60860363 the 2011 State of the Nation Address Technical Report

8/6/2019 60860363 the 2011 State of the Nation Address Technical Report

1/103

The 2011 State of the Nation Address Technical Report

INTRODUCTIONTuwid na Daan or the Straight Path is a phrase repeatedly mentioned by President Benigno S.Aquino III to pertain to his governance direction for the country.Essential to this concept of Tuwid na Daan is the battle cry Kung Walang Corrupt, W

alangMahirap. The administration believes that corruption is the root cause of the countrys woes,and eliminating corruption will necessarily lead to renewed investor confidence,eventual growthand development, poverty reduction, and attainment of peace.The straight path, however, does not only pertain to the Presidents anti-corruption campaign. Italso encompasses a way of doing things right, where the process is participatory; the programsare holistic; growth is sustained; the peace policy is comprehensive; and development is

sustainable. Through the living examples of our leaders, led by the President, this re-awakenedsense of right and wrong continues to be translated to economic value.It is in this light that the accomplishments of the Aquino Administration, sincethe first State ofthe Nation Address (SONA) in July 2010, are being highlighted:A. GOOD GOVERNANCE AND ANTI-CORRUPTIONTaking the initial step in the achievement of .Kung Walang Corrupt, Walang Mahirap., whereeradicating corruption is seen as the key approach to development, President Aquino laid thefoundations for a clean, transparent, and responsive government. Key reforms continue to be

instituted to reduce red tape, enforce anti-corruption and anti-red tape laws, and penalize thosewho violate these laws. The government is also fixing the incentive structures to recognize meritand reward good performance with the aim of ensuring the sustainability of the Aquino reformagenda. These and other initiatives are presented below:1. Institutionalizing Public Accountability1.1. Reforming the budgeting and project identification processes1.1.1. Governments prudent expenditure management was a result of the use of theZero-BasedBudgeting (ZBB) approach in 2010. The ZBB enables the government to identify and

terminateprograms that are no longer delivering intended outcomes. The savings generatedfrom theseterminated programs were channelled to programs that are performing well and toother priorityprograms to address critical gaps in education and health. As part of the ZBB approach, theDepartment of Budget and Management (DBM) is also gradually transferring SpecialPurposeFunds back to the departments for greater accountability and making the PriorityDevelopmentAssistance Fund (PDAF) more transparent.


2/103

Due to the prudent management of public funds, the government has been able to provide P12billion in funding for other key social and economic services that were not included in the 2011General Appropriations Act, including:

. P850 million for the salaries of 10,000 registered nurses hired and deployed to poor ruralcommunities in the country;. P4.2 billion to build 20,000 houses for the military and the police; and. P423 million for the acquisition of the US Hamilton-class cutter, which will helpstrengthen the perimeter security within the Malampaya area

1.1.2. In an effort to address issues about the quality of road projects, the Road Boardstrengthened the identification and selection of projects funded by the Motor Ve

hicle UsersCharge through the proper use of the Highway Development Management version 4 (H

DM-4), aplanning tool that prioritizes or selects projects based on actual needs and economicconsiderations.The Road Board also implemented standard unit costs nationwide that is 30% lowerthanprevious cost estimates; and clearly defined the design and specification of itsprojects to makethese conform to international standards, where previously, Programs of Work were not required.1.1.3. The President directed the DBM to establish a comprehensive database of g

overnmentmanpower through an enhanced Government Manpower Information System (GMIS). TheGMIS shall provide a complete and accurate database of all positions, incumbents, andauthorized compensation in the Executive, Legislative, and Judicial Branches ofthe government,including Government-Owned or Controlled Corporations (GOCCs), Government FinancialInstitutions (GFIs), and Constitutional Offices. The GMIS shall also be linked with the personnelinformation systems of concerned agencies such as the Civil Service Commission (CSC) and theGovernment Service Insurance System (GSIS).1.1.4. To eliminate wasteful spending and fund conversion in the military, the DBM changed itsprevious policy of releasing Personnel Services (PS) allotments in full to agencies. Now, releasesof PS are done for filled positions only. This means that no amount is releasedto the agencies ontop of their actual PS requirement.1.1.5. Moreover, the DBM launched on 20 July 2011 the Electronic Transparency andAccountability in Lump-sum Fund System (eTAILS). The eTAILS is a management informationsystem that digitizes the processing of lump-sum funds and supports the timely d

isclosure oflump sum fund release information on the DBM website. This helps the governmentkeep track


3/103

of information on the release, while enabling the public to scrutinize how theirmoney is beingallocated.1.2. Upholding transparent and competitive bidding

Allegations of collusion in the bidding of public works projects are being addressed through

transparency reforms and strict adherence to public bidding rules. The DPWH nowposts allprojects on its website. The DPWH has also simplified bidding procedures by reducing the


4/103

required 20 documents to just five (5) documents. It has also adopted a new coststructure fordetermining the approved budget cost (ABC), which minimizes leakage by reducingtheallocation for indirect costs by as much as 8%. To cite an example, the DPWH wasable to bid

out the 7.53-km Plaridel By-pass Road Contract Package No. 2 in Bulacan for onlyP543 millionin 2010, at one-third of the cost of the slightly longer 7.93-km Contract Package No. 1 that wasbid out in July 2008. While the two projects are of the same road specifications, the cost ofContract Package No. 1 was 8.5% above the approved agency estimate while Contract PackageNo. 2 cost 23% lower than the agency estimate, saving a total of P163.2 million.As a result of these reforms, the DPWH generated savings of P2.51 billion in taxpayers money

from the 3,692 projects (civil works, goods, and consultancy services) from July2010 to June2011. The DPWH expects total savings of roughly P6 to P7 billion by the end of this year as aresult of transparent and competitive bidding. The savings can then be utilizedfor other prioritydevelopment projects.The P2.51 billion savings generated by the DPWH includes the P1.07 billion savedfrom thereview and bidding of contracts under the Post-Ondoy and Pepeng Short-Term InfrastructureRehabilitation Project (POPSTIRP).On 26 May 2010, the DPWH was granted a loan by the JICA worth P5.05 billion for

79 contractpackages under the POPSTIRP. Of these contracts, 19 were cancelled due to lapsesin theprocess. The 19 contracts were approved and signed even prior to the release ofthe SpecialAllotment Release Order (SARO) for the project, which is against government procurementlaws.Likewise, the government has conducted open and competitive bidding for the reinsurance needsof the National Power Corporation (NPC), the Power Sector Assets and LiabilitiesManagementCorporation (PSALM), the National Grid Corporation of the Philippines (NGCP), and the MetroRail Transit Corporation (MRTC). This generated savings amounting to over US$8 million orabout P370 million from the lower bids of the winning re-insurers compared to the approvedbudget for the contract and last years premium. Moreover, the insured agencies get improvedcoverage by having lower deductibles that allow them to claim for losses or damages at lowerparticipation limits.1.3. Ensuring transparency and accountability in local governance1.3.1. The DILGs full disclosure policy, issued in August 2010, required all Loca

l GovernmentUnits (LGUs) to be transparent to the public by posting in local bulletin boards, newspapers, and


5/103

websites information on the utilization of government funds and the implementation of projects.As of 31 May 2011, a total of 1,473 LGUs (68 provinces, 119 cities and 1,286 municipalities) or86% of the 1,714 LGUs nationwide have fully complied with this policy. For purposes oftransparency, the DBM also posted the annual internal revenue allotment (IRA) fr

om 2006 to2010 per region from the provincial down to the barangay level on its website.


6/103

1.3.2. The DILG also awarded the LGU Performance Challenge Fund (PCF) to LGUs that haveearned the Seal of Good Housekeeping. These LGUs have exhibited strong performance alongthe four (4) core governance areas, as follows:

. Sound fiscal management, i.e., growth in local revenues over three (3) years,and noadverse report from the Commission on Audit (COA);. Transparency and accountability, i.e., strict adherence to the full disclosurepolicy,transparent procurement process, compliance with Anti-Red Tape Law, and functioninglocal special bodies; and. Valuing of performance monitoring, i.e., use of performance monitoring tools and regularreports to the public.. Good planning, i.e., having a comprehensive development plan and an Executive-

Legislative Agenda;

In 2010, 30 or 4.85% of the 619 4th to 6th class municipalities successfully obtained the Seal ofGood Housekeeping.Beginning 2011, the coverage of the PCF was expanded to all provinces, cities andmunicipalities. Assessment is now ongoing and is focused on the COA audit opinion for CY2010 and the posting of local budget and finances, bids, and public offerings. As of 17 June2011, 13 or 46.43% of the 28 4th to 5th class cities and 218 or 35.22% of the 61

9 4th to 6th classmunicipalities subjected to assessment may now be conferred with the Seal and have the chanceto get the PCF.1.4. Providing quality service lanes to fast-track the provision of frontline services

1.4.1. In 2010, the Citizens Charter of the PNP was recognized by the CSC as oneof the fullycompliant government agencies implementing RA 9485 or the Anti-Red Tape Act (ARTA) of2007.[1]Also, the DILG Project Comprehensive Response to Eliminate (CURE) Red Tape in the LGUs issuccessfully being implemented at the local level wherein 94% or 1,613 LGUs (consisting of 75provinces, 121 cities, and 1,417 municipalities) of the 1,714 LGUs nationwide have theirrespective citizens charters, public assistance or complaint desks, one-stop shops and/orcourtesy lanes, thus improving the efficiency and effectiveness of LGUs in the delivery of basicgoods and services.

