philippine development plan 2011-2016

iPhilippine Development Plan 2011-2016

Philippine Development Plan 2011-2016

ii Philippine Development Plan 2011-2016

© 2011 by National Economic and Development Authority

All rights reserved. Any part of this book may be used and reproduced, provided proper acknowledgement is made.

This book is printed on recycled paper.


Published by:

National Economic and Development Authority12 Escriva Drive, Ortigas Center, Pasig CityTel: (+632) 631 0945 to 56Email: [email protected]

ISSN:

Printed in the Philippines

About the cover

The cover depicts a red and blue film strip shaped into a ribbon, with photos showing the various sectors and stakeholders in development. The sunburst and yellow background depict the current administration’s “Daylight” strategy, focusing on good governance and anticorruption to achieve inclusive growth, create employment, and reduce poverty.

iiiPhilippine Development Plan 2011-2016

Table of ContentsList of Tables and Figures xii

Chapter 1. In Pursuit of Inclusive Growth 17

What is Inclusive Growth 18

What Makes Inclusive Growth Elusive 21

How Shall We Achieve Inclusive Growth 26

How Shall We Monitor Progress Towards Inclusive Growth 32

A Window of Opportunity 32

Chapter 2. Macroeconomic Policy 35

Output and employment 36

Economic Performance 2004-2010 36

Employment and Poverty 41

Fiscal and Monetary Sectors 45

Assessment and challenges 46

Fiscal Sector 46

Monetary and External Sectors 50

Strategic framework 53

Fiscal Reforms 53

Monetary Policy and External Sector Reforms 59

Chapter 3. Competitive Industry & Services Sectors 61

Assessment and Challenges 63

Competitiveness 63

Exports of Goods and Services 66

Investment 71

iv Philippine Development Plan 2011-2016

Micro, Small and Medium Enterprises (MSMEs) 74

Employment 75

Consumer Policy 78

Strategic Framework 79

Vision 80

Ten-point Agenda 80

Goal 1: Create a better business environment 80

Goal 2: Action agenda to improve productivity and efficiency 84

Goal 3: Action agenda to enhance consumer welfare 99

Chapter 4. Competitive and Sustainable Agriculture and Fisheries Sector 101

Assessment 102

Sector Performance 102

Challenges 108


Vision 113

Goals and Strategies 113

Goal 1: Food Security Improved and Incomes Increased 113

Goal 2. Sector Resilience to Climate Change Risks Increased 116

Goal 3. Policy Environment and Governance Enhanced 118

Legislative Agenda 119

Chapter 5. Accelerating Infrastructure Development 121

Crosscutting Strategies 122

Transport 125

Assessment, Issues, and Challenges 125

Strategic Plan and Focus 130

Water 133

Crosscutting Issues and Strategies in the Water Sector 134

vPhilippine Development Plan 2011-2016

Assessment, issues, and challenges 134


Water Supply 137

Sanitation, Sewerage, and Septage Management 139

Irrigation 143

Flood and Drainage Management 145

Energy 148



Information And Communications Technology (ICT) Infrastructure 160



Social Infrastructure 169

Waste Management 169

Solid Waste Management (SWM) 169

Health Care Wastes (HCW) 171

Toxic Chemicals and Hazardous Wastes 173

Housing 174

Health Facilities 175

Education 177

Chapter 6. Towards a Resilient and Inclusive Financial Sector 181

Assessment 182

Current Structure of the Financial System 183

Condition and Performance 187

Challenges 190


Vision for the Financial Sector 192

vi Philippine Development Plan 2011-2016

Medium-Term Development Plan for the Financial Sector (MTDPFS) 192

Key Reform Objectives and Targets 192

Specific Reform Strategies 192

Chapter 7. Good Governance and the Rule of Law 205


Public Service Delivery 208

Integrity 210

Rule of Law 211

Citizens’ Participation 212

Political Processes and Systems 213

Gender Roles in Governance Structures 214


Ensure High-Quality, Effective, Efficient, Transparent, Accountable, Economically and Physically Accessible and Nondiscriminatory Delivery of Public Service 215

Curb Corruption Decisively 220

Strengthen the Rule of Law 225

Enhance Citizens’ Access to Information and Participation in Governance 229

Chapter 8. Social Development 231

Assessment 232

Challenges 252


Goals 254

Targets 254

Policies and Strategies 260


viiPhilippine Development Plan 2011-2016

Chapter 9. Peace & Security 291



Section 1. Winning the Peace 294

Section 2. Ensuring National Security 298

Chapter 10. Conservation, Protection & Rehabilitation of the Environment & Natural Resources 303

Assessment 304

State of the Environment and Natural Resources 304

Challenges 313

Policy Responses 313

Institutional Issues 320


Goal 1. Improved Conservation, Protection and Rehabilitation of Natural Resources 323

Goal 2. Improved Environmental Quality for a Cleaner and Healthier Environment 329

Goal 3. Enhanced Resilience of Natural Systems and Improved Adaptive Capacities of Human Communities to Cope with Environmental Hazards Including Climate-Related Risks 331

Cross-cutting Strategies 332


List of Acronyms 338

Glossary 347

Bibliography 373

Planning Committees 385

A Social Contract with the Filipino People 396

NEDA Secretariat 399

Index 401

x Philippine Development Plan 2011-2016

The Philippine Development Plan 2011-2016 was formulated in accordance with the Constitutional provision of Section 9, Article VII, directing the Government’s economic and planning agency to “implement a continuing integrated and coordinated programs and policies for national development.”

Upon the assumption of President Benigno S. Aquino III of the country’s leadership, he embarked on his program of government that is based on his “Social Contract with the Filipino People” wherein he articulated a commitment to transformational leadership, institutional reform, economic stability and inclusive growth.

On September 2, 2010, the President issued Memorandum Circular No. 3 directing the National Economic and Development Authority (NEDA) to coordinate the formulation of the Philippine Development Plan for 2011-2016.

In the formulation of the Plan, NEDA coordinated with all the country’s development stakeholders in giving substance and directions to the document, based on the program of government of the Aquino administration. Exhaustive consultations were conducted throughout the country with the participation of various government agencies, the regional development councils, local government units, the business sector, nongovernment organizations, academe, and groups of well-known experts in economic and social development.

The Social Contract envisions “a country with an organized and shared rapid expansion of our economy through a government dedicated in honing and mobilizing our people’s skills and energies as well as the responsible harnessing of our natural resources.” With good governance and anti-corruption as an overarching theme, the Philippine Development Plan will effectively address poverty and create massive employment opportunities and achieve its vision of inclusive growth. It has emerged into a comprehensive set of strategies, policies and programs and activities within a framework of inclusive growth that will translate the administration’s development agenda for the next six years.

The Plan centers on five key strategies. First is to boost competitiveness in the productive sectors to generate massive employment. Second is to improve access to financing to address the evolving needs of a diverse public. Third is to invest massively in infrastructure. Fourth is to promote transparent and responsive governance, which is emphasized in all the chapters. And fifth, is to develop human resources through improved social services and protection.

These strategies will be supported by complementary action programs that focuses on achieving a stable macroeconomic environment, ensuring ecological integrity, and advancing the peace process and guaranteeing national security.

To achieve growth that is inclusive and sustained, we want to ensure that the production sectors are able to provide the needed employment and livelihood opportunities.

Preface

xiPhilippine Development Plan 2011-2016

Chapter 1, “In Pursuit of Inclusive Growth”, presents an overview of the Plan, detailing the five strategies earlier listed as well as the policy directions that would ensure the country will not fall into the path of a trickle-down jobless growth which we have seen in the past years. Chapter 2 outlines the initiatives that will ensure the stability and growth of a macroeconomic environment.

Chapter 3 outlines the imperatives for a globally competitive and innovative industry and services sectors that will provide opportunity for every Filipino to pursue gainful employment. In the same manner, Chapter 4 pushes for a competitive, sustainable, and technology-based agriculture and fishery sector.

Chapter 5 aims to accelerate the provision of physical infrastructure to support the economic sectors, and ensure equitable access to infrastructure services especially health, education and housing.

A healthy, dynamic and financial system as envisioned in Chapter 6 will gainfully contribute to sustainable and equitable growth.

Chapter 7 summarizes the strategy for greater transparency, good governance, accountability and the pursuit of the rule of law as a precondition for national development.

Chapter 8 translates inclusive growth by ensuring improvement in the lives of all Filipinos through equitable access to adequate and quality social services and assets. To ensure that every Filipino participates and benefits from socioeconomic gains, Chapter 9 advances the peace process and guarantees national security to break the vicious cycle of conflict and underdevelopment in affected areas.

Chapter 10 envisions an environment that is healthy, ecologically balanced, sustainably productive, climate-change resilient, and providing for the needs of the present and future generations.

The Plan shall be accompanied by a Results Matrix which lists the specific programs and projects against which the performance of the implementing agencies shall be graded. A Public Investment Program (PIP) which identifies the budgetary requirements and their sources for these programs and projects is being finalized. The PIP will also link the Plan particularly the Results Matrix to ensure effective implementation and monitoring of the development initiatives therein. Consequently, the various Regional Development Offices will also roll out their individual Regional Development Plans and Investment Programs for their respective areas.

The Philippine Development Plan provides a substantive translation of the Administration’s Social Contract. The support of all sectors of society will be crucial in turning our aspirations for a better quality of life for all Filipinos into reality.

CAYETANO W. PADERANGA, JR.Socioeconomic Planning Secretary and Director-General

National Economic and Development Authority

xii Philippine Development Plan 2011-2016

Chapter 1. In Pursuit of Inclusive Growth

Table 1.1 Annual Average Growth Rate of Real Per Capita GDP (1950-2009)Table 1.2 Poverty and Inequality in Selected Countries (most recent available)Table 1.3 Transport Infrastructure ranking of Selected Countries (out of 139)Table 1.4 Strength of Bureaucracy and Input Costs in Selected Countries

Figure 1.1 Unemployment and Underemployment Rate: 1990 – 2010Figure 1.2 Poverty Incidence and the Gini Ratio: 1991, 2003, 2006, 2009 Figure 1.3 Investment-to-GDP Ratios of Selected Asian Countries: 1994 – 2010 (in percent)Figure 1.4 Cohort Survival and Net Enrollment Rate, Philippines: 1990 – 2009 (in percent)

Chapter 2. Macroeconomic Policy

Table 2.1 Philippine Key IndicatorsTable 2.2. Official Poverty Statistics, Philippines: 2003, 2006 and 2009 Table 2.3 Summary of Fiscal Sector Indicators, 2004-2010 (in million PhP)Table 2.4 Selected External Sector Accounts, 2004-2010 (in billion US$)Table 2.5 Selected Fiscal, Monetary, and External Medium-Term Targets

Figure 2.1 Contributions to Growth (Demand)Figure 2.2 Contributions to Growth (Supply)Figure 2.3 Contributions to Growth (Demand)Figure 2.4 Contributions to Growth (Supply)Figure 2.5 Philippines Unemployment Rate, 2006-2010 (in %) Figure 2.6 Comparative Unemployment Rates in Selected Asian Economies: 2006-2010Figure 2.7 Employment Generated, 2005-2010 ( in ‘000) Figure 2.8 Employment by Class of Worker and Underemployment Rate, 2005-2010 (in %)Figure 2.9 Poverty Incidence of Families by Region (in %): 2003, 2006 and 2009Figure 2.10 Year-on-Year Inflation Rate (2004- 2010)

Chapter 3. Competitive Industry and Services Sectors

Table 3.1 Cost of Doing Business IndicatorsTable 3.2 Export Performance (2004-2010)Table 3.3 Percent Share of Tourism to GDP, Employment and Total Exports Vis-à-vis Visitor Arrivals Globally and in the Asia PacificTable 3.4 Visitor Arrivals to ASEAN Countries (‘000)

List of Tables and Figures

xiiiPhilippine Development Plan 2011-2016

Table 3.5 Philippines Travel and Tourism Competitiveness in Comparison with Selected ASEAN Countries, 2009

Table 3.6 Total Approved Investments of Foreign and Filipino Nationals by Industry: 2004 – 2010, (in million PhP)

Table 3.7 BOI-PEZA Approved Investments (2009-2010)Table 3.8 Total Approved Foreign Direct Investments by Country of Investor:

2004 – 2010, (in million PhP)Table 3.9 PEZA Operating Economic Zones: 2004 – 2010Table 3.10 Micro, Small and Medium Enterprise ProfileTable 3.11 Employment per Major Industry Group

Figure 3.1 BPO/IT Outsourcing, 2004-2011Figure 3.2 Investments by Industry Sector in the PEZA Economic ZonesFigure 3.3 MSME 2008 Employment Share by SectorFigure 3.4 Strategic Framework for Industry and ServicesFigure 3.5 Strategic Destination Area for TourismFigure 3.6 Industry Cluster Map

