NOV.

23, 2011 DATE

NR # 2596
REF. NO.

Speaker assures EU envoys Congress prioritizing bills to further enhance Philippine-EU economic ties
Speaker Feliciano Belmonte, Jr. has assured ambassadors of the European Union that the Philippine legislature is prioritizing bills that will further enhance economic ties between the country and the EU global community. Belmonte gave the assurance in a recent dialogue with the ambassadors of the member-countries of the EU on crucial political and economic matters affecting the global financial liquidity. Incidentally a few days after the dialogue between the Speaker and the EU ambassadors, credit watchdog Fitch Ratings released a study titled Emerging Asian Sovereign Pressure Points which cited the Philippines along with China and Taiwan have the biggest chance of escaping unscathed from the global financial turmoil brought about by the European debt crisis mainly as a result of internal liquidity among the three economies. The study said the Philippines, despite having a low investment level, is getting huge financial infusions from remittances of the estimated 10 million Filipinos working abroad. Fitch Rating noted that exposure to a sharp deterioration in global market liquidity as judged by the adjusted liquidity ratio (ALR) appears greatest for Indonesia, Korea and Malaysia, and more limited for China, Taiwan and the Philippines. The EU is the Philippines' fourth largest trading partner while the Philippines enhanced its rank among EU trading partners from 47 in 2009 to 42 in 2010. Trade in goods between the European Union (EU) and the Philippines increased by +34 percent to 9.1 billion, roughly P558 billion, in 2010 the highest growth rate in over 10 years. The Speaker described his dialogue with the EU ambassadors as a timely opportunity to strengthen the bonds of cooperation and solidarity between the EU and the Philippines, as he expressed hope they may ultimately create new inroads of growth and fresh opportunities for development of their respective people. The Philippines and the EU are enjoying stronger relations as our meaningful collaborations in priority areas including the poorest sectors, trade and investment, human rights and security, and education and technology continue, Belmonte said. Belmonte said there is much that the country and the EU can achieve together, as he urged their common pursuit of genuine and lasting peace, and development of their people serve as the guidepost to the path of progress. Belmonte said worldwide prospects for growth remain sluggish and uncertain. World GDP growth is forecast by the IMF to moderate to 4.0 percent in 2011 and 2012, from a 5.1 percent growth in 2010. The prospects for global economic recovery have become increasingly uncertain due to the weakening economy and high unemployment in the United States as well as the ongoing credit crisis in the Eurozone area, Belmonte said. Consequently, the Philippine economy has slowed down due largely to the contraction in investments and exports according to the Speaker. He cited that GDP growth in the second quarter of 2011 dropped to 3.4 percent, bringing down the Philippines GDP growth rate for the first semester of 2011 to 4.0 percent. Belmonte said there remains much to be done to raise this growth to higher levels. Raising the quality of governance in the country and empowering the poor and the vulnerable have been duly recognized by the President and his administration as necessary for growth.

NOV. 23, 2011 DATE

NR # 2596
REF. NO.

Belmonte said these directions are laid down emphatically and more precisely by the Philippine Development Plan which targets the following for the next six years: Reduction of poverty incidence by half to 16.6 percent in 2015; Employment creation of one million jobs a year; A GDP growth rate of 7 to 8 percent a year; Increase in the investment-to-GDP ratio from 15.6 percent in 2010 to 22 percent in 2016; and Achievement of the Millennium Development Goals. Belmonte said lawmakers in the present 15th Congress, are contributing to the resolution of prevailing concerns of EU member-countries through passage of policy reform measures. For instance, on the issue of common carriers tax and Gross Philippine Billings two legislative proposals, House Bill 4302 and House Bill 4444 seeking to remove the CCT and GPB were filed at the House of Representatives. House Bill 4302 (Committee Report No. 678) repeals the payment of CCT and GPB for international air and shipping carriers doing business in the Philippines. On the other hand HB 444 lifts the payment of CCT and GPB on the airline industry only. We have to address these concerns especially in light of the Board of Airline claim that the tax regime is the major reason why foreign carriers such as Alitalia, Air France, British Aitways, Egypt Air, Lufthansa, Swissair, United and Vietnam Airlines terminated their services to Manila. Just recently also, Air France-KLM revealed its decision to reduce Manila-Amsterdam direct flights to Manila from seven times per week to six until the first week of 2012. Then starting April, the airline will have a Hong Kong detour in order to reduce the amount of tax payments, said the Speaker. The Speaker said another issue being addressed by Congress is how to make existing Philippine laws compliant with the World Trade Organization findings. Last 2009, the EU filed a case before the WTO on the alleged discriminatory treatment of excise taxes imposed on distilled spirits. There are at least seven bills related to restructuring the excise tax on alcohol and tobacco, and they are still under deliberation in the House committee on ways and means, said Belmonte. On investment promotion, Belmonte said the successful implementation of the Public-Private Partnerships (PPP) Program which aims to improve regulatory inconsistency and investor protection is expected to be key driver of improvements in the investment climate and associated rankings. Relevant legislation include HB 759 seeking amendments to the Build-Operate-Transfer Law or the PPP Bill, HB 4835 or the Anti-Trust Act (Competition Policy), HB 4115 or Data Privacy Act, HB 4667 or the Creation of a Department of Information and Technology, and Constitutional Amendments of Restrictive Economic Provisions. Lastly on fiscal consolidation, Belmonte said relevant legislation include the tradition of timely passage of the General Annual Appropriations Act (GAA), the GOCC Governance Act of 2011, reforming the Excise Tax on Sin Products, the Rationalization of Fiscal Incentives, Fiscal Responsibility Bill, Customs and Tariff Modernization Bill, among others. Present during the meeting were House Majority Leader Neptali Gonzales II, Ambassadors Guy Ledoux of the EU, Joseph Rychtar of the Embassy of the Czech Republic, Joachim Heidorn of the Embassy of Germany, Polyxeni Stefanidou of the Embassy of Greece, Jorge Domeq of the Embassy of Spain, Thierry Borja de Mozota of the Embassy of France, Luca Fornari of the Embassy of Italy< Wilhelm Donko of the Embassy of Austria, Veleriu Gheorghe of the Embassy of Romania, Heikki Hannikainen of the Embassy of Finland, Stephen Lillie of the Embassy of the United Kingdomand Ambassador Joe Hayes of the Embassy of Ireland (non-resident in Singapore). (30) rbb