1.4.2. The Department of Trade and Industry (DTI) also improved its mechanisms f

or redress.From 2010 until the first quarter of 2011, 91,828 consumer complaints were received by its


7/103

Consumer Welfare Desk, 90,577 or 98.7% of which were resolved.[2]2. Addressing Graft and Corruption2.1. Addressing allegations of corruption in the military and implementing reforms in the AFP.


8/103

2.1.1. In order to ensure transparency in the use of funds, apart from regular audits, the AFP hasconducted five (5) unprogrammed or special audits on cash examinations and retiring specialdisbursing officers. Three (3) of these are on-going, one (1) report is being drafted, and one (1)

completed.

The AFP-Office of Ethical Standard and Public Accountability (OESPA) noted 100%compliance with accountability measures, such as the filing of SALNs.[3] In compliance withthe rules and regulations to minimize discretion on government deposits, particularly in line withthe provisions of Executive Order (EO) No. 338, the AFP transferred a total of P159 million ofthe residual UN Reimbursement Fund (UNRF) to the Bureau of Treasury (BTr) on 28February2011. To date, the total UNRF amount deposited with the BTr is P426 million. Mor

eover, allreimbursements from the UN are now directly being deposited to the BTr by the DFA.2.1.2. From July 2010 to June 2011, the AFP filed cases before the Sandiganbayanagainst 31AFP officers for corruption-related charges while the cases of 21 AFP officers are with theOffice of the Ombudsman.

2.1.3. The government also pursued the cleansing[4] of the AFP Retired and Veterans PensionLists, which resulted in fund recoveries amounting to P4.685 billion. This amount was used to

pay governments current pension obligations and arrears to the veterans and pensioners.Moreover, through the anti-fixer campaign, three (3) Philippine Veterans AffairsOffice (PVAO)employees have been dismissed, 27 cases have been filed, and three (3) cases resolved.2.1.4. On 14 June 2011, the Office of the Deputy Executive Secretary for Legal Affairs(ODESLA) formally charged Ombudsman Special Prosecutor Wendell Sulit with acts and/oromissions constituting graft and corruption and betrayal of public trust. The case involves herentering into a Plea Bargaining Agreement with Maj. Gen. Carlos Garcia, whereinGen. Garciawas allowed to plea to the lesser offense of indirect bribery and facilitating money laundering.The Ombudsman also ordered Gen. Garcia to restore to the government the amount of P135million despite being accused of plundering P350 million.Special Prosecutor Sulit was placed under preventive suspension for 90 days. TheOffice of thePresident will form a panel that will conduct the formal investigation on the case.2.2. Addressing abuses and irregularities in government agencies2.2.1. Arrested the abuses and funds misuse in the Autonomous Region in Muslim M

indanao(ARMM). An Audit of the ARMM Office of the Regional Governor covering the periodJanuary


9/103

2008 to September 2009 revealed that the funds received by the ORG for its operations were notproperly utilized and managed and that transactions amounting to P1.003 billioncould not beconsidered as valid and legitimate. Also, a total of P866.51 million in cash advances, or 80% oftotal disbursements made by the ORG, were released to the disbursing officers, i

n violation ofthe general rule that payments must be made by check.

As a result of these findings, the current ORG stopped the payment order againstall checksdrawable against the bank accounts of the ARMM Regional Government, terminated all


10/103

contractual and co-terminus employees hired by the previous Regional Governor, conductedinventory reports on personnel and assets, and posted bids and awards and the ARMM budget onthe ARMM website.Likewise, the DILG recommended the filing of administrative charges against some

ARMMofficials and personnel for dishonesty, abuse of authority, gross misconduct, and conductprejudicial to the best interest of the service. The DILG also recommended the filing of criminalcases because of the abuse of regional government resources.An audit of the Province of Maguindanao had similar findings: that financial transactionsamounting to P865.88 million were considered to be fictitious, as these were either denied bysuppliers or supported with spurious documents.Meanwhile, the DPWH-ARMM failed to properly utilize, manage, and record public f

undsamounting to P1.12 billion. Moreover, the COA found that the utilization of funds andimplementation of programs and projects by the ARMM Social Fund Project ProjectMonitoring Office (ASFP-PMO) fell short of the desired improvements as the purpose intendedwas not maximized and the implementation was found deficient.A DILG-proposed roadmap aims to bring ARMM to the sustainable path of good governance.This entails the strengthening of bureaucratic reforms, sustained transparency and performance,improved ORG oversight and assistance to LGUs, stricter COA and Civil Service Commission

(CSC) oversight on ARMM and LGU implementation of development projects, steppedup peaceand order initiatives, and reforms in the electoral process.The postponement of the August 2011 ARMM elections (as mandated by RA 10153) willprovide an opportunity for ARMM to pursue this roadmap.

2.2.2. Suspended Local Water Utilities Administration (LWUA) officials. The Office of theOmbudsman found the LWUA Chairman and two other officers of the LWUA guilty of GraveMisconduct and of violating Republic Act (RA) No. 6713 (Code of Conduct and EthicalStandards for Public Officials and Employees) for the alleged unlawful investment of LWUAfunds in the amount of P780 million in Express Savings Bank, Inc. (EXSBI),[5] without securingprior approval of the Monetary Board. On 4 July 2011, the Ombudsman ordered thedismissal ofthe LWUA Chairman and the two LWUA officers.Administrative complaints were also lodged with the Office of the President against fivemembers of the LWUA Board of Trustees, including the Chairman, for grave misconduct arisingfrom the acquisition of shares of stock of EXSBI. The Office of the President pl

aced themembers of the Board of Trustees on preventive suspension for 90 days.


11/103

2.2.3. Rationalized GOCC bonuses. Early in the term of President Aquino, the administrationdiscovered that officers and board members of several GOCCs enjoyed questionablebonuses andallowances. For example, a COA report disclosed that Metropolitan Waterworks andSewerageSystem (MWSS) employees received more than P150 million in improperly authorized

allowances and bonuses in 2009. Also, the current Board of the PNCC has reviewedactions by


12/103

the previous members of the Board who allegedly benefited from undue privilegesand bonusesduring their tenure. The current PNCC Board has also reduced manpower, terminatedunnecessary positions, and rationalized administrative and support services. These cost-saving

measures and reforms have resulted in the reduction of monthly expenses from about P22 millionto P11 million.The President thus ordered a comprehensive review culminating in the signing ofthe GOCCGovernance Act of 2011. The Act strengthens governments oversight of GOCCs through thecreation of a Governance Commission for GOCCs.As a result of the Department of Finances (DOF) better oversight, GOCCs remitteda total ofP34.47 billion to the national government, inclusive of P27.29 billion in dividends, as of May

2011. This is one of the highest remittances made by GOCCs to date. In contrast,GOCCremittances in 2010 amounted to 26.99 billion.2.2.4. Reforming the National Food Authority (NFA). The Food Staples Self-Sufficiency (FSS)Program and NFA Roadmap were formulated to attain self-sufficiency in the countrys stapleand to implement fundamental reforms in NFA Operations. NFAs role is focused at maintainingbuffer stocks of rice (30 days) and providing price support to small farmers. Stocks for bufferstocking are accumulated by increasing domestic procurement while reducing the volume of

importation by encouraging the private sector to participate more on importation. NFAs policyof .buy high-store long-sell low. has shifted to a policy where NFA selling prices of rice aregradually increased to approach market levels with social welfare agencies handling subsidizedrice if needed but buying stocks from NFA at market prices.A system audit was conducted with the help of the private sector in order to evaluate theprevious administrations unusually large NFA rice importations and evaluate the agencyslegacy problems, with the end in view of not only ferreting out the truth but torecommendprescriptive measures to rehabilitate and strengthen the NFA.2.3. Investigation of Disadvantageous Projects and Contracts

2.3.1. Addressed PCSOs exorbitant spending for advertisements. The Philippine CharitySweepstakes Office (PCSO) overspent its advertising budget by more than P2.14 billion from2004 to 2010.[6] To conceal the expenses, parts of the amounts were debited to differentaccounts. Despite COAs repeated recommendations to cut PCSOs advertising expenses,theformer PCSO Board still authorized more advertising expenses during the campaign

period. ThePCSO also sponsored concerts and produced a full length movie. These were done despite


13/103

having unrecorded payables to TV, radio, and other media companies in the amountofP740 million. As a result of these anomalies, the current PCSO Board stopped theproduction ofthe television dramas, which saved P110 million; and, reduced its 2011 advertising budget by40.8% from P928.3 million to P549.02 million. The current PCSO board was also ab

le to obtaina 25% discount on all outstanding and valid advertising contracts. The savings from thesereductions can now be rechanneled to more meaningful charitable projects.


14/103

The PCSO also spent an estimated P325 million for its intelligence funds from 2008 to 2010.The intelligence funds were allegedly used to pay for anti-jueteng operations, blood money, andfor other discretionary uses. This practice has been discontinued by the presentBoard.

