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PROCEEDINGS A National Consultation of Civil Society Organizations on

Financing for Development

November 21-22, 2007 SEAMEO Innotech Commonwealth Avenue, Quezon City

Proceedings: National Consultation on FfD

A UNDP supported project


Background In 2001, Social Watch Philippines (SWP) led civil society participation in a multistakeholder approach convened by the Philippine government, in crafting of the official policy positions on Financing for Development (FfD). The partnership forged at that time between and among government, civil society and the business sector, was observed by many as a “best practice� in constructive engagement. In preparation for the upcoming global conference, SWP is once again leading the civil society review process which is anchored on the overriding objective of mobilizing new and additional resources for the MDGs at the country level, and identifying stumbling blocks as well as strategies to overcome constraints and challenges. This consultation is intended to take stock of the implementation of the decisions of the first FfD conference in Monterrey in 2002 and to determine what new initiatives are necessary, especially to attain the Millennium Development Goals (MDGs). SWP has prepared papers for the six thematic issues which aim to identify ways of increasing resources while pointing out the need to address existing policies that promote inequities. FfD agenda covers the following six thematic issues: 1) mobilizing domestic financial resources; 2) mobilizing international resources (foreign direct investment and other private flows); 3) trade; 4) Official Development Assistance; 5) debt; and 6) addressing systemic issues (enhancing the coherence and consistency of the international monetary, financial, and trading systems). The consultation which was held on November 21-22, 2007 at SEAMEO Innotech in Quezon City was attended by 69 representatives of 36 civil society organizations. (See Annex 1. Attedance Sheet)

Proceedings: National Consultation on FfD


21 November Welcome Remarks and Introduction Leonor M. Briones, Co- Convenor, Social Watch Philippines

Good Morning, Maayong Buntag, this a perfect time for discussing Financing for Development. Storms come and go, just like the storm recently unleashed by the media regarding the World Bank loan. There is no better time to discuss FfD, now is the perfect time. This is part of a series of consultations being conducted by the Social Watch Philippines. After the big summit in Monterey, Mexico, concerns were felt globally on MDGs. Governments and multi-lateral donors sat down together and asked themselves of the cost of the social development commitments in MDGs. Unless big and small countries sit down together, it will be difficult to move MDGs forward. From 2000-2002, civil society realized they should have a role in making the Philippine government accountable to the people. We urged the UNDP to include civil society in its talks with the government on MDG. In 2006, a paper was prepared by the SW with support from UNDP showing huge gaps in funding requirements for MDG commitments. Governments and donors such as multi-lateral institutions had vigorous discussions on how to approach meeting MDG goals. The assessment is that a number of countries may not be able to meet MDG commitments because in national budgets, the environment, education, nutrition, are the least funded activities. Different consultations are now ongoing in preparation for the 2008 Doha conference which will involve financing institutions. Civil society positions should be included in government positions. In Doha, they need to consider debt problems of middle and big countries. This morning, we are repeating the process we went through seven years ago on six FfD concerns in order to assess for ourselves that by 2015, we will be ready to respond and allocate resources. We welcome Ben Diokno to this consultation. He will share with us his expertise on FfD.

Proceedings: National Consultation on FfD


Keynote Address Benjamin Diokno Philippine National Bank Professor of Economics School of Economics, UP

Financing need will be much higher for the coming years, of course specially for education. The Budget naturally increases every year, but don't believe what the government says because real spending for education and health has declined. Hard infrastructure is important in raising the capacity for growth. We must have roads, bridges, etc. The reason why financing needs will be higher is because of the population growth. There is an absence of a credible and sustainable population policy. The national government leaves population education and control to LGUs. We have a huge shortfall in revenue collection. In a bid to stop this, we sell our family jewels such as the San Miguel shares, Petron and others. We shouldn't have privatized PNOC-EDC. We will soon run out of assets to sell that's why we need to revisit our tax system. We should tax liquor and tobacco, rationalize tax incentives, reform personal and corporate tax system. However, this government is politically weak, it has no political capital. It will only impose new tax measures after 2010. We should not only be raising revenues, but we should also be competitive. Our corporate tax is one of the highest in the world. After 6 years, we have increased foreign direct investment (FDI), but we are still among the lowest in Asia. Competitiveness of Philippine exports will continue to deteriorate because of higher power rates, poor infrastructure, poor governance and relatively strong peso. The best example of poor infrastructure is the international airport. That’s poor governance. Peso appreciated but this is not necessarily good. According to Merrill Lynch survey, growth can be found in technology, materials, and industry. But what can the Philippines offer? On foreign loans, I propose a moratorium on foreign debt. The government should declare a moratorium on foreign debt and loan. If you borrow money now, even with the present exchange rate, we will pay more if the lenders' currency

Proceedings: National Consultation on FfD


appreciate later. China lends money even to the US. It has $1.4 trillion reserve. Chinese money is mostly tied up to Chinese workers coming here. NGOs should intervene during loan preparation, not in the payment stage. NGOs should lobby for higher budgetary allocation for social services and infrastructure. 40% of IRA goes to national government, the rest remain with LGUs. LGUs should be closely monitored. There is big difference between how it's allocated and used. Lots of funds are used for Lakbay Aral or junkets, or for building plazas. (See Annex 2. National Consultation on Financing for Development: Keynote Address, presentation made by Dr. Benjamin Diokno)

Thematic Issue Presentations Mobilizing Domestic Resources, Debt, ODA I. Mobilizing Domestic Resources Leonor M. Briones, Professor, NCPAG, UP

“May Pera Na Ba?” Mobilizing Domestic Financial Resources for Development Budget Requirement The Philippines as an active participant to the Monterey conference held in 2002 on Financing for Development, has committed to raising additional funds for MDGs and social development. In a study done by Dr. Rosario Manasan (2002) indicated that more than 300 billion pesos (?) is needed for fulfilling MDG goals for education, health, water and sanitation. The Social Watch, with assistance from the UNDP published a study in 2006 revealing huge gaps in funding requirements viz a viz funds available in the budget. Five years after the Monterey Conference and seven years after the Millennium Declaration, have we mobilized, committed the necessary resources? In other words, “May Pera na Ba?” The Alternative Budget Initiative (ABI) convened by the Social Watch succeeded in increasing the

