PHILIPPINE
Vol. 23, No. 5 May 2011
FACTSHEET The Month’s Highlights Political
President Aquino has formally restructured his Cabinet into five groups that will serve as advisory bodies, a move seen to increase productivity and efficiency in governance. Under E.O. 43 signed by the President on May 13 and effective immediately, the Cabinet has been organized into five clusters, namely, good governance and anti-corruption, headed by the President and co-chaired by Budget Sec. Abad; human development and poverty reduction, chaired by DSWD Sec. Soliman; economic development, chaired by Finance Sec. Purisima; security, justice and peace, chaired by Executive Secretary Ochoa; and climate change adaption and mitigation, chaired by DENR Sec. Paje. Despite public uproar over the deal, the Sandiganbayan Second Division approved the plea bargain between former military comptroller Carlos Garcia and government prosecutors over his P303 million plunder case. The ruling is a blow to the anticorruption campaign of the Aquino administration. The government is urging the Sandiganbayan to reverse its decision approving the plea bargaining agreement between government prosecutors and former military comptroller Carlos Garcia. Three cabinet members still have to pass the Commission on Appointments: Finance Sec. Purisima, Justice Sec. de Lima, Social Welfare Sec. Soliman, and Public Works Sec. Singson. The President stated that DILG Sec. Robredo and DENR Sec. Paje will stay in the Cabinet and will not be replaced by people who lost in the last election.
Economic
Economic growth eased to 4.9% in the first quarter, pulled down by factors such as government underspending that, analysts said, have place the 7-8% target for 2011 at risk. While well within the official forecast of 4.8-5.8% for the period, it was significantly slower than the revised 8.4% GDP growth recorded in the first quarter of 2010. The industry sector grew 7.2%, the services sector by a low 3.7% and agriculture by 4.2%. The National Statistical Coordination Board’s (NSCB) released preliminary results of the “revised and rebased” national accounts, which now use 2000 instead of 1985 prices and include new components. As a result, the Philippine
economy officially grew by 7.6% in 2010, faster than the record 7.3% rise in gross domestic product (GDP) based on 1985 constant prices. The revisions were done in partnership with the World Bank. The government will continue with the privatization of the remaining Napocor assets, scheduling the bidding of the Cebu-based Naga power complex (149-MW) next month. Other assets that still need to be privatized are the 850-MW Sucat thermal plant and the 630-MW Malaya thermal plant. The bidding program will resume in July, with geothermal plants in Naga (149-MW IPPA contract) and Leyte (640-MW Unified Leyte Complex IPPA contract) to go first. Unemployment remains high and has appreciably increased from late last year, the SWS said in a new report. Joblessness among Filipinos at least 18 years old rose by 27.2% in March, up from 23.5% in November 2010. This means that an estimated 11.3 million are out of work. The government saw its budget return to the black last month as continued underspending, coupled with strong yet-below target revenue collections, allowed to achieve a P61 million surplus in the period January to April. Merchandise imports posted a 21.2% growth to US$ 5.52 billion in March, with a trade deficit of US$ 1.17 billion for the month. The first quarter import bill grew to US$ 15.59 billion, up 22%, resulting in a trade deficit of US$ 3.3 billion. Export growth slowed to 4% in March, reaching US$ 4.350 billion. Exports for the first quarter rose by an annual 7.8% to US$ 12.215 billion. Total foreign investments approved in the first quarter of the year by 4 major investment promotion agencies (BOI, Clark, Subic and PEZA) declined to P22 billion, 52.8% lower as investment applications approved during the same period of 2010.
The Philippines has been conditionally ruled compliant with the OECD’s global tax information sharing standard following the approval of a relevant law. Remittances by overseas Filipinos grew by 4.1% to US$ 1.62 billion in March; the first quarter remittances stood at US$ 4.49 billion, up 5.9% from the same period of last year. Draft rates for renewable energy subsidies were submitted to the Energy Regulatory Commission which has to approve the feed-in tariffs. Meanwhile, DOE Sec. Almendras has expressed exasperation over local energy developers who are urging the government to increase the limit on the renewable energy capacity that would be installed over the next three years. Almendras remains keen on limiting capacity to 830 MW. Indicative schedules have been set by the government for the rollout of the next seven PPP deals it intends to offer this year – LRT 1 south extension (P70 billion) in August; Puerto Princesa airport development (P4.4 billion) in September; the new Bohol and Legaspi airport developments (P7.6 and 3.2 billion respectively) in October; and the Cavite-Laguna expressway extension (P10.5 billion) in December. Two other PPP deals have been delayed: Daang Hari-South Luzon Expressway link (P1.6 billion) and the NAIA Airport expressway (P10.59 billion) will be rolled out next month. Increased earnings from the central bank’s foreign exchange investments on government and private securities pushed the country’s balance of payments surplus to reach US$ 1.08 billion in April. For the four months to April, the BOP reached US$ 4.6 billion, compared to US$ 2.29 billion in the same period of last year.
A P22 cost of living allowance (COLA) will be added to Metro Manila’s current floor daily wage of P367 – 404, bringing the range to P389 – 426. The adjustment took effect on May 26.
The Development Budget Coordination Committee (DBCC) has agreed in principle to move away from tax credit certificates (TCCs) to cash refunds. The proposal is now under study by the technical board. The most important considerations include how the refunds will be appropriated in the 2012 budget and how these will be disbursed.
Direct foreign investments fell by 70% in February to US$ 97 million, bringing the two-month FDI net inflows to US$ 326 million, a decline of 39%, according to BSP data.
The Philippines has been kept in the US’ piracy watch list given its failure to enact key intellectual property right legislation and strengthening the judicial system.