2.3.2. Cancellation of the Laguna Lake Rehabilitation Project. On 17 June 2011,the Presidentcancelled the P18.5 billion Laguna Lake Rehabilitation Project (LLRP) due to inconsistenciesbetween the project components and its intended objectives; and the lack of transparency in thereview and approval of the project. A DENR study found out that due to heavy deforestation anderosion, the areas to be dredged would end up being silted again in three (3) years withoutmassive rehabilitation of the watersheds. The DENR further noted that the approval of the supply

contract was done without any thorough review. In addition, the Projects EconomicInternal

Rate of Return (EIRR) of 7.04%, which considers only the projects quantified economicbenefits, does not meet the 15% minimum hurdle rate or the minimum acceptable rate of return.In the end, despite the laudable objectives, the questionable project componentsof the LLRPjustified its cancellation.

2.3.3. Reviewed the anomalous procurement of second-hand helicopters for the PNPSpecialAction Force. In 2009, the PNP procured three (3) Light Police Operational Helic

opters (LPOH)for P104.99 million on the assumption that these were brand new. However, in 2011, the PNPDirectorate for Logistics discovered that two (2) helicopters supplied by the Manila AerospaceProducts Trading Corporation (MAPTRA) were previously owned by Asian Spirit, which leasedthe same to Lion Air, Inc. The PNP further discovered that two (2) helicopters,which weresupposedly brand new, were used for five (5) years prior with flying times of 536.3 hours and489.9 hours, respectively.[7]

The PNP Procurement Office also failed to recognize that MAPTRA was not an eligible supplierbecause it was just a newly-registered corporation at the time it transacted with the PNP. Thus, ithad no record yet of completing a single contract similar to the contract to bidand of goodstanding as a supplier, which are requirements set by the law.[8] There was alsoan absence ofauthorized observers during the entire procurement process.[9] Lastly, the members of theinspection and acceptance committee (IAC) failed to exercise their duties with diligence as they

did not possess the technical qualifications to perform the duty of the IAC thatresulted in theacceptance of inferior goods.


15/103

2.4. Increasing Civil Society Participation in Governance2.4.1. Implemented participatory budgeting. Six (6) national government agenciesand three (3)GOCCs have piloted participatory budgeting with civil society organizations (CSOs), namely:the Department of Agriculture (DA); the Department of Agrarian Reform (DAR); the

Department of Education (DepEd); the Department of Social Welfare and Development(DSWD); the Department of Health (DOH); the DPWH; the National Housing Authority(NHA);the NFA; and the National Home Mortgage Finance Corporation (NHMFC). Participatorybudgeting helps increase governance transparency by engaging CSOs in the determination of theexpenditure priorities of government.


16/103

The DPWH conducted its first CSO budget consultation for FY 2012 on 28 April 2011. CSOparticipation included the review, assessment, and evaluation of DPWH projects programmed for2012. A Budget Partnership Agreement (BPA) was signed between the DPWH and .Bantay

Lansangan. (Roadwatch) on 15 March 2011 to ensure a continuous budget consultation processwith the private sector. As of May 2011, at least 46 CSOs had been accredited aspartners of theDPWH, while 52 others had pending accreditations prior to their submission and completion ofthe required documents.2.4.2. Forging an integrity pact between government and the private sector. A private sectorinitiative to forge a pact of integrity between the government and the private sector is rapidlygaining momentum. As of June 2011, ten (10) agencies have signed on to the Integ

rity Initiative,namely: DTI, DBM, DepEd, DOF, DOLE, DND, DPWH, DOT, DOE, and DOTC as well as 550private companies. The Integrity Initiative aims to reduce corruption in the public and privatesectors through the voluntary enforcement of good governance norms based on a mutuallyagreed code of conduct. Agencies will soon ask suppliers and bidders to sign onto their agencyintegrity pacts.On 22 February 2011, the DepEd forged an integrity pact with more than 80 of itssuppliers andcivil society partners to promote ethical, clean, and transparent business trans

actions, particularlywith regard to the procurement of basic education goods and services.2.4.3. Entered into a Memorandum of Agreement (MOA) with civil society groups and non-government organizations (NGOs) on the Conditional Cash Transfer (CCT) Program.As of 22July 2011, 222 national and local non-government organizations (NGOs) and civilsocietyorganizations (CSOs) signed a MOA with the DSWD to empower their active participation in theimplementation of the CCT Program to ensure good governance and transparency.2.4.4. Invited CSO participation in monitoring infrastructure projects. The DPWHhas alsoentered into a Memorandum of Understanding (MOU) with a broad coalition of CSOs,NGOs,church organizations, and the academe for the purpose of monitoring the implementation ofDPWH projects.3. Professional, Motivated, and Energized Bureaucracy and Armed ForcesThe government is committed to support the combat readiness and effectiveness ofthe ArmedForces; recruitment and retention of quality personnel; and upliftment of soldier morale andfamily wellness.From July 2010 to June 2011, a total of P21.37 million was used to repair and ma

intain variousAFP housing units; P39.60 million was also released for the housing assistance of AFP battle


17/103

casualties; another P15.19 million has been released to support AFP battle casualties; and a totalof 4,535 dependents of killed in action/wounded in action were awarded educational assistance.

3.1. The President committed to provide at least 20,000 housing units for the AFP and PNP in

2011. In this light, Administrative Order (AO) No. 9 Directing the National Housing Authorityto Formulate, Implement and Manage a Housing Program for the Military and Police


18/103

Personnel was issued on 11 April 2011, which authorized the NHA to adopt the CommunityInitiative Approach Program (CIAP) to implement the housing program.Under the NHAs Socialized Housing Program, a soldier with a rank of Private, receiving aP400 monthly quarters allowance, will now be able to acquire a housing unit in a

ny of the twelve(12) housing project sites in Brgys. (1) Buena Vista and (2) Biclatan in Gen. Trias, Cavite; (3)Brgy. Conchu, Trece Martires, Cavite; (4) Brgy. Timbao, Bian City, Laguna; and Brgys. (5)Looc and (6) Kay-Anlog in Calamba City, Laguna; (7) Brgy. Gaya-Gaya, San Jose Del MonteCity, Bulacan; (8) Brgy. San Mateo, Norzagaray, Bulacan; and Brgys. (9) Batia and (10)Tambubong in Bocaue, Bulacan; and (11) Brgy. Pinugay, Baras, Rizal and (12) Brgy. San Isidro,Rodriguez, Rizal. A housing beneficiary is required to pay the housing unit for

30 years, with amonthly amortization of at least P200.00 for the first five (5) years. The Aquino Administrationwill subsidize P35,000.00 for each housing beneficiary.The ground breaking of the AFP-PNP Housing Project in Barangay Batia, Bocaue, Bulacan washeld on 23 May 2011. The first 4,000 Certificates of Land Entitlement and Lot Allotment(CELA) were awarded and 90 housing units were turned over to AFP and PNP personnel inBrgy. Looc, Calamba City, Laguna; Brgy. Batia, Bocaue, Bulacan; Brgy. Gaya-Gaya,San JoseDel Monte, Bulacan; and Brgy. Pinugay, Baras, Rizal on 15 July 2011.

3.2. The President signed EO No. 15 on 20 December 2010, which increased the current combatduty pay of soldiers from P240 to P500 effective January 2011.3.3. To further unify and strengthen the AFP, the President issued PresidentialProclamationNo. 75 granting amnesty to individuals who participated in the 25 July 2003 Oakwood Mutiny,the February 2006 Marines Stand Off, and the 29 November 2007 Manila Peninsula HotelIncident.4. Revenue Generation EnforcementIn his first SONA, the President pledged that the Bureau of Internal Revenue (BIR) and Bureauof Customs (BOC) would file weekly cases against tax evaders and smugglers. Through theimplementation of the Run After Tax Evaders (RATE) of the BIR and the Run AftertheSmugglers (RATS) of the BOC, the leaks in the governments coffers continue to beplugged.Moreover, the DOFs Revenue Integrity Protection Service (RIPS) investigated allegations ofcorruption in the DOF and its attached agencies.4.1. The current administration intensified the implementation of its RATE program that in justone year, the tax evasion cases filed with the DOJ reached almost half of the 12

9 cases filedduring the previous administration. From July 2010 to 07 July 2011, the BIR wasable to file 55


19/103

tax evasion cases, involving a total taxable amount of over P22 billion.

4.2. As of 19 July 2011, filed with the DOJ 39 criminal cases involving 179 suspected smugglerswith a total dutiable value of P54 billion. Of the 39 cases, one (1) has been filed in court, 21 havebeen submitted for resolution by the DOJ, seven (7) are under preliminary invest

igation, while10 are up for preliminary investigation.


