In February of 2004, civil society led by Bishop Pedro Dulay Arigo of
Palawan, Cesar Sarino, the late Dr Gerry Ortega, the late Dr. Jose
Antonio Socrates, Prof. Oscar Evangelista and Cesar R. Ventura and I
filed suit before the Supreme Court questioning the legality of
President Gloria Macapagal Arroyo’s use of the government proceeds from
the Malampaya natural gas field. Petitioners, before going to the
Supreme Court, had previously filed suit in the RTC of Palawan and the
Court of Appeals, pursuant the hierarchy of Courts.
The petitioners’ complaint was simple. Under the 1987 Constitution,
local governments were given a fair and equitable share in the revenues
derived from natural resources found in their area. Under the Local
Government Code, this share was defined as 40 percent of all gross
government receipts from these resources. Palawan civil society then
argued that a provisional sharing agreement entered into by Mrs. Arroyo
and the then-local leadership of the province providing that Palawan
shall be entitled to 20 percent net of all government revenues was
unconstitutional.
This was on at least four grounds: First, the interim sharing
agreement amended the legal provision on how much the entitlement should
be: from 40 percent of gross to 20 percent net; Second, it amended the
local government code in the manner by which it was to be shared by the
barangay, municipality and province where the resources are found. Under
the law, the province shall have 20 percent of such revenues, while the
municipality and the barangay are to have the lion’s share of the
revenues: 35 percent and 45 percent, respectively. The sharing agreement
called for projects to be identified by the two representatives of the
province, its governor, and the mayor of Palawan. Third, the Code
provides the manner by which the money was to be spent: 80 percent of
all sums should be applied to lower the cost of electricity in the
province, while the remaining 20 percent should go to local government
projects and for livelihood. The Interim sharing agreement made the fund
additional pork barrel for the two representatives of the province and
its other local officials. The fourth argument of the petitioners would
prove to be perhaps the most important argument in promoting good
governance. Petitioners argued that the manner by which Mrs. Arroyo
entered into the agreement was unconstitutional because she spent the
funds without congressional authorization.
In entering into the questioned sharing agreement, PGMA invoked the
provision of a little known Marcos Presidential Decree 910, section 8 of
which reads: “—Section 8. x x x production share on service
contracts and similar payments on the exploration, development and
exploitation of energy resources, shall form part of a Special Fund to
be used to finance energy resource development and exploitation programs
and projects of the government and for such other purposes as may be
hereafter directed by the President.” Petitioners argued that this
violates the rule that no money shall be paid out of the national
treasury without appropriation by law.
PGMA, on the other hand, argued that because of the foregoing PD, all
government revenues earned from Malampaya are in the nature of a
special fund which can be disbursed at the pleasure of the President.
It was this argument that later led COA to conclude that at least
P2.3 billion of the Malampaya funds were misused by local government
officials of Palawan including its fugitive ex-governor Joel Reyes and
the defeated Baham Mitra. Unfortunately, it was this interpretation that
also led to the disbursement of the first tranche of P900 million
Malampaya release that COA now says were plundered by Napoles and her
cohorts. Ironically, the first tranche released to Napoles was
authorized only two days after our oral argument in the Supreme Court on
November 24, 2009. Worse, it is this interpretation that led to the
release of a further P26.3 billion of Malampaya funds which early
reports now say may have been released and malversed by Arroyo shortly
before the 2010 elections.
It comes hence as no surprise that much of the scandal unearthed by
the Napoles revelations involve the Malampaya funds. To begin with, the
popular clamor that there “shall be no taxation without representation”
was based on the idea that the people’s representatives should authorize
all public spending and shall exercise oversight on the manner the sums
are spent. Because the Malampaya funds were spent without congressional
authorization, and hence without oversight, it was spent for any and
all purpose that the President desired, And when you have a kleptomaniac
for a president, that meant spending the money all for naught.
