Wallace Business Forum · 19.11.2012 · During martial law, Marcos formed KBL party, members of LP & NP jumped ship and joined. The EDSA uprising led to Marcos and also KBL’s

11/19/2012

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4th Quarterly Roundtable ProgramNovember 19, 2012 Manila Peninsula

Wallace Business Forum

WWW.WALLACEBUSINESSFORUM.COM

NOV 18, 2012 QRT POL CHART-LONG 2

Features of the Philippine Electoral System

Elitist

Feudal

Warlordism

Personality‐oriented

Money politics

Fraud‐laden

Narco‐politics

Transactional

Festive mood

Political aggrandizement

Politics of convenience

Political compromise

Political patronage

Propaganda warfare

Partisan

Confrontational

Vindictive

Culture of violence

Unjust

Turncoatism

What’s New?

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Turncoatism in History

Marcos was part of LP; When LP chose Macapagal as standard bearer Marcos joined NP as its contender in ’65, and won, NP gained the strategic support of both HousesDuring martial law, Marcos formed KBL party, members of LP & NP jumped ship and joined.The EDSA uprising led to Marcos and also KBL’s downfall. Cory’s LABAN emerged as the dominant pol party.In the ‘92 election, the strongest pol party (LDP) chose Mitra as its standard bearer over FVR.FVR bolted, formed his own party and established a coalition with other parties (LAKAS‐NUCD‐UMDP).The turncoats joined.Erap’s landslide victory turned the tide in favor of his political party (PMP). But was short‐lived due to his ouster



…Turncoatism in History

Gloria’s created KAMPI merged with LAKAS to absorb many party defectors.

GMA’s scandal‐laden administration took a heavy toll on LAKAS.

The admin’s candidate in ‘10 polls, Gibo Teodoro had no chance.

Benigno Aquino III cornered 42% of total votes (15.2M); His party, LP, won only 45 seats in the House; now he has the backing of 200+.

Now Binay has formed UNA with Erap for ‘13 polls (and ’16?); Former GMA allies have joined.

The rats are abandoning ship before the inevitable happens.

The same vicious cycle occurs every election season.

Top party will be whatever the President is

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The party list (watch out for the gate crashers)

The party list system was enacted in ‘95.

Its aim was to give marginalised groups representation in Congress & reduce the dominance of political dynasties

What might have seemed a good idea has been bastardized by politicians to further entrench themselves in power; the system has been captured by dynastic legislators

Candidates from political clans manage to secure party list seats despite not being representative of the sector they are elected under



…The party list

Some party lists are bogus serving only as gov’t, security & religious fronts.

During GMA’s term it also served an alternative parallel route for GMA supporters to assure their continued dominance in Congress to ward off impeachment; and in 2010 to win the speakership (but they failed)

E.G. Mikey Arroyo is the “representative” of security guards & tricycle drivers.

He’d never ridden a tricycle in his life

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COMELEC has started purging the list of party list bets

…The party list



Mikey’s Ang Galing Pinoy as well as the Pro‐Aquino Black and White movement are outThis shows political will & independence of COMELECThose disqualified do not represent the marginalized sectors “Representatives” are in fact multi‐millionaires supposedly representing the disadvantaged.

Party List Who they represent Who they really areAbot Tanaw OFWs Linked to former PAGCOR chief Efraim

Genuino, currently facing plunder raps Agrarian Development Association (ADA)

Farmers Members of the powerful Singsonpolitical family

Alay Buhay Community Development Foundation, Inc. (ALAY BUHAY)

Small businesses Businessman and member of Valenzuela’s Gatchalian political family

…The party list

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Party List Who they represent Who they really are

Alliance for Reforms Towards Effective Management and Sustainable Development (ARMD)

Not Identified

Linked to a Dinagat Island political clan; and owner of Dinagatmining firm

Ikaw Lagi Ang Wagi ng Bayan, Inc. (ILAW)

Urban poor Misamis Occidental political dynasty scion

Movement of Women for Change and Reform (MELCHORA)

Women Heiress to wealthy Ibuna family, granddaughter of longest‐serving San Juan mayor (12 years), and former partner of late Rep. Iggy Arroyo

Alliance of Organizations, Networks and Associations of The Philippines (ALONA)

Not IdentifiedQuezon Province’s Suarez political dynasty

…The party list



Dynasty‐building in the Philippines

Plazas of Caraga

Amantes of Caraga

Salcedas of Albay

Imperials of Albay

Abads of Batanes

Jaafars of Tawi‐Tawi

Ermitas of Batangas

Espinas of Biliran

Acostas of Bukidnon

Zubiris of Bukidnon

Emanos of Cagayan De Oro

Asistios of Caloocan

Villafuertes of Camarines Sur

Fuentebellas of Camarines Sur

Alfelors of Camarines Sur

Romualdos of Camiguin

But an enabling law has yet to be passed

“The State shall guarantee equal access to opportunities for public service & prohibit political dynasties as may be defined by law.”

