First Meeting of the
Legislative-Executive Development Advisory Council
10:10 - 11:54 a.m., 16
February 1999
State Dining Room, Malacañan
SUMMARY OF DISCUSSIONS AND
AGREEMENTS
Presiding Officer
With His Excellency, President Joseph
Ejercito Estrada presiding, the first LEDAC meeting was called to order at
10:10 a.m. Vice-President Gloria Macapagal-Arroyo led the opening prayer.
Attendance
The following officials attended the
meeting:
A. Executive Branch
1 His Excellency, Joseph Ejercito
Estrada
2. Her Excellency, Vice-President Gloria Macapagal Arroyo
3. Executive Secretary Ronaldo B. Zamora (OES)
4. Secretary Felipe M. Medalla (NEDA)
5. Secretary Antonio H. Cerilles (DENR)
6. Secretary Benjamin E. Diokno (DBM)
7. Secretary Edgardo S. Espiritu (DOF)
8. Secretary Jose T. Pardo (DTI)
9. Secretary Alexander P. Aguirre (National Security Adviser)
10. Secretary Fernando C. Barican (Presidential Spokesperson)
11. Secretary Leonora V. De Jesus (PMS)
12. Secretary Jose Jaime C. Policarpio (PLLO)
13. Undersecretary Ronaldo V. Puno DILG)
14. Undersecretary Feliciano M. Gacis (Rep. Sec. O. S. Mercado)
B. Senate
15. Senate President Marcelo B.
Fernan
16. Senate President Pro Tempore Blas F. Ople
17. Senate Majority Floorleader Franklin M. Drilon
18. Senate Minority Floorleader Teofisto T. Guingona
C. House of Representatives
19. Speaker Manuel B. Villar
20. Deputy Speaker Daisy Avance-Fuentes
21. House Majority Floor Leader Manuel A. Roxas III
22. House Minority Floor Leader Feliciano R. Belmonte, Jr.
23. Congressman Ralph G. Recto
D. Local Government Units
24. Atty. Lotgardo Barbo League of
Provinces
E. Other Officials
25. Dep. Dir-Gen. Raphael Perpetuo M.
Lotilla (NEDA)
