OCT.

9, 2012

NR # 2887C

Speech of Hon. Feliciano Belmonte Jr. Speaker, House of Representatives Republic of the Philippines 38th Philippine Business Conference 09 October 2012 Manila Hotel [My good friend] Mike (Miguel) Varela, President of PCCI Tony [Antonio] Lopa, Chair of the 38th Philippine Business Conference Fred [Alfredo] Yao, Chairman of PCCI Donald Dee, Vice Chairman of PCCI Serge [Sergio] Ortiz-Luis Jr., Honorary Chairman of PCCI Distinguished members of the PCC Board of Directors Members of the Diplomatic Corps Delegates to the 38th Philippine Business Conference Ladies and gentlemen: A pleasant morning to all. First, I would like to congratulate the organizing committee headed by the conference chair Antonio Lopa and the board of directors of PCCI for putting together another successful Philippine Business Conference. I am not a stranger to this conference. In the past, I have delivered presentations and speeches before your distinguished audience of business leaders and delegations from all over the country and other parts of the world. Over the years, your conference served as an important venue not just to hear out your concerns and views on critical issues about business and economy. At the same time, it is also a venue to promote cooperation between business and government to address these concerns. Your Conference Theme, Investments and Governance, Pillars of Economic Reforms, is a timely attribution to the growing interest in the Philippine economy, as a result of the various reforms that government and business are jointly pursuing. There is no doubt that we are taking huge steps in our drive to achieve higher and sustainable growth: Our economy grew by 6.1 percent in the first semester of 2012.

 Our gross international reserves, as of August 2012, reached US$80.8 billion. This amount can cover about a years worth of imports. Our competitiveness ranking, as reported by the World Economic Forum, improved by 20 places in the last two years -- from 85th to 65th place. Our countrys corruption perception index also improved by 10 places, from 139 in 2010 to 129 in 2012. We have reduced our budget deficits, and kept them within targets. We have been given successive upgrades in our credit ratings. And our stock market has registered record highs. While these data speak of improving investor sentiments in the economy, a number of risks continue to prevail. They will be critical to the countrys long term economic prospects. These risks include: (1) the looming debt crisis in Europe and sluggish growth in US and Japan economies, (2) high fuel and energy costs, and (3) increased global competition. Mitigating these risks demand improved institutional coordination between local and national government agencies, and among government, business, and civil society. Thus I am fortunate that under my watch as Speaker of the House of Representatives, PCCI continues to play a very helpful role in policy and legislation. One of the innovative mechanisms of our dialogue process is the regular meetings we conduct with the business community. We have had these meetings with the PCCI, various industry associations, and the Joint Foreign Chambers. While our partnership has been fruitful for the most part, there are still significant steps somehow bold actionswhich we must cooperate on to ensure that the introduction of these reforms does not only offer short-term fixes, but also institute permanent solutions to the recurring problems of our country. To attain much higher and more consistent rates of growth to eventually eradicate poverty, we need to bring in more and better investments. We need investments that will bring in capital and technologies that will keep our workers productively employed. We also need a bigger market to allow us to produce more and maximize the productive use of our resources. Together with Senate President Enrile, I advocate for the review of certain economic provisions of our Constitution that restrict foreign investments and constrain our economic progress. I am not proposing to change the restrictive economic provisions of our Constitution overnight. What I am suggesting is for us to take the first step towards relaxing these restrictive economic provisions by allowing Congress to enact the laws defining foreign

participation and nationality requirements in strategic sectors of our economy. We will not relinquish our sovereignty on the preservation of our God-given resources. However, by allowing foreign participation and removing nationality requirements by legislative enactments, Congress can define and propose timely policy amendments, and we can give our economy a more responsive and robust policy environment within which to flourish. Aside from amending the restrictive economic provisions of our Constitution, we have included in the legislative agenda of the 15th Congress various measures to encourage the growth of both domestic and foreign investments. In close collaboration with the Executive, we endeavored to promote macroeconomic stability to boost business and investor confidence. Since the start of the 15th Congress, we have managed to pass the national government budget in time for the next fiscal year. The episodes of re-enacted budget, which caused uncertainties and inefficiencies, are now things of the past. Not only that we pass the budget on time, we have also exercised strong fiscal discipline in our deliberations on the budget. Though politically unpopular, we have reined in congressional insertions in the national government budget. We want to insure that we do not pass bloated budgets that are not within our means. To insure fiscal discipline in all agencies and instrumentalities of the government, we enacted the GOCC Governance Act of 2011 to curb abuses, and to promote accountability and efficiency in government owned and controlled corporations. To sustain the governments fiscal position we have passed on third reading, the rationalization of fiscal incentives, the reform of the excise tax on tobacco and alcohol, and the valuation reform act. We have also used the national government budget to upgrade and modernize our countrys infrastructure. At present, national government spending on infrastructure and other capital projects stands at P252.4 billion, higher by nearly half of the previous years level. In the proposed national government budget for 2013, infrastructure spending is expected to grow further by 17.5 percent amounting to P296.7 billion. To complement public spending on infrastructure, we are also pushing for the amendment of our BOT Law. It will facilitate private sector participation in the construction, operation, and maintenance of public utilities and infrastructure. We also made conscious efforts to enhance social services and to strengthen human capital formation. I believe that an educated and skilled labor force is a major source of competitive advantage. Thus we endeavored to provide the biggest allocation of national government budget to education, health, and other social services.

