Posts Tagged ‘Finance Secretary Cesar Purisima’

Infra crucial to Asean integration – Purisima

The Philippine Star, 04 February 2015
By Zinnia B. Dela Peña
 
MANILA, Philippines – Investment in infrastructure will be crucial if Southeast Asia wants to capitalize on the imminent economic integration of the region, Finance Secretary Cesar Purisima said.

In a speech delivered at the Nikkei Asian Review Forum Friday, Purisima underscored the need for the Association of Southeast Asian Nations (ASEAN) to invest heavily on infrastructure to maintain its current economic growth trajectory.

“From roads and power sources to social infrastructure like health and education, the right investments will enable our young and populous region to take the driver’s seat towards robust global economic growth,” Purisima said.

The key to regional transformation, Purisima said, is continued and sustainable reform on each country’s end.

The Asean, Asia’s third largest economy after China and Japan, lags behind countries such as Hong Kong, Singapore, Korea and Sri Lanka when it comes to quality infrastructure.

Asean’s infrastructure needs are estimated at $7 to $8 trillion over the next 15 years.

Without sustained investment in needed infrastructure, it is unlikely that the region would achieve its full potential and realize the opportunities of the Asean Economic Community (AEC).

The AEC aims to create a single-market economy with free movement of goods, services and investments throughout the ASEAN region. Since 2010, most ASEAN goods have been traded in the region at zero tariffs, including products from the Philippines.

Purisima said the Philippines has much to gain by boosting spending on infrastructure.

He said the Philippines’ strong macroeconomic fundamentals and reform trajectory will allow the country to reap its demographic dividend, to become a major player in an integrated Asean economy.

The Asean population is expected to expand and grow from 600 million to 700 million in 2030, giving it a big advantage for growth.

The government has committed to bolster public infrastructure spending to four percent of the country’s total economic output for this year in a bid to sustain economic growth. It intends to increase this figure further to five percent by 2016.

Budget Secretary Florencio Abad noted in this year’s national budget, the Department of Public Works and Highways (DPWH) received the second largest allocation and the highest year-on-year increase -P303.2 billion. The amount marked a 37.9 percent jump from last year’s P219.9 billion.

Of the total, P185.8 billion will go to the completion of all national roads by 2016 and all bridges along national roads by 2015.

Apart from this, Abad said big-ticket projects offered under the government’s Public-Private Partnership (PPP) initiative are in the offing. Among these include the Tarlac-Pangasinan-La Union Toll Expressway, the Daang Hari-SLEX Link Project, the NLEX-SLEX Link Connector, the Cavite-Laguna Expressway (CALAX), the Laguna Lakeshore Expressway Dike (LLED), and the NAIA Expressway.

The Department of Transportation and Communication (DOTC), meanwhile, was appropriated a budget of P59.5 billion, 21.9 percent higher than the previous year’s P48.8 billion. The funds would be used to cover its own infrastructure programs which include the the improvement of the country’s railway systems (P10.6 billion) and various airport and seaport projects (P15.4 billion).

The Department of Agriculture (DA), meanwhile, received P89.1 billion out of this year’s total national budget. The money would be used to fund a number of agricultural infrastructure programs.

With this funding, the DA will be able to construct a number of irrigation projects, farm-to-market roads, and fishery infrastructure projects like fish landings and fish ports.

Based on the World Bank’s 2014 Logistics Perofrmance Index, Philippine infrastructure is the worst among the six Southeast Asian nations ranked, including Singapore, Vietnam, Indonesia, Malaysia and Thailand.
 

Philippines to push infra, PPP financing across APEC

Philippine Daily Inquirer, 02 February 2015
By Ben O. de Vera

THE PHILIPPINES’ proposed roadmap for financial integration across the Asia-Pacific Economic Cooperation (Apec) will serve to better connect the geographically vast and segmented region, Department of Finance officials said.

During last Friday’s Nikkei Asian Review forum, Finance Secretary Cesar V. Purisima revealed that, apart from the three earlier proposed pillars under the so-called “Cebu Action Plan,” Apec members had also pushed for the inclusion of a fourth pillar on infrastructure, especially aimed at improving access to financing.

The Philippines’ Finance chief noted that the Asian Development Bank had estimated the infrastructure requirement of Apec economies to cost $8 trillion until 2030.

“We have available funds here in the region. The challenge is to create a financial market so that those funds are actually recycled within the region,” he said.

Also, Finance Undersecretary Jose Emmanuel P. Reverente told reporters that the fourth pillar of the Cebu Action Plan would also tackle the role of public-private partnership (PPP) in infrastructure development.

“Apec has been highlighting PPP, so we will have a separate track where we will compile case studies of PPP projects,” said Reverente, who attended the meeting held in Clark, Pampanga last month.

During the meeting, Filipino finance officials pitched the Cebu Action Plan aimed at making the Asia-Pacific region more financially integrated, transparent and resilient.

The financial integration pillar “calls for measures that will help ease trade and investments among Apec member-economies.”

The financial transparency pillar of the roadmap, meanwhile, aims to “improve openness and efficiency in the use of government resources.”

As for the Cebu Action Plan’s financial resiliency pillar, officials hope to institute measures that will “make financial systems of member-economies resilient enough to withstand risks, including natural disasters and external shocks.”
 

YEARENDER:Phl economy shows strong resilience, sustains momentum

The Philippine Star, 01 January 2015
By Zinnia B. Dela Peña
 
MANILA, Philippines – Despite the overwhelming task of rebuilding following a powerful typhoon that ripped through the Visayas region, the Philippines showed great resilience and managed to sustain its growth momentum in 2014, albeit at a slower pace, as the government continued to step on the brakes on public spending.

Once known as the “sick man of Asia,” the Philippines has pulled through admirably to remain one of the fastest-growing economies in the region, owing to improvements in fiscal management and the Aquino administration’s good governance initiatives.

Since President Aquino came into office in 2010, the Philippines has witnessed an unprecedented period of macro-economic buoyancy which allowed it to attract greater foreign investments and win investment-grade ratings.

In 2013, the country expanded 7.2 percent to make it the second best-performing economy in Asia after China, driven by the robust services and industry sector as well as strong household consumption.