Chapter 4. Competitive and Sustainable Agriculture and Fisheries Sector

Table 4.1 Agriculture and Fishery (with Forestry) Performance and Contribution to Economy: 2004-2010:Table 4.2 Contribution of Subsectors in Agriculture and Fishery Growth: 2004-2010Table 4.3 Value of Philippine Agricultural Exports and Imports: 2004 and 2010 (in million US$)Table 4.4 Agribusiness Lands (including Agroforestry) Developed: 2005-2010Table 4.5 Land Acquisition and Distribution Performance 2004-2010, (in hectares)Table 4.6 Land Productivity in Selected Southeast Asian Countries (in MT/Hectare)Table 4.7 Revealed Comparative Advantage (RCA) in Selected ASEAN Countries:

2007Table 4.8 International Trade of Agricultural Products: 2000 and 2009, (in billion

US$)Table 4.9 Inflation Rates by Commodity for All Households (in %)Table 4.10 Poverty Incidence and Magnitude in the Philippines: 2003 and 2009

Chapter 5. Accelerating Infrastructure Development

Table 5.1 Estimated Coverage of Access to Water: 1990-2008Table 5.2 Levels of Access to Safe Drinking WaterTable 5.3 Estimated Coverage for Sanitation: 1990-2008 Table 5.4 Status of Irrigation Development: as of December 2009Table 5.5 Flood-Related Impacts: 1980-2005Table 5.6 Projected Final Energy Consumption: 2009-2016Table 5.7 Internet Connection in Public High Schools Per Region: 2010Table 5.8 NG-LGU Cost-Sharing Framework Table 5.9 Summary of DOH Infrastructure and Equipment Upgrade Projects by Region: 2007 -2010Table 5.10 2011 DBM Budget Gaps

xiv Philippine Development Plan 2011-2016

Figure 5.1 Percentage Access to Safe WaterFigure 5.2 Percentage Access to Sanitary ToiletsFigure 5.3 Primary Energy Mix: 2009Figure 5.4 Philippine Capacity and Gross Generation: 2009Figure 5.5 Sectoral Oil Consumption: 2009Figure 5.6 RE Contribution to Total Power Generating Capacity: 2009Figure 5.7 Growth in Number of Users/Subscribers of Major ICT Services: 2006-2010Figure 5.8 State of Web Presence among NGAs as of September 2010Figure 5.9 New Classroom Construction and Repairs Undertaken: FY 2004–2010

Chapter 6. Towards a Resilient and Inclusive Financial System

Table 6.1 Comparative Market Shares of Key Banking Subgroups in the Philippines as of end-September 2010

Table 6.2 Philippine Stock Exchange - Listed Companies as of February 25, 2011Table 6.3 Structure of Financial Systems in ASEAN-5 (Averages: 2000-2009)Table 6.4 Extent of Financial Access - Customer Reach (2010)Table 6.5 Legislative and Regulatory Priorities for the Financial System

Figure 6.1 Comparative Market Share of the Insurance Industry as of end-December 2009Figure 6.2 Financial Deepening in ASEAN-5Figure 6.3 Comparative Benchmark Yield Curves, ASEAN+3Figure 6.4 Selected Performance Indicators of the Banking SystemFigure 6.5 Selected Stock Market Performance IndicatorsFigure 6.6 Summary of Financial Market Performance

Chapter 7. Good Governance and the Rule of Law

Table 7.1 Status of Submission and Evaluation of Rationalization Plans: as of 31 December 2010

Figure 7.1 Philippines: Worldwide Governance IndicatorsFigure 7.2 CES Occupancy Data

Chapter 8. Social Development

Table 8.1 Formal Basic Education Performance Indicators, by Sex: 2004-2009Table 8.2 Enrolment in Tertiary Level of Education, by Sex: Academic Years 2004-

2009Table 8.3 Direct Housing Accomplishments Table 8.4 Indirect Housing Accomplishments Table 8.5 Total Housing Need: 2011-2016Table 8.6 Proportion of Households in Informal SettlementsTable 8.7 Summary of Actual OFW MembershipTable 8.8 Health, Nutrition and Population Targets: 2011-2016Table 8.9 Education Targets: 2011-2016Table 8.10 Housing Targets by Program/Agency: 2011-2016Table 8.11 Social Protection Targets: 2011-2016 Table 8.12 Agrarian Reform Targets, by Land Distribution and CARP Beneficiaries:

2011-2016Table 8.13 Ancestral Domain and Lands Targets: 2011-2016

xvPhilippine Development Plan 2011-2016

Table 8.14 Urban Asset Reform Targets: 2011-2016

Figure 8.1 Poverty Incidence in Southeast AsiaFigure 8.2 Share of Social Services in Total National Government ExpendituresFigure 8.3 Deployed Landbased OFWs, by Top Occupational Category: 2009

Annex 8.1 Pace of Progress of the Philippines in terms of Attaining the MDG TargetsAnnex 8.2 Regional Poverty and Subsistence Incidence and Magnitude: 2009Annex 8.3 Provinces with High Poverty Incidence: 2009Annex 8.4 Gini Concentration Ratios, by Region: 2006 and 2009Annex 8.5 Income Poverty Measures, by Region: 2006 and 2009Annex 8.6 National and Regional BDR Estimates for the Regular Benefit Package:

2008Annex 8.7 Various Forms of Malnutrition, by Region: 2008Annex 8.8 Poverty Estimates of the Basic Sectors: 2000, 2003 and 2006Annex 8.9 Regions with Minimum and Maximum Poverty Incidences for Each Basic

Sector: 2006Annex 8.10 Regions with the Most Number of Poor for Each Basic Sector: 2006

Chapter 9. Peace and Security No tables and figures

Chapter 10. Conservation, Protection and Rehabilitation of the Environment and Natural Resources

Table 10.1 Top 20 Provinces Susceptible to FloodsTable 10.2 Top 20 Provinces Susceptible to LandslidesTable 10.3 Hazard Susceptibility of Selected Provinces by Poverty IncidenceTable 10.4 Forest Tenurial Instruments Implemented

Figure 10.1 Philippine Forest Cover: 1934-2003Figure 10.2 Distribution of Active Faults and TrenchesFigure 10.3 Frequency of Tropical Cyclones in the Philippines: 1948-2006

xvi Philippine Development Plan 2011-2016

17In pursuit of inclusive growth01 In pursuit of inclusive growth

18 Philippine Development Plan 2011-2016

In pursuit of inclusive growthWhat is Inclusive

Growth?Viewed by majority of Filipinos, the record of economic and social progress up to now has proved unsatisfactory for three reasons: first, its pace has been slow when measured against the achievements of the country’s neighbors; second, the benefits of that progress have not been broadly shared; and third, issues of massive corruption and of questioned political legitimacy have undermined the people’s sense of ownership of and control over public policy. Growth has not only lagged, it has failed to benefit the majority, who feel increasingly alienated because their political institutions provide little relief and have drifted beyond their control. Growth, in short, has failed to be inclusive.

It is high growth that is sustained…

Inclusive growth means, first of all, growth that is rapid enough to matter, given the country’s large population, geographical differences, and social complexity. It is sustained growth that creates jobs, draws the majority into the economic and social mainstream, and continuously reduces mass poverty. This is an ideal which the country has perennially fallen short of, and this failure has had the most far-reaching consequences, from mass misery and marginalization, to an overseas exodus of skill and talent, to political disaffection and alienation, leading finally to threats to the constitution of the state itself.

1951-60 1961-70 1971-80 1981-90 1991-00 2001-09

Hong Kong 9.2 7.1 6.8 5.4 3.0 3.2

Singapore 5.4 7.4 7.1 5.0 4.7 2.0

Korea 5.1 5.8 5.4 7.7 5.2 3.5

Taipei, China 7.6 9.6 9.3 8.2 5.5 2.7

Malaysia 3.6 3.4 5.3 3.2 4.6 2.2

Thailand 5.7 4.8 4.3 6.3 2.4 3.1

Indonesia 4.0 2.0 5.3 4.3 2.9 3.8

Philippines 3.3 1.8 3.1 -0.6 0.9 2.3

Table 1.1 Annual Average Growth Rate of Real Per Capita GDP: 1950-2009 (in percent)

Sources: Asian Development Bank (ADB), 2010; National Statistical Coordination Board (NSCB)*Average for the period 2001-2010

Inclusive growth means, first of all, growth that is rapid enough to matter, given the country’s large population, geographical differences, and social complexity. It is sustained growth that creates jobs, draws the majority into the economic and social mainstream, and continuously reduces mass poverty. This is an ideal which the country has perennially fallen short of, and this failure has had the most far-reaching consequences, from mass misery and marginalization, to an overseas exodus of skill and talent, to political disaffection and alienation, leading finally to threats to the constitution of the state itself.

19In pursuit of inclusive growth

Historically the Philippine economy has been mired in tepid and erratic growth. Since 1981, growth has averaged only 3 percent annually. This is well below the postwar growth rates of several high-performing Asian economies (Table 1.1).

With population still increasing at more than 2 percent per year, per-capita incomes have risen only 20 percent in real terms from 1981 to 2009. Over the same period, by comparison, per capita income increased four-fold in Malaysia, five-fold in Thailand, and 11-fold in PR China, an era in which absolute mass poverty was basically eradicated in these countries.

… that massively creates jobs,

Quality economic growth means primarily that rapid output increases are translated into employment creation. Unfortunately, rates of unemployment have remained high (Figure 1.1), averaging 10 percent in 1990–2005 and 7.5 percent in 2006-2010, (note that the data before and

after 2005 cannot be compared owing to a change in the unemployment definition adopted that year). Underemployment has also been widespread, with rates hovering at around 18-20 percent in the late 2000s. This remarkably contrasts with countries such as PR China, Malaysia, and Thailand, where unemployment has remained at 4 percent or lower over the same period.

… and reduces poverty.

Under the Millennium Development Goals (MDG), the country committed itself to halving extreme poverty from a 33.1 percent in 19911 to 16.6 percent by 2015. This goal can still be achieved provided that determined efforts are undertaken (Figure 1.2). Mass poverty remains the critical challenge, with the poor accounting for more than one-fourth (26.5%) of the population as of 2009. A deep cause for concern is the fact that the incidence of poverty has remained essentially stagnant for almost a decade now. Given the country’s population growth, this actually means that the number of poor families and persons has been increasing through time. This again

1 This uses the revised official methodology approved on February 1, 2011 by the NSCB. Under the older methodology, the poverty incidence for 1991 was 45.3 percent.

Table 1.1: Annual Average Growth Rate of Real Per Capita GDP, 1950-2009 (in percent)

1951-60 1961-70 1971-80 1981-90 1991-00 2001-09Hong Kong 9.2 7.1 6.8 5.4 3.0 3.2Singapore 5.4 7.4 7.1 5.0 4.7 2.0Korea 5.1 5.8 5.4 7.7 5.2 3.5Taipei, China 7.6 9.6 9.3 8.2 5.5 2.7Malaysia 3.6 3.4 5.3 3.2 4.6 2.2Thailand 5.7 4.8 4.3 6.3 2.4 3.1Indonesia 4.0 2.0 5.3 4.3 2.9 3.8Philippines 3.3 1.8 3.1 -0.6 0.9 2.3Sources: Asian Development Bank (2010); National Statistical Coordination Board (NSCB

Figure 1.1: Unemployment and underemployment rate, 1990 - 2010 (in percent)

1990 1991Unemployment Rate (%) 8.4 10.6Underemployment (% of e 31.3 31.9

Note: Starting April 2005, the Labor Force Survey adopts the new definition of unemploymentSource: National Statistics Office (NSO)

0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

1990 1992 1994 1996 1998 2000 2002 2004 2006 2008

Unemployment Rate (%) Underemployment (% of employed)

Figure 1.1 Unemployment and underemployment rate: 1990 – 2010 (in percent)

Note: Starting April 2005, the Labor Force Survey (LFS) adopts the new definition of unemployment.Source: National Statistics Office (NSO)


compares unfavorably with respect to some countries that have similar or lower per capita incomes (Table 1.2).