Proceedings: National Consultation on FfD


2007 budget for education and health by P5.3 billion out of a P22 billion request. Congress asked for an alternative budget, thus ABI came up with one this year, a P20 billion increase. However, the proposal of P 20 billion is small amount based on the absorptive capacity of the government. For 2008, what is required is P98 billion according to the Manasan study. We need to increase the budget base. Money is already allotted for debt service, Presidential budget, etc. Status of Revenue Collection The availability of financial resources for the national budget is determined by the degree of domestic resource mobilization. At present, domestic resource mobilization is inadequate even for MDG goals. Tax revenues and non-tax revenues doubled for a ten year period. The deficit seems to be decreasing, but it must emphasized that the government doesn’t include principal payment on debt in computing expenditures. When you compare actual collection to scheduled collections, you can see the problem. The BIR and the Bureau of Customs are known to be corrupt, the accumulated shortfall is P56.020 billion. Total tax effort is going down despite the ADB- funded revenue reforms initiative, which is supposed to be in place. Obstacles to Increased Domestic Resource Mobilization We have a regressive tax system, a greater reliance on indirect taxes. The trend is to go more towards consumption taxes which are indirect, because they are easier to collect. Indirect taxes place burden on lower income groups. Indirect taxes are shared equally by the rich and poor. Big business is protected by policy makers. Problem of Incentives In our effort to attract more investments, we have gone overboard in offering incentives to big businesses. The major policy strategy is to offer tax holidays, incentives and other perks to lure investors to the Philippines. The Department of Finance is for rationalization of incentives, but the Department of Trade and Industry is not because it is tasked to get more foreign investments. Incentives are foregone revenue. Two Studies on Incentives The study “Investments Incentives and FDI: The Philippine Experience” done by Rafaelita M. Aldaba and “Towards Rational Fiscal Incentives” by Renato E. Reside Jr. conclude that tax incentives were not able to compensate for the weak fundamentals and the poor investment climate. Reside says that incentives are redundant. Firms getting incentives already have high rate of return. Investors come because of peace and security, level playing field, infrastructures, etc. But now, the climate of investment is so corrupt. You

Proceedings: National Consultation on FfD


give bribes to everyone. If we try to rationalize our investments, we will realize the income for government. Global View on Incentives: Incentives are not important. What is important is a level playing field, good governance, not an instability of policies. Corruption is the most problematic factor for doing business in the Philippines. The President even created a P1 billion fund to fight corruption. Governance and Legitimacy As long as questions of legitimacy persist, there will be the problem of credibility and it will be difficult to ask the people to pay taxes. What Needs to be Done 1. Harmonize conflicting policies on incentives 2. Identify causes of revenue shortfalls and appropriate solutions 3. Resolve problems in revenue administration, i.e. VAT 4. Provide incentives in combating corruption 5. Recover stolen wealth 6. Support proposals for the ABI Message to the International Community Lasting solutions to the debt problem should be considered. The international community needs to exert stronger pressure on tax havens and laundry republics. They must support efforts to recover stolen wealth, and also support alternative budget initiatives. (See Annex 3. May Pera na ba? Mobilizing Domestic Financial Resources for Development, presentation by Prof. Leonor Briones)

II. Debt Joseph Anthony Lim, Professor, Economics Dept., Ateneo de University


Possibilities of Debt Reduction for MDG Financing: Philippines and Indonesia Although most MDG targets are on track in the Philippines, more than 30% of the population are poor. Those not on track are malnourished children, family planning and population programs. There is a lot of

Proceedings: National Consultation on FfD


work that needs to be done in both countries because poverty rates are high. It has to be emphasized that debt reduction is not the main policy to achieve the MDGs. Policies to Bridge Financing Gaps There should be progressive taxation, government has to relax fiscal deficit and target the big business. The government needs to reallocate government spending to maximize MDG impacts. Improvement of social accountability and transparency for MDG projects will reduce corruption and wastage. The important thing is to make sure that the debt funds will be converted to MDG financing. We don’t want it to be supply driven, no donors dictating to us. Indonesia is way ahead of us. They have a strong proposal for MDG. MDG fund can be tied up with debt reduction fund. In 2000, Indonesia was far worse in its external debt. 80% of our government revenues go to debt servicing. This means we have to restrict spending or increase debt. Indonesia pays only 40%. Local debt is better than foreign debt. In the graph, spending for social services, economic services, general public services has decreased and only interest payments are going up. Indonesia is paying a lot of recapitalization funds. Philippines & Indonesia’s public debt servicing reduces funds for health, education and other social services. Options for Debt Relief The options for debt relief and debt reduction can be 1) outright cancellation of debts such as the cases of Argentina , Nigeria, Iraq; 2) asking for debt treatments, specifically debt conversion to MDG financing; and 3) debt to equity conversion. However, it should be noted that Indonesia’s most debts are still active. The Philippines has only 1 (1994) active debt. The Paris Club rule states that the only debt you can convert are the active debt. Indonesia has a lot of debt conversions ongoing. DFID, AUSaid, are converting Indonesian debt. For the Philippines, hardly 5% of our external debt was converted. We should change Paris club rules. We should ask the UN and UNDP to spearhead the campaign to change the concept of debt sustainability of the Bretton Woods. Bilateral debts be converted to MDGs. We have experiences with beneficial debt conversions such as the debt-for-Mt. Pinatubo from the French government, the establishment of Foundation for Philippine Environment (FPE) with USAID and Bank of Tokyo assistance, the

Proceedings: National Consultation on FfD


Swiss Debt Reduction Facility created the Foundation for a Sustainable Society, Inc (FSSI), etc. International CSOs, national governments and local CSOs should support the campaign to have international rules changed so that treatment of debts owed to the Paris Club members will be allowed without any IMF conditionalities, to meet MDG financing needs. (See Annex 4. Possibilities of Debt Reduction for MDG Financing: Philippines and Indonesia, presentation by Prof. Joseph Anthony Lim)

III. Official Development Assistance Eduardo Tadem, Associate Professor, Asian Studies, UP

Development Down the Drain: The ODA Crisis in the Philippines

Despite the overthrow of Marcos dictatorship, the Philippines is still mired in a lot of problems and inadequacies. Definition of ODA ODA Act of 1996 has been the subject of several Senate hearings for revision. Provisions scrutinized are: 1) Sec. 2a, promote sustainable social and economic development; 2) Sec. 4a & 4b, for private sector; 3) Sec. 11c, for hiring of consultants; and 4) Sec. 11d, for equipments. Positive indicators 20 year Record: Total ODA commitments from 1986-2006 is US$ 37.92 billion. Multilateral agencies contributed US$ 13.78 billion, while bilateral aid was US$ 63.63 billion. Annual average ODA inflow has been going down from 2001-2006, 23% less than the 1986-2000 period. Of total ODA, 84.22 % was in the form of loans and only 15.78% was in grants.