― Art. Sec. 26 Philippine Charter

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…Dynasty‐building in the PhilippinesRemullas of Cavite

Revillas of Cavite

Osmeñas of Cebu

Cuencos of Cebu

Gullas of Cebu

Garcias of Cebu

Martinezes of Cebu

Bautistas of Davao Del Sur

Antoninos of General Santos City

Marcoses of Ilocos Norte

Singsons of Ilocos Sur

Defensors of Iloilo

Tupas of Iloilo

Dys of Isabela

Albanos of Isabela

Ortegas of La Union

Dimaporos of Lanao Del Norte

Caris of Leyte

Romuladezes of Leyte

Binays of Makati

The list goes on…



Why an Anti‐Dynasty bill must be pushed*• Areas represented by members of dynasties tend to have higher

poverty levels and lower per capita income

• Dynastic legislators are richer than their non‐dynastic colleagues.• Dynastic legislators also dominate in political parties• High poverty and inequality increase dynastic prevalence as

the poor vote for dynastic candidates because they dispense favors • Incumbent officials are able to develop and sustain political dynasties

as public office gives them an advantageous position

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*Sources: PCIJ, Key findings of an AIM Policy Center study

Indicator Dynastic Districts Non‐Dynastic Districts

Ave. Per Capita Income P23,275 P26,872

Poverty Incidence (%) 24% 19%

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Senatorial line‐up for 2013 polls

All 3 UNA leaders have children in Senate slate

5 come from political families

GORDON ZUBIRI MAGSAYSAY COJUANGCO ESCUDERO

3 Same old faces

HONASAN MACEDA LEGARDA

ERAP & JV JPE & JACK JOJO & NANCY



No “New Politics” for LP as wellPNoy’s cousin Bam

Ed Angara’s son Sonny

Manny Villar’s wife Cynthia

Nene Pimentel’s son Koko

Pia’s brother Alan

…Senatorial line‐up for 2013 polls

AFTER ELECTIONSPNoy will have a certain 9 (10 with Miriam)

A probable 4 more as a min.

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Aspirant Winning Edge Issues & ConcernsLoren LegardaRank: 1

Women’s vote; sympathy for losing last polls; ’98 & ’07 senatorial topnotcher; advocacies: envi, entrep,youth & women’s welfare; voted against Corona; media exposure

Turncoat; mudslinging during ’10 polls; signed Cybercrime Act despite e‐libel provision; broken marriage; early political ads; undecided on RH

Francis EscuderoRank: 2

Youth vote; regional vote (Bicol); media exposure; ranked 2nd in ’07 polls; Author of landmark “Desaparecidos” bill; voted against Corona; backed by Fil‐Chi businessmen; law background

Political family; endorsement of Binay in ‘10 (Noy‐Bi); signed Cybercrime Act; broken marriage; early TV ads; young yet trapo; fence‐sitter on RH

Alan Peter CayetanoRank: 3‐5

Youth vote; law background; Pia & Renato Cayetano factor; voted against Corona; FOI bill filed last Congress reached 3rd rdg approval; staunch critic of GMA

Political Dynasty; signedCybercrime Act; early TV ad (Pilipinas 2020); blocking of Brillantes’ confirmation; no eco/business bill passed; fence‐sitter on RH

SURVEY

FRONTRUNNERS



Aspirant Winning Edge Issues & Concerns

JV EjercitoEstrada Rank: 3‐5

Erap factor; executive & legislative experience; conversion of San Juan to a highly urbanized city

Political Family; rift w/ Jinggoy; Anti‐RH Bill

Jack EnrileRank: 3‐5

JPE factor; corporate & legislative background; author of Magna Carta of Household Helpers; advocacies: food security & protection of credit card users; provincial vote (Cagayan)

Political family; early TV ads; Anti K+12 & RH; Flip‐flops on mining

Antonio TrillanesIVRank: 6‐10

Voted against Corona; Anti‐Trapo; idealism & conviction that catapulted him to the Senate in ’07; sponsor of Anti‐Epal (credit‐grabber) bill

2nd biggest spender in ‘10; role as back‐channel negotiator for the PH; rift with JPE; against K+12; rebellion charges

Gringo HonasanRank: 6‐10

Ex‐soldier w/ business background; 1stindependent candidate to win a Senate seat; passed bills on envi, agri, nat’lsecurity & educ.; voted against Corona

Undecided on RH; coup attempts against Cory, GMA;his FOI bill still pending on 2nd rdg