26. Undersecretary Salvacion Z. Perez (PLLO)
27. Undersecretary Conrado V. Apacible (PLLO)
28. Asst. Secretary Sergio A. Andal (PMS)
29. Asst. Dir.-Gen. Ofelia M. Templo (NEDA)
30. Director Ronald R. Golding (Senate PSG)
31. Director Irah Ruth B. Borinaga (Senate PSG)
32. Director Bernardino E. Sayo (PLLO)
33. Director Victoria V. Quimbo (NEDA)
34. HEA Victor Emmanuel S. Dato (NEDA)
35. HEA Nelson A. Victorino (PLLO)
F. NEDA/LEDAC Secretariat
36. Director Virgilio V. Salentes
37. Mr. Aureo P. Castro
38. Mr. Archimedes C. Lazaro
39. Mr. Ronald Jeffrey G. Manulid
40. Mr. Jose Ma. J. Palabrica
41. Mr. Ricardo R. Sunico
42. Ms. Myrna N. Cacpal
43. Ms. Marlene M. Vegafria
G. PLLO
44. Atty. Jonas M. Lamorena
45. Ms. Genevieve Cortazar
46. Ms. Teresita Sumangil
H. PMS
47. Ms. Margie A. Jorillo
48. Mr. Severino D. Del Rosario
49. Mr. Rudy N. Funclara
50. Mr. Reynaldo B. Mira
I. OTHER STAFFS
51. Atty. Nicon L. Fameronag (O/Sen.
Ople)
52. Ms. Susan T. Bulan (CPBO)
53. Ms. Jean Encinas Franco (Senate PSG)
54. Mr. Jose L. Correa
Agenda
The meeting had the following agenda:
I. FOR INFORMATION
A. The Proposed LEDAC Common Legislative
Agenda (CLA)
II. FOR DISCUSSION
A. Economic Situationer
B. Implications of the 1999 Budget
III. OTHER MATTERS
IV. DOCUMENTS DISTRIBUTED DURING THE
MEETING
A. Proposed LEDAC Common Legislative
Agenda
Implications of the 1999 Budget
Minutes
I. CALL TO ORDER
1.0 First LEDAC Meeting
1.1 After calling to order the 1st
LEDAC meeting under the Estrada Administration and the prayer led by Her
Excellency, Vice-President Gloria Macapagal Arroyo, the President
remarked that this 1st LEDAC meeting formalizes what his
Administration has been doing at the outset which is consulting and
working together in setting and pursuing the priorities of Government.
He added that today’s agenda items are
all inter-related, inasmuch as these should lead to policies and
programs that will improve the lives of the poor. He reiterated that
Government’s poverty eradication program is actually a declaration of
war against poverty and the injustice it breeds in society. He finally
stressed that the Council gives him confidence that the Executive and
Legislature will remain allies in this war.
II. FOR INFORMATION
2.0 The Proposed LEDAC Common
Legislative Agenda (CLA)
2.1 Executive Secretary Ronaldo B. Zamora
informed the Council that the LEDAC Task Force on the Common Legislative
Agenda (CLA) was convened last 21 January 1999 in response to a
Presidential directive. The Task Force is composed of the Executive
Secretary as Chair; the NEDA Director-General as Vice-Chair; the
Presidential Legislative Adviser; the Senate Majority and Minority
Floorleaders (as designated by the Senate President); the House
Majority, Minority, and two Assistant Minority Floorleaders (as
designated by the Speaker of the House).
Exec. Sec. Zamora explained that this
proposed LEDAC Common Legislative Agenda (CLA) was culled from the
respective legislative programs of the Senate, the House of
Representatives and the Executive. The CLA includes measures consistent
with the Administration's legislative agenda as laid down in the
President’s 1998 State of the Nation Address (SONA) and Ulat sa
Bayan.
He added that the Task Force identified
ten (10) First Priority Measures targeted for enactment by the end of
the First Regular Session. In addition, six (6) Second Priority Measures
were also identified to complement the First Priority Measures. These
Second Priority Measures are also targeted for priority consideration by
Congress before its sine die adjournment in June 1999. The
following are the status of the Top and Other Priority Measures:
Top Priority Measures
(a) Amendments to the New Central
Bank Act (Bangko Sentral) - This measure is pending in the Senate
Committee on Banks, Financial Institutions and Currencies, while its
counterpart in the House is pending in the Committee on Banks and
Financial Intermediaries;
(b) Amendments to the General
Banking Act - This Bill is pending in the Senate Committee on
Banks, Financial Institutions and Currencies, while its counterpart in
the House is pending in the Committee on Banks and Financial
Intermediaries;
(c) Development of Ecozones -
The Senate version is approved on Third Reading while the House
version is on Second Reading;
(d) Eradication of Racketeers and
Powerful Syndicates – In the Senate, this measure is pending in
the Committee on Constitutional Amendments while in the House, it is
on Second Reading;
(e) Empowering the Local Government
Units in the Administration and Operations of the Philippine National
Police – The Senate version awaits approval on Third Reading
while the House version is for Second Reading;
(f) Clean Air Act - In the
Senate, this bill is in the Period of Individual Amendments while in
the House, it is going through the final rounds of interpellation;
(g) Power Sector Restructuring
– In the Senate, this measure is pending in the Committees on
Energy, Public Services, Finance, and Ways and Means while in the
House it is pending in the Committee on Energy;
(h) Securities Regulations and
Enforcement Act - The Senate version is approved on Third Reading
while the House version is on Committee-level;
(g) Anti-Dumping Act - The
Senate version is approved on Third Reading while the House version is
on Committee-level; and
(h) Domestic Industry Protection Act
(subsidies and countervailing measures) - The Senate version is
approved on Third Reading while the House version is on
Committee-level.