Proceedings: National Consultation on FfD


JAPAN’s ODA to the Philippines Japanese ODA has declined, but Japan remains the country’s top donor. Japanese commitment fell by 37.5 % in 2001-2006 compared to the 1986-2000 annual average. The issue of ”tied aid” remains a major irritant in global aid, and in Philippine ODA. Most countries like US & Japan don’t report how much are tied. For JBIC loan, 59% is totally tied, 28% is partially tied and only 2.8 % is untied. The biggest of these loans was the US$355 m Subic-Clark-Tarlac highway project in 2001. Sectoral Allocation Human development component of foreign aid continues to suffer highly inadequate allocations, while the economic growth-oriented sector of infrastructure development increased from 50% to 67%. This trend violates MDG #8. Geographical Distributions NEDA has stopped reporting how loans are allocated geographically. Luzon’s share of ODA is 31%, with 20% going to Manila alone. Visayas has 10% share while Mindanao has a mere7% share. Share of External Debt ODA’s share of external debt is at 40.8%. Interest payments exceeded principal payments by P3.5 billion, not including other charges like donor fees. COA reports P10.34 billion in superfluous, unnecessary and unauthorized ODA expenditures. Availment Rate The availment rate of ODA funds which reflect the country’s absorptive capacity has deteriorated from 75% in 1988-2000 to 60% in 2000-2006, with some projects at 0% to less than 10%. Debt Passing The government practice of assuming debts of GOCCs (or debts of the private sector) and providing sovereign guarantee resulted to contingent liabilities of P537.2 billion. This is an increase of 147% over the 2002 total of P217 billion. China’s ODA China appears to be filling in the gap but controversies have been arising with such projects as ZTE (broadband network) and the North Rail project. ODA in Mindanao The pattern of foreign aid to Mindanao reflects the new global trend of linking ODAs to the war on terror.

Proceedings: National Consultation on FfD


Corruption and Transparency issues There is lack of transparency in foreign assistance funds thus enabling corruption to work against the interest of the taxpaying public (as cited in the studies undertaken by the Economic Policy Research and Advocacy Group and by the World Bank). Issues Human rights concerns, social and environmental issues arise from ODA funded projects. These problems even lead to killings of oppositors to the projects, dislocation of communities, and the destruction of natural landscapes. Foreign consultants are likewise the problem when they try to push their own agendas that are not appropriate to local situations. There are also other implementation issues such as uncompleted projects, loan cancellation, lack of local counterpart funds, limited LGU capacities and procurement problems. Though problems and issues abound with ODAs, some Best Practices are adopted i.e. Community Irrigation Project by the WB, Third Elementary Education Project by the JBIC and the Alliance for Mindanao Off-Grid Renewable Energy by the USAID. Policy Recommendations Policy recommendations for donor government and agencies including the Philippine government were forwarded. These include increase and improve quality of aid allotments, increase share of human and social development projects, more grants than loans, address social and environmental concerns, end all tied aid, de-link aid from the war on terror, monitor aid effectiveness; and fix implementation problems, plug hemorrhage of government funds, end human rights violations, follow legal requirements in negotiations, long term and alternative sources of debt financing, transparency and popular participation, etc respectively. (See Annex 5. Development Down the Drain: The ODA Crisis in the Philippines, presentation by Prof. Eduardo Tadem)

Reactions A. Jocelyn Cuaresma, Professor, NCPAG, UP

On the call of Prof. Briones regarding fiscal reforms on revenue generation, taxation at local & national levels: Two heads in BIR have been axed because the revenue shortfall is not just P56 billion as of September, it is now P90 billion.

Proceedings: National Consultation on FfD


On the policy level why revenue collection is lower: First, the cap is removed in input VAT, all input VAT can now be claimed. Second is the reduction in excise tax in Pall Mall from 11% to 6%. If we compare Philippines with Thailand, we have 12% VAT while Thailand has only 7% VAT. We have a high VAT which is an indirect tax. The rich and poor pay. The VAT law is not properly implemented. Tax policies and rules are not properly implemented. BIR should strictly monitor big business, the large tax payers. Are we asking for receipts, as tax payers? Our culture doesn’t demand it. We don’t automatically ask, or issue receipts. BIR should strictly monitor issuance of receipts. BIR requires restaurants to separate VAT from the price of food, but now it should be included in the price. There should be a penalty if business don’t issue receipts. The Bureau of Customs and BIR effort is only 15% of the expenditure ratio, difference is accounted for by borrowing. Tax evation or smuggling rampantly happens. Numerous studies by Manasan show that money from tax revenue is more than sufficient to cover the budget deficit. We can easily monitor the revenue collection performance of a local government through computerization. Once payments are computerized, we could easily get the list of delinquent taxpayers. This is the reason why the project was discarded. This is not the first time we are issuing the call for rationalizing fiscal incentives. We are getting less and less investments. The national budget process is a closed system. Budget planning and the release of funds is closed system. How can the civil society participate in the budget process?

B. Maristella dela Cruz, Overall Campaign Coordinator, Freedom from Debt Coalition

Whose development is pushed in Financing for Development? The attainment of MDGs is what we want to see. We have different solutions and different levels of sincerity. Who are really pushing for it? The donors, the governments? At the end of the day, who benefits from this financing? FFD aggravates the poverty experienced by the people. While taxes are supposed to improve the conditions of the people, it is more impoverishing because of indirect taxes. The poor are worst hit by the system. By

Proceedings: National Consultation on FfD


expanding tax coverage, including oil and power, it has a domino effect on the prices of goods. Higher power rates have made our industries uncompetitive. Investors are discouraged to come in. VAT made price of electricity higher. Privatization resulted in higher rates in services, it has also added debt but it hasn’t improved the quality of delivery of services. MWSS was privatized to improve services and lessen the price of water distribution but we haven’t experienced this. 70% rate increase is asked by concessionaire to provide water to the waterless. Investment incentives are too much and unnecessary. An example is the power sector which is entitled to 32 incentives. The contingent liabilities of the power sector contributed to the crisis. On the impacts of debt servicing, where is the money from debt going? For ODAs, we agree that conditionalities must end. They have contributed to the worsening of people’s lives. Privatization is one of the conditionalities. One of ZTE conditionalities involves equipment and consultants. We pay commitment fee but we have 0% availment rate. The government should provide mechanisms or ODA can’t be disbursed. Debt to equity conversions must be thoroughly reviewed. According to the De Venecia proposal, we have to audit debts to find out if they are legitimate. If they are, then it is only then can we negotiate. We must consider the ecological impact of debt. We must do valuation of resources. Once we do this the Philippines comes out as the creditor or donor, the debtor.