SURVEY

FRONTRUNNERS

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Koko Pimentel Rank: 6‐10

Sympathy votes (lost more than ½ of his term due to cheating); Nene Pimentel factor; Mindanao vote; law background; voted against Corona

Political family; broken marriage; only 1 bill passed since assuming office; Anti‐RH

Juan Miguel ZubiriRank: 6‐11

Environmentalist; Principal Author of the Biofuels Act; Bukidnon rep. for 3 terms; : “honorable” exit in ‘11

Political Dynasty; 2007 poll cheating allegations; turncoat; early TV ads

Sonny Angara Rank: 6‐11

Ed Angara factor; provincial vote (Aurora); law background; prosecution panel’s spokesperson during Corona impeachment; most prolific Rep. for the 14th Congress

Political family; earlycampaigning (herbal supplement ads; joined PNoy in relief operations); Pro K+12

Cynthia VillarRank: 9‐11

Manny Villar Factor; super‐rich; business background; district rep. from ‘01 to ‘10; advocacies: senior citizens’ and women’s welfare , and entrep

Early TV ads;

SURVEY

FRONTRUNNERS




Nancy BinayRank: 12‐15

Jojo Binay factor Political dynasty; a “mere” staff of VP Binay

Richard GordonRank: 12‐16

Subic legacy; reform‐minded; Red Cross chairman; Legislative & Executive background; media exposure; advocacies: tourism dev’t & automated elections; sympathy for losing in ‘10

Political dynasty;temperamental; no clear stand on RH; filed bills imposing tax on text (sms)

Ramon Magsaysay, Jr. Rank: 12‐16

The “real” Magsaysay; led Senate inquiry into Fertilizer fund scam;business background; illustrious father

Political family; 2nd oldest candidate

Jamby Madrigal Rank: 12‐17

Maverick; criticized Recto’s Sin Tax report; Pro‐RH; advocacies: education, juvenile justice & anti‐human trafficking, environment & good governance

Political family; rift w/ Senators Pia Cayetano & Villar;Anti‐ downstream oil industry deregulation; pro total log ban; against K+12 & Cha‐Cha

SURVEY

FRONTRUNNERS

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Bill House Senate

1. Data Privacy Signed into Law (RA 10173)

2. Anti‐Cybercrime Signed into law (RA 10175) – but bastardized(SC has ordered 120‐day TRO on its implementation)

3. Department of ICT For Bicameral Committee Approval(but PNoy might veto)

4. Sin Tax Amendments Approved on 3rd Reading Pending on 2nd Reading

5. 3rd Amendments to AMLA Approved on 3rd Reading Pending on 2nd Reading

6. Rationalization of Fiscal Incentives

Approved 3rd Reading Committee Level

CONGRESSWATCHBills that Matter to Us

(likely to pass this year)

(likely to pass this year)

(50:50 chance)



Bill House Senate

7. Fair Competition or Anti‐Trust

Pending 2nd Reading(50:50 chance)

8. Freedom of Info Committee Level Pending on 2nd Reading

9. Reproductive Health Pending on 2nd Reading

(slim chance of passing)

10. Mining Revenue Sharing Bill

Committee Level

11. Amendments to eco provisions of the constitution

Committee Level

12. Anti‐Smuggling Committee Level

13. Anti‐CorruptionAmendments

Committee Level

14. BSP Charter Amendments Committee Level

15. BOT Law Amendments Committee Level

…Bills that Matter to Us

WONT

PASS

(public pressure may work)

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Only 2 out of 14 have been signed into law so far (Anti‐Cybercrime & Data Privacy)

But 1 of 2 has “contentious” provisions (electronic libel)

1 under bicam approval (DICT bill) and could be signed before yearend (if it escapes PNoy’s veto)

Half are stuck at their respective committees

4 are at advanced stage

But House needs Senate concurrence on 3:

Sin Tax Reforms

Fiscal Incentives Rationalization

3rd Amendment to AMLA

All approved by House on 3rd & final reading

…Bills that Matter to Us



The House, dominated by pro‐Aquino Congressmen, follows Malacañang’s directives

The Senate pushes its own agenda – if it pushes anything

With Drilon taking over Recto’s chairmanship, things might just turn around at the Ways & Means Committee.