Other Priority Measures
(a) Regional Area Headquarters
(Incentives to MNCs Establishing Regional HQs) – Both Senate and
House versions are pending at the Committee-level;
(b) Concurrence to a Proclamation
Extending the Period of Application for General Amnesty – The
Senate version is for Second Reading while the House version has been
approved on Second Reading;
(c) Mandatory Use of Safety Belts
- The Senate version is approved on Third Reading while the House
version is pending at Committee-level;
(d) Amendments to the Organic Act of
the Autonomous Region of Muslim Mindanao – In the Senate, this
measure has been approved on Second Reading while in the House, it has
been approved on Third Reading;
(e) Amendments to 1954 Retail Trade
Law (R.A. 1180) – Both Senate and House versions are pending at
the Committee-level; and
(f) Pre-Need Plans Code - Both
Senate and House versions are pending at the Committee-level.
2.2 At the instance of the Executive
Secretary, Senator F. M. Drilon informed the Council that earlier that
day, leaders of both chambers of Congress, together with Defense
Secretary Orlando S. Mercado and Presidential Security Adviser Alexander
P. Aguirre, agreed to expedite the Amendments to the ARMM Organic Act
which should be enacted into law 60 days prior to the ARMM plebiscite on
the second Monday of September 1999.
He added that a joint Senate and House
public hearing on the ARMM Amendments will be held on 25 February at
Zamboanga City. Sen. Drilon then requested the President to certify as
urgent the proposed Amendments to the ARMM Organic Act.
2.3 Likewise, Cong. M. A. Roxas also
requested the President to direct the National Security Adviser, Sec.
Aguirre, to help identify which of the three (3) House versions on the
ARMM law is most amenable to the Executive.
2.4 On Vice-President’s G. M.
Arroyo’s query on why the Visiting Forces Agreement (VFA) was not
included in the LEDAC CLA, Sen. Drilon explained that this is a primary
concern of the Senate only since the Constitution provides that all
international agreements be ratified only by the Senate.
2.5 The Council agreed to adopt and
pursue the LEDAC Common Legislative Agenda (CLA).
III. FOR DISCUSSION
3.0 Economic Situationer
3.1 On the 1998 economic performance,
Secretary Felipe M. Medalla reported to the Council that the country’s
Gross National Product (GNP) grew by 0.1 percent in 1998 which is out of
the originally forecasted range. Meanwhile the Gross Domestic Product
(GDP) reportedly grew at a negative 0.5 percent. The strong growth
(12.9%) of the net factor incomes from abroad (NFIA), which accounts for
the difference between GNP and GDP, enabled overall output to achieve
positive growth.
During the fourth quarter of 1998,
preliminary estimates show a drop in GNP of 1.2 percent while the GDP
fell by 1.9 percent. The fall in GDP is lower than that of private
sector forecasts and is expected to be the lowest among Asian countries
with negative GDP growth.
Sec. Medalla further explained that the
1998 GDP contraction was caused by the 6.6% drop in agricultural
production, and the decline of construction and construction-related
manufacturing by 9.5 percent. Had agriculture posted a zero growth, GDP
would have risen by 1.1 percent. And had construction and
construction-related manufacturing turned in a similar zero growth, GDP
would have grown by 0.3 percent.
In addition, the "El Niño" dry
spell greatly devastated agriculture in the first three quarters. It was
initially estimated that there will be a slower decline in the fourth
quarter but apparently, the typhoons in October and pest infestations in
some areas of the country did more damage. Palay, as well as
other cash crops like coconut and sugarcane all posted double-digit
declines in the fourth quarter. Sec. Medalla noted that the livestock
subsystem remained strong, growing by 6.2 percent in the fourth quarter
and 4.1 in the whole of 1998.
Meanwhile, industry was weighed down by
the drop in construction and manufacturing, which contributed 0.5 and
0.3 percentage points, respectively, to the fall in GDP. Both
construction and manufacturing were disadvantaged by the
market-unfriendly environment, i.e., high interest rates and volatile
exchange rate during the early part of 1998.
