Tuesday, 9 February 2010

Preparing for the next administration

Sen. Edgardo J. Angara
Business Mirror

Last week marked the end of the third regular session of the 14th Congress, which will reconvene in May but only as a canvassing board of the presidential and vice-presidential election.

According to Standard & Poor’s latest report “Asia-Pacific Sovereign Report Card: 2010 Will Be Testing for Policymakers,” this year’s presidential election is crucial to the Philippine economy. The next administration’s priorities, especially with regard to fiscal reform, will determine whether foreign and domestic investment will flourish.

But while the credibility and capability of the next administration are certainly pivotal, its success equally depends on what they’re given to start with. Public policymaking, after all, never starts with a clean slate, but builds on the successes and challenges of the past.

During the 14th Congress we endeavored to lay down the groundwork for sustainable economic growth, with particular focus on banking and financial reform, and on science and technology.

The 2010 national budget sets out a second stimulus package that focuses on sustaining growth through green technology.

Throughout the 14th Congress, we have enacted measures that will strengthen the financial system and build up our capital market.

We shielded our financial system from the strains of the financial crisis through the charter reforms of two key financial institutions: the Philippine Deposit Insurance Corp. (PDIC) and the Pag-IBIG Fund. We amended the PDIC charter to expand and extend its protection to bank depositors, providing wider deposit-insurance coverage, from P250,000 to P500,000. This boosted public confidence in the local banking system amid the global financial crisis. The Pag-IBIG Fund Charter was also amended to allow it to provide more loans for the huge housing backlog. The amendments restored the fund’s tax-exemption privilege, granted its board of trustees the power to set contribution rates, and provided Pag-IBIG employees a compensation plan comparable with the ones prevailing in the private financial sector.

We have also introduced measures to deepen capital markets in the country, through the Personal Equity Retirement Act, or Pera, and the Real-Estate Investment Trust (REIT). Pera is a pension scheme that supplements existing government pension plans, and aims to encourage Filipinos to save more by providing tax incentives to its contributors, such as income-tax credits equivalent to 5 percent of total Pera contribution, and tax exemptions in the income and eventual distribution of the Pera. Pera then channels these domestic savings into financial instruments. The REIT, on the other hand, is a stock corporation that invests in income-producing real-estate assets such as apartments, office buildings, warehouses and the like. It allows the direct returns of real estate in a securitized form by providing a structure for real-estate investments similar to how mutual funds manage stock investments. The introduction of the Reit will hopefully increase investments in realty assets, and allow both large and small investors to invest in real estate.

The “Preneed Code and the Credit Information System” are also now in place. The former establishes rules to govern the operations of preneed firms and provide protection to consumers, while the latter gathers credit information from financial institutions such as banks, credit-card companies and government lending institutions, and makes it available to lenders. Armed with reliable credit information, lenders can now manage credit risks better, which, in effect, can lower the cost of credit and reduce the reliance on physical collateral. Its greatest benefit is making credit more available, especially to small yet responsible borrowers, as their good track record in paying their obligations will be made known to the financial institutions.

Congress also passed the Business Recovery and Insolvency Act, which creates a more systematic framework for insolvency proceedings and provides equitable treatment of all parties involved in financial restructuring or rehabilitation.

Policy proposals recommended by the Congressional Commission on Science, Technology and Engineering (Comste), which I chair, have received budget allocations for 2010. These include the Renewable Energy Research and Development (R&D) Institute and the Philippine Industrial R&D Institute, research institutions that will spur R&D and link it to industries to produce innovative products and services.

Yet another Comste proposal allotted funding is the National Telehealth System, which, through information and communications technology, will allow long-distance consultation with experts in the Philippine General Hospital. An electronic health record system for poison and trauma patients will also be developed to provide relevant information and health education to the public, and facilitate continuous learning for health professionals. The National Telehealth System will eventually bring the best health care to the most remote barangays, and bridge the urban-rural divide in health care.

Another is a Disaster Management Center, in order to manage risks and prepare the populace and public officials to cope with disasters. Typhoons Ondoy and Pepeng and Haiti underscore its national urgency. But we didn’t neglect social protection, we have passed laws that provide social safety nets, especially in response to the economic crisis and the typhoons last year. We enacted a P12-billion emergency fund, intended to rehabilitate areas destroyed and damaged by Ondoy and Pepeng in 2009 and those by Frank in 2008.

We have passed a salary-standardization law, which substantially increased salaries of government employees.

And the Expanded Senior Citizens’ Act of 2009 now awaits the signature of the President. By exempting senior citizens from the value-added tax, the expanded Senior Citizens’ Act will allow them to fully enjoy the discounts granted to them by the Angara Law.

E-mail: edgardo_angara@hotmail.comThis e-mail address is being protected from spambots. You need JavaScript enabled to view it . Web site: www.edangara.com.

1 comment:

  1. I believe that one of the tasks of our next president would be to address our national disaster preparedness and rehabilitation program.