I cannot help but also blame the Court for this fiasco. The Malampaya
petition has been pending in our courts since 2004. It reached the
Supreme Court in 2009 after passing through the hierarchy of courts,
Until today, it has not been resolved. Had the court acted on the
petition seasonably, we may have prevented Napoles from squandering P900
million worth of public funds that could have gone to livelihood and
lowering the cost of electricity in Palawan. We may even have prevented
the further plunder of P26.3 billion worth of Malampaya revenues and
applied the same not just for national defense, but also for education
and heath purposes. As the saying goes, “justice delayed is justice
denied.”
I rest my case.
source: Manila Standard's Column of Atty. Harry Roque, Jr.
Wednesday, August 21, 2013
Monday, July 22, 2013
Thirsting for answers: The MWSS concession agreement
RECENTLY, public interest has been ignited
at the “questionable” practice by Metro Manila’s water concessionaires
of passing on costs to their customers. Advocacy groups such as Water
for the People Network have framed the issue under a public interest
angle, juxtaposing “onerous charges” borne by consumers vis-à-vis the
profits enjoyed by water companies. No less than a key official of the
Metropolitan Waterworks and Sewerage System (MWSS) has called some of
these pass-on costs as “grossly unjust,” in the process hinting at a
possible reduction in water rates.
The root of the issue, however, lies in the concession agreement between the MWSS and its private partners as the actions of both sides governed by a contract. A proper understanding of the matter, therefore, requires a close examination of the agreement and the context under which it was drafted.
Against the backdrop of a bleak water supply situation, the National Water Crisis Law or Republic Act 8041 was passed in 1997. The legislation paved the way for private sector involvement in the provision of water and wastewater services in Metro Manila, mirroring the Ramos administration’s belief in privatization as the most practicable means of improving the efficiency of public services while cutting down government subsidies.
Specifically, R.A. 8041 established the legal basis for the privatization of the MWSS, the government corporation mandated to ensure continuous and sufficient potable water supply and distribution while charging “just and equitable” water rates and sewerage service fees. In a bid to improve water coverage and accessibility, the government encouraged private companies to invest in the MWSS’s operations.
The MWSS was saddled with a myriad of problems: poor coverage, inefficient service, and skyrocketing non-revenue water (NRW). Back then, only 69% of total service area was supplied with water.
Availability was intermittent, averaging only 16 hours per day. The MWSS had the highest proportion of NRW in Asia, double that of developed nations, as a large amount of water was lost to leaks, meter tampering, illegal connections and use of fire hydrants. All these problems led to the privatization of MWSS.
The government commissioned the International Finance Corporation to provide technical assistance in the privatization process, consolidating pertinent data and analyses, designing contractual engagements, and guaranteeing transparency in the bidding process. Upon their recommendation, two 25-year concessions were auctioned to private investors, demarcated as the West Zone and East Zone of the metropolis. The concessions for the West and East zones were awarded to Maynilad Water Services, Inc. and Manila Water Company, Inc., respectively. This public-private partnership (PPP) engagement is administered by two separate Concession Agreements (CA) signed by the MWSS with the winning bidders.
Under the “Grant of Concession” clause of the CA, both Maynilad and Manila Water are considered as contractors and agents of the MWSS. As such, they are vested with certain functions, powers, and rights, including that to manage, operate, repair, decommission, and refurbish facilities located within their respective service areas, on top of the right of billing and collection.
The two companies agreed to absorb the MWSS’s debt obligations valued at $900 million at that time. Maynilad took responsibility for 90 percent of the outstanding loans, while Manila Water assumed the residual. To ensure the sustainability of the concessionaires’ operations, a guaranteed rate of return was provided, dubbed as the “appropriate discount rate” (ADR) based on operating expenses, capital investments, Philippine business taxes, and servicing of MWSS’s debts. ADR is defined as the “real (i.e., not inflation adjusted) weighted average cost of capital (after taxes payable by the concession business).”
Article 11 of the Concession Agreement provides for the establishment of the MWSS Regulatory Office (MWSS-RO). It is principally mandated to implement the CA’s provisions--specifically, to ensure effective regulation of the two concessionaires and guarantee equitable tariff rates. In 2003, the use of key performance indicators (KPI) and business efficiency measures (BEM) was introduced to improve the capability to monitor and assess the performance of the two operators.
