Welcome Remarks of Speaker Feliciano Belmonte Jr. at the House of Representatives and Joint Foreign Chambers/Philippine Business Groups Meeting

Good afternoon. It is a privilege to address you all in this fifth meeting of the House of Representatives, the Joint Foreign Chambers and the Philippine Business Groups. This meeting again reinforces our collaboration in pursuing reforms that would help attain our goal of an inclusive economic growth and development for our country and our people.

While much has been achieved in the last four years since President Benigno Aquino assumed office, much remains to be accomplished.

The Philippines has been one of the best performing economies in the region and in the world in recent years. In 2012, our GDP grew by 6.8% and in 2013 by 7.2%, notwithstanding the weak global economy and the havoc wrought by the series of calamities that hit us. However, we still have a lot of catching-up to do for we continue to lag behind our peers in terms of wealth and income levels. As of 2013, GDP per capita of the Philippines amounted to only US$2,587 compared with US$3,475 in Indonesia, US$5,779 in Thailand, and US$10,514 in Malaysia.

We need to sustain our economic growth, or grow faster, to create more and better jobs for our people, raise their income, and improve their living condition. Our unemployment and underemployment rates, while registering improvements, have remained high. Average unemployment and underemployment rates in the January, April and July 2014 Labor Force Surveys were recorded at 7.1% and 18.7%, respectively–that is 2.8 million unemployed Filipino workers and 7 million underemployed.

Clearly, we need more investments and business activities to absorb our growing labor force.

We have significantly improved our macroeconomic fundamentals and created a more stable environment that is conducive to investments. We have managed to maintain our inflation rates within the targeted range of 3% to 5%.Our foreign exchange reserves have been at an all-time high, amounting to more than the eleven-month equivalent of our imports requirement. Our banking system has been stable and resilient. We have also managed to consistently keep the government’s budget deficit within target and steadily reduce our public sector debt. Surely, these improvements in our macroeconomic fundamentals did not go unnoticed. For the first time, the Philippines got an investment grade credit rating from all major credit rating agencies. This should translate to lower cost of credit and capital that augurs well for investments.

The improvements in our macroeconomic fundamentals are not by chance or happenstance, but are the result of sound monetary and fiscal management and policies adopted by the government. We are confident that we can sustain these improvements because many of them are anchored on structural reforms that are etched in our statutes, such as the Sin Tax law, and in new government traditions that we have established such as the timely enactment of the annual national budget.

We are determined to solidify these gains in our macroeconomic fundamentals with the enactment of laws that would further empower our monetary and fiscal authorities, while making them more accountable, to respond to the changing needs of the time. These legislative priorities that we have agreed upon with our Senate counterparts in our regular monthly dialogue include:

Amendment of the Bangko Sentral ng Pilipinas Charter that would strengthen its regulatory and supervisory powers to respond more appropriately to the changes in both global and domestic economic and financial landscape;

Rationalization of Fiscal Incentives that would consolidate all existing incentive-giving laws to avoid confusion, redundancy, tax avoidance and other inefficiencies, while facilitating investments;

Tax Incentives Management and Transparency Act mandating a full disclosure policy of the tax incentives by requiring taxpayers to report availed incentives in the income tax returns, and establishing a Tax Expenditure Account in the national budget to reflect the amount of tax incentives granted to private individuals and corporations;

Customs Modernization and Tariff Act that would align our Tariff and Customs Code with the simplified and harmonized customs procedures and practices adopted in the Revised Kyoto Convention and other international and legal standards; and

Rationalization of Mining Revenues that seeks to increase the share of the State from mining, and ensure the timely release of LGU share from mining revenues.

In addition to building strong macroeconomic fundamentals, we are also taking positive actions toward promoting competition and the growth of foreign direct investments. These are by liberalizing very restrictive legal provisions on foreign participation in strategic sectors of our economy. I am sure that you are all aware of these legislative proposals, as they are also included in the priority list of legislative measures of the Joint Foreign Chambers and the Philippine Business Group. These include:

Resolution of Both Houses No. 1 that vests on Congress the power to set restrictions on foreign ownership in key economic sectors, including public utilities, property, mass media and advertising, educational institutions and development of natural resources; etc.

Amendments to our Foreign Investment Act, particularly those on the Foreign Investment Negative List. The amendments include lowering paid-in capital requirements for foreign enterprises, redefining “export enterprises” to remove discrimination against foreign investors for BOI incentives, allowing foreign investment of up to 100 percent of equity for manufacturing and radio communication, rationalizing the entry of foreign companies in the construction, operations and maintenance of large public works projects, and the easing of restrictions on the practice of professions;

An anti-trust and competition law that would consolidate and update our laws on competition and establish a strong regulatory agency to deal with anti-competitive practices.

We are also pursuing measures to promote the development of our infrastructure to encourage more investments both local and foreign. In this regard, we are studying amendments of the Build Operate Transfer Law, the Cabotage Law, and the Electric Power Industry Reform Act orEPIRA. Firmly embedded in these reform measures is the ethos of competitiveness.

In the proposed amendments to the Build Operate Transfer Law, we intend to further strengthen the solicited mode of bidding out PPP projects. It is more transparent and competitive, as against the unsolicited mode, which is prone to uncompetitive practices. Likewise, theamendments to the EPIRA include the proposal for competitive bidding of bilateral contracts to provide for a more level playing field among industry players. The amendments to the Cabotage Law, on the other hand, would allow foreign vessels to pick up, transport, and deliver shipments to and from local ports.

We believe that competition is good for our economy and our people. A competitive marketplace for the exchange of goods and services benefits the consumers through lower prices, quality service, and better quality consumer information. On the production side, competition encourages innovation and lowers supplier costs. What is more important, however, is that the ease of entry for businesses encourages more investments and creates more job opportunities for the population.

Aside from their intrinsic values in promoting peace and justice, we also believe that a well-functioning judicial system and the rule of law are critical to attracting investments. In this regard, our priority measures also include the Freedom of Information Act, Bangsamoro Basic Law, Sandiganbayan Act, Witness Protection Act and Whistleblowers’ Act.

The priority list of legislative measures drawn up by the Joint Foreign Chambers, the Philippine Business Groups, and the House of Representatives are almost the same. I do not think that we are here to argue or preach to one another, but to map out directions and strengthen our collaboration for the passage of legislations that would uplift the lives of the people.

On this note, I would like to express my deep appreciation to the Joint Foreign Chambers, the Philippine Business Groups and my own colleagues for taking time from their busy schedules to participate in this meeting. May today’s meeting — our fifth — be another highly productive endeavor for all of us.