BizNews Asia/December 13 – December 20, 2004

The Basic Reforms We Must Carry Out
By Senator Edgardo Angara
(Speech before the Senate November 2004)

The need to carry out the basic reforms is more urgent now than any other point in the recent past. Either we begin now or the decline of the national condition becomes irreversible.

There is not much time left to carry out the urgent task. The window to reform is fast closing. Senator Juan Ponce Enrile has likened the situation to a ticking time bomb.

There is definitely no more place for government-as-usual.

The minority in the Senate, if it were just interested in narrow, partisan ends, could just watch from the sidelines and shirk from active participation in the reform process. But we are Filipinos first and oppositionists second.

The dangers our nation faces and the palpable loss of hope in the future compel us all – majority and minority – to speedily address the crisis.

Suggested reform areas

Today, I shall propose a framework for change and reform. The proposal is not an exhaustive and all-inclusive agenda. For a comprehensive reform agenda will require much time and even much more money, both of which we do not have the luxury at the moment. The proposals relate broadly to four foundation areas of development: human capital buildup, food and income generation, government and governance reform, and the peace process.

I submit reforms can begin with the following specific concerns:

  • Basic Education
  • Primary health care
  • Agriculture, rural infrastructure and agro-tourism
  • Political and constitutional reforms
  • Security and public order reform

Strengthening basic education

EducationBasic education is the first and largest building block of the Philippine educational system. Ninety two percent (92%) of Filipino children go to public elementary schools, while seventy-nine percent (79%) attend public secondary high school.

The reform program shall, first of all, make up the shortage of teachers, classrooms, textbooks, desks and other physical requirements. But even more pressing is an intensive training program for teachers, math and science teachers in particular.

We should fund a year-round training and retraining program for our elementary and high school teachers. Any effort to reform education has to start with creating a vast pool of good teachers at the basic education level.

Primary health care

Reform in the health sector should focus on primary health care. This means immunization, maternal and child health care, and nutrition.

Six of the top ten causes of death and diseases in the country are all poverty-related and only four are lifestyle related.

Our infant mortality rate of 29 deaths per 1,000 live births is one of the highest in Asia. This only means that we have to take better and focused care of our mothers and infant children.

One in every four children under age ten is seriously malnourished.

Addressing now the diseases linked to poverty and improving maternal and child health, I believe, offer a more viable, long-term investment in our people’s health.

Agricultural reform

Agricultural reforms should concentrate initially on building a network of post-harvest facilities across the country to reduce loss and wastage. Right now, this is the most strategic investment in the sector. We need to provide every province with an integrated milling complex. We need dryers and silos, grains handling facilities in ports, cold chain system and refrigeration facilities.

In 2001, the total losses of palay due to lack of post-harvest facilities represent 14.84% of the country’s total production, or the equivalent of P15.23 billion we spent for rice importation. On the other hand, the recorded losses in our corn production reached 12.70% or P2.15 billion in value, which is more than our imports for the same year totaling P1.46 billion.

Plugging, therefore, these huge post-harvest losses in the grains sector even only by half would dramatically reduce our import dependency ratio.

These post-harvest facilities shall be strategically placed in areas around the country that are highly suitable for agriculture. For instance, for corn, we can deploy the facilities in the country’s top-producing provinces of Isabela, Bukidnon, South Cotabato , Lanao del Sur, North Cotabato , Maguindanao, Lanao del Norte, Sultan Kudarat, Cebu , Cagayan, Pangasinan and Saranggani.

For palay, Nueva Ecija, Isabela, Pangasinan, Iloilo , Cagayan, Tarlac, North Cotabato , Leyte , Camarines Sur, Negros Occidental, Sultan Kudarat, Zamboanga Sur, Bulacan, the two Mindoro provinces, Bukidnon, South Cotabato , Maguindanao, Ilocos Norte, Antique, Nueva Vizcaya, Pampanga, Palawan , Lanao del Norte and Aurora can be the initial recipients of these crucial facilities.

Food production, rural infrastructure and agro-tourism should in fact be the Three Cogs of a viable job-generation and poverty-alleviation strategy. The pursuit of the three goes hand in hand. Prioritizing the three under on comprehensive program will provide a major solution to generating jobs and increasing income in the countryside where it matters most.

Agro-tourism development

We can capitalize on our vast natural attractions and rich historical and cultural activities while preserving our rural environment. Local governments, with the full backing and support of the Department of Tourism, can conduct home stay programs in places where hotels are inadequate or lacking. They should strongly promote sanitation and cleanliness, and ensure peace and order in their communities.

In this pursuit, government should promote the development of sites that are out of the traditional tourist destination loop, especially in the eastern portion of the country, which happens to be the most depressed areas. These potential areas can be found starting from the up north in Cagayan, Isabela, Aurora, Quezon, Camarines Norte, Albay, Catanduanes, Sorsogon and stretching down to the southern provinces of Eastern Samar, Surigao Norte, Misamis Oriental, Saranggani, the Zamboanga Peninsula, and Tawi-Tawi.

