JFC PBG Meeting with Speaker Belmonte to Discuss Legislative Priorities

The Joint Foreign Chambers and Philippine Business Groups held a high level exchange on priority legislation February 2, 2011 with the House of Representatives leadership at the Batasan. It was agreed that these meetings would be continued on a quarterly basis.

Speaker Belmonte was joined by his deputies and 15 committee chairmen. In his prepared remarks, he stated 25 priority measures have been identified to be reported out of committee before March 25 and another 40 priority measures will reported before the end of the first year's session June 9, 2011. The 283-member House expects to take up 90 priority measures by the end of 2011, which he explained is the "minimum number of bills of national significance we are committing to bring to the floor for plenary discussion."

After noting that SWS recently showed the House having its highest net satisfaction rating in 25 years, he gave assurances the House will focus on "reforms that enhance productivity and competition" and listed the following, most of which were on the JFC/PBG list of 41 measures sent to the Speaker in October 2010 (1) review and amend the (BOT) law, (2) water sector reforms, (3) review EPIRA, (4) Competition Policy Framework, (5) Pocket Open Skies, (6) Maritime Authority Charter amendments, (7) Philippine Ports Authority amendments, (8) Cybercrime Act,  (9) Data Privacy Act, (10) Department of Information and Technology, (11) amend BSP Charter, (12) amend Anti-Money Laundering Law, (13) Anti-Smuggling; (14) Customs and Tariffs Modernization Act; (15) Common Carriers Tax, (16) Gross Philippine Billings, (17) Rationalization of Fiscal Incentives, (18) Fiscal Responsibility Act, (19) Procurement Act amendments, (20) Automatic Retention of LGU shares of National Taxes, (21) Corporate Farming, (22) Farmland as Collateral, (23) Land Administration Reform Bill.

In his response ECCP President d'Aboville described Speaker Belmonte as "Mr. Arangkada" for his commitment to accelerated reform. He called on his colleagues to describe each of the ten measures from the list of 41 that had been prioritized for the February 2 meeting. After each was discussed, Deputy Speaker Tanada called on respective committee chairmen to comment on the status of the proposed laws.

1)  Data Privacy, DICT - BPAP President Sanez encouraged early passage of these two measures. Rep. Tinga, ICT Committee chair, reported that the reports for both bills are being signed. "A DICT must be created for this potential $20 billion industry."

2)  Foreign Professionals Omnibus Amendment and Retail Trade Act. AmCham External Affairs Director Sears explained these two proposals. Rep. Salvacion, Civil Service and Professional Regulation Committee Chair and Rep. Garcia, Trade Committee chair reported there are no bills introduced. Mr. Sears gave the Speaker draft bills with explanatory statements.

3)  BOT Law Amendments - Atty. Santos of SGV discussed concerns with HB 759. Our support for the bill  of Rep. Daza (HB 3763) in the 14th Congress was explained. (Note: We will also wait to review the BOT amendments that are on the President's Priority Legislation List.) Committee on Government Enterprise is the primary committee and Trade Committee is secondary.

4)  Clean Air Act amendment - Mr. Fuji, VP of JCCPI, spoke. Rep. Abaya commented DENR Sec Paje had told him current law allows high tech incineration. Mr. Fuji explained investors are not confident and it would be better to amend the law to correct the oversight made when it was passed.

5) Mining amendments. Both Anzcham and Cancham spoke to mining issues. HWMC Chairman Mandanas invited the JFCs to attend a forthcoming hearing. Local Government Committee chair Rep. Arnaiz explained the national government is 2-3 years late in paying LGUs their shares of mining royalties.

6) CCT/GPB - BAR 1st Vice-chair Crowdey explained foreign air capacity to the PH is not growing while it has double digit growth elsewhere in Asia, and there are many unused rights. Other Asian countries give foreign airlines incentives for service but the PH gives disincentives. HWMC Chairman Rep. Mandanas reported he has filed a bill which is expected to pass by the end of February.

7)  Anti-trust. ECCP VP Schumacher explained to Trade Committee Chairman Garcia that the business groups have a few comments to present on the consolidated bill. Chairman Garcia replied he is open to comments on the consolidated bill. The issue was first proposed almost two decades ago. He expects to report out a bill before the March 25 recess.

8)  CTMA - SGV Atty Tamayo urged passage of the CTMA. HWMC Chair Mandanas replied that the measure would be reported out by the March 25 recess. (Note. Mandanas was referring to the Anti-Smuggling Bill)

9)  Rationalization of Fiscal Incentives - Amcham Senior Advisor Forbes urged this Congress to pass a law on this issues which has been before Congress since 1995. HWMC Chairman Mandanas replied that end of May is the target for a committee report.

10)  Tax Sector Neutrality Act - CMDC ED Bhagwani explained the proposed bill, which HWMC Chairman welcomed, so long as taxes will not be increased by it.

The meeting concluded exactly on time. In the concluding remarks Mr. D'Aboville proposed meeting 3-4 times a year, to which speaker Belmonte proposed quarterly meetings.