While poverty incidence did decline between 1991 and 2009, the rate of decline has been exceedingly slow. Indeed, there have been periods, such as between 2003 and 2006, when the poverty incidence actually increased despite above-average

economic growth. This underscores the need for renewed efforts if progress in this area is to be sustained. For every percentage-point increase in income-growth in the Philippines, poverty incidence falls by about 1.5 percentage points compared with the range of 2.9 to 3.5 for high-performing economies (PR

Official poverty incidence in % (2007/2008) 1/

Share of population below $1.25 per Day, %

(2004/2005/2006/2007) 2/

Gini Ratio(2004/2005/2006/2007)1/

China 4.2 15.9 0.415

Indonesia 14.2 29.4 0.376

Malaysia 3.6 2.0 0.379

Philippines 26.5* 22.6 0.448**

Thailand 8.5 2.0 0.425

Vietnam 13.5 21.5 0.378

Table 1.2 Poverty and Inequality in selected countries (most recent available)

Sources/Notes: *2009 Official Poverty Statistics, NSCB**2009 Family Income and Expenditures Survey (FIES), NSO 1/ 2010 ADB Key Indicators 2/ UN Economic and Social Commission for Asia and the Pacific (UNESCAP) 2009 Statistical Yearbook (www.unescap.org/stat/data/syb2009/)

Figure 1.2 Poverty Incidence and the Gini ratio: 1991, 2003, 2006, 2009

Sources: NSCB, NSO

Figure 1.2: Poverty incidence and the Gini ratio: 1991, 2003, 2006, 2009

1991 2003GINI index 46.8 46.05Subsistence Incidence 16.5 11.1Poverty Incidence 33.1 24.9

Sources: National Statistical Coordination Board (NSCB), National Statistics Office

Table 1.2: Poverty and Inequality in East Asia (most recent available)

Gini Coefficient/2006/2007

China 4.2 15.9 0.415Indonesia 14.2 29.4 0.376Malaysia 3.6 2.0 0.379Philippines 26.5* 22.6 0.448**Thailand 8.5 2.0 0.425Vietnam 13.5 21.5 0.378Sources/Notes: *2009 Official Poverty Statistics, National Statistical Coordination Board**2009 Family Income and Expenditures Survey, National Statistics Office1/ 2010 ADB Key Indicators 2/ UN Economic and Social Commission for Asia and the Pacific (UNESCAP) 2009 Statistical Yearbook (www.unescap.org/stat/data/syb2009/)

Official poverty incidence in % (2007/2008) 1/

Share of population below $1.25 per Day, %

(2004/20

0

10

20

30

40

50

1991 2003 2006 2009GINI index Subsistence Incidence Poverty Incidenceratio


China, Indonesia, and Thailand)2 and the 2.5 average for a set of 47 developing countries3. Relative to international experience, therefore, Philippine economic growth thus, by far, has largely bypassed the poor.

A proximate factor behind the weak response of poverty to growth is high inequality. Compared to other countries in the region, income inequality in the Philippines is high (Figure 1.2 and Table 1.2). The Gini ratio, a measure of inequality, is in the mid-40s, whereas in Indonesia and Vietnam the Gini ratio is pegged at 38-39. Moreover, there has been no secular tendency towards falling inequality; movements in the Gini ratio have been erratic at best, declining in the early 1990s, rising until 2000, then falling slightly before leveling off at a still-high level by 2006. In general, it is safe to conclude

that the trade-off between growth and inequality that is commonly observed in other countries still raises no policy dilemma in the Philippines, where low growth has been accompanied by increasing or high inequality.

What Makes Inclusive Growth Elusive?

Low growth, weak employment generation, and persistently high inequality are the immediate reasons for the failure of inclusive growth in the country. But these in turn have deeper structural underpinnings.

Inadequate infrastructure is a major constraint…

First, the country’s investment record has been poor and falling (Figure 1.3). As a share of GDP, gross domestic investment peaked at about 24.8 percent, before

2 Cline, W.R. (2004), “Technical Correction,” in Trade Policy and Global Poverty, Institute of International Economics, Washington DC. as cited in Balisacan, Arsenio M., 2007. Why Does Poverty Persist in the Philippines? Facts, Fancies, and Policies. Agriculture and Development Discussion Paper Series No. 2007-1. SEARCA, March 2007, pp. 10-11.3 Ravallion, M. (2001), “Growth, Inequality, and Poverty: Looking beyond Averages,” World Development, 29: 1803-15. as cited in Balisacan, Arsenio M., 2007. Why Does Poverty Persist in the Philippines? Facts, Fancies, and Policies. Agriculture and Development Discussion Paper Series No. 2007-1. SEARCA, March 2007, pp. 10-11.

Figure 1.3 Investment-to-GDP Ratios of selected Asian countries: 1994 – 2010 (in percent)

Note: For 2010, available data for Malaysia and Thailand are for Q1 to Q3 only.Sources: ADB-Asian Development Outlook; Official Country Statistics websites; NSCB

Figure 1.3: Investment-to-GDP ratios of selected Asian countries: 1994-2010(in percent)

1994 1995Philippines 24.1 22.5Indonesia 31.1 31.9Malaysia 41.2 43.6Thailand 40.3 42.1

Sources: ADB-Key Indicators 2010; Official Country Statistics websites; NSCB

Table 1.3: Transport Infrastructure ranking of selected countries (out of 139)Road Port Air Railway

Philippines 114 131 112 97Indonesia 84 96 69 56Viet Nam 117 97 88 59Source: The Global Competitiveness Report 2010-2011, World Economic Forum (2010)�

Table 1.4: Strength of Bureaucracy and Input Costs in Selected Countries

2004 2009 2010

Index of Ease of Doing Business (2010 Rank

Out of 183)

Building Construction

Costs (US$/sq. meter)

Electricity (US$/KwH)Country Public Institution Index

0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

40.0

45.0

50.0

Philippines Indonesia Malaysia Thailand


falling to just 15.6 percent in 2010. In contrast, investment in Malaysia and Thailand soared to over 40 percent of GDP, and although they have dipped since the Asian crisis, their levels are still way above that of the Philippines (except for Malaysia). Not only is the Philippines’ investment ratio low, it has also been falling since the mid-1990s, down to 15.6 percent in 2010. This fall in capital accumulation is a constraint to long-term economic growth and employment-generation.

Weak investment – particularly in the face of a surfeit of national saving – is a clear sign of a lack of productive opportunities in the economy. Inadequate infrastructure and a resulting poor logistics network have been identified as among the critical constraints to investment and growth (ADB, 2007). Besides stimulating investment itself, infrastructure helps improve total factor productivity, enabling the country to produce more from each amount of input, effectively lowering unit-cost.

An inefficient transport network and unreliable power supply have been identified as the most significant infrastructure constraints on overall growth. The percentage of paved roads to total roads in the country remains one of the lowest in the Southeast Asia. Similarly, the quality of the country’s port, air, and railroad infrastructure leaves much to be desired (Table 1.3). Unless urgent action is taken, the hitherto slow pace of investments in power-generation threatens not only growth but also the realization of many critical social and

economic goals under the Plan. Currently, power is already in short supply and unreliable in some parts of the country.

…as are major gaps and lapses in governance,

Weak institutions and governance failures are the second major barriers to investment. On the positive side, with peaceful leadership-changes through orderly and credible elections, the nation has put behind it a period of political instability and deep mistrust of government actions, both of which were rooted in allegations of corruption in major economic projects and the perversion of vital political processes.

The advent of a new administration is an opportunity for government to regain the citizens’ trust, lay bare the truth regarding past abuses, and instil civic vigilance for the future. But stability and a new atmosphere of openness and accountability are only the first steps in removing the governance-based fetters to investment and growth. A great deal more remains to be done in creating a governance climate that encourages massive investment and wins the people’s support. The country continues to suffer from a reputation for bureaucratic inefficiency, excessive red tape, and widespread corruption. In the 2011 Doing Business ranking, for example, the Philippines placed 156th out of 183 countries. After three decades of trade-policy reform, it

Road Port Air Railway

Philippines 114 131 112 97

Indonesia 84 96 69 56

Viet Nam 117 97 88 59

Table 1.3 Transport Infrastructure Ranking of Selected Countries (out of 139)

Source: The Global Competitiveness Report 2010-2011, World Economic Forum (2010)

An inefficient transport network and unreliable power supply have been identified as the most significant infrastructure constraints on overall growth. The percentage of paved roads to total roads in the country remains one of the lowest in the Southeast Asia. Similarly, the quality of the country’s port, air, and railroad infrastructure leaves much to be desired (Table 1.3). Unless urgent action is taken, the hitherto slow pace of investments in power-generation threatens not only growth but also the realization of many critical social and economic goals under the Plan. Currently, power is already in short supply and unreliable in some parts of the country.


rated relatively well in “trading across borders”. It rated poorly, however, for “starting a business”, “closing a business”, “dealing with construction permits”, and “protecting investors”, (156th, 153rd, 156th, and 132nd, respectively).

The country also ranks poorly in international comparisons of the enforcement of law and contracts, and competition measures. At the national level, contracting for and implementation of large public infrastructure projects are frequently stymied by difficult and nontransparent bidding and award rules that discourage wider private sector participation, promote collusion, encourage corruption, or provoke legal and other challenges from losing parties. Risks to large-scale investments can also arise from the bias, incompetence, or outright corruption on the part of some regulatory agencies and other oversight bodies, as well as lead to a culture of litigiousness, encouraged by misplaced judicial activism. Less

sensationally but with not less damage, local governments impose their own share of arbitrary requirements and demands for corruption rents, which take a toll especially on the investment and employment decisions of many small- and medium-scale enterprises.

The country’s long-standing problems with high electricity and construction costs are readily evident in global comparisons (Table 1.4). Such high costs are attributed to the lack of real competition in strategic sectors such as agriculture, maritime and air transport, power, cement, and banking. In some important cases, dominant firms and interests can exert enough social influence and political clout to limit entry. Many of these same sectors have dense backward and forward linkages, so that their failure to advance causes collateral negative effects in productivity growth and investment in the linked sectors, such as manufacturing (Bocchi, 2008). The threat of regulatory capture extends not only to the functions of agencies in the Executive branch but also to those exercising

Country

Public Institution Index Electricity(US$/KwH)

Building ConstructionCost (US$/sq. Meter)

Index of Ease ofDoing Business(2010 Rank out of 183)

2004 2009 2010

Philippines 85 105 113 0.10 1022 144

PR China 0.08 97 89

Malaysia 34 30 43 0.07 282 23

Hong Kong

Indonesia 76 68 58 0.07 221 122

S. Korea

Singapore 1

Thailand 37 57 60 0.06 329 12

Vietnam 0.07 93

Table 1.4 Strength of Bureaucracy and Input Costs in Selected Countries

Sources: World Bank (WB), Doing Business 2006, 2007 and 2010 (www.doingbusiness.org)MIGA and WB, Benchmarking FDI Competitiveness in Asia (2004)


legislative and judicial functions that expand the scope of government.

In agriculture, meanwhile, investment has been stymied by continuing property-rights problems and inconsistent policy. Property rights in the countryside are also insecure. In the remaining areas under land reform coverage, for example, slow implementation creates uncertainty of ownership, both on the side of traditional landowners, and the new landowners, many of whom have yet to receive individual titles to their cultivated parcels. Likewise, private sector investment in some key crops is smothered by politicized decision-making of marketing and regulatory agencies, most prominently in the case of rice, which falls under the purview of the National Food Authority (NFA).

Ultimately, however, the cost of poor governance cannot be simply measured in peso terms. Its more pernicious consequence is the weakening of the civic spirit and the erosion of trust in the rule of law. The country is only now

emerging from a recent past marked by public perceptions of impunity and unresponsiveness on the part of the highest officials of the land, where elections are stolen, public funds misappropriated, private interests promoted at public expense, public policy distorted to favor the few, and public officers who aggrandized themselves in the face of people’s suffering – all without visible legal redress, social consequence, or material recompensation. The institutions meant as remedies to such conditions – the media, the courts, the political opposition, and the electoral process – were viewed as feckless, since many of them had either been cowed, co-opted, or corrupted. In such circumstances, it was unsurprising that people felt alienated from the political process and for cynicism to overcome their respect for the law. Growth in short was not inclusive owing to the basic disregard of the people’s will and the failure to render “full and complete justice to all”.

The government has devoted considerable resources to deliver social services to those lacking access to health care and education. However, poor households in isolated areas have difficulty in going to health centers and schools, even when services are offered for free or at highly subsidized rates. Clearly, poor infrastructure provision, aside from being a hindrance to investment and business activity, also prevents physical access to basic services.

Philippines 85 105 113 0.10 1022 144PRChina 0.08 97 89Malaysia 34 30 43 0.07 282 23Hong KongIndonesia 76 68 58 0.07 221 122S KoreaSingapore 1Thailand 37 57 60 0.06 329 12Vietnam 0.07 93Sources: World Bank, Doing Business 2006, 2007 and 2010 (www.doingbusiness.org) MIGA and World Bank, Benchmarking FDI Competitiveness in Asia (2004)

Figure 4: Education indicators, Philippines, 1991 – 2009 (%)1991 1992

Cohort Survival Rate 68.7 68.4Net Enrollment Rate 85.1 85.2

Source: SY1991-1992 to SY 1998-1999 - DepEd Statistical Yearbook SY 1999-2000 to latest - Basic Education Information System (BEIS) / Basic Education Statistics (Fact Sheet as of 12/5/2008) www.deped.gov.ph

60.0

65.0

70.0

75.0

80.0

85.0

90.0

95.0

100.0

1991 1994 1997 2000 2003 2006 2009

Cohort Survival Rate Net Enrollment Rate

Figure 1.4 Cohort Survival and Net Enrollment Rate, Philippines: 1990 – 2009 (In percent)

Source: SY 1991-1992 to SY 1998-1999, Department of Education (DepED) Statistical Yearbook; SY 1999-2000 to latest, Basic Education Information System (BEIS); Basic Education Statistics (Factsheet as of December 5, 2008); www.deped.gov.ph


… inadequate levels of human development.