Thanks to the steady influx of remittances from millions of Filipinos working abroad as well as investments from business process outsourcing companies, the Philippines defied a regional slowdown which saw China’s economy slumping to its slowest pace of growth since the global financial crisis.

Effects from a slowdown in the world’s second largest economy have trickled through to South Korea, Hong Kong, Singapore and Indonesia.

Stable remittances from Filipino overseas workers have provided a strong foundation for a healthy buildup of international reserves, which stood at $79 billion as of the end of November. The amount is equivalent to 8.3 times the country’s short-term external debt based on original maturity.

The Philippine economy, however, slowed sharply in the third quarter — its weakest pace of growth since 2011 — due to anemic public spending, poor agricultural performance and port congestion.

State underspending remains an acute problem that could jeopardize President Aquino’s goal of boosting annual expansion to as much as 8.5 percent by the end of his term in 2016.

While the government spent six percent more in the nine months through September than the same period a year earlier, the amount was still 16 percent less than programmed.

Underspending by the government has been estimated at P274 billion in first nine months of 2014 alone.

Government expenditure has further weakened after the Supreme Court declared unconstitutional certain portions of the government’s Disbursement Acceleration Program (DAP), a fund allocation scheme intended to pump-prime the economy and address government underspending.

Last July 1, the high court unanimously voted to partially void DAP, saying it was unlawful to take unspent funds from projects that took time to be implemented and transfer these from one government branch to another.

According to the Supreme Court, the DAP encroached on congress’ exclusive power to appropriate funds.

The pullback in spending reflects the cautious stance by government agencies amid concerns over the misuse of public funds.

Major government agencies have become even more reluctant to spend to allow careful screening of projects and streamlining of procedures.

Finance Secretary Cesar Purisima said besides the DAP ruling, court restraining orders on deals under the government’s Public-Private Partnership (PPP) initiative had also affected spending and the implementation of other projects.

Purisima cited the temporary restraining order (TRO) on the largest PPP program, the extension of the Light Rail Transit (LRT) 1 from Baclaran to Cavite, and the writ of kalikasan on the Redondo power plant in Subic, Zambales, issued three years ago that remains in effect.

Analysts said the lack of taxation reforms has also been blamed for the slowdown in state spending.

Public expenditure as a percentage of gross domestic product (GDP) remains low at 16.3 percent compared to the regional average of 24 percent.

Purisima said the government has a lot of room to ramp up spending given higher collections from its two biggest revenue earners — the Bureau of Internal Revenue and Bureau of Customs.

State revenues grew 12.6 percent from January to October with both BIR and BOC posting double-digit growth in collections. Together, the BIR and BOC make up more than 80 percent of total government revenues.

Purisima said the reforms implemented by the BIR and BOC have brought the Philippines closer to its goal of hitting a 16.6-percent tax-to-GDP ratio from the 14.08 percent recorded in the first three quarters of 2014.

The government saw its tax effort rise to 14.1 percent from 13.7 percent while revenue effort improved to 15.8 percent from 15.3 percent.

“These latest tax and revenue effort figures, along with manageable national and general government debt levels, clearly manifest that the Philippines continues to stand on firm fiscal footing, which remains to be at the core of our country’s growth story,” Purisima said.

Finance Undersecretary and chief economist Gil Beltran said the DOF is sticking to its economic growth average forecast of six percent until the end of President Aquino’s term.

Beltran cited weakening inflation, low interest rates and a stable foreign exchange rate as reasons for the DOF’s bullish outlook on the economy.

“Inflation slowed to 3.7 percent in November. Interest rates net of inflation remain one of the lowest in Asia despite QE tapering in the United States,” he said.

Beltran also cited the four credit upgrades received by the Philippines, most recently by Moody’s on Dec. 11 and S&P on May 8 to a notch above investment grade, the highest rating ever given by both ratings agencies to the country.

The Philippines also received upgrades from Japanese R&I and NICE Investors Service of Korea.

Apart from this, the World Economic Forum has also recognized the Philippines as the most improved country since 2010 with a seven-slot gain in its 2014 international competitiveness rankings.

The Philippines also received Finance Asia’s Region’s Best Borrower Award for its innovative execution of an accelerated one-day switch tender offer last January 2014, its first transaction as an investment grade sovereign.

The country was likewise cited by the Economist Intelligence Unit for a financial inclusion policy framework that is among the best three in the world, the best in Asia, and as an acknowledged leader in microinsurance regulation.

The GIZ also cited the Philippines as the Asian emerging country with the highest microinsurance outreach as the country recorded 27 million persons covered. The Philippine model is now being used by GIZ in its technical assistance program for neighboring Asian countries.

“With these improvements and citations, the challenge is there for us to outperform ourselves. In 2015, we will work harder to push the revenue effort further up by at least 1/2 percentage point of GDP, reduce the NG debt ratio by at least a percentage point and further expand fiscal space for infrastructure and social services,” Beltran said.

The Philippines will host the APEC finance ministers’ meeting to showcase its development experience in the hope of boosting foreign investments.

“Seeing the fruits of our labor appear in a virtuous cycle only makes one thing clear: We will roll our sleeves up and hunker down to institutionalize reforms in the tail-end of this administration,” Beltran said.

For 2015, the Aquino administration aims to pass a comprehensive and equitable tax reform package that improves tax administration and revises the tax structure to boost growth and equity for all Filipinos.

Both chambers of Congress earlier approved their versions of a bill increasing the ceiling for tax exemption on bonuses for workers in the public and private sector.

The tax exemption covers all bonuses, including 13th month pay and Christmas bonus.

Aside from this, there are proposals from various parties to cut personal income tax rates from 32 percent to 25 percent to make them comparable to the standard taxation regime in the Asean region.

The Senate believes now is the right time to adjust individual income tax rates and brackets as the existing rates remain unchanged since 1996.

To recover the losses from higher tax exemptions, the DOF is looking at other tax-revenue raising measures, which include the imposition of additional tax on softdrinks and other sugary drinks.

“As we approach the finish line, we will power through with our priorities to modernize the Bureau of Customs, and rationalize fiscal incentives,” Beltran said.

Among the other measures being pushed pushed by the DOF are the Tax Incentives Management and Transparency Act, the Rationalization of the Mining Fiscal Regime, and the Amended Build-Operate-Transfer Law.

