SEVERAL bills related to the financial sector and the country’s economy passed second reading at the House of Representatives. These include the proposed General Financial Institutions Unified Initiatives to Distressed Enterprises for Economic Recovery, called the “Guide Act” by lawmakers and the Real Property Valuation Reform Bill.

Through viva voce voting last Wednesday, lawmakers also approved on second reading the extension of the implementation period of the Agricultural Competitiveness Enhancement Fund and the proposed Public-Private Partnership (PPP) Act.

The “Guide Act” (House Bill 1) seeks to provide financial assistance to distressed enterprises critical to economic recovery through programs and initiatives to be implemented by the Land Bank of the Philippines (LBP) Inc. and the Development Bank of the Philippines (DBP). These initiatives seek to address liquidity or solvency problems of MSMEs and strategically-important industries, encourage their continued operations and maintain employment levels.

The bill expands the loan assistance programs, rediscounting and other credit accommodation facilities of LBP, DBP, Small Business Corp. (SBC) and Agriculture Credit Policy Council (DA-ACPC).

It also identifies targeted sectors and intended beneficiaries of various credit facilities, as follows: for LBP, players engaged in activities in the agribusiness value chain; and, for DBP, eligible MSMEs engaged in infrastructure, services, service industry and/or manufacturing business.

Fiscal incentives

THE bill mandates the LBP and the DBP to create a special holding company (SHC) for the purpose of reinvigorating strategically important companies (SICS) experiencing liquidity issues due to significant economic challenges of national or international scope such as those from the agriculture, infrastructure, services and manufacturing industries.

HB 1 also grants incentives and exemptions to the LBP, the DBP and the SHC. These include exemption from payment of documentary stamp tax, capital gains tax, creditable withholding income tax, value-added tax, gross receipts tax and other taxes imposed under Republic Act (RA) 8424, or the National Internal Revenue Code of 1997 (as amended) for a period of three years.

The bill also grants exemption from RA 9184, or the Government Procurement Reform Act, for mandate-related procurements for a period of three years and: exemption from RA 10149 (GOCC Governance Act of 2011) and RA 10667 (Philippine Competition Act) for a period of three years for acquisitions of assets of an investee company.

Under the proposal, the amount of P10 billion is, hereby, appropriated out of any funds actually available in the National Treasury of the Philippines not otherwise appropriated, as certified by the National Treasurer, as additional paid-up capital of the DBP and LBP.

Real property valuation

THE lower chamber also approved on second reading the Package 3 of the Comprehensive Tax Reform Program, or the Real Property Valuation Reform Bill, which is a priority measure of the Marcos administration.

The proposal seeks to improve real property valuation for the government by adopting a market based schedule of market values (SMV) to be used as the basis of local and national real property taxation.

It also seeks to reorganize and strengthen the Bureau of Local Government Finance (BLGF).

The bill requires that the valuation or appraisal of all real property, whether taxable or tax-exempt, shall be based on prevailing market values in the locality where the property is situated in conformity with the valuation standards adopted in the proposal.

It mandates the BLGF to lead and manage the implementation of the proposal.

The proposal aims to harmonize the real property valuation for taxation purposes, which releases the Bureau of Internal Revenue from promulgating the Schedule of Zonal Values.

The bill also establishes and maintains valuation standards to govern the valuation of real property in the country. It also provides a comprehensive and up to date electronic database of all real property transactions.

Inefficient, chaotic

THE measure also ensures transparency in real property transactions to protect the public and develop confidence in the work of appraisers and assessors.

Kabayan Rep. Ron P. Salo, one of the authors of the bill, said one of the most vaunted sources of revenues is real property, which is considered as the most important natural resource and the biggest financial asset.

Citing the World Bank, Salo said that 50 percent to 75 percent of the country’s wealth is contained in land. Ironically, the land market is contributing only 6 percent to the Gross National Product, the lawmaker said.

According to Salo, the real property valuation system in the Philippines depicts “a depressing state of chaotic, inefficient and inequitable layers of bureaucracy.”

He said at least 23 national government agencies and more than 1,700 local government units perform or require valuation functions and services using varied systems and methodologies for different purposes, thus resulting in multiple, confusing, unrealistic, or outdated values for the same property.

Extending ACEF implementation

THE Lower Chamber also passed on second reading HB 6524, which focuses on the Agricultural Competitiveness Enhancement Fund (ACEF).

The bill seeks to further extend the implementation period of the Acef, which is set to expire in December 2022, to until 2028 to enable the Department of Agriculture to continue to use the funds for development activities of the farming sector.

It mandates the inclusion of duties collected from importation of agricultural products within the minimum access volume mechanism to be credited to Acef under Special Account 183 in the General Fund of the National Treasury.

The bill also directs concerned government agencies to submit pertinent documents to the Acef Executive Committee and the Congressional Oversight Committee on Agriculture and Fisheries Modernization.

It also directs the Commission on Audit to conduct a full audit and report on the status of Acef grants and loans extended for the period 2016 to 2021.

House Committee on Agriculture and Food Chairman Wilfrido Mark M. Enverga said the extension was strongly backed and recommended by the National Economic and Development Authority (Neda).

The bill seeks to amend Section 8 of RA 8178, as amended.

Enverga said the Neda suggested revisiting such proposed provision considering that the Acef’s remaining balance is at P4.4 billion as of August.

“We recommend that the Acef executive committee improve the disbursement of the fund and justify the additional allocation requested from import our-quota collections,” read Neda’s position paper.

NEDA’s role

THE Lower Chamber also approved on second reading the proposed Public-Private Partnership (PPP) Act to provide an updated legal and policy framework for PPP projects.

The bill seeks to strengthen private sector interest in PPP projects by ensuring a competitive climate through reduced cost of doing business.

The measure provides clearer parameters on government undertaking, procedures on project approval, procurement and protest and fiscal rules on contingent liabilities.

Under the bill, National PPP Projects costing up to P5 billion shall be approved by the PPP Center unless overturned by the Investment Coordination Committee of the Neda and projects above P5 billion shall be approved by the Neda Board, upon prior recommendation by the ICC.

It said local PPP Projects shall be approved by the local Sanggunians, regardless of the project cost, except those involving government undertakings using national government funds, which shall require the approval of the PPP Center for projects up to P5 billion in project cost and by the ICC-Neda for projects above P5 billion.

The bill also prohibits issuance by courts except the Supreme Court of temporary restraining orders (TROS) and preliminary mandatory injunctions against all PPP projects. The prohibition shall not apply when the matter is of extreme urgency involving a constitutional issue, such that unless a TRO is issued, grave injustice and irreparable injury will arise.

Discharge of mandates

THE bill also provides for the institutionalization of the PPP Center and the PPP Governing Board, for a more efficient and effective performance of its mandate and as the overall policy-making body for all PPP-related matters, respectively.

The measure creates a Risk Management Fund to ensure fiscal sustainability and enhance the ability of implementing agencies in the discharge of their mandates and contractual obligations.

House Committee on Ways and Means Chairman Joey Sarte Salceda, one of the authors of the bill, said the proposal seeks to unlock “trillions” in corporate and private sector funds towards infrastructure projects in the country.

The proposed PPP law is included in the priority bills of the Marcos administration.

“There is at least P27 trillion in financial resources available in the banking sector and at least P600 billion annually in just the large conglomerates, every year for private sector financing of PPPs. We need that with current elevated debt levels,” Salceda said.

All these bills are expected to be approved on third and final reading next week before the Christmas break of the 19th Congress.

BY JOVEE MARIE DE LA CRUZ
DECEMBER 9, 2022