It is in charge of all bills relating to revenue generation, esp. Sin Tax Reforms and Fiscal Incentives Rationalization. And, later, mining taxes

It is crucial for the first 2 bills to reach bicam before yearend. They must be signed into law before Feb. 12, the start of the campaign period

…Only 2 signed into law so far

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Both bills would help fund President Aquino’s flagship social protection programs (e.g. Universal Healthcare, CCT)

Sen. Drilon, 1 of PNoy’s most trusted allies in the Senate, now oversees 2 powerful committees:

① Finance – in charge of crafting the national budget

②Way & Means – generates revenues for the national expenditure program

…Only 2 signed into law so far

Prelude to a Senate coup?We hope so



Sin Tax Reform Act

Drilon’s (Senate)

Net Retail Price

Tax/Pack

2013‐2015

P11.50 P28.50P11.50 P14

Shifts to single tax rate of P32 by 2016

Projected add’l revenues: P26B

Abaya’s (House)

Net Retail Price

Tax/Pack

2013 2014

P11.50 P28.30 P30

P11.50 P12 P22

Then increase by 8% every 2 yrs. From 2015‐2025

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…Sin Tax Reform Act

For Distilled spirits, P30, plus 30% of the net retail price


For Beer:Proposed Current


Net Retail Price Tax/bottle

P22 P20.57

P14.50‐P22 P15.49

P14.50 P10.42

Net Retail Price Tax/bottle

P22 P25

P22 P20



Anti‐Laborers!Anti‐Farmers!Anti‐Poor!

POSTERS IN MANILA

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…Sin Tax Reform ActPOSTER BY WBF




Sin Tax Bill’s approval hangs on 3 things:① Health

• 90,000 Filipinos die annually (or 240 daily)• Lives that must be prioritized over livelihood of a few farmers

(who can shift to other crops and will be given financial support once the bill passes into law anyway)

• High prices will deter the youth from smoking

②Revenues• Additional P40B‐P45B billion into gov’t coffers if the Drilon bill is

passed; P31B to P35B if it’s Abaya’s• 85% of the funds for Universal Healthcare & 15% to support

farmers • More importantly, bill’s passage is crucial in achieving investment

grade, resulting in FDIs = jobs and borrowing cost for PH

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③FairnessExisting law is grossly distorted to favor local manufacturersIf you were in PH in ‘96, you pay lower taxIf you come in later, pay a much higher one


Brand Tax/Pack Equivalent

Quality

CigarettesMarlboro P12

Lucky Strike P28.30

Basis for taxation? Date at which you entered the market



Dec. 21 – Congress closes down for the year. That’s the final day Sin Tax bill must be voted uponJan.21 – Congress resumes; politicians will be consumed by thoughts of winning again. Raising taxes is not a way to win votes (Ask Recto)At the latest it must be before Feb. 7; Sessions adjourn Feb. 8; campaign starts Feb. 12

Which version to pass?— It must be Drilon’s or Abaya’s — DOH has expressed support for Drilon’s bill— Expect DOF & BIR to follow suit— Recall Recto went against their (PNoy’s?) wishes and was left

with no choice but to leave his Ways & Means chairmanship


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Major Business & Eco bills approved by Congress

0 5 10 15 20 25 30

15TH (2010-2013)

14TH (2007-2010)

13TH (2004-2007)

12TH (2001-2004) 14

6

22

3

1. Lifting of nightwork prohibition on women employees (no direct impact on priority industries)

2. Data Privacy Act3. Cybercrime Prevention Act (but w/ contentious provisions; SC

stopped its implementation by issuing a 120‐day TRO)



Of the bills signed by President Aquino, only 3 will directly impact business

PNoy and Congress need to prioritize eco/business bills

Not those converting municipalities into component cities

This must be done if we’re to send a signal that PH under the current admin is open for business

PNoy’s lack of interest is showing through

…Major Business & Eco bills

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Both Senate & House versions propose the following benefits for househelpers:

— SSS coverage— PhilHealth coverage— Home Dev’t Mutual Fund membership— Employees Compensation Commission coverage

Measures pending with Bicameral Conference Committee since OctoberBut lawmakers’ failure to reach a middle ground on the pay scheme has stalled the measure’s approval Despite it being among Aquino’s priority bills

1 of PNoy’s priorities

Household Help help



Senate version (SB 78) raises monthly salary

Location Senate’s Proposal Existing Laws

Metro Manila P3,000 P850 to P3,000

1st Class municipalities P2,500 P650 to P2,500

2nd Class municipalities P2,000 P550 to P2,000

But the House (HB 6144) wants regional wage boards to determine the salaries

But whose going to enforce it?

Door‐to‐door “inspectors”?