Food manufacturing remained one of the
few bright spots in industry as its growth in 1998 (3.1 %) is in fact
higher than in 1997 (0.8%).
With regard to services, Sec. Medalla
pointed out that its growth remained steadfast led primarily by the
transportation and communication sectors and domestic trade. The
services sector, in fact, accelerated in the fourth quarter vis-à-vis
the third quarter. The telecommunications sub-sector was driven by
firm-level programs to meet roll out commitments.
On the demand side, Sec. Medalla
explained that personal spending remained firm (growing by 3.5 percent)
encouraged by the moderate movement in prices. Government consumption
went up slightly by 0.8 percent, as the national government pursued a
P50- billion deficit program.
However, despite the improvement in
macroeconomic indicators towards the latter part of 1998, investors
remained cautious. The durable equipment sector shrank by 18.4 percent
as almost all type of equipment, except those for telecommunications,
registered declines. Public construction was the only source of
investment growth. Nonetheless, construction declined by 3.8 percent,
compared to its 14.6 percent growth in 1997.
Sec. Medalla stressed that the weak
performance of the economy highlights the need to immediately carry out
measures to ensure recovery in 1999. Thus, he proposed the following
policy imperatives:
(a) Policy reforms to enhance
competitiveness and access to foreign financing - The executive
branch will have to work closely with Congress to speed up passage of
laws on the banking sector, power sector, and air quality reforms to
hasten the release of the Miyazawa and other program loans;
(b) Support the recovery of
agriculture through timely seed distribution by PhilRice; building
up small irrigation/impounding facilities by the NIA; and the timely
release and use of budget for rice and corn programs (PhP 1.6 B);
(c) Support for manufacturing and
other industries by speeding up the release of Miyazawa funds for
the private sector (US$ 500 M); allowing direct power sales to
manufacturing firms, construction, transportation, telecommunications,
power, tourism, and other services (schools, medical services);
(d) Pump-priming, primarily by
speeding up direct releases of payments of accounts payables to
private suppliers and contractors of the infrastructure program of
Government (PhP 76 B); and
(e) Stronger export drive by
implementing an action plan for more aggressive measures to promote
product and market diversification in view of a possible US growth
slowdown.
On the other hand, Sec. Medalla laid down
the following prospects for 1999:
(a) Agriculture is expected to
recover - In the first semester alone, the DA projects palay
production to grow by 47.3 percent and corn by 102.3 percent. This
will have multiplier effects on manufacturing and services;
(b) On manufacturing - initial
capital investments of newly registered domestic stock corporations
and partnerships with the SEC turned a hefty 42.1 percent growth in
October 1998 due to infusions in manufacturing, utilities and mining
and quarrying; and
(c) Government pump-priming
activities - are expected to boost aggregate demand. The national
government has programmed a P68.4 deficit this year.
Sec. Medalla stressed that if these
prospects are realized, GNP is targeted to grow by 3.0-3.7 percent while
GDP will expand by 2.6-3.2 percent. Agriculture is expected to rebound
by 3.0-3.5 percent. This, in effect, will help in the recovery of
industry, leading to a growth of 2.0-2.4 percent. Manufacturing is seen
to grow by 1.7-2.1 percent. The expansion of services by 3.0-3.8 percent
is likewise expected to continue as trade improves.
However, there are possible downside
factors in the global environment that we have to watch out for. Among
these are the protracted recession in Japan and the lingering question
on the yuan devaluation in view of the slowdown in China’s export
growth and Hong Kong’s recession.
Finally, Sec. Medalla said that the
consensus for Asia in general, is that this year will see the start of
recovery. For instance, the IMF’s projection for ASEAN-4 (-2.0 percent
for Malaysia, -3.4 percent for Indonesia, 1.0 percent for Thailand, and
2.5 percent for the Philippines) indicates an improvement from –9.6
percent average GDP growth in 1998 to –1.4 percent in 1999. The
continuing robust growth of the US, albeit at a slower rate than
1998’s 3.9 percent, will boost this recovery process.