Maynilad and Manila Water are entitled to get back costs incurred in operations and maintenance, investments, and concession fees payment--over and above a market-based real rate of return. This forms the foundation for the tariff-setting mechanism, undertaken every five years as “rate rebasing” exercises. During the rate rebasing review, the MWSS-RO evaluates the two companies based on KPI and BEM goals, taking into consideration expenditures and investments to achieve such targets. In the same vein, the concessionaire’s business plans, which lay the framework for new service obligations and anticipated future investments, are also assessed by the MWSS-RO. The tariff adjustment--which yields the ADR--is then derived after comprehensive deliberation and appraisal. The MWSS-RO’s recommended rates are subject to approval by the MWSS Board of Trustees.
Other important features of the tariff-adjustment mechanism is the quarterly foreign currency differential adjustment for the payment of MWSS’s foreign-denominated debt taking into account changes in the exchange rate, annual adjustments for inflation, and an annual extraordinary price adjustment --conditional on MWSS approval-- for events beyond the control of the concessionaires, e.g. natural calamities.
The CA also specifies that disputes, disagreements, controversies, or claims relating to the agreement that cannot be settled via negotiation and consultation between the parties shall be resolved through arbitration proceedings conforming with the arbitration rules of the United Nations Commission on International Trade Law, except in instances when these rules conflict with the stipulations of the CA. Costs incurred for such proceedings are treated as expenditures on the part of the concessionaire and thus can also be recovered through the rate adjustment mechanism. The decision in such arbitration proceedings, once issued, becomes binding on the parties involved.
These elements are key to understanding the controversy that water industry stakeholders (MWSS, water concessionaires, consumers) find themselves in. In a subsequent article, we will look into and try to address the issues that have been called to public attention.
The Institute for Development and Econometric Analysis (IDEA), Inc. is a non-stock, non-partisan institution dedicated to high-quality economic research, instruction, and communication. The views and opinions expressed herein are those of the author and do not necessarily reflect those of the organization. For questions and inquiries, please contact Remrick Patagan via ideainc.mail[@]gmail.com or telefax no. 920-6872.
source: Businessworld
The root of the issue, however, lies in the concession agreement between the MWSS and its private partners as the actions of both sides governed by a contract. A proper understanding of the matter, therefore, requires a close examination of the agreement and the context under which it was drafted.
Against the backdrop of a bleak water supply situation, the National Water Crisis Law or Republic Act 8041 was passed in 1997. The legislation paved the way for private sector involvement in the provision of water and wastewater services in Metro Manila, mirroring the Ramos administration’s belief in privatization as the most practicable means of improving the efficiency of public services while cutting down government subsidies.
Specifically, R.A. 8041 established the legal basis for the privatization of the MWSS, the government corporation mandated to ensure continuous and sufficient potable water supply and distribution while charging “just and equitable” water rates and sewerage service fees. In a bid to improve water coverage and accessibility, the government encouraged private companies to invest in the MWSS’s operations.
The MWSS was saddled with a myriad of problems: poor coverage, inefficient service, and skyrocketing non-revenue water (NRW). Back then, only 69% of total service area was supplied with water.
Availability was intermittent, averaging only 16 hours per day. The MWSS had the highest proportion of NRW in Asia, double that of developed nations, as a large amount of water was lost to leaks, meter tampering, illegal connections and use of fire hydrants. All these problems led to the privatization of MWSS.
The government commissioned the International Finance Corporation to provide technical assistance in the privatization process, consolidating pertinent data and analyses, designing contractual engagements, and guaranteeing transparency in the bidding process. Upon their recommendation, two 25-year concessions were auctioned to private investors, demarcated as the West Zone and East Zone of the metropolis. The concessions for the West and East zones were awarded to Maynilad Water Services, Inc. and Manila Water Company, Inc., respectively. This public-private partnership (PPP) engagement is administered by two separate Concession Agreements (CA) signed by the MWSS with the winning bidders.
Under the “Grant of Concession” clause of the CA, both Maynilad and Manila Water are considered as contractors and agents of the MWSS. As such, they are vested with certain functions, powers, and rights, including that to manage, operate, repair, decommission, and refurbish facilities located within their respective service areas, on top of the right of billing and collection.