Open Forum 1. Jessica Reyes-Cantos, AER: We fought tooth and nail against VAT, but now that its there, the best way for the system to work is if there are no exemptions, which, given the political reality cannot happen. On input tax credit, government must provide incentives to business to issue receipts. The 70% cap mentioned can be really manipulated but of course putting limit is good. But if only 70% can be claimed, then the incentive to ask for receipts is limited. The consumers should be given input tax incentive, for example for sending their kids to school. It is difficult to repeal VAT. I will push for decreasing it to 7 or 5% and give some incentives for consumers. 2. May-an Villalba, Executive Director, Migrant Services Foundation, Inc. We provide small capital for small impressa, to generate income for OFWs and the community. Our civic education says we pay taxes to increase resource base. Small business pay high taxes, they end up bankrupt. A sari-sari store paid P60 thousand in taxes because the BIR told them to pay tax or pay bribe. There is a clash of good governance and good taxpayers. Bidding process is not

Proceedings: National Consultation on FfD


transparent. Good governance runs counter to good business. How do we address the problem in terms of fiscal reform? 3. Jocelyn Cuaresma Small business need incentives and exemptions, not subsidies. They haven’t learned the art of tax evation. We need to lobby to ask for reforms that will put small enterprises to zero-rated and tax exempted brackets. Among the tax exempted is the agricultural sector. 4. Leonor Briones Taxes imposed on small business relative to their income is heavier. Big business have their accountants and consultants to compute for lower taxes. Example: A big business assessed for P200,000 and the examiner says "Lets share the P200,000. Pay only P100,000 to the government and the remaining 50% goes to the examiner." Small businesses are subjected to extortion. Big business have their Congressmen and Senators, even a President to protect them. We have to give more incentives to small business. People go into small business because they have nowhere to go, there are no incentives necessary. Big business have to be lured. There is inequity between and among different business and income. 5. Maristella dela Cruz In the power sector, system lost claims for leakage pilferage should be taken out. VAT is also imposed. The generation charge is already imbedded but the contracted electricity is not necessarily there or generated. 6. Jolly Lais, National Secretary General, Assalam Bangasa Moro People’s Association Why doesn't NEDA do regular reporting of the 7% ODA for Mindanao? This is an exclusion policy of the government. We want to know if military aid is bigger than ODA? If NEDA doesn’t report, can we punish them? Is it NEDA's policy to divert money away from a conflict area. Aid is bigger in other areas. How do we link ODA with the war on terror? ODA money pours (CIDA, USAID, AUSAID, etc) but where is the development? 7. Ed Tadem I don’t know how much is the military aid for Mindanao. Herbert Lucena from the Focus on Global South conducted a study in Mindanao. He interviewed the Chair of VFA Commission, Gen Adan. He asked what do US troops in Mindanao do. Military aid is not ODA. Gen Adan says AFP needs US military assistance in order to perform its functions defending the country against terrorists. Its like saying we have to abolish AFP because it is inept at fulfilling national security goals. They cannot function without US military aid.

Proceedings: National Consultation on FfD


The Mindanao Trust Fund is a consortium led by the World Bank ($55m) with UNDP for rehabilitation of MILF areas. $5m was already released for a secretariat. Additional $50 won't be released pending a peace agreement between MILF & the Philippine government. There's a conflict on ancestral domain boundaries but the findings are not released yet. Land designated for rebel returnees encroaches on Lumad lands. There is a link between war on terror and ODA. There are still many areas in Mindanao that are really marginalized outside MILF/ MNLF areas. This is a global trend. ODA has been redirected to serve war on terror, thus Afghanistan is no. 1 recipient now, Iraq in 2005. Nigeria was recipient of debt reduction. There was a huge increase of ODA in 2005 and debt relief for Iraq and Afghanistan. Scholarships given to war thorn countries should not be part of ODA. There are moves by Senators Legarda and Roxas to sanction NEDA on its failure to report on ODAs. There are also questions why ODA funds are going to more developed areas. 8. Grace Borja, ANGOC We recommended to the Philippine government that it should draw up consistent ODA standards and provide alignment of standards for donor agencies. Any donor views on issues on land as part of ODA? Redistribution of land is a national government responsibility. ODA for agrarian reform is exclusively for support services, road, bridges, capacity building, no money for land distribution. There should be no paying of landlords as this will distort the land market. Transaction should be market assisted reforms. Why give money to land lords which will only be dissipated. Landlords are rent seeking, they are not entrepreneurs, therefore they are not productive. The government has to look into performance standards. How much money has been disbursed? What they are considering are only the standard disbursements. Other indicators such as environment, social, human rights and gender issues are not looked into. We have taken this up with ADB and were met with a blank stare. This is not the world of bankers because bankers are not concerned. They only look into capacity of their debtors to pay. They are more concerned with implementation, counterparts, and less to do with the quality of implementation. 9. Dante Arienza, PSLINK Is it favorable for the government to privatize power/ energy industries? Are we assured of the quality of service? Privatization results to no security of tenure.

Proceedings: National Consultation on FfD


10. Arnel Ramos, ODA Watch What is the reason why the Philippine government still gives incentives to business given studies of failure to generate investment? 11. Prof. Briones In the early years of privatization, the goal was to raise funds for government because of the debt crisis. Government-run industries are burden. But now, it doesn't make sense to privatize money-generating industries. Petron when privatized was the no. 1 income generating government-owned industry. The policy is ideological. People prefer efficient industries to remain with government because it provides lower prices. Now, Meralco and PLDT shares owned by the government are also for sale. The government has to compensate somewhere, thus it has to mobilize resources through tax and non tax revenue. For 2008, the government has committed a balanced budget. P29 billion will come from privatization income. Not only the civil society, but also multi-lateral institutions question why privatization sale is already considered when the sale has not been done. Are services better upon privatization? It doesn’t follow. There is no correlation if a public monopoly is privatized. We are just transferring a private monopoly. It is not a market-based approach. On incentives, why give when we loose so much? There is policy confusion because of the pressure on DTI to bring in foreign investment. Private sector with has strong lobby in Congress. They do not pay taxes in 5 years and their imported machineries are tax free. In Bohol which is a favorite meeting place of Germans, Australians, etc, all donors are there. There was a capacity building seminar for LGUs on tax increase. However, since the hotel they were billeted provided excellent service, the LGU provided the hotel an extended 5 years taxfree incentive. Why are we giving incentives? It's political, it's also executive. Many industries during my time were given exemptions because they were infant industries. 50 years after, they still get their tax perks. 12. Easter Canoy, Kitanglad, Mindanao In discussing development, I find a way in expanding our assumptions. How do we see development in the human landscape of people’s lives? Instead of looking at ODA, I would like to contribute from the non-official development such as community-based development. How does this figure in our notion of development? How do we contribute, not only in financing, but in improving the lives of the people? Look at dynamics of community. In a WB-assisted heritage center built together by the community we considered land, labor force, agroforestry, all together in improving the landscape. 13. Gani Serrano, PRRM I have a cynical take on the menu of FfD. Its a Kaharian ng sana- trade justice, debt relief, domestic trading. I would rather look at the internal payback, taxing