Human development, in terms of adequate health, nutrition, and education outcomes, has an intrinsic benefit. But it is also a means to build the human capital of the poor, providing them a means to break out of poverty. Hence, the MDG of universal primary education is consistent with inclusive growth. Unfortunately, by several yardsticks, the country has fallen short of adequate service delivery (Figure 1.4). While the net enrollment rate peaked at 97 percent in 1999-2000, its drop to 85 percent and below by the late 2000s should be a cause for serious concern. Worse, the cohort survival rate stayed in the 70 percent range throughout the 1990s, only improving somewhat to the 70-75 percent range in the 2000s.

Most of the population is inadequately protected from shocks to their already meager human capital. While natural disasters can affect any population group, it is the poor who tends to be most vulnerable and least resilient to calamities. With respect to health care, catastrophic illnesses are capable of wiping out livelihoods, assets, and well-being of the poor and lower middle classes. Meanwhile, chronic illnesses (such as tuberculosis) may have less extreme impacts, but may prevent the poor from getting and keeping remunerative work.

The government has devoted considerable resources to deliver social services to those lacking access to health care and education. However, poor households in isolated areas have difficulty in going to health centers and schools, even when services are offered for free or at highly subsidized rates. Clearly, poor infrastructure provision, aside from being a hindrance to investment

and business activity, also prevents physical access to basic services.

Compounding the problem of access is the propensity of poorer households for higher fertility rates, reducing households’ assets and per-capita purchasing power. Parents may fail to internalize the intergenerational implications of child-bearing choice. Unfortunately, in the Philippine setting, the State has typically failed in its role in promoting responsible parenthood and reproductive health.

...and a poor and degraded state of environment and natural resources.

The deteriorated state of the country’s environment and natural resources is felt most by the poor, who depend on such resources for their livelihood and are most vulnerable to the consequences of its degradation and depletion. Climate change and risks from natural disasters only amplify the association between poverty and environmental degradation.

Because of continuing deforestation, only 45 percent of classified forestlands remain. The deterioration of critical watersheds is likely to affect water supply. The quality of land resources has been reduced by erosion, pollution, and land conversion. Although one of the world’s 18 mega-diverse countries, the Philippines’ biodiversity resources are also among the most threatened. Coastal and marine resources have been declining as a result of coastal development and unsustainable fishing practices. Major urban areas, on the other hand, remain polluted, as evidenced by poor air and water quality, and by the inability to manage waste properly and adequately.

Better environment and natural resource management could lead to more and better livelihood opportunities that increase the resiliency of the poor. But this remains a challenge that must be fully confronted.

The deteriorated state of the country’s environment and natural resources is felt most by the poor, who depend on such resources for their livelihood and are most vulnerable to the consequences of its degradation and depletion. Climate change and risks from natural disasters only amplify the association between poverty and environmental degradation.


How Shall We Achieve Inclusive Growth?

To recapitulate: failure of inclusive growth in the country is because of growth that is low on average, and because the benefits of such growth largely bypass the country’s poor. Low growth is due to low investment and slow technological progress because of inadequate infrastructure, as well as glaring gaps in governance. Narrow growth, meanwhile, is largely attributed to lack of human capital formation among the poorand the failure to transform output growth to job creation. The following lists the strategies and programs that shall be pursued over the Plan period to help achieve inclusive growth.

Through massive investment in physical infrastructure …

The country urgently needs to make up its massive infrastructure backlog. Investment in infrastructure follows the plan detailed in Chapter 5, which prioritizes the creation of integrated and multimodal national transport and logistics system. The system shall connect underserved but otherwise productive areas and communities to markets and social services. Under this system, rural areas, where most of poor reside, shall receive renewed attention. Property-rights issues in agriculture shall be finally resolved signalling a rebirth of interest in agricultural production that will make infrastructure-investments in that sector, such as irrigation, more effective, helping raise farmers’ income, improve food security, and enlarge agriculture’s contribution to the economy.

Hindered by a record of perennially large budget deficits, government shall generate funds for infrastructure investment through better tax collection and more rational budget allocation – hence the fiscal and budgetary reforms discussed in Chapter 2. Realistically, however, government funds may not suffice, given its need to immediately attend to social development and poverty-alleviation. For

this reason, government shall rely on the public-private partnership (PPP) scheme to implement the bulk of its infrastructure program. This scheme encourages the large-sector of private business, including major Filipino conglomerates and large and reputable foreign partners, to participate in financing, construction, and operation of key infrastructure projects. Such a program seeks deliberately to utilize the huge savings and capital resources in the private sector and to provide market-friendly channels for these to support national priorities.

The provision of vital infrastructure and the expansion of logistics chains, combined with a change in the governance regime, is bound to elicit a strong positive response across all classes of entrepreneurs and financiers. Immediately benefited by this will be those industries in which the country already has a demonstrated global advantage but whose expansion is still fettered by certain infrastructure inadequacies, such as power and transport. Included here are the further expansion of ICT-related activities such as business-process outsourcing, (in which the country is now the world’s largest employer), different branches of tourism, electronics, sustainable mining, housing and construction, and agribusiness and agroprocessing industries (Chapter 3). This list of industries is only bound to expand as distributional bottlenecks across regions are cleared and the country’s inherent advantages finally are revealed. At the same time, government has prepared specific programs to assist micro, small, and medium enterprises (MSMEs) at the enterprise-level and to encourage the formation of industry clusters to foster interfirm linkages.

A big part of the solution to the governance problem however lies outside government itself and involves the active participation of private business, civil society and the media in governance, monitoring, and feedback. This gives “voice” to people, enables civil society and the media to become partners of government, and makes the government more responsive to the needs of citizens. Among other steps shall be the adoption of client-satisfaction surveys at all levels of government. Monitoring and surveillance by the media, civil society, and an engaged citizenry shall underpin the campaign against corruption. This shall be facilitated by formal citizens’ representation in budgeting and procurement processes, the disclosure of the allocation and expenditure of funds of various agencies, the involvement of civil society in the anticorruption effort, and the provision of channels for ordinary citizens to report directly and anonymously to competent authorities on anomalies in government functions and the state of public-service provision.


…through transparent and responsive governance

Underpinning inclusive growth must be a bedrock of sound institutions that promote transparency, accountability, the rule of law, and effective and impartial performance of the regulatory function of government, as discussed in Chapter 7.

To move towards responsive governance, systems that promote objective decision-making, professionalism, transparency, and accountability, shall be instituted and mainstreamed. Thorough reforms in the budgeting process, in public procurement, and in the awarding of major contracts are needed to restore public confidence in government institutions and practices. In budget-planning, a key reform shall be the adoption of zero-based budgeting (ZBB), under which budgets of government departments and agencies are comprehensively scrutinized and justified in complete detail, from a zero base, not just incrementally. Budget releases will also henceforth be aligned with the number of active personnel and the actual progress of programs and projects to avoid such abuses as “conversion” and other kinds of fund diversion.

In public procurement, full use shall be made of electronic bidding and procurement to minimize discretion, achieve arm’s-length transparency, and attain cost-efficiency. Terms of reference shall be based on comprehensive technical specifications prior to bidding and contracting to facilitate close comparability across alternatives and to prevent arbitrary ex-post “variation orders”. Clear terms and transparent rules are vital to the success of big-ticket infrastructure projects such as the PPP. The publication and enforcement of blacklists of contractors and individuals suspected

of rigging bids and showing substandard performance shall be undertaken to show the government’s determination to clean up procurement and bidding.

The rationalization of government functions, pay, and personnel shall be continued and extended to cover not only the bureaucracy itself but also government-owned and –controlled corporations (GOCCs) and government financial institutions (GFIs).

The anticorruption drive shall also be strengthened with the passage of the Freedom of Information Act and the Whistleblowers’ Act, as well as the revitalization of the Run-After-Tax-Evaders (RATE), Run-After-the-Smugglers (RATS), and Revenue Integrity Protection Service (RIPS) programs. Close collaboration, coordination, and information-exchange among various agencies shall form the basis for the build-up of cases against public officials and private persons involved in plunder, corruption, tax evasion, and other crimes involving the misappropriation of public resources. Strong cases, especially those involving well-known instances of plunder and grand corruption, shall be pursued uncompromisingly, showing neither fear nor favor and in line with “true and complete justice for all”. As an indispensable first step, however, the personnel of agencies that directly involved in anticorruption efforts, especially the office of the Ombudsman, the Department of Justice (DOJ), and the revenue agencies, must be reinvigorated and rededicated.

A big part of the solution to the governance problem however lies outside government itself and involves the active participation of private business, civil society and the media in governance, monitoring, and feedback. This gives “voice” to people, enables civil society and the media to become partners of government, and makes the government more responsive to the needs of citizens. Among other steps shall be the adoption


of client-satisfaction surveys at all levels of government. Monitoring and surveillance by the media, civil society, and an engaged citizenry shall underpin the campaign against corruption. This shall be facilitated by formal citizens’ representation in budgeting and procurement processes, the disclosure of the allocation and expenditure of funds of various agencies, the involvement of civil society in the anticorruption effort, and the provision of channels for ordinary citizens to report directly and anonymously to competent authorities on anomalies in government functions and the state of public-service provision.

Ultimately, however, good governance must be founded on a cohesive society and people’s trust in government. For this reason, government will endeavor to be transparent, communicate its intentions clearly, and seek consensus on social directions. The means of development communication and their convergence with traditional and new mass and social media shall be used for these higher purposes.

Improving governance and strengthening weak institutions in the country carry tremendous potential for bringing down the cost and risks of doing business. This is evident in public sector projects themselves. The PPP initiatives of government will not succeed unless private partners are assured of unbiased bid evaluations and award decisions based on competent authority. In the same manner, legitimate proponents of build-and-transfer schemes will be in short supply if their predecessors must face the ordeal of official harassment and regulatory risk. Strengthening governance, therefore, also implies addressing the weak rule of law, legal uncertainty, and high costs and delays of the legal system in the country, which have historically discouraged legitimate investments in the economy and instead fomented corruption. At the same time, there is a simple need to streamline and

harmonize procedures within and across government offices.

A strong competition policy would promote a more open environment for investment, innovation, and appropriate pricing. This may be done by strengthening regulatory agencies and making them less susceptible to regulatory capture, lobbying, and rent-seeking. The linchpin of competition policy shall be an omnibus Competition and Anti-Trust Code that operationalizes constitutional provisions against monopolistic practices, as well as provides a transparent and predictable framework for standards and procedures for all regulatory authorities.

Human development is key…

Together with physical investment, investment in the country’s human resources is key to sustained and broad-based growth. This requires equitable access to basic social services, as well as stronger social safety nets and social protection against shocks. Concrete objectives and programs are spelled out in Chapter 8. Reaffirmed here are the country’s commitments to the MDG, of which the terminal point (2015) is the penultimate year of this planning period.

The major priority reforms in education have been spelled out in the Basic Education Sector Reform Agenda (BESRA). Implementation of the agenda involves: school-based management; enhanced learning efficiency, such as through the K+12 system; quality assurance and accountability; and complementary learning interventions, e.g. alternative learning systems, early childhood education, and so on.


The state shall ensure equitable access to basic health care for all. This requires strengthening the National Health Insurance Program (NHIP). PhilHealth operations shall be oriented towards increasing the benefit delivery ratio at the national and regional level. Investments in public health programs shall aim to reduce maternal and child mortality, mortality and morbidity from tuberculosis, dengue, and malaria, as well as prevent the spread of HIV-AIDS. Upgrades of public health care facilities shall be undertaken under the government budget as well as through private-public sector partnerships.

Two major strategies towards asset and human capital formation for the poor is community-driven development and conditional cash transfers. The former shall be pursued through the Kapit-bisig Laban sa Kahirapan-Comprehensive and Integrated Delivery of Social Services (KALAHI-CIDSS), a program for implementing small-scale projects by barangays following their own plans, priorities, and processes, with funding support and in-kind support from the national and local governments. The KALAHI-CIDSS has demonstrated its effectiveness in generating net economic returns, finding a cost-effective formula for providing village infrastructure, responding to community demands, and sustaining community operations and maintenance (Araral and Holmemo, 2007).

The latter social protection measures are primarily implemented through the Pantawid Pamilyang Pilipino Program (4Ps). At the heart of the 4Ps is the conditional cash transfer (CCT) program, which provides direct cash transfers to the poor on condition that: (a) their children continue to attend school; and (b) the family makes use of preventive health care and nutrition services. The

cash transfer is, thus, linked to the poor’s investment in their own human capital (education and health), which explains the program’s demonstrated effectiveness in reducing poverty both immediately (through the cash transfer itself ) and in the long run (through human capital formation). The provision of CCT targets the truly deserving, while boosting demand for education and health services from poor households. In the design of these and other future social protection programs, the government shall always ensure that such programs remain accessible and attuned to the needs of vulnerable groups, particularly children of both sexes, women, the elderly, and the disabled.

… together with employment generation, for both wage- and self-employed

Emphasizing employment generation means opening the widest legitimate channels for all forms of employment, whether in the form of formal wage- or self-employment, whether in firms, homes, or local communities, whether at home or abroad. Work arrangements mutually agreed upon shall also be introduced. Employment generation can also be pursued indirectly by supporting those activities that exploit the country’s comparative advantage in more labor-intensive activities, typically involving products and services that are more competitive in the world market.

