilities, prolonged lack of investment, and limited options for safe excreta and wastewater disposal – threatens our environment and our health. In 2006, 25 persons were dying everyday from diarrhea and sanitation-related epidemics have broken out over the last few years in low-income communities. Water quality monitoring show that pollution of water is a direct result of lack of sanitation facilities.
The Philippines Clean Water Act of 2005 (R.A. 9275), complementing the Philippine Sanitation Code (P.D.856) addresses the interlinked problems of water quality, pollution prevention, and control and sanitation.
The private concessionaires of the Metropolitan Waterworks and Sewerage System (Manila Water and Maynilad), whose jurisdiction go beyond Metro Manila, have advanced the schedule of implementation of the sanitation and sewerage component as earlier provided in their concessional agreements.
References:
1. NEDA, National Framework for Physical Planning 2001-2030, 2002
2. AIM Policy Center, ed. Luningning Achacoso-Sevilla , “The Ties that Bind: Population and Development in the Philippines 2nd ed.”2004
3. GOP / GTZ / GOA, Philippines Sanitation Sourcebook and Decision Aid, December 2005
Situationer Ways forward.
“ … we are faced not only with large regional differentials in infant mortality rates and unhealthy children who are nutrient-deficient, but also with basic health services that are inadequate, not just on family planning dimension but even in terms of environmental sanitation and childhood healthcare (immunization). Families are unable to provide adequately for their health needs, and government is equally unable to generate sufficient per capita spending for the health needs of its population. Healthcare accounts for the largest component of out of pocket spending for Filipinos and their families. Aggravating the existing problems are fertility rates that are the highest in the region on one hand, and the unmet needs of families desiring a smaller family size on the other.
Population growth will necessarily take into account the changing demographic structure of the country so as to best provide the health care services most needed by each sector.” The Philippine health care delivery system is made up of the public facilities and personnel – hospitals, rural and urban health centers, and barangay health stations (distributed across the country according to population criteria and therefore more accessible) – and private hospitals and clinics that tend to concentrate in large urban centers.
Health care utilization is dependent on the capacity of the health sector to deliver basic services as against the effective demand by the population for such services. Demand, in turn, demands on knowledge of key services, as well as the availability of financial means to access them.
In 2000, the Department of Health formulated the Health Sector Reform Agenda consisting of 5 major reforms to improve the delivery, regulation and financing of health care. These reforms are:
(1) providing government hospitals fiscal
Life expectancy at birth for males: 57 in 1970, 63 in 1995; for females: 62 in 1970 to 68 in 1995 but we lag behind other Asian countries, including South Korea and Thailand
Infant mortality for males: 93.8/1000 live births in 1970 to 65.2 in 1980, to 58.9 in 1990, and 53.2 in 1995. (Regional infant mortality) In NCR, 37.5 infant deaths per 1,000 live births in 1995 to 71.3 per 1,000 in the ARMM. (Provincial) 42.8 per 1,000 live births in Bulacan to a high 73.4 infant deaths per 1,000 live births in Sulo.
Maternal mortality (number of maternal deaths per 100,000 births
1980-1986 213
1987-1993 209
1991-1997 172
Causes of death (mortality) : data limited to re \
pored cases of which a large number are not “medically attended” but trends are consistent
with international patterns from reliable data.
1. diseases of the heart
2. diseases of the vascular system
3. pneumonia
4. malignant neoplasms
5. TB, in all forms
6. accidents
7. chronic obstructive pulmonary diseases
8. diabetes mellitus
9. nephritis, nephritic syndrome
10. other diseases of the respiratory system.
Causes of infant mortality (1996):
1. respiratory diseases (pneumonia, diarrhea, measles
2. birth injury, difficult labor (41 percent of all births in 1998 were attended to by hilot; 66 percent of all births were delivered at home) autonomy, allowing them to collect socialized user fees to reduce their dependence on government subsidy so that freed government resources can be used to fund critical health programs;
(2) securing funding for priority public health agencies through multi-year budgets;
(3) developing local health systems to ensure effective and efficient delivery of basic services under the devolved arrangement;
[The Local Government Code Section 447 (Municipal Governments), section 458 (City Governments) and section 468 (Provincial Governments) define the functions and powers of the different local authorities. Functions of local governments or their so-called traditional responsibilities include construction and maintenance of city/municipal or provincial roads, provision of health services and agricultural extension work; “… approve measures and adopt quarantine regulations to prevent the introduction and spread of diseases within its territorial jurisdiction”.]