Don’t get too worried

…Household help help

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How does House compare to SenateBusiness bills passed on 3rd Reading

House Senate1. Department of ICT 1. Department of ICT2. Sin Tax Reform3. AMLA Amendments4.Fiscal Incentives Rationalization5. Customs Modernization6. Intellectual Property ActAmendments7. Micro‐Enterprise Dev’t8. Insurance Code Amendments9.Rural Banks Act Amendments10.Rationalization of taxes on Int’l Air Carriers11. Direct Remittance of LGU Share in National Wealth Taxes12. Land Use Policy13. Real Property Valuation Act



Number of LEDAC Meetings

PNoy and Congress must convene regularly and discuss their legislative agenda

PER ADMIN

PER YEAR

RAMOS (1992‐1998)

81 14

ESTRADA (1998‐2000) 3 1

ARROYO (2001‐2010) 25 2.5

AQUINO (2010‐PRESENT) 2 1

Ramos got things donePNoy hasn’t. Here’s one reason why

LEDAC

Sources: JFC, Congress

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A hardworking Congress (?)In Session Period

Resumption of session Nov. 5 to Dec. 21, 2012

Adjournment of session Dec. 22, 2012 to Jan. 20, 2013

Resumption of session Jan. 21, 2013 to Feb. 8, 2013

Adjournment of session Feb. 9, 2013 to June 2, 2013

Resumption of session June 3, 2013 to June 6, 2013

36 session days left to approve key reform measures (2013 budget yet to be passed)

If bypassed, the bills will have to be turned over to the 16th Congress

It’s back to square one



Social Weather StationsPresident Aquino’s Net Satisfaction Rating

(% satisfied minus % dissatisfied)

0

20

40

60

80

100

SEP '1

0

NOV '10

MAR '11

JUN '11

SEP '1

1

DEC '11

MAR '12

MAY '12

AUG '12

+60%+64%

+51%+46%

+56% +58%+49%

+67%

+42%

↑ Sa sfac on Rating means ↑ Political Capitalnecessary to make tough, unpopular decisions

― Why doesn’t he?

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It’s time for him to do 2 jobsLeadership is a fulltime job, not a 9‐5 one

He’s the President, not P‐NoyHe needs to copy FVR=CSW

The Philippines needs 7% + P.A. to break the poverty trapThat needs social reform

+Economic/business reform

Remarkable success on the 1st —Anti‐corruption, CCT, K+12 But not the 2nd

The interest is not thereDespite that he’s winning, people want to help him

Jobs – his and theirs



Manufacturing needs to be revivedServices alone can’t do it –

They need education many don’t havePlus the wealth creation producing products achieves

But real action to achieve it is not happening.The words are there, the action is not

He supports mining, but issues an EO that stops itHe doesn’t mix with business—here, or overseas

Business doesn’t come

Nonetheless there’s a business confidence, optimism that wasn’t there under GMA

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→ However, he is getting somewhere politically. The unusual actions of the President are working.

→ Corruption is actively being attacked. His “NO WANG‐WANGS” has had dramatic reverberations throughout society.

→ Unbelievably, it wasn’t a 7‐day wonder; it’s lasted some 28 months.

→ The arrogance of power has been lessened.

→ The President has been single‐minded on this, and with some success.

The essential social reform could be in place by 2016



A non‐cooperating ombudsman kicked outAn ex‐president with an ever increasing number of cases against her – under (hospital arrest)A Chief Justice convicted by Senate impeachment court

The successful impeachment strengthens him considerably so these could be the beginning of a true clean up of many other

scandals by many other people

And his no wang‐wangs has brought an important societal change

But he’s taken some bold, and politically risky steps

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NET SATISFACTION RATINGS(PNOY VS PREVIOUS PRESIDENTS)



The huge gain is attributed to:

CJ Corona’s ouster

Emphasis on his goal to build a culture of accountable & transparent governance – end corruption

Taking the unpopular GMA to task for her alleged transgressions in office (highlighted the “lost decade” under GMA in his last SONA)

Improved weather forecasting & relief & rescue operations during calamities

Personable nature

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…The huge gain is attributed to

Emphasis on: Health (expanded PhilHealth coverage to reach the poor)

Education (K+12, substantial increase in Deped budget, but still unable to close all resource gaps)

Social Protection (Expansion of CCT)

Rice Production ( lower imports, self‐sufficiency by ‘13)

Death of Sec. Jesse Robredo

Sustained high satisfaction & approval ratingsDespite he’s done little, just the occasional action at the right timeSadly he doesn’t need to do a lot to gain high satisfaction ratings



1. Rise of hunger & poverty incidence2. Failure to address unemployment & underemployment3. Increase of public transport fares4. Failure to convict Arroyo5. Disappointing implementation of flagship PPP6. Defeat of LP candidates in the 2013 Senatorial elections7. Non‐approval of critical & popular bills this 15th Congress8. Failure to conclude peace deal with the MILF9. Failure to address Mindanao power shortage10. Further delay in the resolution of the Maguindanao

Massacre case11. Failure to resolve Scarborough stand‐off

Factors that could affect PNoy’s approval ratings:

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Signing of framework peace deal w/ MILF

What could further raise his approval rating?