Exports have learning-by-doing and dynamic comparative advantage aspects. Through active trade policy, exporters learn through time, and their skill sets have evolved and became entrenched into more technologically intensive and higher skills processes. Exports can become an important means of obtaining technological know-how and in turn generate positive spill over effects to other sectors in the economy. This redounds to faster accumulation and innovation, and therefore accelerated growth.


Wider self-employment opportunities shall be afforded by providing credit-access to the poor through microcredit, integrated in a business-service package that includes market matching, technical assistance, and community organizing where necessary. Government will direct wholesale finance institutions – such as the People’s Credit and Finance Corporation (PCFC), the Land Bank of the Philippines (LBP), and the Small Business Corporation (SBC) – that deal with microfinance institutions to coordinate with Department of Trade and Industry (DTI), Department of Tourism (DOT) and viable microfinance institutions (MFIs) to develop market-based innovative financing schemes to support microenterprises. Government will collaborate with MFIs to use microfinance as a tool for inclusive growth by expanding access by microenterprises and poor households to credit, savings, and other financial services. Innovative market-based financing schemes in support of microenterprises will support government’s goal of providing productive employment opportunities to a broad cross-section of the population. Other channels for rapid employment generation shall be opened through programs of community-driven development (CDD), which are linked to poverty-relief, and labor-intensive infrastructure projects of local governments. In providing opportunities for formal or self-employment or access to credit, government shall take particular cognizance of the special needs of women, whose potentially large social contributions to social and economic development are stunted by their domestic and other social circumstances.

… but complementary strategies will be essential for success

The plan’s broad thrusts are massive infrastructure development, higher governance standards, human development and human capital formation, direct poverty-relief, and employment-generation.

But such initiatives cannot succeed if complementary and strategies do not support and enhance their impact.

These strategies can prosper only in a macroeconomic regime of low inflation and sustainable fiscal balances (Chapter 2). Inflation directly and immediately erodes the public’s purchasing power and particularly affects the poor and fixed-income earners, thus putting poverty goals in peril. On the other hand, uncontrolled government debts and deficits endanger the goals of growth and employment by raising borrowing costs for public and private sectors alike, putting a brake on all forms of investment. Government shall, therefore, institute fiscal reforms to permanently place the revenue system on an even keel, primarily through comprehensive coverage of taxpayers and uniform coverage of commodities and activities, higher standards of performance and integrity among tax administrators, and prompt rate adjustments, as allowed by law, applied to tax and nontax revenue sources alike. Expenditures shall be kept within the bounds set by macroeconomic targets, among others, by cutting back on wasteful programs and deprioritizing unfunded mandates, exercising tighter internal controls, and continuing the rationalization of the size of government, including GFIs and GOCCs. Many of these reforms can become imperatives of fiscal behavior through the enactment of a fiscal responsibility law. Monetary policy, on the other hand, will continue to emphasize low and stable inflation, with the Bangko Sentral ready to use its tools to prevent the emergence of asset bubbles, whether domestic or foreign. In accord with the changing strength of the country’s external position, foreign exchange regulations shall be adjusted to facilitate payments for trade and investment and, in line with the policies of other


countries, to maintain the economy’s competitiveness.

Ensuring ecological integrity and mitigating the effects of climate change is essential for success on several fronts. Natural disasters and calamities can nullify hard-won gains by damaging physical infrastructure, directly endangering human lives and health, and destroying livelihoods, particularly among the poor and vulnerable. The dismal state of the environment and natural resources is a major reason that rural communities, who depend on them as primary sources of livelihood, perennially find themselves at the bottom rung of the development ladder. The country’s location makes it inherently vulnerable to potentially destructive natural events. This is aggravated by the pressure of a growing human population on environmental resources and habitable environments as well as the anticipated effects of global climate change. It shall be an urgent task (Chapter 10), therefore, to devise and adopt measures that will improve the state of environment and natural resources, enhance the resilience of natural systems, and improve the ability of communities to cope with environmental hazards, including climate-related risks. Priorities include the conservation, protection, and rehabilitation of the country’s natural resources, urban renewal, measures to reduce waste and pollution, and heightened capacities for disaster-preparedness and response.

Although it is the Plan’s main thrust to raise participation and standards in basic education, there is no denying the important role of higher education and science and technology in the country’s effort to attract high-quality and high-productivity activities, such as the greater value-added parts of business-process outsourcing (BPO), tourism, and some branches of

industry. Through a rationalization of the roles of higher-education institutions and a finer delineation of their roles (Chapter 8), the turnout of a critical mass of scientists, engineers, and other technical personnel shall be pursued to allow the country is to climb the value-added ladder in sectors where it possesses global competitive potential.

The end of armed conflict and the attainment of lasting peace is vital to breaking the vicious cycle of conflict and underdevelopment in affected areas that have otherwise huge potential for social and economic development. Towards this end, the government shall pursue different tracks to complete and implement negotiated settlements with various armed groups under a comprehensive peace process. At the same time resources shall be marshaled to raise the capacity of the armed forces and the police in dealing decisively with criminal groups (Chapter 9). Relations with foreign nations shall be actively cultivated to support sovereignty, regional peace and security, and economic cooperation based on equitable and mutual benefit. Paramount consideration shall be paid to ensure the welfare and protection of the millions of Filipinos working overseas.


How Shall We Monitor Progress Towards Inclusive Growth?

Accountability requires government to make known its plans in order to afford its citizens the chance to test its assumptions and monitor progress quantitatively and in detail whenever possible. Towards that end, the Plan commits itself to quantitatively and observable targets and milestones. More detailed targets are presented in the succeeding chapters, but the most important ones are listed below:

Growth in output and employment through higher investments…

A growth in real GDP averaging 7-8 percent per year under the Plan period shall be a major objective. This figure implies a tripling of per capita income to about US$5,000 in two decades. This is a higher growth trajectory than the past decade’s and shall be attained through a higher contribution of physical capital to GDP growth, as well as through increases in total factor productivity. Through massive investments in transport, water, energy, and other infrastructure, and through good governance, the contribution of physical capital to GDP growth is targeted to increase. This is possible under current conditions through a significant but still attainable increase in the share of investment to GDP. Sustaining growth in later years, however, will require even higher investment ratios reaching 22 percent by 2016. It is expected that the investments in infrastructure and in education and health, improvement in governance, and the supporting strategies (such as research and development and science and technology policies), are expected to boost total factor productivity’s contribution to GDP growth.

This annual growth target will generate an average of some one million (1,000,000) net employment annually, and these will be found primarily in industry and services, even as the agricultural sector may

continue to be a net shedder of jobs. The completion of agrarian reform, a resolution of property rights issues in agriculture and implementation of major infrastructure shall enable agriculture and agro-processing to come into their own again and begin to reabsorb labor. If the labor force grows at 2.75 percent annually, the unemployment rate should hover at 6.8 -7.2 percent during the Plan period, although it should be noted these numbers do not factor in possible reversals in overseas migration trends as more domestic jobs are created.

… should lead to poverty incidence being cut by half

As productive employment raises incomes, cash-transfer programs are sustained and access to health and education improved, the incidence of poverty among the population should decline from 33.1 percent in 1991 to 16.6 percent by 2015 or less, in line with the country’s MDG commitment. Inequality can also be expected to decline over the medium term as access to development opportunities are equalized across geographic areas and across the different income and social spectrum.

A window of opportunity

Since more than two decades past, the Philippines has never faced a better chance than today of finally breaking out of its perennial condition of poverty, inequity, and lagging human development.

In economic terms, the country’s external payments and international credit position have not been healthier in decades for various reasons. Thanks to overseas remittances, surpluses on current account have been run consistently since 2003. After decades of trade reform, the industrial structure is now fairly undistorted by subsidies

To be sure, immediate problems and obstacles remain, chief of which are the country’s lagging rate of investment, the government’s continuing fiscal constraints and heavy debt burden, the country’s poor quality of infrastructure, and stagnating levels of human capital. But many of these phenomena have existed long before and are in the nature of consequences rather than causes. Undeniable is the fact that some hopeful conditions have emerged, and that economic and political opportunities now exist for a real change – a break-away from the cycle of mass poverty, social division, and political conflict that have been the hallmarks of the country’s recent history.


and heavy protection. The currency is stable and perhaps even too strong and inflation has been low to moderate for more than a decade. Lastly, the country is emerging relatively unscathed from the worst global economic downturn since the 1930s.

Even politically, there have been positive developments: the country has managed a peaceful constitutional transition through a popularly elected government; financial and political sovereignty vis-à-vis creditor and other nations has never been greater; civil liberties and political rights continue to be asserted and exercised even in the face of brutal assaults; agrarian reform, the country’s most ambitious attempt at asset reform, is due to be completed; and efforts to resolve armed conflicts finally and peacefully are under way.

To be sure, immediate problems and obstacles remain, chief of which are the country’s lagging rate of investment, the government’s continuing fiscal constraints and heavy debt burden, the country’s poor quality of infrastructure, and stagnating levels of human capital. But many of these phenomena have existed long before and are in the nature of consequences rather than causes. Undeniable is the fact that some hopeful conditions have emerged, and that economic and political opportunities now exist for a real change – a break-away from the cycle of mass poverty, social division, and political conflict that have been the hallmarks of the country’s recent history.

The true paradox is why the nation has been unable to step forward even under improving conditions.

This Plan is built on the conviction that such obstacles can be cleared and the above historic task accomplished in this lifetime through the prudent marshalling of available resources, the participation and support by all sectors,

and through government and citizens living out and practising the country’s best civic ideals. Without the wise application of resources, social cohesion, and good governance, little can come of even the best-laid plans, and another window of opportunity will have closed for this generation of Filipinos.

Nor should it be forgotten that today’s chances were purchased by past sacrifices: by overseas workers who endured separation from their families; by laborers and farmers who experienced wrenching structural changes; by the middle class and other taxpayers who shouldered the debt burdens of the past; by government personnel who soldiered on professionally despite the rot surrounding them; and by the brave and vigilant citizenry who never lost faith in constitutional values, democratic processes, and the possibility of an honest government.

Such sacrifices can be repaid only by demonstrable success in our time. Neither the past nor future generations will forgive the present if it fails in its pursuit of inclusive growth.

35Macroeconomic Policy02Macroeconomic Policy


Growing output and employment are the preconditions for progress in almost all social and economic aspects of development. Productive employment and rising incomes for the vast majority over a long period can do more to combat poverty decisively than any direct assistance government can ever provide.

It is private actors – from the smallest self-employed entrepreneurs to the largest conglomerates – that create productive jobs and incomes. Government’s responsibility however – through fiscal and monetary policies – is to create an environment for vigorous economic activity, as well as to ensure that enough gains from growth are set aside for larger social purposes or channelled into social investments that facilitate future growth. These objectives are achieved by government decisions regarding the size and direction of public spending and taxation (fiscal policy) and by decisions regarding the control of the nation’s money supply (monetary policy).

Macroeconomic Policy

Output and EmploymentEconomic Performance 2004-2010

GDP growth averaged 5.6 percent for the period 2004–2006, while average GNP growth was higher at 5.9 percent, boosted by transfers from overseas workers. On

the demand side, private consumption (which comprises about 70% of GDP), grew an annual average of 5.4 percent. Merchandise exports grew at an average of 9.4 percent, while exports of non-factor services (which included BPOs such as back office payroll or accounting and call centers) registered an average of 20.6 percent.

Figure 2.1 Contributions to Growth (Demand)

Source: National Statistical Coordination Board (NSCB

6.4

5.0

5.3

7.1

3.71.1

7.3

-10.0

0.0

10.0

20.0

30.0

2004 2005 2006 2007 2008 2009 2010

Imports Net Exports StatD Gov't Investment Private GDP


Source: NSCB

37Macroeconomic Policy

Capital formation, on the other hand, averaged 1.2 percent growth per year during the period (Table 2.7). Overall, consumption fuelled by remittances is the largest and most stable source of growth from the demand side. The contribution of net exports (including BPO), although volatile, was also positive. Investment made a small positive contribution in 2004 and 2006, but contributed negatively in 2005. The contribution of public consumption to growth has been marginal (Figure 2.1).

On the supply side, the largest contribution to growth consistently came from the services sector, followed by the industry sector. The agriculture sector, which is vulnerable to changes in weather patterns, managed to make a small positive contribution to growth during the period (Figure 2.2).

Average growth was relatively modest, owing to the economy’s vulnerability to a number of domestic and external shocks. The continued US-led war on terrorism, accompanied by the escalating prices of petroleum and sluggish demand for electronics

dragged down economic activities in 2005. Domestically, political factors were partly responsible for compelling the government to run under reenacted budgets. The relatively low inflation in 2002-2003 was followed by upward price pressures in 2004 due to geopolitical tensions in the Middle East and growing resource demands from China and India, all of which contributed to a surge in world oil prices.

