10/8/04 Hey Vuk....I posted a letter sent to the president which is from Sept 23rd, this is the president's reply to it on the 24th
GMA BACKS DE VENECIA'S WEALTH-CREATION PROPOSALS
MANILA, September 24 , 2004 (STAR) By Paolo Romero - President Arroyo endorsed yesterday Speaker Jose de Venecia’s 12-point program to create new wealth centered on reviving the mining industry, implementing major reclamation and reforestation projects, and creating special zones within Subic and Clark to attract long-term investments.
In her speech at the Legislative Agenda Planning Conference at the Land Bank Plaza in Malate, Manila, Mrs. Arroyo said De Venecia’s proposal will be incorporated into the government’s medium-term development plan.
The President also instructed National Economic and Development Authority Secretary-General Romulo Neri to ensure the implementation of the proposal.
In his letter to Mrs. Arroyo, De Venecia said his proposal complements the Arroyo administration’s 10-point legacy program and is a sequel to the 747 Economic Action Plan he released in 2001, which the Cabinet adopted in 2002 "as a major component of the government’s economic blueprint."
He said the country’s current wealth is no longer enough to support a population of 84 million. The population growth rate is 2.36 percent, one of the highest in Asia.
"This strategy seeks to propel the country’s economic growth to a level competitive with its prosperous neighbors," De Venecia said. "It seeks to build an economic superstructure to sustain the continuing gains of the President’s programs."
He batted for a policy decision — including a favorable Supreme Court ruling — to rebuild a mining industry that would open its enormous economic potential since the country’s mineral wealth is estimated at $800 million to $1 trillion vis-a-vis the Philippines’ external debt of $57 billion.
Rebuilding the industry would attract the United States, China, Australia and Canada as major players and "would employ hundreds of thousands of people and create the beginnings of a tiger economy for the country," De Venecia said.
He also urged a "business-friendly decision" by the high tribunal, not just on mining but on the exploration of oil and gas reserves in the country similar to the Malampaya oil and gas fields in Palawan. The government’s share of $500 million a year for over 20 years from the Malampaya project could begin to go up next year after its partner, Pilipinas Shell Petroleum Corp., fully recovers the money it spent on the project.
De Venecia, in his letter to the President, also proposed the exploration of more oil and gas wells in offshore Palawan; mobilizing local and international investors to develop the gold mines in Mt. Diwalwal in Compostela Valley; and strengthening of the information technology sector as among the major components of a strategy to "build a major reserve of resources in the future."
He also called on the government to relaunch a major reclamation program in Manila Bay, Cebu, Mindanao, and northern Luzon, saying "reclaimed land provided a major stimulus in the economic miracles of Hong Kong and Singapore."
De Venecia’s program also mentioned starting a major reforestation program covering the mountains in Luzon, the Visayas and Mindanao to provide revenues for the government and income to tree farmers.
He batted for a massive program to promote tourism, pointing out that the Philippines is one of the best tropical destinations in the Far East "yet its two million tourist arrivals pale in comparison with those of Thailand and Malaysia, which are in the 10-million mark."
Saying that airports, seaports, railways, dams, irrigation systems and expressways are "so critical to economic growth," De Venecia said the government should create a national infrastructure corporation to build them.
He added that jump-starting the housing construction sector will spur economic growth because of its multiplier effect.
"Every P10-billion worth of housing units will contribute P166 billion of economic activity for the country," De Venecia said.
He called for micro-finance credits for businesses and urged the passage of a bill allowing the use of agricultural land as capital to enable 3.7 million farmers to avail themselves of production credits and become agricultural entrepreneurs.
This will "enable the poor to enter the formal economy and unleash a vast store of untapped capital," he said.
De Venecia cited the need to organize a large-scale program of non-traditional high-value crops in farms and fisheries "to create a new class and a new generation" of farmers and fishermen.
He also proposed that the government "securitize" portions of Clark and Subic and provide the covered territories a special charter of good governance.
"This is like creating a new Hong Kong or Singapore in our backyard where investors would be free from political interference," he said.
De Venecia, in presenting his 12-point program, stressed that generations of Filipino political leaders "squandered unique opportunities to propel the country" forward.
"The current financial crisis is the greatest motivation for us to make this strategy succeed, because the alternative to failure would be unthinkable," he said.
Meanwhile, Mrs. Arroyo said she counts on her allies in the House of Representatives led by De Venecia — whom she described as a "master of (the) win-win solution" — to whip the 13th Congress into line and ensure the speedy approval of at least four of eight vital but unpopular tax measures she endorsed.
She said the most urgent measure is the indexation of taxes on alcohol and tobacco products.
The President noted with satisfaction that the House committee on ways and means, chaired by Tarlac Rep. Jesli Lapus, has sponsored the bills on tax amnesty and lateral attrition at the floor deliberations.
"I wish we did not have to enact taxes at a time of hardships for the poor, but it is time to act now rather than when it is too late," she said. "It is time to act now while we can still grow at 6.2 percent (in terms of gross national product) as we did in the last quarter."
Mrs. Arroyo admitted that this economic growth was financed largely by the government’s foreign and local borrowings.
She noted that while the government is still "credit-worthy," it cannot sustain growth based on loans.
"Our fiscal problem is a cumulative result of incessant borrowings in lieu of generating the proper level of revenues to meet the needs of our people," the President said.
She said the Philippines’ debt grew from P1 billion during the time of her late father, former President Diosdado Macapagal, to P30 billion in September 1972, and has grown "exponentially" since then.
To complement the proposed tax measures, Mrs. Arroyo reaffirmed the executive branch’s commitment to intensify its tax collection efficiency and its campaign to run after tax cheats and smugglers.
She reiterated her directives to Bureau of Internal Revenue (BIR) Commissioner Guillermo Parayno to use all the powers under his command, including the authority to garnish bank accounts of notorious tax evaders.
While the President heaped praises on congressmen for supporting her proposed tax bills, Parayno told reporters that much of the country’s tax evasion problems can be traced to defective tax policies implemented by the government.
In a press briefing at Malacañang yesterday, Parayno clarified that he was not trying to blame anyone but results of a study done by the Philippine Institute for Development Studies show that 40 percent of total BIR collections, or almost one-third of "foregone revenues" were lost due to tax evasion.
"I do not want to pinpoint who is at fault. I think it is much more constructive to just repair those provisions of the law rather than... to start finger-pointing," he said.
The BIR’s total collection last year was at P426 billion, about half of the P861.6 billion budget for 2004.
Parayno said the same study shows that 47 percent of tax evasion happens as a result of tax policy, another 46 percent is due to tax administration, and the rest is because of the economy.
He said the "most famous one on tax policy" is the failure to index excise taxes on alcohol and tobacco.
Parayno added that 1.7 percentage points out of a total fall of 3.07 percent in taxes collected by the BIR over a five-year period is due to the failure to index "sin" taxes on alcohol and tobacco products.
Since Congress is now deliberating on this particular issue, Parayno said he will present these facts amid intense lobbying by affected sectors.
He also said the proposed tax amnesty bill will not benefit those with tax evasion cases pending in court, such as the P27-billion suit filed by the BIR against businessman Lucio Tan. — With Marichu Villanueva ------------------------------------------------------------------------------
Reported by: Sol Jose Vanzi
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