• Comes 15 years after negotiations were started• Agreement has been generally well‐accepted• A major achievement of PNoy• A welcome dev’t and there does seem to be sincerity and a mutual

trust that give hope it could succeed

But…• Already there’s a splinter group, the BIFM • Nur Misuari has questioned the deal • Infighting w/in the MILF, like its rift w/ with the MNLF, shows

the limitations of a peace agreement in bringing actual peace and development to a conflict zone



With the signing of the draft framework now is the most opportune time for the Aquino admin to intensify its dev’tefforts:

• Improve the delivery of basic social services

• Enforce the Law

• Improve transparency in governance

If these were in place, insurgencies become irrelevant

But no one’s succeeded at doing so yet

And will be the real test of the success, or otherwise, of the peace agreement

A deal could be reached by 2016―if all goes well

…Signing of framework peace deal w/ MILF

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In a Nutshell

‘10 ‘11 ’12

1. Get infrastructure built ¼ ½

2. Fully spend the money DBM disbursed ½

3. Resolve open‐pit mining ban

4. Upgrade air safety

5. Put 2 big corruptors in jail

6. Swift resolution of the Ampatuan massacre & other EJKs

7. Mandate that all pork barrel funds should go to health & education

8. Increase VAT to 15% & greatly reduce income tax for salaries < 20K

Where PNoy could use his political capital



…In a Nutshell

‘10 ‘11 ’12

9. Legalize jueteng

10. Revive family planning & sex education in Schools

11. English as primary language for learning

12. Reduce no. of buses on EDSA by half

13. Add carriages to the MRT ?

14. Aggressively push for FOI’s approval

Except for a couple of changes

The political will to get things done is lacking

Not a record to be proud of

Case in point: Implementing Rules & Regulations of EO 79

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EO 79 was issued to clear up the situationInstead, it created a wall of confusion:

• What taxes to pay?

• What term limit will mining firms have?

• What chance of being granted an ECC can companies expect?

• How and when will a firm’s right to open‐pit mining as defined by nat’l law be allowed?

There’ll be no new mining projects for at least 2 years



The controversy that arose over Section 9 of the IRR forced the gov’t to backtrack:

But the message given cannot be taken back:

This is a government that will change contractual terms if it feels it wants to.

Original Section 9 of IRR Revised Section 9

“Expiring 25‐year mining tenements may be renewed subject to new terms and conditions pursuant to the laws and rules and regulations that are existing at the time of renewal or may be hereafter issued, such as, but not limited to the establishment of the contract area as a mineral reservation.”

“The mining contract/agreement that may be renewed shall be subject to existing laws, rules, and regulations at the time of renewal.”

…Back to EO 79

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New mining investments brought to a standstill• Outflow of P10B since 2011• $4B in add’l investments will not

eventuate in 2013Source: Chamber of Mines

Tampakan ProjectProjected contribution to GDP/year P134 billion or additional 1% to GDP

Gov’t revenues (national & local)through taxes

P307B over 20 years

Employment opportunities ↑10,000 at the peak of construction & 2,000 during operations

Source: Tampakan Project report

…Back to EO 79



Tampakan’s Contribution to the PH economy in 2010

Employment 1,500 people

Local purchase of goods & services P656M

Power &Fuel Charges P77M

Taxes paid to Nat’l Gov’t P400M

Community sponsorships & donations P135M

Benefits from just a single project Despite these, EO 79 says in clearest terms: The Philippines doesn’t want mining Government can deny, but that’s the perception And perception drives decisions

…EO 79 was issued to clear up the situation

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• NAIA 3» Gloria unilaterally cancelled the contract on the grounds of corruption

(this was during her good days)

» Agreed that as a condition for cancellation just compensation would be immediately paid – but no payment was made

» Had it been settled, the terminal would’ve been in full operation for the past 10 years – imagine the cost of those lost years!

• IPP Contracts» Renegotiated by the Arroyo admin in ‘01

» A populist move to bring power rates down and to reduce state guarantees under IPP contracts

» Gov’t saved $1B; IPPs lost $1B

Contract Sanctity



• Waste‐to‐energy project w/ Jancom» Arroyo gov’t cancelled the project in ‘02, 5 years after its approval» Despite the SC ruling declaring the contract “valid & perfected”

• DOE‐Mitra Energy oil exploration contract» Nullified in 2006» Contract had not yet been signed, but was about to be» Mitra Energy had expended for it, done everything required

• Thales» Contract to build & install an air navigation system» Existing system is old & failing; several air crashes have already almost

occurred» Contract was put on hold because then DOTC Sec. Roxas wanted to

question its technical suitability & cost

…Contract Sanctity

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• Baggerwerken decloet en zoon» To dredge Laguna de Bay» Cancelled in December ‘10 over allegedly questionable design

specifications» The Belgian firm was not formally informed by the gov’t of the

cancellation, only learned of it through press statements

• Eiffel Matiere» To put up 72 Ro‐Ro ports» The French firm had already delivered 50% of the steel pipes & was

scheduled to deliver the remaining materials, until –» It was deferred due to a change of leadership in DOTC; Sec. Roas

recommended its cancellation» Seemed like a typical GMA project full of questions and should be

cancelled → but only a er due discussion w/ eiffel matiere, & proper recompense

…Contract Sanctity



Update on Scarborough standoff

PNoy stressed during the Asia‐Europe Meeting (ASEM) that disputes over the West Philippine Sea (WPS) must be resolved following int’l laws