The economy expanded at its fastest rate in three decades in 2007, with GDP growing at 7.1 percent (and GNP growing at 7.4 %). With greater fiscal space from the previous years’ tax reforms , and with spending ahead of national elections, public construction rose 29.1 percent. Private construction likewise grew 13.3 percent, boosted by remittance-fuelled residential construction as well as the need for more supply of office space. Overall, capital formation grew 12.4 percent, up from the 5.1-percent growth of a year ago and the 8.8- percent contraction two years previously. Likewise, private consumption, which constitutes the largest proportion of GDP on the expenditure side, continued its stable growth at 5.9 percent, fuelled by

The economy expanded at its fastest rate in three decades in 2007, with GDP growing at 7.1 percent (and GNP growing at 7.4%)

Figure 2.2. Contributions to Growth (Supply)


6.4

5.0 5.3

7.1

3.7

1.1

7.3

-1.0

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

2004 2005 2006 2007 2008 2009 2010

Services Industry Agriculture GDP

Figure 2.2 Contributions to Growth (Supply)

Source: NSCB


Indicators 2004 2005 2006 2007 2008 2009 2010

GNP 6.9 5.4 5.4 7.5 6.4 4.0 7.2

GDP 6.4 5.0 5.3 7.1 3.7 1.1 7.3

Agriculture 5.2 2.0 3.8 4.9 3.1 0.0 -0.5

Industry 5.2 3.8 4.5 6.8 4.9 -0.9 12.1

Mining 2.6 9.3 -6.1 26.0 1.9 21.5 18.4

Manufacturing 5.8 5.3 4.2 3.3 4.2 -4.4 12.3

Construction 3.4 -5.9 9.6 21.0 7.6 9.8 10.5

Electricity, Gas & Water 4.2 2.5 6.4 6.7 7.3 -2.9 8.5

Electricity & Gas 4.3 2.5 6.2 6.7 7.6 -3.5 8.8

Services 7.7 7.0 6.5 8.1 3.1 2.8 7.1

Personal Consumption 5.9 4.8 5.5 5.8 4.7 4.1 5.3

Government Consumption 1.4 2.3 10.4 6.6 0.4 10.9 2.7

Capital Formation 7.2 -8.8 5.1 12.4 2.3 -5.7 17.0

Fixed Capital 1.3 -6.6 3.9 10.9 2.7 -0.4 17.1

Construction -0.8 -7.3 7.6 19.5 4.2 7.4 12.0

Public Construction -9.3 -18.0 31.4 29.1 -1.3 22.5 3.7

Private Construction 4.8 -1.1 -3.7 13.3 8.2 -2.8 19.1

Durable Equipment 3.2 -7.1 1.3 4.5 1.9 -8.2 25.7

Changes in Stocks -444.1 -58.1 64.1 57.5 -7.5 -139.8 -356.1

Changes in Stocks

(% of capital formation) 4.2 1.9 3.0 4.3 3.8 -1.6 -5.6

Exports 15.0 4.8 13.4 5.5 -2.0 -13.4 25.6

Merchandise Exports 12.9 4.2 11.3 4.1 -1.7 -16.8 26.0

Non-Factor Services 28.8 8.3 24.7 12.3 -3.0 2.3 24.3

Imports 5.8 2.4 1.8 -4.1 0.8 -1.9 20.7

Merchandise Imports 6.2 2.1 1.3 -5.6 0.1 -1.8 20.2

Non-Factor Services -1.4 8.5 11.0 20.9 9.9 -3.6 26.3

Unemployment (in percent) 11.8 8.7 8.0 7.3 7.4 7.5 7.3

Underemployment (in percent) 17.6 21.0 22.6 20.1 19.3 19.1 18.7

Table 2.1 Philippine Key Indicators

Sources: NSCB; Labor Force Statistics Yearbook; DOLE-LFSNote: The 2005 unemployment rate data may not be consistent due to the adoption of a new unemployment definition in the April 2005 round LFS.


remittances from overseas workers (Table 2.1).

On the production side, the services sector continued to be the largest contributor to growth. The industry sector, with unprecedented growth rates from mining (at 26.1%) and construction (21% ) sectors, contributed higher more to GDP growth as compared with the previous three years (Table 2.1 and Figure 2.2). Agriculture, with help from the better weather compared to the past two years, also had a higher contribution to GDP than in the past two years (Figure 2.2).

Price pressures toward the middle part of 2008 (Figure 2.10) - on account of rising world prices of grains and petroleum, as well as the global recession affecting the country through the trade channel towards the later part of the year, contributed to the slowdown of GDP growth to 3.7 percent (GNP growth was 6.4% for the year). As early as the start of 2008, it was clear the US would experience a recession and that the impact would reach the Philippines (in fact the Philippine stock index

already fell 9.8% month-on-month in January 2008 and electronic exports contracted 6.5% in August 2008). It was not until close to the bottom of the crisis that policy rates were cut (on December 18, 2008) and the fiscal stimulus bared (in January 2009)This, although the inflation had been headed down since September 2008.

Monetary and fiscal stimuli came somewhat late. Overall, there was a noticeable slowdown in private consumption, and in government construction and consumption, and a contraction in exports during the year. On the production side, agriculture, industry, and services all slowed down.

The brunt of the global crisis was felt in the first half of 2009 when merchandise exports registered an average decline of 23.4 percent per quarter, caused largely by the contraction of electronics and garments exports. Furthermore, although government consumption and construction increased in the second quarter, the effects of the fiscal stimulus were blunted by the impact of two typhoons that hit the country in September-October 2009. Notwithstanding the effects of the global

Notwithstanding the effects of the global financial crisis, GDP in 2009 rose by 1.1 percent, a figure within the target of 0.8-1.8 percent, making the Philippines one of the few economies in the region to register positive performance amidst the recession.



3.9 3.74.6 2.8

0.5

1.20.2 2.1

7.88.2 6.3 7.1

-15.0

-5.0

5.0

15.0

25.0

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

2008 2009 2010

Imports Net Exports StatD Gov't Investment Private GDP


Source: NSCB


financial crisis, GDP in 2009 rose by 1.1 percent, a figure within the target of 0.8-1.8 percent, making the Philippines one of the few economies in the region to register positive performance amidst the recession. GNP on the other hand, grew by 4 percent, fuelled by robust inflows of overseas remittances.

In 2010, coming from a low base and boosted by the rebound in world trade, quarterly GDP grew 7.3 percent. Remittance-

driven consumption and the pick-up in investments and net exports (from significant negative contributions in 2009) boosted growth (Figure 2.3). On the supply side, the strong reversal of industrial performance (from negative contributions to growth in 2009), and the continued significant contribution of the services sector, drove the growth (Figure 2.4). Higher growth, however, was constrained by the negative impact of El Niño on agriculture and fisheries.



3.93.7

4.6

2.8

0.5 1.20.2

2.1

7.8 8.2

6.37.1

-4.0

-2.0

0.0

2.0

4.0

6.0

8.0

10.0

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

2008 2009 2010

Services Industry Agriculture GDP


Source: NSCB

Figure 2.5 Philippines Unemployment Rate, 2006-2010 (in %)Figure 2.5 Philippine’s Unemployment Rate, 2006-2010 (in %)

Sources: National Statistics Office, Labor Force Survey �

8.0

7.3

7.4

7.3

7.4

6.8

7.0

7.2

7.4

7.6

7.8

8.0

8.2

2006 2007 2008 2009 2010

Sources: NSO, LFS


Meanwhile, real GNP expanded by 7.9 percent as growth in net factor income from abroad eased to 10.3 percent from 31.6 percent in the same period in 2009. A significant part of the high growth in 2010 was clearly due to a recovery from a low base, implying that these growth rates cannot be expected to continue in 2011 and beyond without structural changes in the economy. Such structural changes are needed even more to achieve this Plan’s goal of a 7 to 8-percent annual growth rate in GDP.

Employment and Poverty

Increased globalization and faster economic growth have provided opportunities for Filipinos entering the labor market. Using the old concept of unemployment on which the Plan targets were based, unemployment rate improved from 11.9 percent in 2004 to 11.4, 11.1 and 10.8 percent in 2005, 2006 and 2007, respectively, lower than the Plan targets. Using the new International Labor Organization

Figure 2.6 Comparative Unemployment Rates in Selected Asian Economies: 2006-2010

Sources: NSO, LFS; http://www.tradingeconomics.com. * latest available data

Figure 2.6 Comparative Unemployment Rates in Selected Asian Economies: 2006-2010

Sources: National Statistics Office, Labor Force Survey; http://www.tradingeconomics.com.* latestavailable data

0.0

2.0

4.0

6.0

8.0

10.0

12.0

2006 2007 2008 2009 2010*

China Indonesia South Korea Malaysia Philippines Singapore Thailand

Figure 2.7 Employment Generated, 2005-2010 ( in ‘000 )

Sources: National Statistics Office, Labor Force Survey

-200

0

200

400

600

800

1000

1200

2005 2006 2007 2008 2009 2010

Services Non-Manuf. Industry Manuf. Agriculture Total

Figure 2.7.Employment Generated, 2005-2010 ( in ‘000)

Sources: NSO, LFS


(ILO)-based methodology recently adopted by the country, unemployment stood at 8 percent in 2006, 7.3 percent in 2007 and 7.4 percent in 2008 (Figure 2.5)1. Despite these improvements, however, unemployment remains high in comparison with the country’s Asian neighbors (Figure 2.6) and meeting job creation targets continued to be a challenge.

The economic slowdown in 2008 affected the manufacturing sector and resulted in a net employment generation of only 530,000 net compared to the 771,000 yearly average for the period 2005-2007. The manufacturing sector in particular registered a negative net employment generation of about 134,000. In 2009, employment in both agriculture and manufacturing sectors remained sluggish. During that year, the services sector accounted for about 94 percent of the

total 972,000 new jobs generated. (Figure 2.7).

With strong export and industrial performance in 2010, the economy showed some improvement on the labor front. In the October round of the 2010 LFS, the unemployment rate stayed at 7.1 percent, bringing the 2010 full-year average unemployment rate to 7.3 percent, lower than the 7.5 percent recorded in 2009. New jobs generated for the year were estimated at around 983,000, slightly more than in the previous year. Average underemployment in 2010 likewise improved to 18.7 percent from the previous 19.1 percent. While the LFS results indicated an improved employment situation, underemployment was still relatively high. In addition, the employment share of unpaid family workers and

Figure 2.8.Employment by Class of Worker and Underemployment Rate, 2005-2010 (%)

Sources: National Statistics Office, Labor Force Survey

0.0

20.0

40.0

60.0

80.0

100.0

2005 2006 2007 2008 2009 2010

Unpaid family Workers Own-accountWorkers Wage and Salary Workers Underemployment Rate

Figure 2.8 Employment by Class of Worker and Underemployment Rate, 2005-2010 (in percent)

Sources: NSO; LFS

1 The DOLE started using the ILO-based definition in the April 2005 round of the Labor Force Survey (LFS) thus making it difficult to compute the FY2005 unemployment rate.


part-time workers stood at 11.5 percent and 35.2 percent, respectively, which suggests there is great room for improving employment conditions in the country.

Given the high underemployment rate of about 20 percent, it is not surprising to find a relatively high percentage of own-account workers (averaging 35.7%) among Filipinos. This partly reflects the difficulty of gaining employment in the formal labor market and implies a high incidence of informal sector work. In addition, the 43.2-percent “educated unemployed” out of the total unemployed labor force is also very high, a symptom of the labor mismatch in the country and a factor contributing to the growing deployment of Filipino workers overseas, averaging about 1.1 million per year.

In the labor and employment sector, therefore, the policy challenge is to increase decent and productive employment and to enhance inclusive

job-rich growth. To achieve this goal, the country can pursue supply-side strategies (such as enhancing the human resource base), as well as demand-side approaches (such as enhancing the returns to human and physical or entrepreneurial capital).

Supply-side measures

Working people are not simply the beneficiaries of growth but also its creators and drivers. Just as increases in employment and labor productivity contribute to economic growth, so too investments in the development of human resources help provide a foundation for a job-rich growth and development strategy. Qualities such as education, skills, health, and cognitive abilities help determine an individual’s ability to obtain productive employment, as well as expand the scope of labor productivity and pace of technological advancement of the country. Inclusive growth thus requires a special focus on the working poor and the unemployed, who comprise a significant portion (43%) of the labor force.

IndicatorYear

2003 2006 2009

A. Among Families

Poverty incidence (%) 20.0 21.1 20.9

Subsistence incidence (%) 8.2 8.7 7.9

Magnitude of poor 3,293,096 3,670,791 3,855,730

Magnitude of food poor 1,357,833 1,511,579 1,453,843

B. Among population

Poverty incidence (%) 24.9 26.4 26.5

Subsistence incidence (%) 11.1 11.7 10.8

Magnitude of poor 19,796,954 22,173,190 23,142,481

Magnitude of food poor 8,802,918 9,851,362 9,440,397

Table 2.2.Official Poverty Statistics, Philippines: 2000, 2003 and 2006

Source: NSCB

In the labor and employment sector, therefore, the policy challenge is to increase decent and productive employment and to enhance inclusive job-rich growth.