20/103

4.3. As of 19 July 2011, the DOF has filed 86 cases against allegedly corrupt governmentemployees before the Office of the Ombudsman since 2003. A total of 53 officialshave beensuspended since the beginning of the RIPS program in 2003, 17 were suspended under President

Aquinos watch. A total of 19 officials have been dismissed from the service since2003, three(3) of whom were dismissed under the term of President Aquino.5. Making the Country an Attractive Investment Location.5.1. Streamlined business name registration. The DTI successfully implemented measures toreduce the time span of business name registration from an average of 4 to 8 hours to within 15minutes. The Enhanced Business Name Registration System (EBNRS) simplified the applicationprocess by reducing the required information fields from 36 to 18, resulting inthe reduction of

the application form from nine (9) pages to a single page.5.2. Streamlined issuance of local government business permits. The DILG also signed a JointMemorandum Circular with the DTI to streamline the Business Permits and Licensing System(BPLS) of 480 priority cities, capital towns, and municipalities from 2010 to 2012. Out of these480 priority LGUs, 18% or 86 LGUs have already streamlined their BPLS. Meanwhile, for all1,634 cities and municipalities in the country, at least 21% are ready for the streamlining of theirBPLS.As a result, LGUs utilizing the new and improved BPLS offer better service to ap

plicants forbusiness permits in their respective areas of jurisdiction. LGUs are encouragedto use a single orunified form in every transaction, with a maximum of five (5) steps and five (5)signatories. Theoutcome is a .Business Friendly LGU. that offers reduced processing time for business permitsand licenses, i.e., 10 days or less processing time for new applications and five days for licenserenewals.5.3. Developed an electronic payment system. The PEZA has completed the development of anElectronic Payment System for four (4) out of five (5) selected transactions ofPEZA enterprises.PEZAs E-payment System is a cashless payment solution that allows clients to payfortransactions with PEZA online, 24 hours a day, and from anywhere. This system promotesgreater transparency and efficiency.5.4. Promoted competition. The President issued EO 45 on 9 June 2011, designating the DOJ asthe Competition Authority. This will encourage competition and open markets. EO45 mandatesthe DOJ to conduct investigations, enforce competition laws, and prosecute violators. It also

authorizes the DOJ to supervise competition in the markets; monitor and implement measures topromote transparency and accountability in the markets; and to call on governmen


21/103

t agencies tosubmit reports and provide assistance to the agency. With this EO, the government will be ableto strengthen its enforcement of existing antitrust laws and policies to promotea level playingfield, while Congress deliberates on the pending antitrust bills.B. ECONOMIC DEVELOPMENT

1. Sustaining Economic Growth and Employment


22/103

In the first quarter of 2011, real GDP grew by 4.9%, slower than the 8.4% growthin the sameperiod in 2010 but very close to the 5.0%-6.0% forecast of the Development BudgetCoordination Committee (DBCC) for the year. Furthermore, this growth is within the NEDAs

forecast for the first quarter of 4.8%-5.8% and higher than the growth rate of Malaysia, Korea,and Thailand[10] for the same period. The strong performance of the industry andagriculturesectors, increased investments in capital formation, and increased household final consumptionexpenditure boosted growth.In April 2011, the unemployment rate went down to 7.2%, significantly lower thanthe 8.0% ratein April 2010 due to stronger growth of agricultural employment. The number of unemployedpersons decreased by 228,000 from 3.099 million in April 2010 to 2.871 million i

n April 2011.Employment level grew by 4.0% in April 2011, translating to a net addition of 1.408 millionemployed persons in the private sector.1.1. Expanded Trade and Investments. Crucial to the goal of generating jobs is the promotion ofkey investment areas and expansion of trade and investment activities where thecountry couldbe globally competitive (e.g., tourism, business process outsourcing and information technology,among others).1.1.1. Increase in Philippine Exports. Exports increased by 33.7% from $38.4 billion in 2009 to

$51.4 billion in 2010, even surpassing the $50.27 billion record set in 2007. The 2010 exportgrowth is the highest in 11 years since 1999. Exports grew by 7.5% from US$19.2billion fromJanuary to May 2010 to US$20.6 billion in the same period in 2011.1.1.2. Increase in Investments. For the period July 2010 to May 2011, the BOI and PEZAapproved a total of P535.19 billion worth of investments, a 73% increase compared to theP309.87 billion approved investments in the same comparative period in 2009 and2010. TheP535.19 billion investments are expected to generate 137,118 employment opportunities oncefully operational.The larger part or 68% of the total investment approvals during the period July2010 to May2011 came from local investors with committed investments worth P366.62 billion,95% largerthan the P187.53 billion in July 2009 to May 2010. Foreign investors contributeda total ofP168.57 billion or about 32% of the total.Just looking at the first five months of 2011, the strong business confidence, particularly fromlocal investors, was evident as overall domestic investments soared by 258% to atotal of

P224.57 billion from the P62.78 billion level posted during the same period in 2010. The bulk ofthese domestic investments went into manufacturing (e.g., refined petroleum prod


23/103

ucts, metals,and electronic products), power, and real estate activities, among others.1.1.3. Investments in Major Sectors. The following major investments in key sectors form part ofthe approved investments for the period July 2010 to May 2011:


24/103

. Manufacturing. The manufacturing sector tops the list of sectors with the highestcommitted investments worth P283.07 billion during the period July 2010-May 2011, a131% increase compared to the P122.30 billion posted in the same period in 2009-2010.

. Electronics. The Semiconductor and Electronics Industries in the Philippines (SEIPI)reported that electronics investments in the country broke an all-time record high as freshcapital expanded by 369% from $484 million in 2009 to $2.27 billion in 2010. This isalso the 7th year the industry hit over $1 billion in investments. As a result,24,552 directjobs will be generated. Of the 100 companies, which registered in 2010, 10 areexpansions while the rest are new projects. The industry hopes to double its exports in six(6) years from $22 billion in 2009 to $50 billion in 2016. The industry is bulli

sh for 2011as its exports are expected to hit over $31 billion noting that the electronicssector willcontinue to be the driver of growth of Philippine exports.. Information Technology Business Process Outsourcing (IT-BPO). A total of 30,198 IT-BPO jobs were created for the first quarter of 2011. At least 84,000 more jobs areexpected to be generated in the BPO industry within 2011. The BPO industry includescall centers, legal and medical transcription, accounting services, software developmentand animation, and other services for overseas principals. To help fill up the p

rojectedvacancies, the Technical Education and Skills Development Authority (TESDA) willoffer free six-month training courses for prospective BPO workers. Graduates will beabsorbed by the BPO companies. TESDA has allotted a total of P20 million for thefreetraining of workers.. Shipbuilding. Investments in shipping increased because of foreign investors access to100% ownership of companies engaged in shipbuilding and repair.. Mining. The mining and quarrying sectors recorded the highest increase in approved FDI,from P0.6 billion in 2009 to P 6.0 billion in 2010. The 2010 investments in mining areabout nine times larger than the 2009 mining investments.. Mass Housing. Investments are huge at P59.02 billion. These investments, whichrepresent about 50,000 units, are also expected to generate around P900 billion[11] worthof investments in related industries.. Energy. On 30 June 2011, the DOE launched the fourth Philippine Energy ContractingRound (PECR4), the biggest of all contracting rounds, in which 15 blocks with atotal

area of more than 10 million hectares were offered. The PECR4 is envisioned to addressthe countrys energy supply through the exploration of local indigenous resources.


25/103

Thiswill help the country meet its daily demand and reduce the importation of petroleum andpetroleum products.

The PECR4 road shows have attracted at least 140 independent and large-scale int

ernationalexploration companies expressing their interest to tender bids in the offered blocks. The DOEexpects around US$300-500 million for each service contract[12]. Interested investors will have


26/103

until December 2011 to signify their intent to bid while the contracts are expected to be awardednext year.1.2. Improved fiscal consolidation

1.2.1. The government deficit in 2010 was at P314.40 billion, 3.23% lower than t

he P325 billionprogrammed deficit for the year.[13] The lower deficit was due to the implementation ofmeasures to improve collections and spend wisely.

1.2.2. For the first five months of 2011, the government posted a deficit of P9.54 billion, 94.11%lower than the P162.107 billion deficit in the same period in 2010. However, excluding interestpayments on debt, the National Government (NG) incurred a primary surplus[14] ofP108.26 billion as of May 2011 due to increased revenues and sound spending, alo

ng with thestrict observance of the principles of zero-based budgeting.1.2.3. Revenue collection increased to P1.21 trillion in 2010, 7.5% higher thanthe P1.12 trillionin 2009. The BIRs collections increased from P750.30 billion in 2009 to P822.60 billion in2010. The BOCs collections increased by 17.7% from P220.30 billion in 2009 to P259.2 billionin 2010.1.2.4. Revenues grew by 16.30% from P500.01 billion in the first five months of2010 toP581.50 billion in the same period of 2011.1.2.5. The government lowered its disbursements by 10.73% from P662.12 billion i

n the firstfive months of 2010 to P591.04 billion in the same period of 2011 due to more prudent planningand sound spending of agencies. Government disbursed P1.52 trillion in 2010, orabout 94% ofthe P1.62 trillion programmed for that year.1.3. Other important initiatives to improve the fiscal position include the following:1.3.1. Congress prompt enactment of the 2011 General Appropriations Act (GAA) on27December 2010, the first budget passed on time since the 1999 National Budget. The P1.65trillion 2011 national budget is in favor of the poor and the vulnerable, as social services wereallotted the lions share (34%). The budget is based on the principle of zero-based budgeting, theobjective of which is to cut wastage.1.3.2. The 2012 Budget preparation is ahead of schedule, again, the first budgetprepared aheadof schedule since 1998. As early as 30 December 2010, the DBM had already issuedNationalBudget Memorandum (NBM) No. 107, s. 2010 providing all heads of departments, agencies,bureaus, offices, commissions, state universities and colleges, and other instrumentalities of the

national government the overall policy framework and thrusts for the FY 2012 Budget. TheNBM also set specific guidelines for the budget preparations.