JFC Meeting with DOH Secretary Enrique Ona on Arangkada Philippines 2010 recommendations

On February 2, the Joint Foreign Chambers (JFC) met with Department of Health (DOH) Secretary Enrique Ona at his office in Manila. This was the eleventh of a series of meetings with key cabinet officials to present the recommendations of the JFC advocacy paper entitled “Arangkada Philippines 2010: A Business Perspective,” a copy of which was given to the secretary.

Secretary Ona identified three goals of the department: (1) achieve Universal Healthcare particularly focusing funds on the two lowest and poorest income quintiles; (2) improve facilities in regional and provincial government hospitals; and (3) strengthen government’s capacity of bringing affordable drugs to the barangay level. 

The poorest Filipinos are not granted insurance coverage through the state-run Philippine Health Insurance Corp. (PhilHealth) for their lack of resources to pay the PhP 100 premium, insufficient documents, and limited access when they live in far flung rural areas. The secretary explained the government will direct funds to provide PhilHealth coverage to the 5 million families belonging to two lowest income quintiles. The DSWD is assisting the department in this program through Conditional Cash Transfers.

The Health Department aims to reduce infant and maternal mortality by improving health facilities such as birthing capabilities in more communities. The secretary reported, “Previously, the government anticipated that the targets on infant and maternal mortality reduction in the UN Millennium Development Goals will be missed, but in the Aquino administration this will not happen.”

The department has already submitted its financial mobility plan for the next five years to President Aquino.  To modernize the 72 DOH hospitals and medical centers, large funding is required which will principally come from the private sector through Public-Private Partnerships. “PPP is a relatively new concept to the department. Traditional PPP projects mostly involved transportation infrastructure. We would need your help on this,” Secretary Ona told the group.

The JFC highlighted the potential of medical tourism and retirement in attracting more investment and generating high quality jobs. The secretary believes in the potential of the two sub-sectors. However, he explained there is a need to correct the public perception that “the prioritization of medical travel and retirement may divert government’s attention from improving health services to the poor.” He said, “the public must be helped to understand that the income generated from these sectors will eventually trickle down to the poor and government revenue generated will be earmarked to pay for the health insurance of the poor.”

The JFC explained, “The patient should be protected from point of arrival to the time of departure.” They commended the creation of a medical tourism visa which allows patients to stay for 6 months in the country. However, there should be a basic policy of allowing such patients to stay longer if their medical condition requires it.

“On the hospital side, there is a lack of transparency in doctor’s fees and procedures. If we do not address that, Singapore, Malaysia and Thailand will walk away with the market,” commented ECCP EVP Schumacher. There is a need to impose guidelines on how to make doctor fees transparent. Legislation requiring stricter rules on doctor-patient privacy and harsher punishment for medical malpractice is required.

The JFC recommended that the government pursue bilateral negotiations of public insurance portability. For many foreign patients, their health insurance cannot be used outside their home country. The same should be done for retirement benefits.

To attract more foreign patients, hospitals in the country should partner with hospitals in the target markets to create a facility that would allow them to easily exchange patient data. Doctors can explore IT solutions such as telemedicine to facilitate this.

Issues on medical tourism and retirement have also been discussed in other venues. The American, European, Japanese, and Korean Chambers of Commerce formed the Retirement and Healthcare Coalition to identify the needed reforms to grow these sectors. The secretary proposed to meet with them soon to discuss the specific recommendations.

On the Reproductive Health bill, Secretary Ona is hopeful that it be passed this year. The secretary, who is part of a negotiating panel, is confident that they can have a reasonable discussion with the Church. The bill promotes responsible parenthood and, if passed, will ensure that the family is aware of the need for responsible parenting and receives government assistance for the informed choices on family size by parents. 

JFC Meeting with DOT Secretary Alberto Lim on Arangkada Philippines 2010 recommendations

On January 27, the Joint Foreign Chambers (JFC) met with Department of Tourism (DOT) Secretary Alberto Lim at his office in Manila. This was the tenth of a series of meetings with key cabinet officials to present the recommendations of the JFC advocacy paper entitled “Arangkada Philippines 2010: A Business Perspective,” a copy of which was given to the secretary.

Henry Schumacher, Executive Vice President of ECCP, opened the meeting saying “as representatives of the foreign investment community we welcome this opportunity to discuss with you the barriers that prevent the rapid growth of tourism in the Philippines.” The Part 3 section on Tourism, Medical Travel, and Retirement has 34 recommendations—most gathered from a focus group discussion attended by foreign and local sector experts including the secretary himself—to improve the sector’s business climate.

The JFC expressed willingness to participate in the implementation of business reforms. For instance, in the planning and implementation of infrastructure projects, the involvement of business associations and non-government organizations is key to make the process faster and transparent. The JFC explained that local business associations have a key role in identifying important projects and ensuring that deals are made transparently. They recommended that the DOT form partnerships with local players in each of the tourist hubs to watch over infrastructure projects.

The JFC lauded the strategy of the Aquino administration to give priority to needed road infrastructure projects in tourism hubs.