Proceedings: National Consultation on FfD


the rich. I'm not so optimistic about ODA. The biggest payback is trade justice and debt relief. We must look into progressive taxation, one of which is carbon taxation. If we have a global average higher than a national average, this should translate in electricity bill, water, cars, and the excess of freedom of movement. What is the possibility with the current dispensation? 14. Prof. Joserph Lim I agree. We talk too much about VAT which has too many loopholes when another tax law is possible. A country that cannot tax its own rich will not prosper. We must reduce exemptions. Another option is with the government eyeing OFW bonds (bonds that go to MDG financing). But the problem with debt conversion is we have to ask for another IMF program. This is a bad system for middle income countries. That's why we have to lobby the Paris Club. 15. Prof. Briones I have no problems with community-led development. It will cost much less. The cultural, identity, consciousness gains will be bigger. Loans have damaged our identity, sense of who we are. There should be global taxes for those who overuse the environment. Torrent tax is now considered unlike before. We need a strong lobby to push for it. There should be studies on how much can be raised and on the impact if tackled on international level. We need to tax the rich, 2010 is just around the corner. Incentives is related to tax spending. In terms of equity, it makes sense. Those who get more from the economy should give back. 16. Ed Tadem I agree to reconfigure our alternative notion to development. It should not only be community-based, but also socialist based. I reject state based socialism, it should be community socialism.

Proceedings: National Consultation on FfD


Thematic Issue Presentations Trade and Systemic Issues I. Trade Jessica Reyes- Cantos, President Action for Economic Reforms

Can Trade Finance Development? The Philippine Experience

Trade can be used to develop a country, to finance capital goods that we need. We can also produce over and above exports to have surplus. The Philippines has adopted an export-oriented strategy. Normal export development path would show: ● declining agricultural share in total output in the economy, increase share in industrial sector ● in the country’s total output there is an increase in high value added exportables ● increase if higher value added results to greater economies of scale and high technology manufactures ● diversification of export market ● positive trade balance However, looking closer at the picture reveals that we have rarely experienced a positive trade balance. An IMF report showed that, from 2002 to 2006, the value of “untracked” importation amounted to $68.04 billion. This is actually smuggling and therefore represents foregone revenues. Export earnings to be used to finance investments never happen because we always have trade imbalance. Only the service sector rises significantly. In manufacturing, there is absolute stagnation in contribution to labor. Our manufacturing sector is a laggard compared to our Asian neighbors. From 1970, it was decreasing. Malaysia, Thailand, even Indonesia has increased.

Proceedings: National Consultation on FfD


On a positive note, our export market is somehow diversified. There is still a potential for making inroads in the export market, through our reliable agricultural exports. A lot has to be done in making our exports acceptable specially in markets that use sanitary and phytosanitary measures (protective barriers used by other countries). Standards imposed constrict the potential. We should lessen our dependence on imports. This maybe easier said than done since the trade liberalization in 1994 wherein GATT/ WTO liberalized our industrial and agricultural sectors. Prior to this the IMF has already liberalized our economy. Nominal tariffs are going down, but there was a moratorium in 2005 to more decrease of tariffs because of civil society protests. Philippine tariff Profile: Binding coverage: 98% of agriculture are bound. , 61.8 % NAMA (non-agri & manufacturing Average bound rates : agri 34.7%, NAMA 23.4% Average applied tariffs: agri 8%, NAMA 4.3% Not only our OFWs are affected by appreciating peso, even local producers are hurting from low dollar rates. This is the curse of an appreciating peso. Caution vs. Ecozone Creation Ecozones distort whatever rationality we have in our tariff structure. It discourages forward and backward linkages, smuggling is done back door, it deprives country of revenues. The government plans Ecozone/ Freeport Creation in many areas around the country. Its like creating something like Hong Kong, wherein the conditions are different. Economic policies in the past had disintegrated our economy. Before being competitive, our internal economy should first be strong. Inputs should be sourced internally. We should create incentives to integrate the economy. Putting a Stop to our Economic Disintegration What is critical in achieving meaningful and sustainable economic development is the creation of strong backward and forward linkages among and between sectors. The trade policy that government has implemented through the years has not contributed to this kind of development. Further, ensuring that most important property rights reform and the concommitant support services are delivered, especially in the agriculture sector is key ingredient in making sure that gains in, for instance, market access goes directly to small marginalized farmers.

Proceedings: National Consultation on FfD


Slow trade, south farming , as long as farmers don’t own the land they till, benefits from production will not accrue to them. There should be access to land, there should be security of tenure. Policy recommendations CSOs continuously issue repeated calls for a clear agro-industrial development plan that would guide the formulation of trade and investments policy. The impending impasse in the WTO talks is a fertile ground for the proliferation of bilateral trade agreements. With WTO collapse, the government is entering into trade agreements and bilateral agreements. The DTI will not release details of trade agreements, thus a legislative measure creating a Philippine Trade Representative Office wherein trade negotiators will be accountable to the people is worth supporting. Trade is used as leverage, trade is war. Telling our negotiators to simply "preserve our policy space" is no battle plan at all. Creating an institute that will present a coherent trade battle plan based on an agri-industrial forces the issue and the institution. Before negotiating, we have to create a mandate. We can simply unite on one call- moratorium in the creation of economic zones until a comprehensive study of what it has brought on to us so far is done. (See Annex 6. Can Trade Finance Development? The Philippine Experience, presentation by Ms. Jessica R. Cantos)

II. Systematic Issues – Filomeno Sta. Ana III, Coordinator, Action for Economic Reforms

How relevant is Financing for Development to Philippine Realities? This presentation situates FFD as a means to financing the MDGs in the Philippines. Monterey contains sections on systemic issues but it is nothing, it is just a guide. UN cannot impose itself on other agreements done by multi lateral institutions. Developing countries lack savings, but