The two companies agreed to absorb the MWSS’s debt obligations valued at $900 million at that time. Maynilad took responsibility for 90 percent of the outstanding loans, while Manila Water assumed the residual. To ensure the sustainability of the concessionaires’ operations, a guaranteed rate of return was provided, dubbed as the “appropriate discount rate” (ADR) based on operating expenses, capital investments, Philippine business taxes, and servicing of MWSS’s debts. ADR is defined as the “real (i.e., not inflation adjusted) weighted average cost of capital (after taxes payable by the concession business).”
Article 11 of the Concession Agreement provides for the establishment of the MWSS Regulatory Office (MWSS-RO). It is principally mandated to implement the CA’s provisions--specifically, to ensure effective regulation of the two concessionaires and guarantee equitable tariff rates. In 2003, the use of key performance indicators (KPI) and business efficiency measures (BEM) was introduced to improve the capability to monitor and assess the performance of the two operators.
Maynilad and Manila Water are entitled to get back costs incurred in operations and maintenance, investments, and concession fees payment--over and above a market-based real rate of return. This forms the foundation for the tariff-setting mechanism, undertaken every five years as “rate rebasing” exercises. During the rate rebasing review, the MWSS-RO evaluates the two companies based on KPI and BEM goals, taking into consideration expenditures and investments to achieve such targets. In the same vein, the concessionaire’s business plans, which lay the framework for new service obligations and anticipated future investments, are also assessed by the MWSS-RO. The tariff adjustment--which yields the ADR--is then derived after comprehensive deliberation and appraisal. The MWSS-RO’s recommended rates are subject to approval by the MWSS Board of Trustees.
Other important features of the tariff-adjustment mechanism is the quarterly foreign currency differential adjustment for the payment of MWSS’s foreign-denominated debt taking into account changes in the exchange rate, annual adjustments for inflation, and an annual extraordinary price adjustment --conditional on MWSS approval-- for events beyond the control of the concessionaires, e.g. natural calamities.
The CA also specifies that disputes, disagreements, controversies, or claims relating to the agreement that cannot be settled via negotiation and consultation between the parties shall be resolved through arbitration proceedings conforming with the arbitration rules of the United Nations Commission on International Trade Law, except in instances when these rules conflict with the stipulations of the CA. Costs incurred for such proceedings are treated as expenditures on the part of the concessionaire and thus can also be recovered through the rate adjustment mechanism. The decision in such arbitration proceedings, once issued, becomes binding on the parties involved.
These elements are key to understanding the controversy that water industry stakeholders (MWSS, water concessionaires, consumers) find themselves in. In a subsequent article, we will look into and try to address the issues that have been called to public attention.
The Institute for Development and Econometric Analysis (IDEA), Inc. is a non-stock, non-partisan institution dedicated to high-quality economic research, instruction, and communication. The views and opinions expressed herein are those of the author and do not necessarily reflect those of the organization. For questions and inquiries, please contact Remrick Patagan via ideainc.mail[@]gmail.com or telefax no. 920-6872.
source: Businessworld
Sunday, July 21, 2013
2013 IPP finally up for Palace okay
THE 2013 Investment Priorities Plan (IPP)
has finally been submitted to Malacañang, a Cabinet official yesterday
said, with the government also looking to fast-track the issuance of the
2014 blueprint to make up for the delays that marked this year.
“We already submitted the [2013] IPP,” Trade Secretary Gregory L. Domingo said at the sidelines of a FUJIFILM Corp. plant launch.
“There are minor changes there compared to last year. The major changes may be for 2014 ... [the IPP for] which we will try to issue by December,” he added.
The IPP -- which is updated annually -- identifies industries and sectors that are eligible for incentives such as income tax holidays and duty-free importation of equipment.
Mr. Domingo said the 2012 plan remained in effect while this year’s IPP remained unapproved. It was supposed to have been submitted last March; the plan’s release was subsequently moved to May and then to end-June. There was no word as to when Palace approval would be secured now that it had been submitted.