The secretary reported that in the ASEAN Tourism Ministers meeting in Cambodia, the officials pledged to make ASEAN a regional tourism hub and to create a regional tourism development strategy, aimed at strengthening regional links, raising the quality of tourism products and services, increasing mobility through a common ASEAN visa that is comparable to the EU Schengen visa, increasing connectivity through the adoption of open skies policy in capital cities, and improving marketing strategies. The secretary explained that the government is working with GTZ in improving the quality and standard of tourism products and services.

The secretary expressed the need to improve the country’s marketing strategy despite the constraints in funding. He noted that more than half of the marketing budget is spent on attending the three key international travel shows: ITB Berlin Convention, World Travel Market in London, and the ASEAN Tourism Forum. The JFC noted the success of Thailand in attracting millions of tourists despite the occurrence of political crises such as the Red Shirt protests in mid-2010. “Their marketing campaigns must be very effective.”

Policy pronouncements of the new administration to implement an open skies policy have generated much interest among low cost carriers in the region. Singapore low-cost carrier Tiger Airways has partnered with SEAIR and will be flying to Macau and Hong Kong from Clark starting February. Jet Star and Air Asia are planning to expand their services to the country later this year. With a high demand for low-cost carriers, the Clark terminal should—in the medium term—be marketed as a budget terminal following the strategy implemented in Kuala Lumpur’s airport where the LCC terminal has more than 130 gates. The secretary replied that the Tourism Department is closely monitoring progress on the issuance of the Executive Order on open skies which President Aquino announced in November 2010.

The foreign chambers recommended that airport authorities of international gateways outside Clark should actively partner with tourist agencies in bringing in more low-cost carriers. For example, the international airports in Cebu, Davao, Iloilo, Laoag, and Puerto Princesa have existing capacity for more flights but little is being done to bring in more carriers. Clark has been very successful in increasing passenger movement from 7,880 passengers in 2003 to approximately 600,000 in 2009. This should be replicated by the other international gateways which need to be productive.

On the issue on the Common Carriers Tax and Gross Philippine Billings, the JFC recommends the reduction of airline taxes to make the country a cheaper destination and put off plans of foreign airlines to stop flights to the Philippines. The duties have made the country an unattractive market for foreign airlines, especially those which operate longer flights and therefore have higher ticket prices, in turn requiring them to pay more taxes. Foreign carrier service to Manila is much lower than comparable large Asian markets and risks further shrinking if tax reforms are not implemented. The secretary explained that the DOF is planning to negotiate bilateral agreements with countries where such airlines are headquartered to bring down airline taxes on a case-to-case basis. “It will have to be reciprocal.” Initial agreements should then be replicated and be a basis for further agreements.

Regarding the serious problem of Customs, Immigration, and Quarantine (CIQ) overtime charges, Secretary Lim explained that the Bureau of Customs has proposed that US$ 2 be deducted from the terminal fee to pay for the overtime of CIQ personnel. The secretary reported that the Finance Department will issue a department circular implementing this policy.

There is also the issue on the US Federal Aviation Administration downgrade of the Philippine aviation safety rating from Category 1 to Category 2 and a standing ban on Philippine carriers from flying to Europe—a result of the inability of the CAAP to enforce minimum international safety standards. The secretary ensured that highly-qualified personnel have been hired by the government to improve the country’s aviation safety standards.

The secretary justified the need to cater to the Meetings, Incentives, Conventions, and Exhibitions (MICE) market. There is increasing demand to hold conventions in the Philippines; however, existing facilities are extremely limited. There should be more investment in the building of large convention halls.

The department also plans to promote the country’s cultural heritage. Secretary Lim plans to further develop Intramuros by inviting investment in hotels, coffee shops, and restaurants and rehabilitating heritage sites such as churches. He explained his initial challenge is the transfer of thousands of informal settlers.

On the issuance of medical tourist visas, the JFC expressed concern on its 6-month and no extension limitations. “The visa should be valid as long as the medical condition requires.” This issue should be addressed before the new visa is announced to the public to avoid sending wrong signals to potential markets.

The JFC noted that the confiscation of the passports of more than a hundred Korean elementary school students was badly mishandled by immigration authorities. This incident made headlines in South Korea and damaged the image of the Philippines. The students had their passports seized by for taking English-language study courses without "special study permits." Secretary Lim said he will discuss this with the Bureau of Immigration.

The secretary also informed the JFC that the department has hired the respected firm Asia Pacific Tourism Training Institute to prepare an updated Tourism Master Plan. Principals of the firm prepared the UNDP Tourism Roadmap in the early 1990s.

Arangkada Philippines 2010: Media Coverage of the Press Launch

Arangkada Philippines 2010

Arangkada Philippines 2010: A Business Perspective has a strategic purpose – to provide recommendations that lead to higher investment, millions of new jobs for Filipinos and higher economic growth for the country. The document, based on extensive consultations with domestic and foreign investors and business groups, includes hundreds of recommendations for action by both public and private sectors . Together they add up to an agenda for change to help policy makers and business leaders enable the national economy to compete in a world increasingly interlinked and competitive. In this world, keeping up is an imperative, not a choice. For some years and in some sectors of its economy the Philippines has lagged, losing competitiveness despite the nation’s immense potential. Going forward, it should build on its many strengths to grow much faster.