“Ingredients for sustained growth remain abundant as the fundamentals of our economy remain sound. Our reform agenda has been and will always be a force for inclusive and sustainable growth for an increasingly competitive Philippines,” Purisima said.

The Institute of Chartered Accountants in England and Wales said the Philippines’ low budget deficit and slowing inflation will push the economy to grow over 6.4 percent in 2015, making it the fastest growing in Southeast Asia.

However, the group warned that the country’s accelerating growth must be supported by the construction of quality infrastructures.

The Philippines continues to lag behind its counterparts in the Southeast Asian region when it comes to public infrastructure.

The inadequate supply of reliable infrastructure remains as one of the impediments to the country’s global competitiveness.

Despite its strong economic performance in recent years, the Philippines still posted low scores in other key indicators such as fixed phone lines, households with power, and paved roads.

Sluggish infrastructure development has been partly attributed to corruption and inefficient investment.

To catch up with its neighbors and sustain inclusive growth, the Philippines needs to raise public infrastructure spending to about five percent of GDP from the current 2.5 percent annually, which is one of the lowest rates in the region.

Foreign investors pointed to bureaucratic inefficiencies, particularly delays in the bidding and review process, as well as disputes within the private sector as barrier to investment and growth.

The Philippines ranks 91 among 144 countries in the World Economic Forum’s infrastructure rankings.

In the World Bank’s latest ranking of ease of doing business, the Philippines slid nine places to 95 out of 189 countries. The country fares poorly in the categories ability to start a business, access to credit, enforcement of contracts, and protection of minority investors.

The Philippines also continues to be in the bottom half in the Corruption Perceptions Index, the most widely used international measurement of corruption.

The Corruption Perception Index ranks countries based on how corrupt their public sector is perceived to be based on a scale of zero to 100, where zero means that a country is perceived as highly corrupt and 100 means it is perceived as very clean.

Despite these, the Philippines is still seen to post the most favorable growth rate in Southeast Asia in the next five years on expectations that post-typhoon reconstruction accelerates and exports rise, the Organization for Economic Cooperation and Development said.

“Whoever will take office in June 2016 will inherit an economy that has less debt, more able workers, fewer dependents, low borrowing costs, and excess savings,” Trinh Nguyen, a Hong Kong-based analyst at HSBC said in the report.

“We believe the Philippines, as an economy in 2016 will be in the best shape in decades,” Nguyen said.
 

Manila to make a pitch to Japanese investors

Philippine Daily Inquirer, 06 October 2014

By Ben O. de Vera

 

Focus on infra, tourism, power and capital market

Philippine economic managers will hold a roadshow in Japan this week to encourage Japanese companies to make the Philippines their hub, particularly in the areas of infrastructure, tourism, power sector and the capital market.

In a statement issued over the weekend, the Investor Relations Office (IRO) said the roadshow, to be held at Shangri-La Hotel in Tokyo, Japan on Oct. 8, would carry the theme “Sustaining Inclusive Growth through Infrastructure and Capital Market Development.”

During the said roadshow, Philippine officials will “discuss before the Japanese audience updates on the Philippines’ economic performance and outlook, as well as the country’s development plans and targets for the medium term,” IRO said.

Economic managers joining the roadshow are Finance Secretary Cesar V. Purisima, Socio-economic Planning Secretary Arsenio M. Balisacan, Public Works and Highways Secretary Rogelio L. Singson, Tourism Secretary Ramon R. Jimenez Jr. and Securities and Exchange Commission Chair Teresita J. Herbosa.

“There have been exciting developments in the Philippine economy over the past four years, and even more exciting things are expected to happen over the medium term as the agenda of good governance, infrastructure development and social progress continue. We would like to share the positive outlook to investors and fund managers in Japan, and tell them it is worthwhile to do business in the Philippines,” Purisima was quoted by IRO as saying.

Latest government data showed that pledges made by Japanese firms to the country’s investment promotion agencies in the first quarter of 2014 rose by 59.3 percent to P8.327 billion from P5.229 billion in the first three months of last year. For the entire 2013, Japanese investors committed P44.784 billion worth of projects.

Also joining the Philippine team at the Tokyo roadshow are National Treasurer Rosalia V. de Leon, Public-Private Partnership Center Executive Director Cosette V. Canilao, Bangko Sentral ng Pilipinas Assistant Governor Johnny Noe E. Ravalo, Bureau of Internal Revenue Deputy Commissioner Nelson M. Aspe, Transportation and Communications Undersecretary Rene K. Limcaoco, Energy Undersecretary Raul B. Aguilos, IRO Executive Director Editha L. Martin, and Philippine Stock Exchange head of marketing services Jose Antonio S. Vilar.

“The Philippine delegation will also talk about the income potentials for investments in the priority sectors of the government, as well as the processes involved in securities and tax registration in the Philippines,” the IRO said.

Also, the event would showcase talks by Japan Bank for International Cooperation director and senior economist Etsuaki Yoshida and Japan International Cooperation Agency director general for Southeast Asia and Pacific Hidetoshi Irigaki. The two Japanese speakers will discuss their outlook on the Philippines’ monetary and fiscal system as well as the infrastructure sector.

The IRO said the Philippine economy expanded by an average of 6.3 percent between 2010 and 2013, making it one of the “fastest-growing” Asian economies of late.

For this year, the government had projected the gross domestic product (GDP) to grow by between 6.5 and 7.5 percent. In the remaining two years of the Aquino administration, the GDP rates are expected to expand by 7 to 8 percent in 2015 and 7.5 to 8.5 percent in 2016.

 

Japan road show set

Business World, 05 October 2014

By D.E.D Saclag

 

THE GOVERNMENT is staging a road show in Tokyo this week to attract Japanese investors to do business in the Philippines, according to a statement from its Investor Relations Office (IRO).