Based on a draft, the 2013 list largely carries over the 2012 IPP that focused on the following areas:
• agriculture/agribusiness and fishery;
• creative/knowledge-based industries;
• shipbuilding;
• mass housing;;
• iron and steel;
• energy;
• infrastructure;
• research and development;
• “green” projects;
• motor vehicles;
• strategic projects;
• hospital/medical services; and
• disaster prevention, mitigation and recovery projects.
Projects will only be granted pioneer status if completely new to the Philippines.
Another proposed change is the need for an opinion from the Agriculture department before any farm project is given incentives.
The draft removes toll ways and railways from the IPP, consolidating these under the public-private partnership project heading. Power projects in missionary or off-grid areas are no longer included.
Income tax holidays for tourist accommodations in Cebu, Mactan, Metro Manila and Boracay were also removed.
source: Businessworld
“We already submitted the [2013] IPP,” Trade Secretary Gregory L. Domingo said at the sidelines of a FUJIFILM Corp. plant launch.
“There are minor changes there compared to last year. The major changes may be for 2014 ... [the IPP for] which we will try to issue by December,” he added.
The IPP -- which is updated annually -- identifies industries and sectors that are eligible for incentives such as income tax holidays and duty-free importation of equipment.
Mr. Domingo said the 2012 plan remained in effect while this year’s IPP remained unapproved. It was supposed to have been submitted last March; the plan’s release was subsequently moved to May and then to end-June. There was no word as to when Palace approval would be secured now that it had been submitted.
Based on a draft, the 2013 list largely carries over the 2012 IPP that focused on the following areas:
• agriculture/agribusiness and fishery;
• creative/knowledge-based industries;
• shipbuilding;
• mass housing;;
• iron and steel;
• energy;
• infrastructure;
• research and development;
• “green” projects;
• motor vehicles;
• strategic projects;
• hospital/medical services; and
• disaster prevention, mitigation and recovery projects.
Projects will only be granted pioneer status if completely new to the Philippines.
Another proposed change is the need for an opinion from the Agriculture department before any farm project is given incentives.
The draft removes toll ways and railways from the IPP, consolidating these under the public-private partnership project heading. Power projects in missionary or off-grid areas are no longer included.
Income tax holidays for tourist accommodations in Cebu, Mactan, Metro Manila and Boracay were also removed.
source: Businessworld
First of 4 Metro integrated bus terminal opens August 6
The southwest integrated bus terminal in Parañaque City will
open on August 6, the Metropolitan Manila Development Authority (MMDA)
said Sunday.
MMDA Organized Bus Route Director Mila Silvestre said the terminal, located at the Uniwide Reclamation Area, will help decongest the 23.8-kilometer long EDSA.
Silvestre said the terminal can handle about 955 buses from Cavite and Batangas daily, as well as 326 utility vehicles (AUVs, PUJs and taxicabs) to ferry passengers to their destination in the metropolis upon disembarking from their buses.
She said the terminal will also address the problem of “colorum” or out-of-line vehicles plying EDSA, the metropolis’ busiest highway where about 325,000 vehicles pass everyday.
“We are very sure that the integrated bus terminal will weed out colorum or out-of-line buses because it has the Bus Management Dispatch System,” she said.
The bus management dispatch scheme features a biometric-based system in which the drivers go through fingerprint scanning before they are allowed on the road.
The system’s databank makes sure that only authorized buses from Cavite and Batangas can use the facility. It also identifies drivers who are recidivist traffic violators.
MMDA General Manager Corazon Jimenez said similar integrated bus terminals will be set up on the fringes of Metro Manila.
“This is just one of the terminals and President Aquino has already issued an Administrative Order for its construction,” Jimenez said.
The other terminals will be at Trinoma Mall in Quezon City, the Uniwide Reclamation Area and Filinvest in Alabang, Muntinlupa City.
source: Manila Times
MMDA Organized Bus Route Director Mila Silvestre said the terminal, located at the Uniwide Reclamation Area, will help decongest the 23.8-kilometer long EDSA.