Legislators, especially Senators, can allocate some of their pork barrel budget for projects such as farm-to-market roads, abattoirs, public markets, communal irrigation and other water resources. These key rural infrastructure projects are critical in helping promote economic growth and progress in the countryside.

Rebuilding our political institutions

ElectionsConstitutional change is imperative. Whether one sees the present system as predictable and need not to be changed, and a new one uncertain which we cannot risk, all of us can agree that almost six decades of the present political system has not made the Filipinos more comfortable and secure. Our earlier dependency on the colonial master has just been transferred to a powerful Filipinized central government. I believe we need a thorough going review, not a patchwork of amendments, of our Charter.

But a change in the form of government requires a precondition reforming the way we conduct elections. Automation shall be the anchor of our electoral reform. The experience of India, a tumultuous democracy that recently conducted a peaceful election using modern and untainted technology, shows that we can also do it here.

We can lay down the foundation for a durable and stable party system. Two critical pieces of legislation, the Political Party Development Act and the Campaign Finance Reform Act have been forwarded to the legislative mills of both chambers, awaiting consideration and passage.

The first one seeks to make political parties strong and independent, with ideology and program – not personalities – as their reason for being.

The proposed Campaign Finance Reform Act seeks to prevent the entry of dirty money into political campaigns and ensure the integrity of the electoral process.

Anti-corruption program

Combating official corruption is a key component of political form. A 2004 country assessment made by the United Nations Development Program said P100 billion of the country’s annual budget is lost to corruption, mostly to rigged public works contracts and the purchase of goods and services.

A rigorous implementation of the Government Procurement Act and E-bidding would help ease official corruption. A system of reward and protection to those who expose corruption should be put in place. A rigid regulatory audit should be conducted, focused on simplifying ways of doing business with government.

Promoting the peace process

A speedy resolution of the lingering insurgency problem is a prerequisite to attaining durable and sustainable development. And so is the final solution to the secessionist problem in the South.

In the case of the MILF, Congress should formulate a special Mindanao Agenda to bolster the peace process. Securing peace in the troubled spots of the region is critical and should be accorded high priority in our agenda. Apart from preventing unnecessary waste of human lives, the money that we would save once we stop buying arms and ammunition to secure the peace there will not only be our peace dividend. Just consider the following:

  • Mindanao is free from the dreaded foot and mouth disease – which is commercially worth billions of pesos. How many areas in the world today can truly claim to be FMD-free?
  • Mindanao is typhoon-free, ensuring year-round agricultural production. This is of huge monetary value.
  • Mindanao has marine and mineral resources that have yet to be fully taped and exploited.
  • Mindanao is linked to an economically vibrant region and that linkage is of immense value in international trade and commerce.

Having indicated the areas where the reforms will initially take place, it is fair to ask this question – where do we get the money?

To get the money for these initiatives, we need not to impose new taxes. I propose that we carry out several measures to increase revenue collection, plug tax leakages and raise money from off-tax undertakings. We can cut down on non-essential government expenses and vigorously pursue the collection of receivables.

Funding sources

The government can generate an extra P14 billion in revenues annually from the rationalization of its various fiscal incentives.

Yearly tax leakages amount to P240 billion. We can solve this by strengthening our tax administration system and by intensifying the drive against tax dodgers and cheats.

Based on 2003 earnings, revenue-generating public agencies, such as PCSO, PAGCOR, NAIA, ATO, LTO, LTFRB, LRA and PPA, among others, generate a cumulative income estimate of about P52.47 billion, which easily can be increased by 10%.

For this year, the expected revenue program of government from the privatization pipeline translates to approximately P1 billion in income that could also be tapped. This does not include, of course, the US$4 billion target yield from the sale of 30 percent of the National Power Corporation’s generating and transmission assets this year.

The equity holdings of government in top-grossing private corporations like Meralco, Petron, and Equitable Bank is estimated at P18.1 billion. This could also be an additional source of funding.

Government account receivables worth P523 billion is also a potential source. A serious effort to collect 5% of this big amount is already worthwhile.

We can also save roughly P7.78 billion a year imposing across-the-board cuts on traveling funds, intelligence funds and extraordinary and miscellaneous expenses.

Money can be raised – if only the government has the will to improve tax collection, cut down on non-essential expenditures, intensify the collection of uncollected fees and charges and rationalize state incentives.

This, of course, is not an exhaustive listing. Our tax experts in this hall, I am certain, can originate other innovative ways of raising revenues without imposing new taxes. For instance, the national government can augment its financing of rural infrastructure through a matching grant program with the LGUs.

What I have tried to do is only to indicate some of the areas for extra revenue generation.

For now, let us build a bipartisan consensus to get these critical few projects moving and set a timeline for their implementation.

The programs are about social spending and equity, designed to bridge the vast chasm between the rich and the poor. The gap should not b allowed to stretch to a dangerous threshold.

We ask the chamber to consider these practical proposals, which are within our means to finance and carry out. They can be achieved within a certain time frame. And when implemented, I believe can provide a sure and sound foundation for sustainable development.

We have not time to waste. Let us begin now!

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