The road show, which will be held on Oct. 8 at the Shangri-La Hotel in Tokyo, will be led by Finance Secretary Cesar V. Purisima, Socioeconomic Planning Secretary Arsenio M. Balisacan, Public Works and Highways Secretary Rogelio L. Singson, Tourism Secretary Ramon R. Jimenez, Jr., and Securities and Exchange Commission Chair Teresita J. Herbosa.Other key officials accompanying them are National Treasurer Rosalia V. de Leon, Public-Private Partnership Center Executive Director Cosette V. Canilao, Bangko Sentral ng Pilipinas Assistant Governor Johnny Noe E. Ravalo, Bureau of Internal Revenue Deputy Commissioner Nelson M. Aspe, Transportation and Communications Undersecretary Rene K. Limcaoco, Energy Undersecretary Raul B. Aguilos, Philippine Stock Exchange Marketing Services Head Jose Antonio S. Vilar, and IRO Executive Director Editha L. Martin.

With the theme “Sustaining Inclusive Growth through Infrastructure and Capital Market Development”, the IRO said the road show is meant to update Japanese businessmen on the economic performance of the Philippines and its prospects moving forward, as well as the government’s plans for the medium term.

The delegation, the IRO said, will also talk about the income potentials from investing in the government’s priority sectors in the country — such as tourism and energy — as well as the processes involved in securities and tax registration here in the country.

“There have been exciting developments for the Philippine economy over the past four years, and even more exciting things are expected to happen over the medium term as the agenda of good governance, infrastructure development and social progress continue,” the Finance department’s Mr. Purisima was quoted as saying in the statement.

“We would like to share the positive outlook to investors and fund managers in Japan, and tell them it is worthwhile to do business in the Philippines,” he added.

The Philippines grew by an average of 6.3% from 2010 to 2013, making it one of the fastest growing economies in Asia, the IRO noted.

Economic growth as of June averaged at 6%. The government expects the economy to hit a 6.5-7.5% growth target for this year, 7-8% for next year, and 7.5-8.5% in 2016.

Apart from the Philippine officials, also invited to speak during the Wednesday event are Etsuaki Yoshida, director and senior economist at the Japan Bank for International Cooperation, and Hidetoshi Irigaki, director general for Southeast Asia and Pacific at the Japan International Cooperation Agency, according to the IRO.

The two will discuss the Japanese outlook on the Philippines’ monetary and fiscal system, and infrastructure, respectively.

The IRO noted in its statement that government road shows are meant to support its aim of boosting foreign investments here in the Philippines.

A similar road show was conducted by key officials in London last July, which included meetings with credit raters and think tanks, among others.

PH secures another credit upgrade

Manila Bulletin, 09 July 2014

By Chino Leyco

 

The Philippines has secured another credit-rating upgrade, this time from Japan-based R&I, which sees consistent rise in per-capita income in the country as a result of immense growth in infrastructure investments and continuity of reforms.

R&I raised the country’s long-term foreign-currency issuer rating by a notch from the minimum investment grade of BBB- to BBB. The rating was assigned a “stable” outlook, which means it is unlikely to change within a year.

At the same time, the credit watchdog maintained the country’s short-term debt rating at a-2, which indicates high certainty that short-term financial obligations would be paid.

“The Philippines’ economy continues to show strong growth, thanks to brisk investment coupled with private consumption driven by remittances from overseas Filipinos,” R&I said in a report released yesterday.

“This should allow for relatively high growth and raise per-capita income levels steadily,” it stressed.

Per-capita income in the Philippines has been modest compared with those of more advanced neighbors, but the country is catching up in this area. From $3,684 in 2009, per capita income in the country (using current prices and purchasing power parity) increased to $4,649 last year.

R&I recognized the country’s healthy fiscal situation, saying this helps fulfill the plan of boosting public spending.

“Savings in interest payments, thanks to fiscal consolidation, help the government to finance infrastructure projects. Budget execution is also expected to accelerate,” it said.

This year’s state budget for infrastructure at P404.3 billion, R&I cited, is 40 percent more than last year’s.

R&I also said the rollout of more projects under the Public-Private Partnership (PPP) program would help drive more job-generating investments and sustain the rise in incomes.

“Furthermore, public-private partnerships, which utilize private capital [for funding public infrastructure], are underway, albeit gradually, and will likely boost investments,” R&I said.

Earlier this year, the government awarded contracts for two PPP projects, namely the P1.72-billion automated fare collection and single ticketing system for the MRT and the LRT, and the P17.5-billion Mactan Cebu International Airport expansion project. This brings to seven the total number, and to P62.6 billion the aggregate cost, of the PPP projects awarded so far.

R&I also recognized the country’s sound macroeconomic fundamentals, including ample foreign-exchange reserves, improving manageability of government debt, and within-target inflation.

It also said reforms instituted by the Aquino administration, including legislative and administrative reforms in tax collection, helped improve the investment climate. R&I expressed belief reforms will be sustained even beyond 2016.

“There is risk that the next government will not be as reform-minded as the Aquino administration. However, pressures from growing international relationships, such as the establishment of the ASEAN Economic Community in 2015, along with public expectation for sustained reform initiatives, should deter the post-Aquino government from going backwards,” it said.

Meantime, Governor Amando M. Tetangco Jr. of the Bangko Sentral ng Pilipinas welcomed the upgrade, saying this validates soundness of existing policies.

“The latest development on the country’s credit standing is a recognition of a host of favorable macroeconomic indicators, particularly an inflation outlook that is conducive for business and the stability of the financial system amidst a difficult operating environment,” Tetangco said.

“The upgrade is an expression of confidence, in part, on the ability of the Monetary Authority to implement appropriate and timely measures that ward off threats to the economic stability we are enjoying. The BSP will continue to craft policies that will help maintain this stability,” the BSP chief added.

Finance Secretary Cesar V. Purisima, likewise, affirmed the focus on sustainability of favorable trends for the economy.

“Reforms that this government has started to institutionalize help ensure that the positive momentum will not falter,” Purisima said.

“On the fiscal front, administrative and policy reforms implemented by the Bureau of Internal Revenue (BIR) and the Bureau of Customs (BOC) will make it easier in the future to keep the growth trend in public revenues,” he said.

Investor Relations Office (IRO) Executive Director Editha Martin said the country’s upward movement in the credit-ratings scale bodes well for raising the country’s international profile as an investment destination.

“It is always good to have institutions outside the government point out the strengths of the Philippine economy. The string of credit-rating upgrades that the country has secured in recent years makes it difficult for investors not to notice the Philippines,” Martin said.