Silvestre said the terminal can handle about 955 buses from Cavite and Batangas daily, as well as 326 utility vehicles (AUVs, PUJs and taxicabs) to ferry passengers to their destination in the metropolis upon disembarking from their buses.
She said the terminal will also address the problem of “colorum” or out-of-line vehicles plying EDSA, the metropolis’ busiest highway where about 325,000 vehicles pass everyday.
“We are very sure that the integrated bus terminal will weed out colorum or out-of-line buses because it has the Bus Management Dispatch System,” she said.
The bus management dispatch scheme features a biometric-based system in which the drivers go through fingerprint scanning before they are allowed on the road.
The system’s databank makes sure that only authorized buses from Cavite and Batangas can use the facility. It also identifies drivers who are recidivist traffic violators.
MMDA General Manager Corazon Jimenez said similar integrated bus terminals will be set up on the fringes of Metro Manila.
“This is just one of the terminals and President Aquino has already issued an Administrative Order for its construction,” Jimenez said.
The other terminals will be at Trinoma Mall in Quezon City, the Uniwide Reclamation Area and Filinvest in Alabang, Muntinlupa City.
source: Manila Times
Friday, July 19, 2013
PPP still a myth
It still a standstill for Skyway 3, one of the biggest projects that fall under the public-private partnership (PPP).
No less than the head of the Department of Transportation and Communications (DoTC) confirmed it three years after President Aquino announced the project.
DoTC Secretary Joseph Emilio Abaya said the supplemental toll operation agreement of the project is still on President Aquinos desk.
It was the same reply Abaya gave when theDaily Tribune first asked about it some six months ago.
Skyway 3 will traverse from Gil Puyat Station in Makati up to Monumento in Caloocan.
Compared with the South Luzon Expressway-North Luzon Expressway connector, Skyway 3 is more expensive because of so many private properties that will be hit when the government pays the right of way of the project.
STOA of Citra/San Miguel Corp. Skyway stage 3 now at OP (Office of the President) for approval, Abaya explained.
The DoTC chief didn’t give substantial reply regarding the P11-billion Ninoy Aquino International Airport expressway.
NAIA expressway handled by Department of Public Works and Highways (DPWH). Not sure of time frame, the official said.
The DoTC and DPWH are the two government agencies that handle PPP projects.
Both departments have not seen the completion of any such project.
Earlier, Abaya denied that the government lacks legal and technical knowledge on how to roll out PPP thats why three years after President Aquinos announcement, none among those big ticket projects was built.
The former congressman of Cavite also said criticisms about the project are acceptable but not to the extent that they fall below the belt or as if sounding like having a crab mentality.
Governments PPP has been labeled power point presentation by many critics as none of it has been built three years after announcement that all big ticket projects will be turned over to private sector.
Unless one or two are built next year, we will not see our gross domestic product growing by at least seven percent. Infrastructure are very important because those who want to do business here look at it before throwing their money, said Finance Undersecretary Gil Beltran.
source: Philippine Tribune
No less than the head of the Department of Transportation and Communications (DoTC) confirmed it three years after President Aquino announced the project.
DoTC Secretary Joseph Emilio Abaya said the supplemental toll operation agreement of the project is still on President Aquinos desk.
It was the same reply Abaya gave when theDaily Tribune first asked about it some six months ago.
Skyway 3 will traverse from Gil Puyat Station in Makati up to Monumento in Caloocan.
Compared with the South Luzon Expressway-North Luzon Expressway connector, Skyway 3 is more expensive because of so many private properties that will be hit when the government pays the right of way of the project.
STOA of Citra/San Miguel Corp. Skyway stage 3 now at OP (Office of the President) for approval, Abaya explained.
The DoTC chief didn’t give substantial reply regarding the P11-billion Ninoy Aquino International Airport expressway.
NAIA expressway handled by Department of Public Works and Highways (DPWH). Not sure of time frame, the official said.
The DoTC and DPWH are the two government agencies that handle PPP projects.
Both departments have not seen the completion of any such project.
Earlier, Abaya denied that the government lacks legal and technical knowledge on how to roll out PPP thats why three years after President Aquinos announcement, none among those big ticket projects was built.