Proceedings: National Consultation on FfD


they need investments for growth. ODA, debt can provide the gap. This is tried recipe but with a new twist, as we learn from the past problems associated with debt, ODAs and FDI. FFD Framework's "Leading Actions" ● Mobilization of domestic financial resources (e.g. taxation) ● International trade ● International private capital (e.g. FDI) ● International financial aid (e.g ODA) ● Foreign Debt Critique FFD model criticizes the Washington consensus for anti-poor conditionalities that pushes Third World nations to accept policy prescriptions. Are FFD's "leading actions" the right course for the Philippines? On domestic mobilization of resources, FFD lacks concrete proposals on improving tax policy and administration. Trade liberalization is not a predictor of growth. Trade openness does not guarantee growth. ODA provide little evidence to correlate it with growth, much less to say it contributes to growth (even good ODA). Good policy doesn’t matter either, but avoidance of extremely irresponsible policies such as very high inflation is. Relationship between FFD goals and national development goals Institutions are determinant of long term growth. Building or reforming institutions are country specific. The way to go is not how national reforms serve FFD. The relevant question is how the global FFD can serve or supplement national institutional policy reforms. A Question of Relevance Growth diagnostics is necessary to determine the main building constraints on growth and development. Unless the main binding constraint pertains to global rules, FFD becomes a secondary issue. While affirming that growth process is internally driven, external factors like FFD can provide an enabling environment for processes and innovations to prosper. FFDs “leading actions and the Philippine case We should be managing our budget deficits, but our government is saddled with its failure to meet revenue targets. This makes it difficult to mobilize domestic resource. Increase in revenues do not automatically lead to social and economic spending. Financing from debt and ODA results to big-ticket projects becoming haven for corruption and are cornered by big interests (e.g. NBN Project). More borrowing adds public debt. It also leads to peso over-valuation which lowers the buying power of families of OFWs. The real sector of the economy (tradable sector, specifically) is hurt by an overvalued currency. It has been asserted that

Proceedings: National Consultation on FfD


an undervalued currency is significant for long-term economic growth (Rodrik, 2007). FFD and Institutional Reform FDD documents state that “good governance at all levels is also essential for sustained economic growth, poverty eradication and sustainable development worldwide.” Institutional reforms needed. Calls for the president’s resignation is also a means to rebuild the country’s institutions. By using growth diagnostics, it may be the case that political variables such as these are more pressing than economic ones. Role of external parties can also have positive impacts (e.g. European Union’s pressure on the Philippine government regarding extrajudicial killings). Zimbabwe’s main constraint is Mugabe. In the Philippines, similar to Zimbabwe, we have our Mugabe. Conclusions: The FFD as a means to finance the MDGs must be situated within the context of relevant development and economic issues of the Philippines. The "leading actions must be reviewed. There is lack of substantive evidence to show that aid, trade, and debt financing to growth are the determinants of growth. The relevance of FFD mechanisms in addressing unique hurdles in Philippine development is premised on making rigorous diagnostics to identify binding constraints. Within this context can the FFD’s mechanisms and “leading actions” supplement or help enable nationally owned institutional and policy reform innovations. (See Annex 7. How relevant is Financing for Development to Philippine Realities?, presentation by Mr. Filomeno Sta. Ana III)

Reactions A. Mario Jose Sereno, Member of International Trade Policy Committee, Federation of Philippine Industries

When Cory issued the EO on reducing tariffs, a group of industrialists and local manufacturers considered the unilateral decision on accelerated reduction of tariffs leading to the decline of the manufacturing sector. I was struck by the information shared that $68.04 billion of imports is unreported. With an import tariff of 3%, the possible leakage of Php102 billion is huge. We can solve problem

Proceedings: National Consultation on FfD


of smuggling but we have our frustrations. This brings to mind strengthening our institutions. Ecozones, trade liberalization and tariff reduction are discordant. Ecozones are tariff neutral, they don’t contribute to the local market and they aren’t integrated to the local economy which makes them irrelevant. The control of 1000+ enterprises is not done. Imports should be re-exported. Internal integration should happen for the ecozones or the export products can contribute to the standard of living for the host countries. A good example is Korea. We are very intimate with the Washington consensus. The concept of integration is crucial. Once we are part of supply chain of TNCs, this should translate to growth. Products should be linked backward, forward, horizontally to the local economy. They will provide backbone to the local economy. Integration maybe a mortal sin, but when you integrate the value chain into the local economy, growth can happen. Planning should be of value. Exports grew when tariffs were reduced as in the case of electronics which is 70% of export volume and garments. If you remove electronics, remaining products may have stagnated. The recommendations are valid. we should challenge policy makers on the urgency of these recommendations. Issues were raised in the past, sadly, proper responses are wanting. To balance the budget, there are two approaches. 1) preserve revenues and maximize receivables collected, 2) control and rational costs. Our tariffs are similar to developing countries but applied rates are closer to US, Australia, Japan. This is the irrationality of the present tariff regime.

B. Arze Glipo, Executive Director, Integrated Rural Development Forum

I represent coalition of NGOs and POs of farmers working towards food sovereignty. It is big hypocrisy for developed countries to say that developing nations don’t need protection for their industries. They imposed trade liberalization for developing countries as determinants for growth. In Philippine history, we

Proceedings: National Consultation on FfD


have tried these tools yet we failed. Now even Vietnam may overtake us. If we look at the Philippine experience under trade liberalization, there is a bigger negative impact in agriculture and industry. There were import surges during the period after we subscribed to WTO requirements. We imported vegetables which led to disenfranchisement of small farmers. The impact on garments and shoe manufacturers were also severe. Free trade will not result to economic growth. Trade liberalization is not a key element. Even UN and FAO say that trade liberalization exacerbates poverty. Now there is a boom in construction but more families don’t eat three times a day. More than 20% of families live in poverty. This is a direct impact of exportoriented strategy on agricultural production. High value crops can only be afforded by rich nations. Mindanao is planted to high value crops which are converted to export crop plantations. Poor Filipinos cannot afford to buy these high-value crops for food. Now the craze is for biofuel crops such as cassava, jathropa, for ethanol. More agricultural lands will be converted. Export-oriented strategy cannot be a proposal given our context. There is dislocation of local products. Trade in general is good, but adherence to WTO conditions will hinder us. We cannot use trade to direct growth, especially with the restrictions. Trade agreements severely limit our economic base. We don’t say we don’t want trade. We are saying we have to prioritize food security. Allocate resources to industries that will ensure access to food, labor. We need an expanded policy base that will give us access to the sectors that will give us protection. Tariffs at present nominal rate of 7%, isn’t it enough? There should be no more new agreements, no more to the next Doha Round. Bilaterals should be stopped, we will loose tariff space. There are no more instruments to protect us from import surges. Quotas are also needed on specific sectors to food and livelihood security. Rice will loose its quantitative restriction by 2010. The farmers need support. We need to prioritize food security. We should not look at privatization as a tool, such as privatizing the NFA because NFA regulates prices. I believe institutional reforms are need to strengthen institutions that give protection to people like the state trading enterprises, research and technology. Stigrits, a WB economist says that bilaterals blackmail us. Foreign direct investments won't come in. What is important are the human resource and infrastructures.