In the past two years we have given social services, particularly education, the highest share of the budget to promote human capital formation and broaden access to opportunities. The 2013 General Appropriations Act is not any different. We are allocating P698 billion or 34.8 percent of the national budget to social services. Education in particular will be receiving P329.4 billion or 16.4 percent of the total budget. To enhance social protection particularly to the most vulnerable sector of our society, we are allocating P44.3 billion to the Pantawid Pamilyang Pilipino (4Ps) to provide conditional grants to extremely poor households. As we have always stressed, the 4Ps is not a dole-out. It is investment in human capital. Aside from assuring maternal health care, 4Ps insures that all children, especially those coming from poor families, will be healthier and more educated, and will grow up to be productive members of society. In addition to the general appropriations act, we have enacted RA 10157 institutionalizing the Kindergarten Education into the Basic Education System, and RA 10165 strengthening and propagating foster care for abandoned and neglected children and children with special needs. We have also approved on third reading the following bills: (1) instituting the Ladderized Education Program, (2) establishing an open high school for out of school youths and adults, and (3) implementing open learning through distance education. Also, approved on 3rd reading is a bill providing a definite targeting strategy in identifying the poor and the provision of mandatory health coverage. Aside from measures to enhance the quality of our labor force, we have also worked to promote efficiency and reduce distortions in our labor market. We have passed a law, Republic Act 10151, rationalizing the nightwork prohibition on women workers. We have also approved on third reading, the bill expanding the prohibited acts of discrimination against women on account of gender. To attract more investments, we also need to expand our market. We must encourage greater competition not only to improve the efficiency of our local producers and manufacturers in serving the domestic market but also, to boost their ability to compete in the larger international market. Thus we have approved on third reading, the bill creating the Office of the Philippine Trade Representative, and the bill on the Customs Modernization and Tariffs Act. We are also close to approving on second reading, the Anti-Trust or Competition Policy, and the Pocket Open Skies Policy. Other measures included in our legislative agenda on this matter are the bills on strengthening anti-smuggling provisions in the tariff and customs code, the rationalization of the charters of the Philippine Ports Authority, MARINA and Civil Aeronautics Board. We have also included in our legislative agenda certain measures to promote investments in specific sectors of our economy. In particular, we have enacted the Anti-Cybercrime Act

and the Data Privacy Act which could contribute to the growth of e-commerce and our BPO sector. Also approved by both houses of Congress is the bill creating the Department of Information and Communications Technology. In the House of Representatives, we have also approved on third reading the National Land Use and Management Act of the Philippines, the Sustainable Forest Management Act, the Land Management Bureau Survey of Cadastral Lots, and the Delineation of Specific Forest Limits of the Public Domain. Let me now touch on the flagship reform area of this administration: the elimination of corruption. Corruption is a major deterrent to investments. It reduces the rate of return, and increases the risks of investments. The United Nations estimates that more than 10 percent of the countrys GNP is lost to various forms of corruption. The Philippines is the fourth most corrupt among sixteen Southeast Asian countries. Paradoxically, this level of corruption co-exists with, and festers inspite of, the numerous institutions that have been established to fight it. There are about thirty anti-corruption laws and more than fifteen agencies established to eradicate it. This paradox reminds us that the drive against corruption necessitates a comprehensive approach that includes enhancing law enforcement, increasing prosecutorial success, and establishing a culture of transparency in government. Towards these ends, we enacted into law the amendments to strengthen the Anti-Money Laundering Act. We have also passed on third reading at the House of Representatives, the bills on strengthening the Witness Protection Act, and the Whistleblowers Protection Act. Also included in our legislative agenda in this area is the Freedom of Information Act. In the same pursuit of good governance, we have introduced measures to promote a regime of peace and security. We enacted into law RA 10168 defining the crime of financing terrorism. We have approved on third reading a bill defining the maritime zones of the Philippines, a bill establishing the archipelagic sea lanes, and a bill lowering the age of criminal responsibility of minors. To prevent human rights abuses, we have passed on third reading bills on anti enforced or involuntary disappearance, human rights victims compensation, and internal displacement act. In closing, government and business must continue to work together and keep the reform process moving. The mid-term elections are scheduled next year. Let us not be distracted by political noise. Let us focus on making our economy grow much further. Let us keep our eyes focused on our common drive towards continued growth.

Once more, we are at a crossroads where we can either shrink back to mediocrity or propel ourselves forward on a path trained towards sustained growth. History is giving our country yet another opportunity for broad and inclusive development. Let us not waste this opportunity. Today, let us start action on what needs to be done to make our country realize its longheld aspirations for greater prosperity. Thank you very much to all of you. May this Conference be a fruitful one.