 

PPP infrastructure program seen template for developing nations

Manila Bulletin / Yahoo, 23 May 2014

By  Chino Leyco

 

The Philippine government’s infrastructure program, the supposed centerpiece of the Aquino administration, is seen to become a new global benchmark that other developing nations may emulate, a cabinet official said.

On the sideline of the World Economic Forum (WEF) on East Asia, Finance Secretary Cesar V. Purisima cited the two-pronged approach of the government in boosting infrastructure, which include Public-Private Partnership (PPP) program, and higher budget allocation for infrastructure projects.

“We need connections to supply chains. We need to make it easy for tourists to visit and move around the country. We need to make it easier for investors to do business here. All of these require heavy investments in infrastructure, and the Aquino administration is doing exactly that,” Purisima said in a speech delivered at the Bloomberg Leadership Forum.

He said the national government targets to increase the budget for infrastructure from 2.9 percent  of the economy, as measured by its gross domestic product (GDP), last year and 3.1 percent this year, to 5 percent by 2016.

Moreover, under the PPP program, over P1 trillion in infrastructure projects are already in the pipeline.

According to data from the PPP Center, there are 57 infrastructure projects under the PPP program that are in various stages of implementation.

So far, contracts have already been awarded for seven PPP projects that have a combined cost of P62.6 billion.

These projects are the following: Daang Hari-SLEX Link Road Project, PPP for School Infrastructure Project Phase 1, NAIA Expressway Project, PPP for School Infrastructure Project Phase 2, Modernization of the Philippine Orthopedic Center, Automatic Fare Collection System, and Mactan-Cebu International Airport Passenger Terminal.

“Soon, one can look at the PPP program of the Aquino administration and say that it has been one of the better [economic development] programs not only in the Philippines but in the world,” Purisima said.

Rising infrastructure spending is credited for helping boost growth of the Philippines, which last year became the fastest growing economy in Southeast Asia and one of the fastest in the world with an expansion rate of 7.2 percent.

Robust economic growth achieved amid relatively weak global economy helped the Philippines secure investment grades last year.

 

NAIA CLOSED TO OPEN SKIES; Bad airports deter tourists

Malaya Business Insight, 23 May 2014

By Angela Celis and Irma Isip

 

The Philippines will continue to close its main gateway, the Ninoy Aquino International Aiport under the ‘open skies’ of Asean which takes effect next year according to Trade Secretary Gregory Domingo.

Domingo during a lull in the discussions at the World Economic Forum on East Asia admitted to reporters “pressure from local airlines” to keep NAIA closed to international airlines.

Finance Secretary Cesar Purisima also explained to delegates that the country needs to ease first the congestion at the Ninoy Aquino International Airport before it can be opened as the key entry point from the open skies being negotiated by the 10 economies in Asean.

In a related development, Transport and Communications Secretary Joseph Emilio Sevilla said the government will build a second runway at the NAIA that will cost P2 billion, as an immediate solution to the congestion.

Domingo said: “we are part of the open skies (agreement in Asean) but our stand is our open skies is all ports outside Manila,”

Purisima said infrastructure bottlenecks in the aviation industry must first be addressed before pushing for open skies policy on a national scale.

Purisima said yesterday NAIA is a problem aching to be solved immediately.

(As if to make a bad situation worse, air conditioning failed in Terminal I and III for about two weeks.  Terminal II built by Lucio Tan for Philippine Airlines remains comfortable)

“The challenge really is congestion in Manila so we need to fix the infrastructure (if) we want to have more connections,” Purisima said at the forum on East Asia Economic Outlook.

Purisima politely suggested open skies policy will attract more foreign airlines and increase the number of tourists only if the airports are comparable to those in Asean region.  The Federal Aviation Authority of the US has raised to 1 the category of the NAIA from 2.  The upgrade directly relates to safety.

Congestion is a different problem.

The Aquino administration adopted a pocket open skies policy, which liberalized the country’s secondary international airports by allowing more foreign carriers to fly and bring in more tourists.

“It’s okay to take small steps as long as you continue to take the right direction,” the finance chief added.

Tony Fernandes, AirAsia CEO, said during the forum there is great potential in the Asean region.

“We’re moving in the right direction, but there’s still a lot to be done. Open skies is one thing, but there are still a lot of invisible barriers,” Fernandes said.

“There’s a disconnect between policymakers and what the private industry thinks. The communication has to grow between the private sector and the government,” he added.

Meanwhile Purisima said he is confident the Aquino administration will succeed in pushing through with its planned reforms in the last two years of its term.

“The good thing about President Aquino is that he is extremely popular. He has the political capital to make sure that on the last two years of his term, he will follow through with the reforms,” Purisima said.

“What’s important is we have set the foundations. We can’t finish it all in six years. But the important thing is the opportunity is there. That’s why we’re optimistic,” he added.

Meanwhile, the alternative runway will be located in the South of the main current runway, Abaya said the biggest challenge is the relocation of the 600 households that will be affected .

NAIA has only one runway that currently handles commercial aircraft takeoff and arrival of 40 events per hour its lower compared three years ago of 52 to 56 events per hour. But , NAIA still operating beyond its capacity limit of 36 events per hour. NAIA handles 625 flights daily.

At the session on Connect on Trade:Lifting Barriers to Growth, Singapore Senior Minister of Finance Josephine Teo said when Asean opens its skies next year, demand for air traffic will grow, driven by a growing middle class in Asia and specifically in Asean who are now interested and can afford to travel.

Open skies will allow Asean airlines to fly with fewer restrictions within the region and according to Teo, Asean could consider the EU aviation as a reference point.

She said while there is today overcapacity among low cost airlines, it is a matter of timing that demand would grow and multiple links and direct city links are needed to satisfy the travelling preferences of people in Asean.

The benefit, Teo added, would be in reduced cost of air transport passenger and freight.

“But this goes beyond idea of single aviation for the market and demand for air travel but also because of the tremendous effort on harmonizing regulatory requirements.”

She admitted though that challenges many Asean economies face is in the overcapacity of their airports and need to invest in airport infrastructure to expand the capacities.

Teo also broached the idea of considering liberalizing air transport agreement (ATA) as a bloc with other countries like what it forged with China.