27/103

1.3.3. Liability Management. Various upgrades in the countrys ratings were obtained. Debtwatcher Standard & Poors revised its long-term foreign currency credit rating forthePhilippines upwards to BB stable from BB- last November, reflecting the countrysstrong fiscal


28/103

fundamentals. The Moodys Investors Service and the Japan Credit Rating Agency, Ltd. alsoraised their outlooks for the Philippines from .stable. to .positive. in Januaryand April 2011,respectively. The upgraded outlook from Japan reflects greater possibility that the Philippine

economy will resume momentum for the improving trend of its fiscal position after successfullyweathering the challenges of the world financial crisis. For the second time in 2011, MoodysInvestors Service has upgraded the Philippines Ba3 foreign and local currency long-term bondratings to Ba2, with a stable outlook, on the back of sustainable fiscal consolidation process ofthe Aquino administration. On 23 June 2011, Fitch Ratings upgraded the Philippines Long-Term Foreign Currency Issuer Default Rating (IDR) to =BB+ from =BB, with a stableoutlook,

just one notch below investment grade. This rating was last achieved in 1997 just before theAsian financial crisis. With the upgrade, the country is now one step closer toattaining aninvestment grade rating, which is crucial in further lowering borrowing costs and attracting moreforeign direct investments.The Aquino administration moved early in executing its first Global Exchange last September2010 wherein a total of US$2.29 billion worth of short-term, high coupon U.S. dollar bonds wereexchanged into less costly but longer dated Republic of the Philippines (ROP) global bonds. This

represented one of the largest liability management exercises from an emerging market issuer atthe time and was immediately followed by the P199 billion domestic bond swap inDecember2010, which offered 10 and 25-year securities to holders of maturing bonds.Debt exchanges and the issuance of longer-termed securities increased the average maturity ofgovernment debt to 8.8 years in December 2010 from 7.9 years in June 2010.The debt-to-GDP ratio dropped from 57% in 2009 to 55.4% in 2010, well within the2010 targetof 56.5%. This means that the Philippine government is in a better position to settle its liabilities.The government decreased debt servicing by 2.14% year-on-year from P339.34 billion in the 1stquarter of 2010 to P332.07 billion in the first quarter of 2011 as the Aquino government cutdown on interest payments.1.4. Ensuring Monetary and Banking StabilityThe government maintained an effective balance on policies to preserve price stability andsupport economic growth. As a result, inflation for 2010 averaged at 3.8%, whichwas within theGovernments 2010 inflation target of 3.5%-5.5%. The inflation rate for the firstfive months of2011 averages at 4.2%, which was likewise, within the Governments target of 3%-5%

.1.4.1. Government also ensured a stable, market-driven peso. The peso appreciated by 6.8%,


29/103

from P47.46/US$1 average in July-December 2009 to P44.45/US$1 in July-December 2010. Thepeso appreciated by 4.8%, from P45.66/US$1 average in January to May 2010 to 43.55/US$1average in January to May 2011. The sustained foreign exchange inflows of portfolio and directinvestments, overseas Filipinos (OF) remittances, receipts from exports, BPO, an

d travelcontinued to support the pesos strength.


30/103

The countrys international reserves were built up, taking advantage of the stronginflows offoreign exchange to cushion the economy from external shocks. As a result, the countrys grossinternational reserves (GIR) grew by 44% from US$47.7 billion in end-May 2010 to$68.8

billion as of end-May 2011.[15] The country is expected to achieve the 2011 GIRtarget level of$70 billion as it anticipates sustained foreign exchange inflows from portfolioand directinvestments, OF remittances and receipts from exports, BPO and travel.1.4.2. The government continued to pursue reforms and implement new regulationsto maintainthe soundness and stability of the banking system. The total resources of the banking system roseby 9.4% to P7.1 trillion as of end-March 2011, spurred by the robust growth in bank depositswhich grew by 9.3% to P5.0 trillion.

Asset quality continued to improve with the non-performing loan ratio[16] of universal andcommercial banks falling to 2.95% as of end-April 2011. This is well below the pre-1997 crisislevel of 4%. The banking systems overall capitalization also remained strong, with a 17%capital adequacy ratio (CAR) [17] as of end-September 2010. This is way above the BSPregulatory requirement of 10% and the Bank for International Settlement (BIS) standard of 8%.With stability and ample liquidity in the banking system, banks continued to perform their

critical function of channeling credit to the productive sectors of the economy.Bank lendinggrew at a healthy pace of 14.2% as loans for production activities increased by15.7% in April.1.4.3. Stock Market. Since the start of the Aquino Administration, the Philippines StockExchange Index (PSEi) hit all-time high levels on seven (7) different occasions:on 20 July 2011at an all-time high of 4,507.04 points; 19 July 2011 at 4,485.65 points; 18 July2011 at 4,476.01points; 15 July 2011 at 4,458.74 points; 5 July 2011 at 4,439.61 points; 4 July2011 at 4,421.56points; and 4 November 2010 at 4,397.30 points. Mining and Oil, holding firms, and industrialsectors are among those industries that outperformed their own previous performances in thestock exchange.2. Ensuring Vital Infrastructure and Energy Sufficiency2.1 Improved infrastructure support to sustain economic growth. The following are some of themajor infrastructure projects completed during the first year of the Aquino Administration:

Name of Project

Amount


31/103

CompletionDate

Valderrama Bridge andApproaches, Antique(UK-ODA)

P53.07 million

28 March 2011

Bugo Bridge andApproaches, Antique(Austria-ODA)

P148.17 million

31 March 2011

EstrellaPantaleon Bridgeand Approaches, Makati

and Mandaluyong City

P189.32 million

15 January 2011


32/103

(GOP and Austria-ODA)

Butuan City Bypass Road(Bonbon-BanacasiAirport Section andLemon-Antongalon

Section), Agusan DelNorte

P177.96 million

30 April 2011

Butuan City-Cagayan deOro-Iligan Road(Agusan-Misamis Road),Agusan del Norte

P105.12 million

26 October 2010

Tiniwisan-MaguindaRoad (Lemon-PigdaulanSection), Agusan delNorte

P335.03 million

23 April 2011

Metro Iloilo Radial (R4)Bypass Road and IloiloCity-Sta.Barbara Road

P1.21 billion

23 April 2011

ODA and partnerships with the private sector augment governments infrastructure spending toensure the timely and full completion of our infrastructure priorities. The DPWHsmanagementphilosophy of .Doing the right projects at the right cost and right quality. also resulted inincreased savings.The DPWH aims to use these savings for prioritization of other development projects. For 2011,P16.20 billion or 24.3% of the total DPWH Capital Outlay has been allocated forinfrastructuredevelopment in Mindanao. This will help facilitate economic growth in the region.2.2 Upgrading the quality and safety of national roads.2.2.1 Strictly enforced the anti-overloading program pursuant to RA No. 8794 (MV

UC Law).The DPWH deployed additional mobile weighing stations to augment the 22 weighbridge


33/103

stations nationwide. Out of 92,279 weighed trucks in the 22 weighbridge stationsnationwide,37% or 34,026 trucks were overloaded and apprehended from January to May 2011, while 4,188trucks or 3% of 143,928 weighed trucks in the 13 mobile weighing stations in Metro Manilawere apprehended from February to May 2011.

2.2.2 Enhanced road safety and minimized traffic congestion on major roads. A total of 757,809violators of transport laws and regulations were apprehended for the period July2010-April2011. This is 45.79% higher than the DOTCs target to apprehend 519,780 errant drivers for thesame period.2.3 Working Towards Energy Sufficiency

2.3.1 Energy Efficiency and Conservation. The DOE took the following initiativesto promotethe conservation and efficient utilization of energy resources:


34/103

2.3.1.1 Established the Wholesale Electricity Spot Market (WESM) in Visayas, whichimmediately stabilized electricity supply and eliminated the manual load dropping of customers.WESM Visayas has also provided good market signals for investors. Currently, there are already

180 market participants for the integrated Luzon and Visayas market. On the other hand, theEffective Settlement Price (ESP) in the WESM for both Luzon and Visayas from January toApril 2011 ranged from a high of P3.33/kWh in February to a low of P2.30/kWh inMarch 2011.These prices are lower than the NPC regulated price of P4.6727/kWh. This is a big reductionfrom the 2010 ESPs which ranged from a high of P10.63/kWh in March 2010 to a lowofP3.63/kWh in August 2010. This means that the more players in the market translate to a more

stable and reliable supply of electricity, as well as better power pricing for the benefit ofconsumers.With the commercial operations of the WESM in the region, power outages were eliminated as itallowed even the power plants generating capacity not covered by bilateral contracts to bedispatched by trading its capacity in the power spot market. This kind of set-upprovides bettermarket condition and structure to entice more investors to address future powerneeds.2.3.1.2 Increased the Visayas generation capacity by 610 MW with the commissioning of new

power plants in the Visayas region. These power plants are the 246 MW coal-firedpower plantof the Cebu Energy Development Corporation (CEDC), the 164 MW clean coal-fired powerplant of the Panay Energy Development Corporation (PEDC), and the 200 MW coal-fired powerplant of the KEPCO Salcon Power Corporation. This gave the Visayas surplus powerof about600MW. Increased and constant investor interest, in turn, will provide a long-term solution interms of power sustainability for the region.2.3.1.3 A Shareholders Agreement was recently signed to develop a 600-MW circulatingfluidized bed coal-fired power plant project within Subic Bay Freeport Zone. Theprojectconsists of two (2) 300-MW generating units. The total cost of the project is estimated at US$1billion and its commercial operations is scheduled in October 2014 (for the first 300-MW unit)and April 2015 (for the second unit). Said power plant will use an environment-friendly cleancoal technology known worldwide to cut down environmental impacts of operating acoal firedplant. The power facility is expected to augment generation capacity of the Luzon Grid.