(4) strengthening the capacity of health regulatory agencies to ensure safe, quality, accessible, and affordable health services and products; and
(5) expanding the coverage of the National Health Insurance Program, especially for the poor. The leadership of the DOH must remain steadfast in overcoming such barriers as “bureaucratic inertia” and pressure from various interest groups.
Causes of morbidity (1996)
1. diarrheal diseases
2. pneumonias
3. bronchitis
4. influenza
5. TB, respiratory
6. malaria
7. diseases of the heart At the macro level, (1) A slowdown on population growth will put less stress on the ecology, less stress on the fragile economy and less stress on the overburdened public health sector; and (2) real economic growth will allow households and government to generate more resources for health.
8. measles
9. chicken pox
10. dengue fever
Among malnourished children, females tend to be more underweight than males; males tend to be more stunted or wasted than children. There remain large provincial and regional differentials in child malnutrition up to 1998.
Child nutrition, prevalence rates (percentages)
1990, underweight ages 0-5
9.8
1993, underweight ages 0-5
8.2
1990, stunted,
ages 0-5
6.5
1993, stunted,
ages 0-5
5.4
1990, wasted,
ages 0-5
4.6
1993, wasted,
ages 0-5
5.9
1993, underweight 8.2
1998, underweight 5.9
1993, stunted 5.4
1998, stunted 5.4
1993, wasted 5.9
1998, wasted 7.2
Micronutrient deficiencies, particularly iron and iodine, remain high among children and among lactating and pregnant women.
Environmental sanitation and surface water pollution and lack of potable water supply brought about by inadequate sanitation – deteriorating sewerage and on-site sanitation facilities, prolonged lack of investment, and limited options for safe excreta and wastewater disposal – threatens our environment and our health. In 2006, 25 persons were dying everyday from diarrhea and sanitation-related epidemics have broken out over the last few years in low-income communities. Water quality monitoring show that pollution of water is a direct result of lack of sanitation facilities.
The Philippines Clean Water Act of 2005 (R.A. 9275), complementing the Philippine Sanitation Code (P.D.856) addresses the interlinked problems of water quality, pollution prevention, and control and sanitation.
The private concessionaires of the Metropolitan Waterworks and Sewerage System (Manila Water and Maynilad), whose jurisdiction go beyond Metro Manila, have advanced the schedule of implementation of the sanitation and sewerage component as earlier provided in their concessional agreements.
References:
1. NEDA, National Framework for Physical Planning 2001-2030, 2002
2. AIM Policy Center, ed. Luningning Achacoso-Sevilla , “The Ties that Bind: Population and Development in the Philippines 2nd ed.”2004
3. GOP / GTZ / GOA, Philippines Sanitation Sourcebook and Decision Aid, December 2005
NOTES ON The Medium-Term Philippine Development Plan for the Period 2004-2010: Basic Education
Basic Education
Situationer Ways forward.
“The trends in Philippine education point to an alarming decline in quality, particularly at the primary (elementary) school level. National testing reveals that mean performance scores for elementary school children are only at 50 percent, with no region achieving higher than a score of 61. Students are doing particularly poorly in math and reading, and results are further magnified outside the NCR, where student test scores tend to be significantly lower. International tests bear out similar results, with Filipino school children performing well below average – coming in 36th positions out of 38 test countries – as compared to their peers. It is an increasingly common view that the current educational level is failing to provide Filipino students with the levels of education necessary to find the jobs that they need to pull them out of poverty.” (4) Various studies have sought to examine the many issues in the education sector. These include studies undertaken by the Congres-sional Commission on Education (1993), the ADB and World Bank 1998 Philippine Education Sector Study, and the Presidential Commission on Educational Reform (2000).
Low GDP allocation on education.
[Education was once high in the priorities of government (throughout the 1960s) but such high priority was lost in the 1970s and 1980s.
Years Share in national budget
1965-1970 25 percent (approx.)
1985 12 percent
In response, the 1987 Constitution accorded education with the highest budget priority.