Teo said there is a potential for a region to region ATA between Asean and EU.

 

ADB: Private investment lags in Southeast Asia

The Philippine Star, 23 May 2014

By Teresa Cerojano

 

MANILA, Philippines — An Asian Development Bank official warned Thursday of a largely unnoticed crisis in Southeast Asia: private investment in infrastructure has not recovered in the nearly two decades since the Asian financial crisis.

Stephen Groff, ADB Vice President for operations, said in an interview on the sidelines of the World Economic Forum on East Asia, that private funding for infrastructure in five of the biggest Southeast Asian members has declined steeply. It was $38 billion in 1997 and around $25 billion in 2010.

“It’s coming up but it’s nothing like it was in 1997,” he told The Associated Press. “Essentially, the ASEAN financial crisis led to a crisis of confidence with governments, a crisis of confidence in the private sector, and there hasn’t been enough investment or discussion or development of tools that allow risk-sharing to be used appropriately.”

The five members he referred to were Indonesia, Malaysia, the Philippines, Thailand and Vietnam. The other members are Singapore, Cambodia, Laos, Myanmar and Brunei.

Groff said while private investors assume risks, there are other types of risks that governments and financial institutions need to assume “and that hasn’t yet come into play as much as it needs to.”

The region, which will launch next year a common market comprising 600 million people, needs to spend $60 billion yearly until 2020 to meet its infrastructure needs. But Groff said ASEAN currently spends only about half that.

He said while there has been some progress in a number of countries in recent years in helping facilitate private investments in infrastructure by addressing legal and regulatory issues that restrict private participation, the process is not easy and takes time.

There is a need to think about financing interest mechanisms, mechanisms to mitigate risks, developing bankable projects that attract private investments and bringing back home the region’s extra savings that have been invested in low-yielding treasury bonds in the U.S. and Europe, he added.

To bring back some of those funds, the ADB has helped develop the ASEAN Infrastructure Fund which began lending last year. Two infrastructure projects in Indonesia have been funded while more projects throughout the region are in the pipeline, Groff said.

The fund is being managed by the ADB, with funding coming from ASEAN members and the bank.

Indonesian Finance Minister Muhamad Chatib Basri said infrastructure is the “first priority” for his country after it had established political stability under outgoing President Susilo Bambang Yudhoyono.

However, he said the ” main challenge in the future is not only sustainable growth but also shared growth.”

Philippine Finance Secretary Cesar Purisima said the region’s relatively young population, natural resources and its geographic location are factors that would contribute to growth. But to make sustainable growth a reality the “capital surplus region” has to make more infrastructure investments, he added.

“We have the money … but we need to make our financial markets more efficient and more connected,” he said. “Governance is the most important ingredient because businesses want predictability, want open economy, want to be able to reduce the risks.”

 

World Economic Forum zeroes in on development gaps

Business World, 22 May 2014

 

SOUTHEAST ASIA, the Philippines in particular, is primed for continued economic growth but will have to hurdle barriers such as territorial disputes, political unrest and continued socioeconomic inequality.

Regional leaders and speakers at the ongoing World Economic Forum on East Asia in Makati City highlighted gains that have been made so far — from regulatory reforms to curbing corruption — but noted that countries faced similar challenges involving infrastructure, governance and even food security.

Philippine President Benigno S. C. Aquino III, keynoting the afternoon plenary session, touted gains made in the first four years of his administration — from above-target economic growth and resulting credit ratings upgrades to the detention of his predecessor, Gloria Macapagal-Arroyo, on corruption charges.

The same themes were expounded by Cabinet officials who spoke at earlier sessions, including Finance Secretary Cesar V. Purisima and Budget Secretary Florencio B. Abad.

Similar reforms were presented by Indonesian President Susilo Bambang Yudhoyono, Vietnamese Prime Minister Nguyen Tan Dung and Myanmar Vice-President Nyan Tun.

At a morning session focusing on the region’s prospects, the upcoming economic integration of ASEAN was cited as a means of addressing barriers to development and stability, including the ongoing political crisis in Thailand and territorial disputes with China — seen as risks to investment.

Highlighting the heightened tensions over China’s claims to the South China Sea, Vietnam’s Mr. Dung blasted the regional power for “slandering” his country, and Klaus Schwab — the Forum’s founder — while stressing that the organization was not taking sides, said there was a need to “resolve this situation which has potential to create a situation we do not want.”

‘WE HAVE TO CHANGE…’
Mr. Schwab, returning the discussion to the issue of growth and equitable progress, said the biggest challenge for the world, and not just the region, was “social inclusion.”

“We have to change the way we run our economies,” he said.

“Income inequality has been getting worse across the world for the past 30 years,” Lee Il-Houng, G20 Sherpa and ambassador for international cooperation of South Korea, noted earlier in the day.

Mr. Aquino was in agreement, saying in his speech that “[i]nclusive growth cannot be delivered by simply delivering the services… [that the people] deserve.”

Mr. Yudhoyono called for “mobility for all”, while Mr. Dung said “domestic reform must be coupled with regional integration.”

Mr. Schwab said it didn’t matter if the viewpoint was glass half full or glass half empty, only that the “glass is still growing… there is more water [in it].”

The morning session on East Asia’s economic outlook also cited long-standing development gaps.

“We need to invest in infrastructure to assure our connectivity with each other and the rest of the world,” Mr. Purisima told forum participants.

Among others, he noted that the Philippines’ infrastructure backlog has hindered the country from implementing an “open skies” policy, which would relax aviation restrictions that currently provide local players an advantage over foreign rivals.

“The challenge really is congestion in Manila, so we need to fix, of course, infrastructure,” Mr. Purisima said.

Mr. Purisima was responding to a comment by AirAsia Group Chief Executive Officer (CEO) Anthony F. Fernandes in the same session that many Southeast Asian economies have been moving in the right direction by taking steps toward an “open skies” policy. At the same time, Mr. Fernandes noted: “Open skies is one thing, but many invisible barriers still exist.”

Mr. Purisima also highlighted infrastructure’s role in supporting agriculture, which in the Philippines accounts for a third of the work force but contributes less than a fifth to national output.

‘“There is need for sectoral interventions, in particular, in agriculture,” Mr. Purisima noted.