2.3.1.4 Promoted the .Don Emilio Abello Energy Efficiency Awards.[18], whose recipients,


35/103

including some 61 industrialized, commercial, and transport companies, were ableto post totalsavings of 156 million liters of oil amounting to P5 billion, and reduced carbonemissionsequivalent to 269,000 tons.

2.3.1.5 Conducted 12 energy audits[19] for industrial, commercial, academe, and

governmentbuildings to ensure the efficient use of energy. Total energy savings reached P24.6 million afterthe conduct of such audits.3. Achieving Food Security for More Equitable Economic Growth


36/103

The country has been highly dependent on the importation of food staples. To lessen thenations dependence on imports, Government has placed top priority on agriculturaldevelopment.3.1 The Agriculture sector (Agriculture, Hunting, Forestry and Fishing) grew by

4.2% inthe first quarter of 2011 from a negative growth of 1.08% in the first quarter of 2010. TheBureau of Agricultural Statistics (BAS) reported a 4.04 million metric ton (MT)palayproduction in January to March 2011, 15.6% higher than the 3.49 million MT produced inthe same period in 2010.The yield per hectare is estimated to reach 3.8 MT from January to June 2011, a4.3%improvement from the 3.64 MT per hectare in the same period in 2010. As such, the farmers

profit per hectare would reach P14,782.00 from January to June 2011, a 4% improvement fromthe P14,159.00 profit per hectare in the same period last year.Expansion in palay harvested area, availability of irrigation water and services, andaggressive advocacy of the DA in the implementation of its Rapid Seed Supply FinancingProject, which distributes high quality seeds to qualified palay farmers, contributed to theincrease in palay output.3.2 Completed projects to strengthen the agricultural sector3.2.1. Under the continuing regular fund from the DA, a total of 1,814 kilometers of Farm to

Market Roads (FMRs) were completed from July 2010 to May 2011, out of the targeted 2,567kilometers. In addition, 687 kms more FMRs were completed under the locally-funded andforeign assisted projects. Overall, a total of 2,501 kms of completed FMRs provide better accessto markets and social services and boost economic activities by allowing goods and products toflow in and out of the barangays. FMRs also help reduce transport costs, spoilage anddeterioration of quality of agricultural products, and facilitate delivery of farm inputs.3.2.2. From July 2010 to June 2011, a total of 65 tramlines were completed connecting remoteareas to FMRs. A total of 67 agricultural tramlines were completed since projectstart-up in2009, which is 63% of the targeted 107 units to be completed by December 2011. The use ofthese tramlines cuts the cost of hauling by half from P2 to P1 per kilogram of produce andreduces hauling time significantly from hours to just a few minutes.Inaugurated on 13 April 2011 at Twin Peaks, Tuba, Benguet, a 400-meter tramlinehas reducedhauling time from 2 hours to five minutes. Farmers pay P1 per kilo of produce tocover the cost

of diesel fuel, engine maintenance and other repairs and allowance for the tramline operator.


37/103

On 25 February 2011, a tramline built by DA-Philmech at a cost of P1.6 million was inauguratedin La Paz, Zamboanga City, a barangay located 970 meters above sea level. A 370meterdistance between the barangay and the closest national road used to take 12 hours to traverse.With the tramline, travel time over this distance has been reduced to three minu

tes. A localgroup, the La Paz Farmers Association operates the tramline collecting a fee of one peso for aload of 350 kilos of corn and vegetables.


38/103

3.2.3. All in all, in the first 11 months of the Aquino Administration (July 2010 to May 2011),11,611 hectares of new areas were irrigated, 40,053 hectares were restored, and171,910 hectareswere rehabilitated both for current and carry over projects. Restoration entailsrepairing the

irrigation facility that is currently not functional while rehabilitation meansupgrading orimproving the facility, which is currently working but has not attained the maximum or designedirrigation efficiency.3.2.4. Put up the following post-harvest facilities:

. One hundred eighty seven (187) food terminals from July 2010 to April 2011 benefiting1,155 small farmers and fishers. These food terminals provide affordable basic foodcommodities to around 457,859 households who are able to save not only from low-

priced commodities but also from cuts in transportation expenses and reduction ofmiddlemen costs. The savings on transportation cost ranges from P8P200 for everytripto the market.. Thirteen (13) or 68% of the targeted 19 Corn Post Harvest Trading Centers (CPHTC) inmajor corn producing areas nationwide. These centers ensure continuous supply ofcorneven during the wet season, guarantee premium quality, and open opportunity forotherinvestments in the corn industry.. A total of 1,342 small scale composting facilities in the different regions na

tionwide,reaching 100% of the target, and generating 5,368 jobs. This forms part of thegovernments promotion of organic farming through the Organic Fertilizer ProductionProject, which will enable farmers to produce their own organic fertilizer to reducedependence on expensive synthetic fertilizers.. A total of 56 units of flatbed dryers from July 2010 to April 2011, attaining100% of thetarget and generating 402 jobs. These will reduce post-harvest losses during thedryingstage of palay and ensure quality drying during the rainy season.. Four (4) cold chain facilities[20] from July 2010 to May 2011 would enable farmers ofhigh value crops to store their fruits and vegetables in the appropriate temperature andprolong the quality and shelf life of perishable crops, obtaining for the farmers a betterselling price for their produce. These facilities were turned over to three (3)cooperativesin Benguet, Palayan City, and San Jose City, benefiting 139 farmers.. Ten (10) units of Village-Type post-harvest facilities as of June 2011, in keycornproduction areas and strategic demand sites nationwide. Thirty-one (31) more units are

expected to be completed and operational by the end of 2011.


39/103

3.3. Fostered a culture of self-reliance

3.3.1 Some of the strategies under the Food Staple Self-Sufficiency program include thetermination of direct input subsidies to farmers and front-loading of irrigationinvestments in2012 and 2013 to increase output as early as possible, thus decreasing the need

to import rice.


40/103

These actions are already bearing fruit as seen in the bumper crop harvest fromJanuary to March2011.3.3.2 The countrys rice importation dropped significantly by 80% from an import volume of2.02 million MT from July 2009 to June 2010 to 386,243 MT from July 2010 to June

2011. Thedecrease in volume of actual rice import arrivals can be attributed to the goodharvest and thecomfortable stock position of the country. Likewise, rice shipments were scheduled better. Fromhere on, NFA buffer stocks will consist mainly of palay purchased from local farmersa longstanding demand of the rice farmers. From January to June 2011, the government through theNFA has procured some P7.64 billion worth of palay from all over the country. This is 16% ofthe NFA stock. The NFA targets to increase this volume from the harvest from the

maincropping season later this year.The total rice imported in 2010 was 2.38 million MT. For 2011, the government shall import64% less or 860,000 MT, with 200,000 MT imported by the government, and 660,000MT by theprivate sector. For 2012, rice imports shall further decline to 500,000 MT, with100,000 MTimported by the government and 400,000 MT imported by the private sector.3.3.2. The government was able to increase the average farm gate price of palayby 2.89% withina short period, thereby immediately increasing the farmers income. Strategic reserves and

placements made it possible for the price of rice to remain stable, thereby assuring theaffordability and availability of rice to the public.3.3.3. Production in the crops subsector was also up by 8.19% and the main contributors werepalay, corn, sugarcane, and banana. The country has regained its status as net sugar exporter forthe current crop year, having recovered from the sugar shortage in 2009-2010 when the countryimported raw and refined sugar.3.3. Other Agribusiness Interventions

Livestock. Today, the Philippines is both avian flu-free and foot-and-mouth disease (FMD) free.The OIE[21], or the World Animal Health Organization, last May 2011 certified the Philippinesas .FMD-free without vaccination.. This accreditation opens the gates for the countrys hograisers to export meat products.4. Improving National Productivity and Competitiveness4.1. National Competitiveness Council (NCC). NCC was reconstituted through the issuance ofEO No. 44, s. 2011. NCC is working on improving the Philippine standing on competitivenessindicators where the Philippines had the lowest rankings including infrastructur

e, governance,and ease of doing business.


41/103

4.2. Tourism Industry. In 2010, visitor arrivals surpassed the 3.3 million target for the yearreaching an all-time high of 3.52 million, 16.67% higher than the 2009 visitor arrivals of3.01 million. In just the first year of the Aquino administration, a 15.60% increase in visitor


42/103

arrivals was recorded from 3.2 million arrivals in the period July 2009-June 2010 to 3.7 millionarrivals in the period July 2010-June 2011.More particularly, in the first six months of the Aquino Administration, visitorvolume grew by21%, faster than the first semester of 2010s 12% growth. Total receipts from visi

tors increasedby 11.3% from $2.24 billion in 2009 to $2.49 billion in 2010. This may be attributed to theconfidence in the new administration, as well as the improved economic conditions in touristsource markets.The continued growth in visitor volume is the result of sustained marketing andpromotionsefforts undertaken jointly by the public and private sectors in key source markets, such asattendance to travel fairs, invitational programs and very selective advertising.