The former congressman of Cavite also said criticisms about the project are acceptable but not to the extent that they fall below the belt or as if sounding like having a crab mentality.
Governments PPP has been labeled power point presentation by many critics as none of it has been built three years after announcement that all big ticket projects will be turned over to private sector.
Unless one or two are built next year, we will not see our gross domestic product growing by at least seven percent. Infrastructure are very important because those who want to do business here look at it before throwing their money, said Finance Undersecretary Gil Beltran.
source: Philippine Tribune
Tax holidays for mining removed from IPP
NEW MINING projects will no longer be able
to enjoy tax holidays as the Trade department has removed the perk from
the proposed 2013 Investment Priorities Plan (IPP) it has endorsed for
the President’s approval, the agency said Friday.
Board of Investments (BoI) Executive Director Lucita P. Reyes said in a text message to reporters that "only mining projects have limited incentives to zero duty importation of capital equipment; there are no income tax holidays for [the sector]."
The Finance department said in its March 26 position paper that income tax holidays for some sectors, including mining, should be removed.
The 2013 IPP features much the same priority areas as the 2012 version, with only minor changes in some sectors.
"The proposed 2013 IPP roster includes agriculture/agribusiness and fishery, creative industries/knowledge-based services, shipbuilding, mass housing, iron and steel, energy, infrastructure, research and development, green projects, motor vehicles, strategic projects, hospital/medical services, disaster prevention and mitigation and recovery projects," the Trade department said in a statement Friday.
It also transferred health and medical-related activities from the tourism sector to hospital and medical services "for a more focused classification."
The IPP lays out which sectors the government can grant incentives, like four-year to six-year income tax holidays and duty-free importation. Other perks include relief from corporate taxes and employment of foreigners.
Trade Secretary Gregory L. Domingo said on July 16 that the department has forwarded the proposed IPP for the President’s approval. If approved, the IPP cannot be enforced without implementing guidelines.
The Trade department is also now preparing for the 2014 IPP.
"The agency is currently undertaking studies, in partnership with the private sector, in the development of the country’s industry roadmaps to support the formulation of the 2014 IPP," the statement said.
The draft 2014 IPP is expected to be completed by December this year.
source: Businessworld
Board of Investments (BoI) Executive Director Lucita P. Reyes said in a text message to reporters that "only mining projects have limited incentives to zero duty importation of capital equipment; there are no income tax holidays for [the sector]."
The Finance department said in its March 26 position paper that income tax holidays for some sectors, including mining, should be removed.
The 2013 IPP features much the same priority areas as the 2012 version, with only minor changes in some sectors.
"The proposed 2013 IPP roster includes agriculture/agribusiness and fishery, creative industries/knowledge-based services, shipbuilding, mass housing, iron and steel, energy, infrastructure, research and development, green projects, motor vehicles, strategic projects, hospital/medical services, disaster prevention and mitigation and recovery projects," the Trade department said in a statement Friday.
It also transferred health and medical-related activities from the tourism sector to hospital and medical services "for a more focused classification."
The IPP lays out which sectors the government can grant incentives, like four-year to six-year income tax holidays and duty-free importation. Other perks include relief from corporate taxes and employment of foreigners.
Trade Secretary Gregory L. Domingo said on July 16 that the department has forwarded the proposed IPP for the President’s approval. If approved, the IPP cannot be enforced without implementing guidelines.
The Trade department is also now preparing for the 2014 IPP.
"The agency is currently undertaking studies, in partnership with the private sector, in the development of the country’s industry roadmaps to support the formulation of the 2014 IPP," the statement said.
The draft 2014 IPP is expected to be completed by December this year.
source: Businessworld
Monday, July 15, 2013
Cabinet cluster pushes nine priority measures
NINE PRIORITY legislative measures have
been identified by the Cabinet’s economic development cluster ahead of
the 16th Congress’ opening next week.
The Finance department, in a statement, said that its chief, Cesar V. Purisima, proposed the measures in a Cabinet meeting yesterday.
The list is expected to be considered by President Benigno S. C. Aquino III for possible inclusion in priority laws he will ask Congress to pass.