Funding for education was constrained by the country’s slow economic growth or poor economic performance (as compared to other countries in the region), high poverty rates, and misallocation of resources. While the country lagged in economic growth, the other countries also experienced slower population growth during the same period. Resources for basic education were reallocated for tertiary education.
Sen. Roxas accuses government of having failed to support basic education sufficiently, allocating only 2.5 to 3 percent to education as against the global norm of 5 to 6 percent.
Scare financial resources, not to mention the reports of corruption with regard classroom
construction and textbook production, have brought about the low wages of teachers, shortage of and overcrowding in classrooms and school laboratories and other facilities, insufficient and defective textbooks and teaching materials, among others
Low teacher pay.
According to Alliance of Concerned Teachers Secretary-General Francisca Castro, the forthcoming 10-percent salary increase will hardly make a dent on the deficit of teachers pay. While teachers received a PhP10,9162-monthly pay, their “take home” pay is only about PhP 8,000. She cited current data from the National Wages and Productivity Commission showing that, as of April 2008, a family of six living in the NCR needs PhP 871.00 a day to afford basic requirements of shelter, food, clothing and medical services or about PhP19,162 a month. The last figure is PhP8,299.00 more than a teacher’s monthly take home pay. Thus the deficit.
To good teacher pay is attributed the effectual public education systems of Singapore, Malaysia and Hong Kong. Private business, out of corporate social responsibility, participates in the DepEd’s Adopt-a-School Program that aims to respond to the classroom shortage problem, e.g. Coca Cola’s “The Little Red Schoolhouse” program. Government, however, must remain as the primary investor and prime mover in public education.
The DepEd’s Adopt-a-School Program generated PhP200 million in 2002, PhP400 million in 2003 and PhP4.05 billion in 2007 when it was relaunched by former banker now DepEd Secretary J. Lapus.
The Omnibus Education Reform Act of 2008 (Senate Bill 2294) , which Sen. Mar Roxas has sponsored, proposes eight (8) measures “that could institute real, meaningful change” in Philippine education. These are (in italics):
Within 60 days after the enactment of the said education reform bill, the formulation by the DepEd of a 10-year Strategic Education Reform Program.
The success of this 10-year Strategic Education Reform Program is dependent on the inclusion of an investment plan to fund the recommenda- tions and activities to be contained in the said long-term plan.
Mother tongue as medium of instruction.
A proof that students learn better when the medium of instruction is their mother tongue is the outcome of the 2006 National Achievement Test (NAT) Grade 3 Reading Test where students of Lubuagan in Kalinga, M.P. topped the said test for both English and Filipino, with mean scores of 76.55 percent and 76.45 percent, respectively. These good test scores are attributed to the use of the mother tongue as medium of instruction, in this case Kalinga, for teaching content and our two national languages. Mandating the use of the mother tongue – the language or dialect first learned by the child and customarily spoken at home – as the medium of instruction for Grades 1 to 3 and the teaching of Filipino and English as separate subjects.
Intensive training and upgrading programs for teachers, e.g. training on teaching methods using the mother language/dialect for teachers in Grades 1 to 3 and upgrading courses for English, Science and Mathematic teachers who did not take the said subjects as their majors.
Lack of mastery of subjects that are said to bring about national development; poor reading skills.
There are so-called “international averages” that we subscribe to in the matter of subject proficiency. Sen. Roxas reveals that the Philippine average for Math in the 2003 Trends in Match and Science Survey (TIMSS) is 378, over a hundred points below the international average of 467.
Philippine average in Science is 377 where the international average is 474.
He attributes this sorry national performance to our “incomplete” Philippine education that continues to subscribe to a shorter 10-year basic education cycle as compared to the 12-year global norm. He adds that there are now just three countries with 10-year basic education cycles: the Philippines and two equally depressed African states.
Only 23 percent of the 65 out of every 100 children who enter Grade 1 and who reach Grade 6 can comprehend what they can read.
Only 16 percent of senior high school acquire mastery of Math; 7 percent for English; and 2 percent for Science.
Sen. Roxas that their lack of mastery in these subjects make them not effective enough in their jobs. Increase of the education cycle from 10 years to 12 years by adding a seventh grade in elementary school and a fifth year in secondary school.