The Civil Aeronautics Board (CAB) granted new permits to operate regular air services to thefollowing: Korean Airlines, Gulf Air, Continental Airlines, Pakistan International Airlines,which are expected to provide weekly seat capacity of 12,090 from Korea, Bahrain, Guam, andPalau. The CAB also granted permits to Jin Air, Jetstar Airways, Air Busan, Mandarin Airlines,Air Nippon Airways, and Jeju Air. These airlines are expected to bring in 1,498and 2,265tourists weekly from Japan and Korea, respectively.The DOT further estimates that there will be an additional 37,623 potential Japanese tourists and

56,888 potential Korean tourists in the country with these additional seat capacities.It may be noted that in 2010, Korean tourists accounted for the biggest chunk ofvisitor arrivalsor 21.04% (740,622) while Japanese visitors accounted for 10.19% (358,744) of total touristarrivals.4.3. Pocket Open Skies Policy. EO Nos. 28 and 29 were issued on 14 March 2011, which aims toreorganize the Philippine Air Negotiating Panel and Philippine Air ConsultationPanel; andauthorize the CAB and the Philippine Air Panels to pursue more aggressively theinternationalcivil aviation liberalization policy. The Implementing Rules and Regulations (IRR) wasapproved by the CAB Board and published in Manila Bulletin on 09 May 2011. It isalsoavailable in the CAB website.4.4. Encouraging Local Innovation. The DOST is concentrating its efforts on innovating andpromoting technology as economical solutions to exigent socio-economic matters that affect ourcountry. This includes the development of the ovicidal/larvicidal (O/L) trap. This is a simple toolto lessen the incidence of dengue. The O/L trap consists of a tin can containing

an organicsolution that attracts and terminates the eggs and larvae of mosquitoes. As of May 2011, the


43/103

DOST distributed four traps per household or a total of 200,000 O/L traps to 50,000 householdsnationwide.

Another innovation that the DOST is developing is a prototype of the Automated GuidewayTransit (AGT) System, a monorail-type rapid mass transit system that employs a r

ubber tire onconcrete form of conveyance. Unlike the common light-rail type train systems available in thecountry, the AGT System requires less space for its structural support, making it suitable for the


44/103

narrow spaces that are available in the cities. It is also cost-efficient, Philippine-made, andenvironmentally-friendly.Yet another important DOST innovation is the landslide sensor. A landslide sensor is anautomated borehole sensor column that is buried in the ground. It gathers data o

n groundmovement and soil moisture content, and sends it automatically to a computer that runspredictive models for landslides called Dynaslope. A landslide sensor is currently deployed inBenguet and there are plans to install more sensors in provinces such as Southern Leyte, Albay,and Bohol within the year.C. HUMAN DEVELOPMENT AND POVERTY REDUCTIONThe anti-corruption call Kung Walang Corrupt, Walang Mahirap further serves as a means toachieve a higher end, which is to reduce poverty and improve the quality of life

of the Filipinopeople. It increases investments and advances economic development to further free-upresources for much needed social interventions. Towards this end, a convergenceapproach hasbeen adopted, with opportunities for education, housing, health care, employment, and livelihoodmade available. With savings arising from eliminating wasteful and corrupt practices, programsand projects for social intervention can be funded. These include the following:1. Building Capacities of the Poor and Marginalized1.1 Expanded coverage of the CCT or the Pantawid Pamilyang Pilipino Program (Pan

tawidPamilya). The government has reached the targeted 1 million households in 2010,and intends tocover an additional 1.3 million households for a total of 2.3 million householdsby the end of2011.As of 10 July 2011, a total of 2,201,792 household beneficiaries, or 94.12% of the 2,339,241million households target for 2011, have been registered in the program. The registration for theremaining 137,449 households is on-going.As of 30 May 2011, the cash grants funded cover 1,619,974 household beneficiaries.

Overall average compliance rate vis--vis the program conditionalities in 2010 forhouseholdbeneficiaries belonging to Set 1[22]and2[23] is high, as may be observed inthe following:

PROGRAM CONDITIONALITY

RATE

Health Visits


45/103

(for pregnant women and children 0-5years old)96.16%Education (Day Care)

95.40%


46/103

Education (Elementary)96.86%Family Development Sessions95.92%From January to April 2011, high compliance rate to the program conditionalitieswas also

recorded:

CONDITIONALITY

January

February

March

April

Health Visits (forpregnant women andchildren 0-5 y.o.)

90.82%

91.94%

92.86%

93.72%

Education (Day Care)

90.20%

90.95%

92.82%

notavailable

Education (Elementary)

90.27%

90.82%

92.69%

notavailable

Family DevelopmentSessions

96.34%

96.47%


47/103

96.64%

96.45%

The high compliance rates with the programs conditions indicate that the people a

re responsiveto the importance of investing in health and education in order to improve theirquality of life.Currently, the DSWD is converging its core social protection programs (i.e., Pantawid Pamilya,the Kapit-Bisig Laban sa Kahirapan-Comprehensive and Integrated Delivery of Social Services,and the Self-Employment Assistance-Kaunlaran Program) to ensure that poverty reductionobjectives of the Aquino Administration are accomplished.1.2 Empowered communities through the Kapit-Bisig Laban sa Kahirapan Comprehensive and

Integrated Delivery of Social Services (KALAHI-CIDSS).The KALAHI-CIDSS is a strategy for community empowerment and poverty reduction thatemploys a community-driven development (CDD) approach. KALAHI-CIDSS allowscommunities to identify, analyze and prioritize the projects that would best solve their immediateneeds (e.g., water systems, school buildings, day care centers, barangay healthstations,electrification, housing, access roads/trails/bridges, livelihood assistance, environmentalprotection/ conservation programs, and skills training, among others). From July2010 to 30May 2011, the KALAHI-CIDSS projects have been implemented in 10 regions, 25 prov

inces, 78municipalities, and 1,759 barangays. The programs capacity building initiatives have beencompleted benefitting the 40,112 targeted community volunteers. These initiatives cover theconduct of project development and management, financial management, procurement,development planning, and infrastructure implementation.


48/103

As of 30 June 2011, out of the 570 targeted community projects, 490 community sub-projectscosting P507.94 million, have been completed, benefiting 133,439 households. Thesub-projectsinclude the construction of health and day care centers, pre- and post-harvest facilities, roads,

and bridges, among others.1.3 Enhancing the capacity of the poor for entrepreneurship through the Self-EmploymentAssistance-Kaunlaran (SEA-K) Program. The SEA-K is a capability building and livelihoodprogram that aims to enable poor families to establish and manage sustainable community-basedcredit organizations for entrepreneurship development.From July 2010 to June 2011, a total of P120,058,333 was released to 21,296 families as capitalseed fund at a maximum of P10,000 per family. Out of which, P40,349,333 has beenreleased to

5,572 Pantawid Pamilya beneficiaries under the Sustainable Livelihood Program ofthe DSWDsConvergence Strategy.2. Advancing and Protecting Public HealthUniversal Health Care or Kalusugang Pangkalahatan is the governments response totheinequities and lack of access to health care. It envisions providing all Filipinos with quality andappropriate health care whenever and wherever needed.

2.1. Pursued Universal Health Care. The National Household Targeting System forPoverty-Reduction (NHTS-PR) has identified 5.2 million households[24] for enrolment in t

he SponsoredProgram of the Philippine Health Insurance Corporation (PhilHealth).As of 19 July, all of the 5.2 million families identified by the NHTS-PR are nowenrolled inPhilHealth under the Sponsored Program. This represents 100% of the families classified byNHTS-PR as the poorest Filipino families.

Starting August 2011, PhilHealth will offer the poorest of the poor a no-balancebilling packagecovering 22 medical and surgical cases[25]. This means that for the poor patients who belong inthe 5.2 million families identified by the NHTS-PR and enrolled in PhilHealth, no paymentsshall be required by the public health facility or public hospital for the treatment of illnesses suchas dengue, diarrhea, pneumonia, typhoid fever or asthma, or for normal or caesarean deliveriesduring childbirth, among others.

2.2. Upgrading the rural health units and government hospitals. A total of P7.1billion has beenallocated in 2011 for the Health Facility Enhancement Program (HFEP),[26] P5.70billion ofwhich shall be used for the improvement of rural health units (RHUs) and baranga

y healthstations, while P1.40 billion shall be used for the enhancement of DOH retainedhospitals.


49/103

A total of P3.70 billion was also released to various LGUs nationwide for the upgrading ofhealth infrastructure. The amount funded a total of 553 projects for the civil works and upgradingof equipment for Basic and Comprehensive Emergency Obstetrics and Neonatal Care(BEmONC) in new or renovated health centers and government hospitals.