The measures, which Mr. Purisima noted would “answer key economic concerns of both the government and private sector,” comprise the following:
• amendments to the Build-Operate-Transfer (BOT) Law or Republic Act (RA) 7718;
• rationalization of the fiscal regime for mining;
• rationalization of the Fiscal Incentives Law and the Tax Incentives Monitoring and Transparency Act (TIMTA);
• Customs Modernization and Tariff ACT;
• amendments to the Bangko Sentral ng Pilipinas charter;
• further amendments to the Anti-Money Laundering Act;
• removal of restrictions in specific laws cited in the Foreign Investment Negative List;
• amendments to RA 8974, also known as the Act to Facilitate the Acquisition of Right-of-Way, Site or Location for National Government Infrastructure Projects and For Other Purpose; and
• amendments to the Cabotage Law.
Mr. Purisima leads the economic development cluster of the Cabinet. Its members include the heads of the National Economic and Development Authority (NEDA) and the Agriculture, Budget, Interior and Local Government, Trade, Public Works, Transportation, Energy, Science and Technology, and Tourism departments.
The Finance chief said amendments to the BOT Law would help the government implement its flagship public-private partnership (PPP) program.
“We propose to amend the inclusion of other PPP modalities such as joint ventures, concession and management contract, and enhancing provisions on unsolicited proposals including the conduct of competitive challenge,” he said.
“We also need to make sure that the PPP Governing Board is properly accounted for in legislation. These measures will make sure that the lessons we learned from our PPP experience are institutionalized.”
As for the rationalization of fiscal perks, Mr. Purisima said the measure would make the country’s incentives system more efficient.
He said the Finance and Trade departments, together with the NEDA, were discussing the measure.
“A monitoring and accountability mechanism through the TIMTA bill will effectively account for the utilization of public monies, including monies that are “spent” through the grant of tax incentives to businesses and activities,” Mr. Purisima added.
source: Businessworld
The Finance department, in a statement, said that its chief, Cesar V. Purisima, proposed the measures in a Cabinet meeting yesterday.
The list is expected to be considered by President Benigno S. C. Aquino III for possible inclusion in priority laws he will ask Congress to pass.
The measures, which Mr. Purisima noted would “answer key economic concerns of both the government and private sector,” comprise the following:
• amendments to the Build-Operate-Transfer (BOT) Law or Republic Act (RA) 7718;
• rationalization of the fiscal regime for mining;
• rationalization of the Fiscal Incentives Law and the Tax Incentives Monitoring and Transparency Act (TIMTA);
• Customs Modernization and Tariff ACT;
• amendments to the Bangko Sentral ng Pilipinas charter;
• further amendments to the Anti-Money Laundering Act;
• removal of restrictions in specific laws cited in the Foreign Investment Negative List;
• amendments to RA 8974, also known as the Act to Facilitate the Acquisition of Right-of-Way, Site or Location for National Government Infrastructure Projects and For Other Purpose; and
• amendments to the Cabotage Law.
Mr. Purisima leads the economic development cluster of the Cabinet. Its members include the heads of the National Economic and Development Authority (NEDA) and the Agriculture, Budget, Interior and Local Government, Trade, Public Works, Transportation, Energy, Science and Technology, and Tourism departments.
The Finance chief said amendments to the BOT Law would help the government implement its flagship public-private partnership (PPP) program.
“We propose to amend the inclusion of other PPP modalities such as joint ventures, concession and management contract, and enhancing provisions on unsolicited proposals including the conduct of competitive challenge,” he said.
“We also need to make sure that the PPP Governing Board is properly accounted for in legislation. These measures will make sure that the lessons we learned from our PPP experience are institutionalized.”
As for the rationalization of fiscal perks, Mr. Purisima said the measure would make the country’s incentives system more efficient.
He said the Finance and Trade departments, together with the NEDA, were discussing the measure.
“A monitoring and accountability mechanism through the TIMTA bill will effectively account for the utilization of public monies, including monies that are “spent” through the grant of tax incentives to businesses and activities,” Mr. Purisima added.
source: Businessworld
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