Demand-side approaches

Earnings and employment will depend on the rate, quality, and distributional aspects of economic growth. The rate of economic growth determines the extent of employment opportunities. Inclusive growth, in particular, must mean a higher and broad-based demand for labor and therefore more employment opportunities. This is important, considering the persistent unemployment and underemployment levels in the country. The sheer volume of workers working temporarily overseas2 indicates the lack of employment opportunities and suggests that domestic investments and entrepreneurship are being held back. These constraints need to be addressed along with strategies formulated to ensure

that the working poor and the unemployed can participate and benefit from the development process.

A lack of gainful and quality employment opportunities is an important reason why poverty incidence in 2006 went up to 32.9 percent from 30 percent in 2003 (Table 2.2) and essentially stagnated between 2006 and 2009.

Disaggregated data also shows that across the different regions of the country, poverty incidence among families generally increased, with Regions 3, 4-B, 7, 8, and ARMM posting more than 3 percentage points increases in poverty. The Regions ARMM (55.3%), CARAGA (45.5%), MIMAROPA (43.7%), Bicol (41.8%), Eastern Visayas

Figure 2.9 Poverty Incidence of Families by Region (in Percent): 2003 and 2006

Source: National Statistical Coordination Board

-

10.0

20.0

30.0

40.0

NCR I II III IV-A IV-B V VI VII VIII IX X XI XII CAR ARMM Caraga

2003 2006 2009

Figure 2.9 Poverty Incidence of Families by Region (in %): 2003, 2006 and 2009

Source: NSCB

2 About one million OFWs are deployed per year, with their remittances accounting for at least 9.5 percent of GNP in 2009.


(40.7%), and Central Visayas (40.2%) also registered more than 40 percent poverty incidence while NCR had the lowest estimated poverty incidence of 7.1 percent. For the period 2003-2009, the geographical distribution of poverty remained unchanged, with the locus of high poverty incidence being consistent in MIMAROPA, Bicol, Eastern Visayas, and in Mindanao (Figure 2.9).

The regional distribution of poverty also highlights the large disparities in family income across the country. Most of the regions in Luzon had relatively lower shares of families living below the poverty threshold than in MIMAROPA, Bicol, Visayas and the Mindanao regions. The lower poverty incidence in NCR and Regions 1, 2, 3

and 4-A can be attributed to higher access to employment opportunities and basic social services, while armed conflict and peace and order problems resulted in higher poverty in Mindanao.

Fiscal and Monetary Sectors

Sound fiscal and monetary policies that foster macroeconomic stability are crucial to achieving sustained economic growth. A sustainable fiscal balance helps the country avoid boom-bust cycles that disrupt the pace of economic growth. Appropriate levels of fiscal deficits also allow the government to continuously support critical social programs and infrastructure projects. Prudent and responsible monetary policy that achieves low and stable inflation, in turn, gives both consumers and businesses

Table 2.3. Summary of Fiscal Sector Indicators, 2004-2010 (in million PhP)

Sources: Bureau of Treasury (BTr), Department of Budget and Management (DBM)Note: Table 2.3 was based on 2011 Fiscal Statistics Handbook and Cash Operations Report as of September 2010.

Particulars 2004 2005 2006 2007 2008 2009 2010

Total Revenues 706,718 816,159 979,638 1,136,560 1,202,905 1,123,211 1,207,926

Tax Revenues 604,964 705,615 859,857 932,937 1,049,179 981,631 1,093,643

BIR 470,329 542,697 652,734 713,605 778,571 750,287 822,623

BOC 127,269 154,566 198,161 209,439 260,248 220,307 259,241

Others 7,366 8,352 8,962 9,893 10,360 11,037 11,779

Non-Tax Revenues 101,754 110,544 119,781 203,623 153,726 141,580 114,283

Total Disbursements 893,776 962,938 1,044,429 1,149,001 1,271,022 1,421,743 1,522,384

Current Operating Expenditures 755,748 831,716 904,179 947,357 1,031,849 1,141,967 1,229,785

Personal Services 283,065 296,361 324,690 350,291 374,662 414,023 469,402

MOOE 83,838 84,753 99,993 128,311 138,690 176,458 182,092

Subsidy 6,926 8,151 11,884 21,686 16,982 17,438 21,005

Allocation to LGUs 114,068 122,194 136,865 149,150 170,583 203,233 216,079

Interest Payments 260,901 299,807 310,108 267,800 272,218 278,866 294,244

Capital Outlays 132,352 129,515 140,120 191,894 224,780 274,712 283,340

Net Lending 5,676 1,707 131 9,750 14,393 5,064 9,258

Fiscal (Deficit)/Surplus (187,058) (146,779) (64,791) (12,441) (68,117) (298,532) (314,458)


a chance to plan over a longer time horizon. At the same time, it helps ensure that financial markets are stable and credit conditions are appropriate to support the continuous expansion of economy.

This section thus addresses the issues of macroeconomic stabilization. Performance and challenges in the fiscal and the monetary or external sectors are first addressed. Strategies that need to be adopted to achieve macroeconomic stabilization are then outlined.

Assessment and Challenges

Fiscal Sector

In 2004-2009, the government implemented reforms to place the fiscal house on a sounder footing. Major reforms to improve the revenue situation during the early part of the period included the revisions of the excise tax on alcohol and tobacco, an expansion of the scope and an increase in the rate of the value-added tax (VAT), as well as the enactment of the Lateral Attrition Law. As a result, tax

effort rose from 12.5 percent in 2004 to 14.2 percent in 2008. The National Government (NG) reduced its deficit from an average of 3.9 percent of GDP in 2000-2004 to a more manageable 2.7 percent of GDP in 2005. This was further reduced to 1.1 percent in 2006 and was almost balanced in 2007 at 0.2 percent of GDP. The improved fiscal positions of the NG, the social security institutions, local governments, and the GFIs translated into a surplus in the country’s consolidated public sector financial position amounting to PhP21.3 billion or 0.3 percent of GDP in 2007, from a deficit of PhP235.9 billion or 5.0 percent of GDP in 2004.

As economic activities slowed down owing to the recent global financial crisis, however, revenue collection weakened. Revenue effort dropped from 16.2 percent in 2008 to 14.6 percent in 2009, back to prereform levels. Tax effort dipped to 12.8 percent in 2009, the lowest in the

Government’s ability to raise additional revenues from nontax sources has remained weak as well. Part of the problem lies in the governance challenges faced by GOCCs in their operations.

Figure 2.10 Year-on-Year Inflation Rate (2004- 2010)

Source: Bangko Sentral ng Pilipinas (BSP)

6.0

7.6

6.2

2.8

9.3

3.2

3.8

0.0

2.0

4.0

6.0

8.0

10.0

2004 2005 2006 2007 2008 2009 2010

Figure 2.10 Year-on-Year Inflation Rate (2004- 2010)

Source: Bangko Sentral ng Pilipinas (BSP)


ASEAN region, where it averaged 14.9 percent. In addition, several tax eroding measures were enacted in 2009 and 2010, which granted tax relief to various sectors, but depleting the revenues gained from earlier tax reforms. Revenues from taxes with specific rates also either remained flat or failed to rise in proportion with GDP because of the failure to index them. The share of excise taxes on “sin products” and petroleum barely changed during the period, from 21 percent of total revenues in 2004 to 22 percent in 2009.

Government’s ability to raise additional revenues from nontax sources has remained weak as well. Part of the problem lies in the governance challenges faced by GOCCs in their operations. Foremost of these are the multiple and often conflicting mandates; the various levels of oversight bodies; the need to update government ownership policy; the need to improve board governance; and the need to strengthen transparency and disclosure. The exemption of some GOCCs, including GFIs, from the Salary Standardization Law (SSL) granted by Congress, has provided authority to the

2004 2005 2006 2007 2008 2009 2010

CURRENT ACCOUNT 1.6 2.0 5.3 7.1 3.6 9.4 8.5

Goods and Services -7.5 -9.1 -6.6 -6.1 -11.7 -6.7 -8.4

% of GDP 1.9 2.0 4.5 4.9 2.2 5.8 4.5

Trade in Goods -5.7 -7.8 -6.7 -8.4 -12.9 -8.8 -10.4

Trade in Services -1.8 -1.3 0.1 2.2 1.2 2.1 1.9

Income -0.1 -0.3 -1.3 -0.9 0.1 -0.2 0.3

Current Transfers 9.2 11.4 13.2 14.2 15.2 16.2 16.6

CAPITAL AND FINANCIAL ACCOUNT -1.6 2.2 0.0 3.5 -1.6 -1.6 7.9

Capital Account 0.0 0.0 0.1 0.0 0.1 0.1 0.1

Financial Account -1.6 2.2 -0.1 3.5 -1.7 -1.7 7.8

BALANCE OF PAYMENTS -0.3 2.4 3.8 8.6 0.1 6.4 14.4

OFW Remittances 8.6 10.7 12.8 14.4 16.4 17.9 19.4

Gross International Reserves (GIR) 16.2 18.5 23.0 33.8 37.6 44.2 62.4

% of short-term debt based on original maturity 321.6 289.2 458.5 476.4 536.4 1105.5 1086.2

% of short-term debt based on residual maturity a/ 163.0 164.6 251.3 300.7 333.2 500.5 575.1

External Debt-to-GDP 63.3 55.0 45.9 38.5 32.6 34.89 33.1 b/

Medium-to-long-term (% of total) 90.8 88.2 90.7 87.2 87.0 92.7 90.4 c/

Short-term (% of total) 9.2 11.8 9.3 12.8 12.9 7.3 9.6 c/

Table 2.4 Selected External Sector Accounts, 2004-2010* (In Billion US$)

Source: BSP (http://www.bsp.gov.ph, updates as of March 30, 2011a/ Refers to the adequacy of reserves to cover outstanding short-term external debt based on original maturity plus principal payments on medium-to-long-term loans of the public and private sectors falling due within the next 12 monthsb/ Outstanding external debt as of September 2010c/ January-September 2010


boards of government corporations to adjust the compensation of their officials without restraint. Certain GOCCs also have mandates that are inconsistent with prudent fiscal behavior (e.g., they are used as subsidy providers and conduits for social services which were not compensated by the NG), while others have managed to exist only on the back of government subsidies.

In addition, many fees and charges for services have not been appropriately adjusted and in some cases, have even been lowered on request of the private sector (e.g., some fees and charges which affect exporters have been lowered to accommodate them). Collections from this source have not risen in line with the costs of providing the said services.

As the revenue position weakened and given the need to for a stimulus to counter the continuing recessionary pressure, the NG deficit in 2009 reached 3.9 percent of GDP while the consolidated public sector deficit was 3.3 percent of GDP in the same year. In 2010, the NG deficit to GDP ratio dropped to 3.7 percent from 3.9 percent in 2009 while the consolidated public sector deficit improved to 1.6 percent of GDP.

Some recent developments have been encouraging, however. Total revenues in 2010 rose by 7.5 percent from the previous year. Tax revenues were up by 11.4 percent due to improved performances by the Bureau of Internal Revenue (BIR) and Bureau of Customs (BoC) which had higher collections by 9.6 and 17.7 percent, respectively. Notwithstanding these, the revenue position still remains precarious as both the BIR and the BOC fell short of their respective targets in 2010. The postponement of privatization efforts, in the expectation of better terms and conditions, has reduced nontax revenues relative to the same period in 2009. Dividends and interest income have not increased sufficiently to offset the lack of proceeds from sale of assets.

Meanwhile, disbursements grew at a slower pace than revenues, increasing by 6.7 percent from the 2009 level compared to the 7.5 percent expansion in revenues. The increase can be attributed to the higher personal services requirements (13%) due to the continuing implementation of the SSL 3, the increased provision for the CCTs and the automated national and barangay elections, the carry-over disbursements from last year’s rehabilitation and reconstruction projects, and the higher provision for Internal Revenue Allotment (IRA) and interest payments.

Government spending contracted from 18.3 percent of GDP in 2004 to 17.2 percent of GDP in 2008 but has since increased to 18.5 percent of GDP as of 2009 given the government’s economic resiliency program (ERP). As a share to GDP, disbursements dropped to 17.9 percent in 2010.

The year 2010 was notable for the expenditure controls brought back by government, which enabled an orderly transition — from two years of fiscal stimulus in response to the global economic crisis back to fiscal consolidation mode — as the global economic situation normalized. The tighter prioritization of expenditures with the application of the ZBB approach, and the calibration of allotment and cash releases in anticipation of revenue inflows were particularly helpful in this transition. But as the composition of expenditures and the quality of services improve, the absorptive capacity of the agencies and their capability to implement projects must be strengthened to spur economic activity and help create employment particularly in the countryside. The early approval of the Fiscal Year (FY) 2011 budget, the release of 100 percent of agency budgets in January 2011, as well as measures facilitating the procurement process were all intended to provide

The year 2010 was notable for the expenditure controls brought back by government, which enabled an orderly transition — from two years of fiscal stimulus in response to the global economic crisis — back to fiscal consolidation mode as the global economic situation normalized.


this spending jumpstart for the year. The closer monitoring of the rate of agency spending and absorption issues during the year should facilitate the identification of needed measures.