The EU supports a multilateral, ASEAN‐centric approach as instability in the WPS would result in higher insurance premiums for their commercial ships

Australia backs a regional code of conduct & resolution of dispute via UNCLOS

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…Update on Scarborough standoff

Back home, recent events only reinforce China’s argument that PH has been inconsistent in its territorial claims over WPS

DFA Sen. Trillanes

• The Philippines is standing firm on its territorial claims, esp. in Scarborough Shoal and wants a multilateral resolution of the dispute

• Back‐channeling talks seemed to be doing more harm than good.

• Filipinos are not interested in Scarborough and the dispute should be settled bilaterally

• DFA Sec. Del Rosario strained PH‐China ties by taking a hard‐line stance

Sen. Trillanes’ statements reflect the exact position of Beijing and the exact opposite of expressed PH foreign policy



…Update on Scarborough standoff

Sen. Trillanes has no foreign affairs experience but was entrusted by PNoy to handle such a delicate task

Handling of territorial disputes is one area where mature circumspection is vital

Also, his tirades vs Enrile have bordered on juvenile

Whatever gains Trillanes gained in easing tension bet. the PH & China were negated by the political ruckus that followed

What transpired was a foreign affairs debacle and was reflective of the ul mate authority in cra ing PH foreign policy ― Pres. Aquino himself

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Recent Appointments & Reshuffles①Mar Roxas (DILG)

Has the integrity to continue the reforms initiated by Sec. Robredo. He has no record of corruption, but is not action oriented

Served as PNoy’s trouble shooter – a sign of Pres. Aquino’s confidence in him

Can use his political astuteness as Malacañang’s bridge to LGU’s

Has experience: District rep. for 3 terms; Authored laws that give priority to LGUs

It’s a political move for ‘13 elections; strengthens LP with LGU’s

As LP President and now DILG Sec. strengthens his position should he decide to run for the presidency in 2016



② Jun Abaya (DOTC)Comes to task relatively unknown, but w/ a good reputationOne of PNoy’s most trusted allies in the House

Manager of the prosecution team in the impeachment trial of Corona

As LP sec‐gen, he was the architect of LP‐Akbayan‐NPC‐NP‐LDP‐NUP coalition for ‘13 Senatorial polls

Head of the Appropriations Committee that reviews & ensures timely enactment of the nat’l budget

Principal author of Palace‐backed Sin Tax Reform

In line w/ the mandate of the DOTC: co‐authored bills that seek to upgrade and improve various domestic airports

Has legislative, military, law & engineering background – so gets things done (progress in infra dev’t has been slow in the past year or so)

…Recent Appointments & Reshuffles

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Set to face huge challenges as DOTC Sec.:1. Resolution of the NAIA 3 case2. Implementation of PPP projects3. Improvement of the PH aviation status to Category 14. Rehabilitation of NAIA Terminal 15. Dilapidated air navigation system of NAIA

He’s an engineer!



③ Jericho(Icot) Petilla (DOE) Executive experience as governor of Leyte for 3 terms & CEO ofIT‐BPO companiesNo significant exposure to the power sector (limited to dealing w/ electric cooperatives & power plant operators in Leyte)Biggest concerns are:1. Upgrading of power distribution & generation systems2. Mindanao power crisis3. “Thin” power reserves in Luzon & Visayas4. Getting investors who would be willing to construct more power plants esp. in

Mindanao5. Sustainability of electric cooperatives6. Shift to renewable energy – solar & wind are costly

His eloquence & experience as LGU official could help in dealing with local politicians who have influence over power cooperativesDaunting tasks ahead and with limited relevant experience, the objectives seem difficult to achieve


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④ Rene Almendras (Secretary of the Cabinet)

Vast managerial expertise (29 years w/ top private firms)

Could serve as Malacañang’s link to the private sector

Criticized during the Mindanao power crisis; but he merely inherited the non‐action when he joined the PNoy cabinet

» Tried to get awareness of the problem – but was ignored until it occurred

» Encouraged distributors to contract barge power but they refused

New post shows PNoy’s trust & confidence in him―he’s among PNoy’s closest friends




Extensive powers and functions:

• Identify priority areas under the Phil. Dev’t Plan 2011‐2016

• Monitor the status & impact of admin’s key projects

• Represent the President in meetings

• Run the Presidential Management Staff (PMS)