3.2 Sen. Drilon informed the Council that
the Senate will pass the Clean Air Act very soon and that the Amendments
to the General Banking Act will be approved on Third Reading by the end
of this month.
3.3 The Vice-President suggested that the
LEDAC Task Force on the CLA identify the legislation conditionalities of
the Miyazawa fund for discussion at a later time.
3.4 Cong. R. Recto noted that lower
interest rates were not having an effect on the rural sector
necessitating new government initiatives to improve agricultural
productivity. Thus, he suggested that the Agri-Agra Law be considered
for prioritization to spur long term growth in the rural agricultural
sector.
4.0 Implications of the 1999 Budget
4.1 Secretary Benjamin E. Diokno reported
to the Council that the 1999 budget of PhP 579.5 B is 10 % higher than
the 1998 budget. As a percent of GNP it is only 18.7 % which is slightly
less than what it was in 1998. The social sector accounts for the
biggest share of the budget at 43.7% if IRA and debt service are netted
out.
Agriculture, agrarian reform and natural
resources will get a total of PhP 31 B or 8.5% of total budget net of
IRA and debt service; Education culture and manpower development will
receive an allocation of P112.6 billion or 30.7 percent of total budget;
and Public order and safety, a priority program of the Estrada
administration, will receive an allocation of PhP 40.8 B or 11.1 % of
total the budget.
Sec. Diokno explained further that an
increasing share of the budget is being set aside for the Internal
Revenue Allotment (IRA) to local governments. The total amount of
budgetary resources that will go to local government units is estimated
at PhP 103.8 B of which PhP 97 B will be in the nature of the IRA grant.
He explained that IRA use was supposed to be less than 10% of the
national budget, however assistance to LGUs has now reached 18.8 percent
of the budget. Thus, Government should try to influence local government
spending so that the IRA will be spent in a way that supports national
priorities.
According to Sec. Diokno, the national
budget is based on and will support an economic growth of between 3.0 to
3.7% and an inflation rate of between 8-9 percent. The 1999 budget
should be a critical tool for early economic recovery. Our success or
failure to make this happen will depend on: (a) a fiscal stimulus
package that will help perk-up construction and raise overall demand in
the economy; (b) a sound revenue base; (c) a financing program
that is less inflationary and that will not cause domestic interest
rates to rise; and (d) a set of budget reforms that will speed up
implementation, reduce graft, foster transparency, and improve public
accountability of public funds.
He stressed that Government’s
commitment to the IMF is the size of the deficit. However, the size of
the deficit is nothing to be of major concern. The proposed national
government deficit will be in the neighborhood of 2.2% of GNP while the
consolidated public sector deficit - the deficit including those of the
major corporations, the old Central Bank, and other public institutions
– will only be 3.1% of GNP. This is in stark contrast to other
troubled countries with a deficit-to-GNP ratio ranging from 5 to 7%.
As private aggregate demand continues to
be weak during the first half of the year, Sec. Diokno stressed that
Government has to pick up the slack through a program of stimulating
government construction and payment of accounts payable; the revenue
base has to be improved in order to support our plan to have a balanced
budget by year 2001; and tax legislation should focus on broadening the
tax base and improvement of tax administration.
Finally, Sec. Diokno stated that the
Estrada Administration’s strategy for financing the budget deficit
will rely more on foreign financing in order to avoid the rise in
domestic interest rate.
4.2 Sen. T. T. Guingona noted that the
regional allocations in the budget were still biased in favor of richer
regions. In reply, Sec. Diokno explained that Departments can realign up
to 30% of their non-personal services portions of their budgets to
support regions with greater needs.
4.3 Atty. L. Barbo, representing the
League of Provinces, requested the Council that functions devolved to
LGUs be given adequate financial support from the national budget. As an
example, he cited the Devolution Support Fund which is sourced from the
IRA fund thus, defeating IRA’s very purpose.
5.0 Council Agreement
5.1 For the Council to adopt and pursue
the LEDAC Common Legislative Agenda (CLA).
V. ADJOURNMENT
The meeting adjourned at 11:54 a.m.
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