“And here infrastructure takes that role. Rice facilities, storage facilities, irrigation — we need to invest [in those],” he stressed, adding: “We need to give [farmers] better access to technology.”

“If we succeed in doing that, we improve the overall competitiveness of the country.”

Mr. Fernandes echoed Mr. Purisima’s view later in the session, urging governments to “allow businesses to grow by facilitating them by providing the right infrastructure.”

Infrastructure, however, is not the only issue casting a shadow on the region’s otherwise upbeat outlook.

In an opening press conference, Forum co-chairs Takeshi Niinami, chairman of Lawson, Inc., and James T. Riady, CEO of Lippo Group in Indonesia, cited risks posed by current geopolitical tensions.

“Tensions are real and this impacts directly and indirectly business enterprises,” Mr. Riady said at the press conference.

“Capital markets reflect that immediately.”

Mr. Niinami stressed, however, that business must not take a back seat to territorial disputes.

“We have to focus on the business first, then politics follows,” he said.

 

Philippines to pursue more reforms in next 2 years

The Asset, 25 May 2014

 

While quite a number of governance reforms had already been put in place over the last four years, the Philippines’ Aquino administration is bent on implementing more.

The country’s finance secretary Cesar V. Purisima said the administration will continue to take advantage of the political capital of President Benigno Aquino III to pursue additional reforms in his remaining two years in office.

This is to help ensure the good governance agenda is institutionalized and sustained beyond 2016.

“The people have come to know the impact of good governance on their lives as the economy makes huge strides,” Purisima said in one of the sessions of the 23rd World Economic Forum on East Asia (WEF-EA), which the Philippines recently hosted.

As the public appreciates the benefits of good governance, he said, the administration is hoping for the swift passage in Congress of bills backed by the executive branch.

Some of these legislative measures are the amendment of the charter of the Philippine central bank, the streamlining of customs procedures, the rationalization of fiscal incentives, and the easing of restrictions on foreign investments.

The bill seeking to amend the regulator’s charter is aimed at providing the monetary authority with more flexibility in managing liquidity in the economy. It is also aimed at giving the central bank more teeth in regulating banks.

One of the key provisions in the proposed bill seeks to allow the central bank to trade its own bonds in the capital market. Another seeks to require banks to secure prior approval of the regulator before changes in their ownership structure take place. This is to ensure the financial entities are managed by qualified people.

The bill seeking to streamline customs procedure is aimed at helping the bureau of customs in its fight against smuggling, while the one seeking to rationalize fiscal incentives seeks to lift unnecessary tax perks to boost revenue collection of the state.

The bill easing restriction on foreign ownership is aimed at boosting investments and job creation, and increasing incomes.

So far, some of the key reforms implemented in the first four years of the Aquino administration include the Sin Tax Reform law that raised levy on alcohol and cigarettes, the Reproductive Health law, the tighter campaign against smugglers and tax evaders, and the reform in the national budget process to have integrity in handling of public funds, among others.

Moreover, infrastructure development has been accelerated under the Aquino administration.

Purisima said that out of over 50 projects included in the Public-Private Partnership (PPP) programme, seven have been awarded to winning bidders.

These projects are the Daang Hari-SLEX Link Road, the first and second phases of the PPP for school infrastructure project, the Ninoy Aquino International Airport (NAIA) Expressway Project, the modernization of the Philippine Orthopedic Center (MPOC), the automatic fare collection system, and the Mactan-Cebu International Airport passenger terminal building.

Purisima said that with the continued pursuit of reforms, the Philippines, which has become one of the fastest growing economies in Asia, is expected to generate more gains in the economic and political front.

 

Good governance is good economics

Philippine Daily Inquirer, 21 May 2014

By Cesar V. Purisima

 

As policymakers and business leaders gather in Manila this week for the World Economic Forum on East Asia, the talk will inevitably turn to growth.

Sustaining economic growth has become harder for Asian policymakers as interest rates in the developed world rise on signs of recovery. After years of easy credit, emerging markets will have to compete for funds to fuel development, and woo investors with fundamentals and structural reforms.

Reforms have the power to alter a country’s economic destiny. This is why they inspire confidence from markets, businesses and citizens. To see how reforms can change perception and reality, one may look at the Philippines.

Since assuming office in 2010, President Aquino has turned around a country from being “the sick man of Asia” to an economic comeback story. He undertook reforms that economists have been urging and politicians shirking (from). These include the Sin Tax Law that raised the levy on alcohol and tobacco products, and spurred the revamp of commonplace procedures.

Our reforms have been rewarded.

Rating upgrade

Gross domestic product grew by 7.2 percent in 2013, the fastest in the Asean (Association of Southeast Asian Nations) region, notwithstanding natural calamities, including Super Typhoon Yolanda (international name: Haiyan) that is said to be one of the strongest ever recorded.

Moreover, the Philippines received investment grades from Fitch, Standard & Poor’s and Moody’s in 2013, lowering the country’s borrowing costs and allowing us to redirect funds for social services and infrastructure. The Philippines earned another rating upgrade this month from S&P, which showed the reforms will endure beyond President Aquino’s term.

A powerful force

Our efforts have boosted the country’s ranks in global surveys. Its rank jumped 26 places in the World Economic Forum’s Global Competitiveness Index since 2010, and 30 places in the International Finance Corp.’s  Doing Business Index in 2013.

Despite our gains, much remains to be done both at the national and Asean levels. In the remaining years of our term, the Aquino administration will intensify efforts at reform by opening up more sectors to foreign investments, rationalizing tax incentives and institutionalizing transparency.

Those who doubt our commitment should take note of the unpopular enactment of the reproductive health bill and the amendment of the Sin Tax Law.

Across Asean, we must integrate our economies in a way that simplifies rules and lowers the cost of doing business. With our young populations and growing economies, we have the potential to become a powerful force for liberalization. However, we need reforms.

Without those, growth is fleeting. For too long, many politicians have avoided unpopular reforms. But our citizens deserve better.

Reward for telling truth

The Aquino administration’s electoral success and approval ratings are proof that voters listen to, and reward, politicians who tell the truth. This is as true in the rest of the Asean as it is in the Philippines.