Sen. Roxas set the following “qualitative” targets in the next 10 years:
- literacy and numeracy by Grade 3;
- a solid foundation in Math and Science by Grade 6 (or 7, if his Omnibus Education Reform bill is enacted);
- Proficiency in English and Filipino by Grace 6 (or 7, as the case may be); and
- Attainment by high school students with sufficient competency to pursue higher learning or a productive career;
His quantitative targets within the same period are:
- For 83 percent of first-graders to reach Grade 6;
- For 99 percent of sixth-graders to reach the first year of high school;
- For 85 percent of high school freshmen to reach 4th year; and
- For 70 percent of first-graders to reach fourth year high school.
Imposition of performance standards, particularly a diagnostic test to be administered to students at the end of Grades 3 and 6 to identify those who need special learning assistance as they proceed to the next grade level.
Staggering dropout rate nationwide.
Of every 100 children who enter Grade 1, only 65 reach Grade 6, of which only 43 finish high school and only 2 enter college. Data on poor rural areas record higher dropout rates where 25 percent of students enrolled in Grades1 and 2 stop schooling.
Sen. Roxas cites the strong correlation between poor nutrition and high dropout incidence. Many grade school pupils children are not properly nourished (and a great number come to school without breakfast). Some 30 percent of grade-schoolers are underweight or “underheight” (or both).
That children have to walk great distances to get to school and extreme poverty, such that parents are unable to even send their children to public schools that charge minimal fees, also contribute to the high drop out rates.
Social and political analyst Juan T. Gatbonton says that school dropouts make up our biggest social problem because they perpetuate poverty.
School dropouts make poverty a generational problem as lack of education causes them unable to function in the modern economy. Dropout parents raise dropout children who, in turn, raise drop out grandchildren.
He further cites call centers as an example, where, at most, only 5 percent of interviewed applicants are hired because school dropouts are also unable to fill the jobs that are created by the so-called modern economy.
Ms. Castillo shatters the myth of the school-dropout-who-made-good as she declares that only 3 percent of farmer’s children become modern professionals. Establishment of a mandatory in-school direct feeding program for Grade 1 and 2 , to sustain the nutrition and health of children and prevent drop-outs.
The DepEd and the DSWD have partnered in providing incentives for parents to keep their children enrolled. The sustainability, however, of this rice-and-cash dole outs is held suspect in the light of severe inflation and widespread corruption that is bleeding government coffers, ours included.
Mr. Gatbonton, in addition to the DepEd-DSWD effort, also cites in-school feeding program and the Latin American “wages for learning” model as workable schemes to keep students in school.
The office- and factory-based on-the-job-training for students that have been made mandatory by the Swiss government has been enhanced by the requirement of parents’ support and participation.
Offering of electives to help equip students with the knowledge and skills necessary to pursue further studies or a line of work.
Mr. Gatbonton also stressed that, for a poor country such as ours, “public education must be geared primarily to the needs of those who have only a minimum number of years … that we return early public education to the basics – to reading, writing and arithmetic – to making the experience of book-learning, no matter how brief, as nearly complete and as useful as possible.”
Decrease in enrolment from 2003 onwards. While school enrollment increased during the period 1995 to 2002 at an average of 1.98 percent each year, from 2003 until the opening of classes this June, there has been a decline by almost 1 percent. It should be noted that this condition prevails even as 6-year-olds have been allowed to enroll in Grade 1.
Sociologist Gelia Castillo warns that inflation and the crisis of surging food and commodity prices will cause dropout rates to increase.
Note however that these same sad conditions are also driving students from private institutions to public schools so that relying on statistics or incomplete headcounts might not be all too good at this time.
Brain drain “complication”.
Ms. Castillo also revealed that only 9 percent of Filipinos are college graduates and that 51 percent of those leave to work overseas are college graduates. Call centers and business process outsourcing companies are said to be encountering difficulties in hiring better-than-average accountants and computer technicians.
A personal observation is that pre-school education as a pre-requisite to Grade 1 lightens the Grade 1 teachers burden of having to teach “too basic” skills, e.g. alphabet, vowels and consonants, cleaning up, etc.
MMDA Chairman claims to have done away with day care/pre-school centers while mayor of Marikina because he found many of the enrolled children’s parents engaging in unproductive endeavors while they let government take care of their children. He thought that government personnel and facilities could be put to better use. Compulsory pre-school education year.