Proceedings: National Consultation on FfD


Open Forum

1. Jolly Lais, Bangsa Moro

1. Jolly Lais, Bangsa Moro Why didn’t you include commercialization of education in your presentation of the Systematic Issues.? Our educational system is still Westernized, what do we do about this? 2. Men Sta. Ana The difficulty is that the paper is bounded by the systemic issues, which is contained as a section on the FFD. Scope of paper is only on FFD. There are many more development issues that may be considered outside of the FFD. 3. Paquito Yaneza - ISACC There are too many things to absorb all at once. Economic zones were shown negatively. Is it really negative? Some ecozones have generated employment. Workers use funds that revolve in the local economy. The ecozones weren’t designed for backward and forward linkages. What you produced will be exported too. Examples of positive impact of ecozones are: in Aurora (good because of the port); in Marbel, some ecozones hiked property prices; in Catarman, San Jose in Samar there’s nothing there so the ecozone provided employment.

Proceedings: National Consultation on FfD


Why are ecozones established? They may not be altruistic. Some are mere buildings like call centers. If you put up ecozones, they contribute to employment, what is wrong is the smuggling. In Mindanao, if an ODA is done right, it picks up the development such as in General Santos. Roads, fishport, airport were built. I saw the influx of investments. If you provide the right infrastructures, the investments will come. I saw MILF people carrying guns before, who are now carrying cellphones. They are healthier and they are already smiling. The canning factory in General Santos resulted to a boom in employment. Why is there poverty in Mindanao? A lot of areas are used for agricultural products that are exported such as bananas, pineapple and cut-flowers. I never saw people starving in those areas. The land is a fertile area composed of old lahar. There are a lot of areas not utilized for export or food requirements. Some local farmers might not be doing their work such as planting. Some farmers love to drink. The local government’s role is to ensure food security. We criticize ODAs, we look at the past tense and find it difficult to campaign for reforms. The loans in cue that are yet to be approved should be watched, not loans secured many years ago. 4. Jeck Cantos I agree that we need to rationalize the establishment and even the incentives given in ecozones. At the moment, we have to stop the establishment of more ecozones and study their impacts first. For example, let’s take a look at Cavite. The LGUs there don’t get taxes from the ecozones. It is easy to designate ecozones, just ask a Congressman to sponsor a bill creating one. Infrastructures must be built first before encouraging investments. What is being done now is creating ecozones and the government expects the infrastructure to follow. We have to rationalize our fiscal incentives. Even pizza parlors are tax free in Subic just because they are in an ecozone. What is critical is technology transfer. Apart from capital infusion, technology transfer should happen. Even JPEPA doesn’t impose performance / technology transfer. 5. Men Sta. Ana I believe Jeck’s paper could be developed further and take into consideration the critique shared. Rationalization is important. Coherence and clarity happens if we have an industrial and technology policy. It will be problematic if we don’t have this. Ecozones will be messy in the absence of technology transfer. Some technology don’t generate much employment, but still have a large impact to the economy like in India, where GE is in Bangalore. GE employs 2000 Indian engineers who are involved in research.

Proceedings: National Consultation on FfD


We should also think of the implication of our exports. We should have specialization of field/s that are important to the first world. In technology transfer, we should be specific. Smart and Globe can claim fiscal incentives based on the 3-D technology they have introduced to the market. 6. Easter from Kitanglad Development is a comprehensive process. This forum cannot do the whole process. The idea of industrial estate is not new. In Leyte, there is the Leyte Industrial Development Estate (LIDE) where PASAR and Philphos are located. We see dead fish floating in the sea. We should not only be limited to thinking about economic zones and their contribution to the economy. We need to incorporate environmental indicators. Ecozones should balance with environmental zones. What’s our Doomsday scenario? We should look at the silent stakeholders, the biodiversity, the environment, health and water. In LIDE, they say the forest is “naupaw’ na. The workers are only employed for a period 6 months because the emission of sulphur caused the workers to develop tuberculosis. Let's start to have realistic response to our development objectives 7. Gani Serrano It is difficult to find absolute right and wrongs in any assumption. With regard to ecozones, there are studies that look into their impacts. What we need to do is a full-cycle accounting. Full cost accounting may not be efficient at all for ecozones because of the many discounts available to them. Ecozones are an enclave, a micro-sovereign within a wider body. Philippine reality is unlike Singapore which is mainly a trans-shipment point. Our institutions are weak and susceptible to corruption and inefficiency. What matters is .. 8. Men Sta. Ana Forget the term ecozone, the idea has been abused. There has to be some kind of specialization in certain activities that can ignite growth and development. We must discover particular strength/s in a given area, i.e. Bangalore which hosts GE, Infosys, with their many engineers. The bigger story is that India became pro-business but not anti worker. It created an entrepreneurial class. To say that India grew because of trade liberalization is wrong. Recall that India is mainly socialist. Indira’s party had to consolidate power. Business was encouraged. Being pro-business isn’t also pro market. Being pro-business also means having protection for your own industries. 9. Thea Soriano, Civil Society Network for Education Reforms (E-net Philippines) On recommending ideas for growth, we don’t have base for manufacturing and industries. In India as early as 70s their IT base was already developed. Our strength is agriculture. When we talk of trade, we develop sub-sectors such as

Proceedings: National Consultation on FfD


fisheries. Our advocacy is to compete globally but our labor costs is higher than China. Do we want to lower wages to attract industries? The next wave of advocacy should be to develop sub sectors. Use research generated by the industries. 10. Jolly Lais On the integration of industries, we should have a knowledge-based economy wherein we tap inherent culture i.e."sukli suki". In the Philippines maybe we can use our own cultural practices. In Ecozones where contractualization of workers is the norm, we also have PLDT outside ecozones with 6000 workers and only 2000 are regular. How do we find our own strengths without being limited to trade liberalization? Is there effort to tap knowledge-based economy? There are intangibles that are important. 11. Mario Jose Sereno Technology is a factor to consider for business growth. It will give you edge in developing new products. Filipino ingenuity is world class. The petroleum industry imported technology and experts. As part of the agreement, any technology developed locally will be owned by locals. Technologies were developed in the petroleum industry which surpassed even European standards. We can harvest technological enhancements. It is continuing process. We have to innovate, develop products. In trade provision of technology as service, compared to products with technological edge, the economic formula should be a period of high protection up to full integration then liberalize. If you are fully integrated, you can compete in exports globally. 12. Arze Glipo We have to go out of Washington consensus. Same banana as FfD. There is hope in the Philippines. Thirty (30) years ago our manufacturing was no. 1 in relation to GDP. Trade agreements need consultation with sectors that will be affected. We need to democratize the market. There is local capital, look at the Chinese Filipinos. But there are also cartels.

Workshops on the Thematic Issues There were four Thematic Groups (Mobilizing Domestic Resources, Trade, Debt and ODA, and Systematic Issues) formed for the workshop. The participants were encouraged to join any of the thematic groups they were interested in. Each group discussed the issues and challenges and recommendations on the themes given using the guide questions provided below.

Proceedings: National Consultation on FfD


Questions: 1) What are the other issues and challenges that can be added? Need to be addressed? 2) What are your recommendations and your action points.