50/103

2.3. Provided more health workers to the unserved and underserved communities2.3.1. Registered Nurses for Health Enhancement and Local Service (RNheals) Program. As of28 June 2011, the DOH has deployed 9,884 out of the targeted 10,000 nurses to 1,331municipalities. This program aims to help uplift the health conditions of the po

or in the rural andunderserved municipalities.2.3.2. Doctors to the Barrios (DTTB) Program. As of 28 June 2011, 83 doctors were deployed to83 5th and 6th class municipalities that had few or no medical practitioners, thereby improvingaccess to quality healthcare.2.3.3. Rural Health Midwives Placement Program (RHMPP). As of 28 June 2011, 173midwiveswere deployed to 15 regions to provide maternal and child health care services in the CCT areas,BEmONC facilities and in the unserved, underserved, and hard-to-reach 5th and 6t

h classmunicipalities.2.3.4. Rural Health Team Placement Program (RHTPP). As of 28 June 2011, 44 dentists, 43medical technologists and 40 nutritionist-dieticians were also deployed to 105 municipalities toprovide the community with a complete healthcare package.2.4 Other health-related accomplishmentsThe Iligtas sa Tigdas ang Pinas Program. For the period 4 April 2011 to 04 June2011, the DOHallocated P635 million to procure vaccines and other mobilization requirements for thenationwide door-to-door vaccination of an estimated 18 million children aged 9 t

o 95 monthsold. Out of the 18 million target, 15,321,749 children or 82% have been vaccinated.Government effort on Dengue. Due to intensive public information, preventive measures andcollaboration among government and the private sector, as of July 2011, the number of denguecases is lower by 13.8% with 34,090 compared to 39, 556 last year.3. Providing Access to Quality Education

3.1. Allocated a bigger budget for basic education. The government allocated P207.30 billion forbasic education in 2011, which is 18.46% higher than the 2010 budget of P175 billion. Thebudget includes P2.30 billion[27] for the 1,193,550 kindergarten students for SY2011-2012, thestart of universal kindergarten under the governments K to 12 program. The budgetalsoincludes P5.8 billion for the Government Assistance to Students and Teachers inPrivateEducation (GASTPE) program, which shall benefit 757,806 students for school year2011-2012,a 9.54% increase over the 2010-2011 period. Furthermore, to ensure that more students frommarginalized families benefit from the GASTPE Program, the tuition subsidy for s

tudentsresiding outside Metro Manila was increased from P5,000 to P5,500.


51/103

3.2. Constructed more classrooms and toilets. From July 2010 to May 2011, 2,493newclassrooms had been constructed out of the remaining 3,962 classrooms to be constructed usingfunds from fiscal years 2008 to 2010. The remaining classrooms are expected to be completed


52/103

from August to October of 2011. The construction of new classrooms, this time provided for inDepEds 2011 budget, commenced, with 9,104 out of 11,683 classrooms already in theprocessof bidding and procurement.For the period July 2010 to May 2011, about 6,691 classrooms, or 75% of the targ

eted 8,871classrooms due for repairs, have also been rehabilitated. In addition, 2,493 toilets or 71% of thetargeted 3,501 toilets have been newly installed in schools.LGUs and private sector partners have also actively participated in the provision of newclassrooms to schools. LGUs have built a total of 1,662 new classrooms in schoolyear 2010-2011 alone. Several LGUs have also responded positively to the Counter-Parting for ClassroomConstruction Program, which was established early this year. As of June 2011, LGUs have a

running commitment of P760.65 million to build 895 new classrooms this school year on top ofthe DepEds regular school building program through the counter-parting scheme.Meanwhile, private sector groups committed to build 251 new classrooms. The DepEd continuesto cultivate its strong partnership with business and civil society organizations through school-building initiatives such as the Bayanihang Pampaaralan, which aims to significantly addressthe public schools systems classroom shortage within the next two years.4. Providing Decent and Affordable HousingThe Aquino Administration is espousing transparency, decisive action to resolvegovernment

inefficiencies, preferential action for the underprivileged, and increased partnership withstakeholders for the purpose of affording decent shelter to those in need.

4.1 Closing the housing gap by providing secure tenure and increasing the socialized housingstock. From July 2010 to June 2011, the Housing and Urban Development Coordinating Council(HUDCC) and its Key Shelter Agencies[28] (KSAs) focused on the review of housingpoliciesand programs to improve the delivery of housing services. These activities haveso far resulted inthe provision of decent housing to 104,903 families.4.2 Pursued a more responsive housing loan policy. From July 2010 to June 2011,amidst thepolicy reforms being undertaken by the Home Development Mutual Fund (HDMF or Pag-IBIG)to avoid fraudulent activities and make the lending program more responsive to its members, theagency approved the release of P47 billion worth of loans to a total of 67,660 members for thepurchase of new houses.4.3 Pursued a More Comprehensive Resettlement Policy. The National Housing Authority(NHA) released P3.08 billion for resettlement and other programs from July 2010

to June 2011.This benefitted nearly 25,400 beneficiary-families. The review of the NHAs resettlement


53/103

policies is on-going to include the provision of basic social services (e.g., schools, publicmarkets, health care centers) and livelihood opportunities at the resettlement sites.

4.4 Intensified the implementation of the Community Mortgage Program (CMP). Under the

CMP, P692 million was released from July 2010 to June 2011 to organized informalsettler


54/103

communities for land acquisition, benefiting 11,413 beneficiary-families. Of this number, 8,880families benefited in the first half of 2011, which already surpassed the full-year accomplishmentin 2010 of 7,109 beneficiary-families.4.5 Partnering with LGUs in providing housing to the homeless. The HUDCC conduct

edPabahay Caravans in Region VII (Cebu), Cordillera Administrative Region (Baguio), Region III(Pampanga), Region IV-A (Tagaytay), Region VIII (Tacloban City), Region IX (ZamboangaCity) and Region XI (Davao City). The caravan brought the various housing programs andservices of the shelter agencies, to help the LGUs address their housing needs directly to theLGUs.HLURB and HUDCC offer assistance in the preparation of the LGUs respective comprehensive

land use plans and local shelter plans, respectively. The Pag-IBIG Fund has devoted a lendingwindow for LGUs with available land for housing but lack funds to build units. For LGUswithout land for housing, the Social Housing Finance Corporation (SHFC) may fund75% oftheir housing project cost under the Localized Community Mortgage Program. Underitsresettlement assistance program, the National Housing Authority (NHA) is open for jointventures with LGUs that need to relocate informal settlers. The LGU provides theland whileNHA funds the site development.

Stronger linkages with the LGUs have started to bear fruit. The Pag-IBIG Fund has just signed aMemorandum of Understanding with the Quezon City LGU for the housing project inBarangayPayatas for low-income personnel and informal settlers occupying danger areas. Manila and SanPedro, Laguna are also set to enter into a partnership with Pag-IBIG Fund for their own housingprojects. These projects are in the assessment stage on technical design of units, specificationsand income profiling of beneficiaries.The SHFC adopted the strategy of expanding partnership with LGUs to have a pro-activeidentification of areas for CMP. More specifically, it has targeted 70% of its portfolio for citiesoutside the National Capital Region, prioritizing Highly Urbanized Cities, cities with highpopulation growth rates, and the Metro cities.4.6 Improved coordination among KSAs and other partners. For the first time in several years,the HUDCC was convened and now holds regular quarterly meetings to discuss policies andenhance coordination not only among government agencies but also with Congress and theprivate sector. Members of Congress, notably the Chairmen of the respective Hous

esCommittees on Housing and Urban Development, have participated in the Council meetings,


55/103

resulting in a unified position on housing policies and directions for the nextsix (6) years, whichwere adopted during the first Council meeting held on 13 January 2011.On the other hand, Non-Government Organizations (NGOs), such as the Gawad Kalinga and theHabitat for Humanity (HfH), have proven that affordable housing and better communities can be

developed with the help of concerned private citizens and LGUs. As such, HUDCC involved theparticipation of NGOs in policy making. It is worth noting that HfH was electedas one of themembers of the SHFC Board of Directors.


56/103


57/103

and utilization of resources especially in POLOs where it is more needed.5.1.2 Provided assistance through the Legal Assistance Fund (LAF). The DFA providedassistance amounting to P10.21 million to 146 Filipinos in need of legal aid forthe period July2010 to 28 June 2011. Assistance through the LAF may take the form of fees for competent

private counsel, bail bonds, court fees, charges and other reasonable litigationexpenses,travelling expenses, and communication expenses in connection with the legal assistance.

5.1.3 Provided assistance to OFWs in crisis areas through the Assistance to Nationals (ATN)Fund. From July 2010 to 28 June 2011, assistance amounting to P281,489,716.65 was provided


58/103

to overseas Filipinos in distress through the ATN Fund. Government repatriated atotal of 10,369overseas Filipinos in four (4) crisis-affected areas (Egypt; Libya; Yemen; and Fukushima, Japan)from 29 January to 28 June 2011.In response to the Egypt Crisis, 93 Filipinos out of the estimated 6,569 Filipin

os in Egypt wererepatriated through the timely operations of the Department of Foreign Affairs (DFA) from 29January to 16 February, 2011. On the Libyan Crisis, a total of 9,951 overseas Filipino workers(OFWs) were repatriated as of 28 June 2011 out of the estimated 29,823 Filipinosin Libya. Thegovernment provided necessary travel documents and immigration assistance, and helped securetemporary visas, food, accommodation, transportation, and connecting flights ofFilipinos intransit countries. The government also repatriated a total of 232 OFWs out of 1,

422 in Yemen.In response to the earthquake, tsunami, and reported nuclear leaks in Japan in March 2011, thegovernment initiated mandatory repatriation of Filipinos living within the 50-kilometer radius ofthe Fukushima Dai-ichi Nuclear Power

60860363 the 2011 State of the Nation Address Technical Report

Documents