To rise from poverty, a nation’s population must obtain sufficient “leaning to know”, “learning to do”, and “learning to be” – learning and able to act productively, with discipline, and with responsibility for the environment. In addition, they must also obtain “learning to live together” with others – as members of the community, as a citizen of his country, and as a citizen of the world. (UNESCO Four Pillars of Learning)
Possession of these competencies that may, hopefully, be obtained through good primary education is a very basic need so that information and education campaigns and advocacy activities undertaken by government and NGOs are “appreciated” by their target publics and, thus, put to action in terms of the desired attitude change. What good are the glossy, expensive posters and flyers if the target groups are unable to read and fully understand the many and important issues and concerns that government and other sectors need to regularly inform the public about.
The role of education, IECs and advocacy in the Philippine Sustainable Development Agenda. The attainment of the goals of Philippine Agenda 21 – “the document that will guide Filipinos in their quest for genuine implementation of our commitments to the Rio Declaration” (1992) – and the targets of the MDG (Millenium Declaration 2000) both rely heavily on improvements in education, sustained IECs and advocacy. Together, functional literacy, education and IECs are vital if our generation is to bequeath social capital (defined in the first part of this paper) to future generations.
Among the “descriptors” or strategies to attain the goals of sustainable development are:
(1) developing the quality of human resources, (2) developing resource conservation technology, (3) stakeholders participation in the various stages of public project planning and implementation, (4) upholding human rights, (5) effecting change in values and attitudes through environmental education and ethics, and (6) professionalizing careers in sustainable development management.
“developing the quality of human resources”. There are various options available to government to develop the quality of its human resources – its people – but education, formal or non-formal, leads all others on account of its time-tested efficacy, aside from being a basic right of a child and a dream to almost all Filipinos, regardless of age.
“developing resource conservation technology”. The development of resource conservation technology requires sound official policy on education and science and technology and sufficient public investment to produce a well-remunerated and inspired “scientific community” – a legion of dedicated savants who will work out timely solutions to the country’s problems of rapidly denuding forests and dwindling resources in our soils and seas.
“stakeholders participation in the various stages of public project planning and implementation. The beneficiaries of public works can only meaningfully participate in the planning and implementation of projects that may drastically changes their lives and the future of their children if they can read and fully understand information beyond signboards that announce which local politician has pushed for the digging up of new wells (that, unregulated, actually destroy our aquifers and lets in salt water that decreases water potability).
“upholding human rights”. The task of defending human rights of victims would have been less difficult is the victims have long been informed, through education, of their basic rights and the recourses available for their protection.
“effecting change in values and attitudes through environmental education and ethics”. Inculcating values and attitudes through environmental education is actually “old hat” now; trees and mountains, the birds and the bees, and flowers and butterflies, and how they came to be are long-time favorite objects in elementary education. But it is a great source of wonder to many that many kids who once loved these beautiful (but at times, non-renewable) creations of God transform into adults who dump their garbage in streams and street corners, indulge in illegal logging, indiscriminately dump mine tailings and smuggle endangered species. And there are many who, in exercise of local autonomy, also make a killing from garbage hauling contracts. Environmental education appears to fail on the ethics component.
“professionalizing careers in sustainable development management” As to professionalizing careers on SD management, how can little Juan dela Cruz possibly fulfill his dream of becoming an SD manager when he spends his nights earning some money selling sampaguita garlands on Ortigas Avenue as his share of an x-deal with his drunkard father so he will be allowed to attend his early public school classes?
References
1. The Sunday Times Special Report on Basic Education Reform, Rene Q. Bas, “Same old problems still bedevil basic education”, June 15, 2008 issue, pp. 1-2
2. The Sunday Times Special Report on Basic Education Reform, “Lack of facilities, low pay for teachers bug public basic education”, June 15, 2008 issue, pp. 1-2
3. The Sunday Times Special Report on Basic Education Reform, “Increasing dropout rate destines more millions to endless poverty”, June 15, 2008 issue, pp. 1-2
4. AIM Policy Center, ed. Luningning Achacoso-Sevilla , “The Ties that Bind: Population and Development in the Philippines 2nd ed.”2004
5. Department of Environment & Natural Resources- Integrated Environmental Management for Sustainable Development Programme, Sustainable Development Operational Framework (Sustainable Development Handbook), 1996
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