• Sit as member of the NEDA Executive Committee

Appointment has sparked speculations of wrangling between the 2 factions w/in the official family (Almendras w/ Balay; ES Ochoa w/ Samar)


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⑤Ma. Lourdes Sereno (Chief Justice)At 52, she has 18 years to undo the damage to the institution that was caused by the scandal involving her predecessorHas shown independence in controversial decisions where she did not go along with the majority who seemed to favor GMAWhat needs to be done:

Hasten resolution of casesPut litigation w/in the reach of many people, even w/ free legal assistanceHire more judges & court personnel & increase their payInvite experts or “friends of court” when deciding on business‐related cases




Prelude to a Senate coup?Malacañang officials & Senators deny it but SP Enrile’s stand on Sin Tax & RH (PNoy’s priority bills) could cost him his seat

If the Malacañang‐backed Sin Tax, RH, etc. aren’t passed this 15th Congress, there could be a new Senate President on July 22, 2013, when the 16th Congress opens

Fellow senators can easily invoke “loss of confidence”

If UNA gets at least 8 seats Enrile could stay – Can UNA?

Of the current frontrunners, only 6 are strongly pro‐UNA

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Rank Aspirant PRO‐LP PRO‐UNA

1 Legarda

2 Escudero

3‐5 Cayetano

3‐5 Ejercito **

3‐5 Enrile **

6‐10 Trillanes

6‐10 Honasan **

6‐10 Pimentel

6‐11 Zubiri **

6‐11 Angara

9‐11 Villar

12‐15 Binay **

12‐16 Gordon **

12‐16 Magsaysay Jr.

12‐17 Madrigal

How the current frontrunners are aligned

‐ strongly pro‐LP ‐ strongly pro‐UNA 9 6



Who Has Who

Senator PRO‐LP PRO‐UNA

Estrada **

Enrile (excluded)

Sotto **

Drilon

Recto

Guingona

Osmeña

Cayetano, Pia

Marcos *

Revilla *

Lapid

Miriam *

6(+1) 4(+1)

You need 13 to win, or 12 if Miram goes

How the Non‐Reelectionists are Affiliated

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Senate Presidency (A competitive advantage)3rd Highest post in the Land

3rd in the line of constitutional succession

Presiding Officer & CEO of the Senate

Even more powerful than the VP in the past,

3 Senate Presidents became Presidents – Quezon, Roxas, Marcos

Also,

A STRATEGIC POSITION TO CHALLENGE THE PRESIDENT ON

KEY ISSUES



What to expect

in 2013

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…What to expect in 2013Mid‐term elec ons―li le surprise. It will be the same old faces.

Enrile will go; Belmonte will stay

The House will continue to follow the President; Senate will push its own agenda—unless PNoy “LEDAC’s”

More funding for CCT, K+12, and Universal Healthcare as the gov’t scrambles to achieve its MDG targets

President Aquino’s satisfaction ratings will remain high

But down a little – if he implements some needed tough reforms, as he may

Initial stages of the framework agreement w/ MILF likely to be settledInvestment pledges in ARMM; but won’t eventuate till after ratification of the Bangsamoro Basic Law



…What to expect in 2013

Upgrade to investment level

Continued implementation of zero‐based budgeting scheme, approval & implementation of budget on time

Competitive bidding of government projects will continue

Infra construction finally starting

Lackluster inflow of FDIs despite PNoy’s popularity & extensive campaign vs corruption

Power shortage in Mindanao to worsen

Rice self‐sufficiency goal in ’13, maybe a little later.

Open‐pit mining ban to continue till after elections after w/c PNoymust act. But uncertain if he will

The bureaucracy won’t improve much

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Eco/business bills before end of 15th Congress:

① Sin Tax Reform Act②AMLA amendments (3rd phase)③Department of ICT④ Intellectual Property Act amendments⑤Fiscal Incentives Rationalization‐but 50:50 chance⑥ RH—If PNoy pushes it hard (he’s not yet)

Other key reform bills (FOI, Mining Revenue Sharing, Anti‐Smuggling) will be revived in the 16th CongressReview of the Constitution now unlikely to occur




The PH’s anti‐corruption and competitiveness rankings will improve

Gov’t to pursue fertilizer fund scam, other scandals vs GMA; tax evasion raps vs Corona

Strengthened campaign vs. top‐level corruption; but corruption among LGUs must also be a acked aggressively―unlikely to be

More tax evasion cases will be filed before the DOJ; but legal processes will defeat the success

NO DRAMATIC CHANGES

– BUT BRIGHTER PROSPECTS

Wallace Business Forum · 19.11.2012 · During martial law, Marcos formed KBL party, members of LP & NP jumped ship and joined. The EDSA uprising led to Marcos and also KBL’s

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