Proceedings: National Consultation on FfD


22 November Recap of Day 1 (See Annex 8. Recap of Day 1, presentation by Rizalino Cruz, moderator)

Plenary on the Workshop Results Group 1 Mobilizing Domestic Financial Resources Members – Jolly Lais, Christopher Rey Cadiz, Jeng Duclayaz, Whelannie Pingoy, Mary Jane Homena, Sonio Cadornigara, Paquito Yaneza

Issues 1. Consideration of natural resource utilization 2. Institutionalization of M&E

3. IRA dependent (LGUs) , empowerment

4. Absence of national industry

Proceedings: National Consultation on FfD

Recommendations 1. Non-extractive alternative projects i.e. mining vs agroforestry, accounting resource 2. Capacity building of Stakeholders Strengthen partnership between LGUs and CSOs Use of language 3. Have an initiative to create an LGU alternative source of funds in collaboration w CSOs Mobilize export earnings for social programs Mobilize OFW earnings Raise revenue through regularization of contractual labor 4. Develop national industry utilization of natural resources (oil, Mindanao is floating on oil, part of Malaysian grid), ok to extract for domestic needs, not for export


Group 2 Trade Members – Jeck Cantos, Mario Ocampo, Thea Soriano

Challenges and Issues that need to be addressed/ Action points 1. Support HB creating a Phil. Trade Representative Office 2. Thorough going AR and provision of support services to help improve small agri stakeholders competitiveness 3. Full cost of accounting of ecozones to include environmental impact Group 3 Debt and ODA Members – Find Abragan, Jessica Claridad, Portia Villafuerte, Julie Concha, Arnel Ramos, Grace Borja, Chy Canoy

QC Declaration Issue and Challenges 1. Are the issues of recipient agencies addressed? 2. Policy of counter-parting limits low income LGUs from accessing OD .. 3. Top down approach of data gathering lessens sense of ownership of communities over projects funded by ODAs 4. Grants usually have rigid and unrealistic conditionalities 5. few grant components in ODAs 6. Little focus/ emphasis of ODA on human and social development 7. Disparity in the geographical distribution of ODA Recommendations 1. ODA maybe source of financing for development . 2. While donor agencies are bound to allocate 0.7% of their GNP to ODA, reliance of countries like the Philippines on ODA should be at a decreasing rate as this explore ways of strengthening its fiscal capacity 3. increase number of grants provided by donors, no to tied aid 4. donor agencies should be flexible to suit the culture/nature of the recipient or community benefiting the assistance 5. CS should have active participation in government-donor agency negotiations 6. multi stakeholder and participatory approach with emphasis on community participation should be practiced in the entire project cycle of ODA funded projects including participatory monitoring and evaluation 7. donor agencies should harmonize their systems for efficient implementation of projects 8. emphasis on quality and quantity of grants versus loans 9. more allocation to social services 10. transparency and accountability of donor agencies- government agenciesaccess to information 11. benchmark information should be reliable and accurate

Proceedings: National Consultation on FfD


Action Points 1.Amend ODA law to include the following: use “prioritize” instead of “preferring” in reference to the hiring of consultants for ODA projects 2.persistent lobbying and mobilizing for campaigns 3.debt audit & social audit of ODAs 4.Cs should be involved in all ODA concerns- negotiations, projects QC Declaration (can be deleted, just include in Attachments) Call on donors to re-align the loan grant mix of aid ●

Establish linkages and closer coordination with civil society groups of recipient and donor countries

Develop mechanisms for tighter coordination among civil society groups in Asia working on ODA

Work on mechanisms for greater democracy, accountability and full transparency in the processes of the multilateral financial institutions to enable civil society to effectively participate in the discussions.

End conditionalities (especially on the area of political and macroeconomic policies) and the practice of tying aid to the hiring of foreign consultants, purchase of goods, etc.

Align ODAs flows effectively with MDGs and all internationally agreed agreements

Extend the Gleneagles concession of debt-relief from low to middle income countries Press National Governments in Asia to: Reject tied aid

● Ensure meaningful participation of stakeholders especially the poor and socially excluded both in the formulation of national development strategies and in the implementation of ODA programs ● Conduct debt and ODA audits in consultation with civil society and third party auditors ● Provide venues for the participation of civil society representatives (as well as of local governments) in the Country Coordinating Groups (or Country Development For a) and in the government oversight agencies for the implementation of ODA projects.

Proceedings: National Consultation on FfD


● Explore internally driven, alternative sources of financing ● Progressively increase from at least 30 percent to 100 percent the share of ODA allocation to social services and pro-poor infrastructure development, and prioritize aid flows to the poorest regions in the country. Negotiate that ODA allocations for social services be in the form of grants. ● Develop alternative sources of sustainable development financing towards exit from ODA regime in the medium-term ● Develop an alternative framework and set of indicators to measure the impact of ODA using the principles of gender justice and women’s empowerment.

Group 4 Systemic Issues Members – Joseph T. Raymond, Jillian T. Roque, Dante B. Arienza Issues and Challenges 1. Reforms in small doses Progressive tax system, improve delivery of public services, impose stiff punishment on tax evader, electoral reforms, strengthen party list system, reduction of discretionary powers residing in the presidency, reorientation of AFP, deployment of incentives (disincentives) and the use of policies to shape the attitudes and behavior of politicians, businesspeople etc. 2. Look for untied resources Increase in quantity and quality of inflows, transparency in the recipient f inflows, trade justice, debt relief, no negotiations 3. FFD policies should address problems according to Philippine context Using MDGs as a benchmark for IRA release; attitude of persons in charge; effectiveness of programs; elite capture of influence

Presentation and Adoption of Conference Resolution The discussion and adoption of the conference resolution was moderated by Jeck Reyes- Cantos. (See Annex 9. Conference Declaration: National Consultation of Civil Society Organizations on Financing for Development: “Pera lang ba ang Kailangan?”)

Proceedings: National Consultation on FfD


Closing of the Conference One representative each from the Visayas and Mindanao shared their insights on the conduct of the conference as part of the Closing Rites. Mary Jane R. Homena, Iloilo- CODE NGO Reflecting on our own work, this is an opportunity for us to work together, unite on our stand and demand what we need to develop. Find Abragan, Pilipina, CDO I have realized why am I here, that nothing is impossible and everything happens for a purpose. I have an errand to travel to Pangasinan. But since I have time to spare, I tagged along with Chy to attend this conference. I felt immediately comfortable with the group. Nothing will happen if we don’t have the psychological honesty. Each of us is a grain the sack. For an ordinary person, this may seem high falutin'/ faluting. Let's go back to field experience.

Proceedings: National Consultation on FfD


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