The good news is that reforms are not rocket science. We are well-aware what needs to be done. Good governance is good economics. Just look at the Philippines.

(Editor’s Note: Cesar V. Purisima is the finance secretary of the Philippines. Manila is hosting the World Economic Forum on East Asia from May 21 to 23).

 

Infra streamlining to drive growth

The Visayan Daily Star, 20 May 2014

 

The national administration is confident about the sustained growth of the domestic economy beyond its term as more social infrastructures have been bidded out and are now being implemented and more are still in the pipeline, a press release from the government said.

Finance Secretary Cesar Purisima, in his speech during the Financial Times-First Metro Investment Corp. Philippines Investment Summit yesterday, said excluding the emergency power projects put in place during the Ramos administration, the Aquino administration posted the highest number of infrastructure projects implemented so far.

There are about 54 projects listed under the public-private partnership initiative of the current administration and seven of these have been awarded.

These seven are the four-kilometer, four-lane DaangHari-SLEX Link Road; PPP for school infrastructure project phase I and II; the four-lane elevated Ninoy Aquino International Airport Expressway Project, the modernization of the Philippine Orthopedic Center, the automatic fare collection system, and the construction of the Mactan-Cebu International Airport passenger terminal building.

The national administration has ensured that needed infrastructure projects are put in place since these are the major economic growth drivers and would ensure that domestic expansion would be inclusive.

Purisima admitted that implementation of these projects cannot be done as fast as everybody wants it to be and not all the projects can be implemented under one administration.

Analysts said the slow implementation of the PPP projects is understandably okay because of the reforms put in place to ensure that the projects were property scrutinized, the press release said.*

 

Aquino admin institutionalizing infra project to sustain PHL growth – Purisima

InterAksyon, 20 May 2014

By Philippine News Agency

 

MANILA – The Aquino government is confident on the sustained growth of the domestic economy beyond its term as more social infrastructures have been bidded out and are now being implemented and more are still in the pipeline.

Finance Secretary Cesar Purisima, in his speech during the Financial Times-First Metro Investment Corp. (FT-FMIC) Philippines Investment Summit Monday, said excluding the emergency power projects put in place during the Ramos administration, the Aquino administration posted the highest number of infrastructure projects implemented so far.

There are about 54 projects listed under the public-private partnership (PPP) initiative of the current administration and seven of these have been awarded.

These seven are the four-kilometer, four-lane DaangHari-SLEX Link Road; PPP for school infrastructure project phase I and II; the four-lane elevated Ninoy Aquino International Airport (NAIA) Expressway Project, the modernization of the Philippine Orthopedic Center (MPOC), the automatic fare collection system, and the construction of the Mactan-Cebu International Airport passenger terminal building.

The Aquino administration has ensured that needed infrastructure projects are put in place since these are the major economic growth drivers and would ensure that domestic expansion would be inclusive.

Purisima admitted that implementation of these projects cannot be done as fast as everybody wants it to be and not all the projects can be implemented under one administration.

“It’s never fast, quick enough. It can never be done in one administration but one thing that this administration can do is institutionalize the standards,” he said.

“The future is under our control. It is up to us to tell the world that this time is for real,” he said.

At the sidelines of the summit, Purisima said the government will continue to pursue the bidding of the projects but he declined to give specifics.

“The important this is we continue the process and we do it properly,” he added.

Analysts said the slow implementation of the PPP projects is understandably okay because of the reforms put in place to ensure that the projects were property scrutinized.

 

World economic forum on East Asia: Phl to showcase big-ticket infra invesments

The Philippine Star, 16 May 2014

By Iris C. Gonzales

 

MANILA, Philippines – The Philippines is rolling out the red carpet for world leaders and global businessmen as it hosts the World Economic Forum (WEF) on East Asia, with plans to showcase the country’s infrastructure projects and how these big-ticket investments could significantly boost economic development, two key administration officials said in a round-table discussion with editors and reporters of The STAR Wednesday night.

“Here at the World Economic Forum, we hope to be able to open the Philippines to the world and show the past three years in terms of good governance, economic reforms and solid performance. Now is the best time to offer the Philippines as a good investment arena. It’s a good time to open our doors to World Economic Forum and APEC (Asia Pacific Economic Cooperation),” Department of Public Works and Highways (DPWH) Secretary Rogelio Singson said.

“We want to show that infrastructure projects really make a difference in economic development like in Singapore and Malaysia. They can see how much they can invest in infrastructure and they can really be assured that the Philippines has an understanding of what they are investing in,” he added.

The Philippines will host the 23rd WEF on East Asia from May 21 to 23 at the Shangri-La Hotel in Makati. President Aquino will give the keynote address. Vietnamese Prime Minister Nguyen Tan Dung, Indonesian President Susilo Bambang Yudhoyono and Myanmar’s Vice President U Nyan Tun will also lead the opening ceremonies, officials announced in a separate press conference yesterday.

Singson said the forum would be an opportunity for the Philippines to show progress in economic reforms and investment opportunities to more than 600 delegates from over 30 countries.

He said the Aquino administration is planning to increase infrastructure investments to five percent of the country’s economic output from the current 2.8 percent.

“We should up our investment in infrastructure from 2.8 percent to five percent of GDP, so five percent of GDP means more investment. The biggest spender in infrastructure is DPWH so everyone’s watching us because we are very much part of what affects GDP growth,” he added.

Singson said the department does not create projects out of whim, allowing them more savings for better projects ahead.

In 2011, DPWH was only able to convert 70 percent of what was allocated to them into contracts but in 2013, converted contracts rose to 91 percent, he explained.

Aside from the ongoing six Public-Private Partnerships (PPP) projects implemented, DPWH aims to start two more road projects this year, the Cavite-Laguna Expressway (CALAx) and the Central Luzon East Expressway (CLEx).

The 47-kilometer CALAx will run from Bacoor, Cavite to Canlubang, Laguna and will cost P35 billion. This major road, which will start its bidding on June 2, will allow people to have easier access in entering parts of the Calabarzon region.

Meanwhile, the 65-66 kilometer CLEx will lead toward Cabanatuan and San Jose in Nueva Ecija. The P28-30 billion project is expected to be completed in 2017 and DPWH has already charted its master plan including checking of roads that will be affected by the expressway.