For the period 2004-2010, infrastructure outlays were given an increasing share of the budget, rising to 15.2 percent (2009), and remarkably higher by 4.7 percentage points than that in 2004. In 2010, infrastructure spending was 14.7 percent of total government expenditure. Similarly, the budget share of regular expenditure items necessary for more efficient operations of government increased by 2.6 percentage points from 9.4 percent in 2004 to 12 percent in 2010. Meanwhile, the budgetary requirement for interest payments was reduced from 29.2 percent of the budget in 2004 to 20.7 percent in 2010. As a result, greater fiscal space was created for capital outlays and other productive expenditures.

For 2010, infrastructure and other capital spending grew more slowly by PhP6.5 billion or 3 percent year-on-year, given the lower obligation program for infrastructure and other capital outlays in 2010 compared to 2009. The growth is largely attributed to the carry-over disbursements for rehabilitation and reconstruction activities due to typhoon Ondoy in the latter part of 2009, and for other completed projects.

Disbursements were expanded in 2009 to counter the effects of the global economic slowdown and to provide additional relief, rehabilitation and reconstruction efforts prompted by the destructive calamities that hit the country. In 2010, total national government spending for the first

three quarters amounted to PhP1.15 trillion, a 7.2-percent increase over that in 2009. The increase stemmed largely from spending on personal services, in compliance with mandated salary adjustments, and larger maintenance outlays. However, interest payments increased its share of the total budget from 19.6 percent to 21.2 percent after higher fiscal deficits reappeared. This higher deficit scenario, coupled with the weaker revenue effort, has constrained budgetary allocations to the economic and social sectors, which are vital for the achievement of faster and more inclusive economic growth over the medium-term.

Low levels of spending on education, health and infrastructure largely and generally reflected the low level of government public expenditure3 . Low spending for social sectors caused poor outcomes in these areas and meant higher costs for the population who must spend for what government ought to have provided. NG spending on social services sector as a share of the budget declined from 28.9 percent to 27 percent in 2004 to 2007, recovering to 28.7 percent in 2009, and to 31.9 percent in 2010. Although spending on social services has gone up, the government still needs to increase its spending on priority sectors and reduce nonpriority expenditures if it is to keep pace with neighboring countries and close the gap in public spending.

Thus, generating sufficient revenues to support growth in the medium-term remains the greatest challenge for the fiscal sector. More effort in revenue collection is needed so that an expenditure program more responsive to growth can be undertaken without bloating the country’s deficit and while still keeping the debt ratio at sustainable levels. Proactive debt management should also continue in order to reduce the debt

Low levels of spending on education, health and infrastructure largely and generally reflected the low level of government public expenditure. Low spending for social sectors caused poor outcomes in these areas and meant higher costs for the population who must spend for what government ought to have provided.

3 This is also the view of the recent Public Expenditure Review (PER) by the WB.


service burden and to free up resources that could otherwise be channelled to more productive spending.

While the rules governing the contracting of debt and debt guarantees by agencies have recently been streamlined, some have failed to adhere to best practice and have contributed to the bloating of deficits. These instances include projects under build-transfer contracts whose fees and charges were kept unduly low for political reasons, those implemented and funded from government-to-government arrangements where accusations of overpricing are still being investigated, and automatic guarantees provided under the charters of some GOCCs.

GOCCs continue to be a large source of fiscal risk. As of end of 2008, their total liabilities (excluding those of the BSP) amounted to 36.9 percent of GDP. GOCCs are frequently directed to bear the cost of social programs that should ideally be funded out of the budget. A case in point is the NFA, which operates on a “buy-high-sell-low” policy. NFA’s mandate to maintain floors for farm gate prices while keeping retail rice prices at reasonable levels virtually prevents the agency from recovering its cost. Public utilities like the Light Rail Transit Authority (LRTA) also face considerable financial constraints because user charges are maintained at levels that can only be maintained through heavy public subsidies.

Despite the power tariff increase in 2005 and the privatization of the generating assets and the off-loading of the operation and investment responsibilities for both the power plants and transmission assets to the private sector, the National Power Corporation (NPC) and the Power Sector Assets and Liabilities Management Corporation (PSALM) remain sources of fiscal

risk. The full implementation of the universal levies, provided for under the Electric Power Industry Reform Act (EPIRA) will play a major role in mitigating the fiscal risks from the power sector.

Monetary and External Sectors

Prices

Inflation in the Consumer Price Index (CPI) averaged 5.6 percent for the period 2004-2010 with a declining trend, averaging 3.8 percent in 2010. From 2004 to 2006, much of the inflation pressure was due to supply shocks, including increases in global oil prices that led to higher domestic pump prices, minimum wage adjustments throughout the country, hikes in transport fares and utility charges, and weather-related disturbances. Meanwhile, with good weather conditions and a relatively firm peso, inflation declined to 2.8 percent in 2007, the lowest annual average in 21 years.

The steady decline in inflation was interrupted by sharp increases in world commodity prices, which fed into a 9.3-percent inflation rate in 2008. Monetary authorities responded by raising the policy rate by 100 basis points for June-August 2008. By late 2008, the balance of risks to the inflation outlook had shifted downwards following the easing of commodity prices, the moderation in inflation expectations, and the slowdown in economic activity. These developments provided latitude for monetary easing to support growth amidst the global financial crisis in 2008-2009, including the 200-basis point reduction in policy interest rates. Monetary authorities also adopted other crisis intervention measures at

GOCCs continue to be a large source of fiscal risk. As of end of 2008, their total liabilities (excluding those of the BSP) amounted to 36.9 percent of GDP. GOCCs are frequently directed to bear the cost of social programs that should ideally be funded out of the budget.


the height of the global financial crisis and smoothly disengaged from these when financial conditions began to normalize. 4

The monetary policy stance remains supportive of noninflationary growth. Credit remains adequate in supporting economic activity. This is evident in the steady uptrend in bank lending and smooth functioning of domestic financial markets. Low and stable inflation has also contributed to lower costs of funds in the market, supporting investment and consumption expenditures by firms and households.

External Sector

The current account balance as a ratio of GDP has increased from 1.9 percent in 2004 to 4.5 percent in 2010. The current account position has shifted to structural surpluses in large part due to the resilience of overseas remittances, increased services receipts from business process outsourcing, and steady tourism receipts. These sources of foreign exchange inflows have been more stable than investment flows. Driven by the surplus in the current account and the improvement in capital and financial account, the balance of payments has also registered surpluses since 2005.

However, merchandise exports growth performance was relatively volatile, reflecting the country’s vulnerability to global developments. The annual average export growth for 2004-2010 was 6.5 percent, which was pulled up by the 34.8-percent growth in 2010 as the global economy began to recover.

Meanwhile, the exports of services have been on an uptrend, mainly on account of transportation, travel, and other business, technical, and professional services. Merchandise imports outpaced exports, with more than 60 percent of total imports consisting of raw materials and intermediate goods, and capital goods.

Overseas Filipino (OF) remittances have been steadily growing even when the global financial crisis broke out. In 2010, remittances coursed through banks amounted to US$18.8 billion, an increase by 8.2 percent from the level recorded in previous year.

The country’s favorable external position has also been supported by the continued improvement in the country’s external debt profile. The Philippine external debt-to-GDP ratio was 63.3 percent in 2004. As of September 2010, this ratio was down to 33.1 percent. The long-dated maturity structure of the country’s foreign currency debt has helped to limit rollover and foreign exchange risks.

With the strong external payments performance, international reserves have risen, providing strong coverage for both imports and short-term external debt. At end-December 2010, the gross international reserves (GIR) stood at US$62.4 billion, based on preliminary data. This level of GIR could cover 10.3 months of imports of goods and services, and was equivalent to 10.8 times the country’s short-term external debt based on original maturity and 5.7 times based on residual maturity. The comfortable level of foreign exchange reserves provides a strong cushion that helps the economy withstand external shocks.

The monetary policy stance remains supportive of noninflationary growth. Credit remains adequate in supporting economic activity. This is evident in the steady uptrend in bank lending and smooth functioning of domestic financial markets. Low and stable inflation has also contributed to lower costs of funds in the market, supporting investment and consumption expenditures by firms and households.

4 In addition to the 200-basis point reduction in the BSP policy rate, other measures included the: (a) opening of US dollar repo facility; (b) increase in rediscounting budget from PhP20 billion to PhP60 billion; (c) the reduction in banks’ reserve requirement by two percentage points; and (d) some easing of the loan value and access criteria to the rediscounting facility. The BSP later disengaged from these measures. It aligned the peso rediscount rate to the BSP’s policy rate, restored the peso rediscounting budget to its precrisis level of PhP20 billion and restored the loan value and the past-due loan ratio requirements for banks availing themselves of the rediscounting facility to their precrisis settings.


As a result of the strong external liquidity position, the Philippine peso has remained broadly stable. The trends in the real effective exchange rate (REER) show that the peso has lost some competitiveness against major trading partners compared to six years ago. In the last two years, however, the peso gained competitiveness against baskets of competitor currencies (both broad and narrow) owing to the narrowing of the inflation differential, which offset the nominal appreciation of the peso.

Challenges

The Philippine economy nonetheless faces a number of issues and challenges that may warrant monetary policy actions.

Capital Inflows

Bright prospects for emerging economies combined with the prolonged accommodative monetary policies in advanced economies have driven large capital inflows into emerging economies, including the Philippines. Foreign capital inflows can be an important source of funds for investment expenditures but also entail risks that need to be closely monitored and addressed when warranted. Huge capital inflows can contribute to excessive liquidity growth, cause asset market imbalances, and lead to inflation pressures that can complicate monetary policy.

Asset Market Imbalances

Asset price dynamics are an important consideration in the pursuit of price stability by monetary authorities. The build-up of asset market imbalances contributes to financial stability risks that can harm economic activity, and in turn affect the outlook for price developments. The recent global financial crisis resulted in a deep economic downturn which became a major source of downside risk for the inflation outlook in advanced economies. Furthermore, financial markets provide an avenue through

which monetary policy actions are transmitted to the real economy. Vulnerabilities stemming from the financial sector as a result of asset price bubbles can complicate and reduce the effectiveness of monetary, fiscal, and regulatory policies. While monetary authorities remain focused on achieving low and stable inflation, they will continue to be highly attentive and alert to credit growth, asset price developments, and financial imbalances which can have implications on financial stability and ultimately, on price stability. Monetary authorities will also continue to employ macroprudential tools to help prevent overheating and undue risk-taking in asset markets. Macroprudential regulations already in place have thus far helped make the economy less prone to asset price escalations. These regulations include the statutory limit on the share of real estate loans to banks’ total loan portfolio and the maximum loan-to-value ratio for real estate loans.

Global Commodity Prices

Volatile and rising global prices of key commodities can have significant impact on domestic prices. While these are mainly supply shocks in nature, they may lead to second round effects that could result in elevated inflation expectations. Monetary authorities will continue to coordinate with other government agencies to temper the impact of global commodity price shocks on domestic prices. Monetary authorities will remain vigilant and ready to implement timely policy adjustments in response to the emergence of second-round effects on inflation.

Bright prospects for emerging economies combined with the prolonged accommodative monetary policies in advanced economies have driven large capital inflows into emerging economies, including the Philippines.


Strategic Framework

To achieve the overarching goal of inclusive growth, government lays down the conditions for a stable macroeconomic environment that is conducive to sustaining a higher growth path. For fiscal policy, the main task is to expand the narrow fiscal space and to get on a sustainable revenue-and-spending path. For monetary sector and external sector policies, this means commitment to low and stable inflation conducive to balanced and sustainable growth and reduced external vulnerabilities.

Fiscal Reforms

One of the most important tasks that need to be addressed in order to achieve macroeconomic stabilization is to put order in the fiscal house. The large budget deficits incurred as a result of the fiscal stimulus during the global economic and financial crisis resulted in the need for fiscal consolidation. At the same time, the reduction of spending for infrastructure and social services as a result of the government’s expenditure compression efforts in 2002 to 2006, has resulted in large financing gaps in these areas. These financing gaps, in turn, not only constrained the country’s economic growth, but also limited the access of the poor to the economic gains the country has achieved. The challenge in the medium term, therefore, is one of achieving fiscal consolidation, while at the same time substantially increasing the country’s investments in infrastructure, health, and education.

The overall strategy in the fiscal sector in the medium term is to increase tax effort to 15.6 percent of GDP. This is to be achieved through an annual incremental 0.3 percentage point annual rise in the collection effort of BIR, and 0.1 percentage pointfor the BOC. At the same time, non tax

revenue collection would be increasing equivalent to an average of 1.2 percent of GDP through governance reforms. Correspondingly, the NG deficit should decline to a level of 2 percent of GDP by 2013 and must be maintained at this level until 2016. Also, beginning 2013, the consolidated public sector deficit must be brought down to 1.5 percent of GDP. The specific strategies and programs designed at achieving the abovementioned targets are detailed below.

Tax Administration Reforms

Before even attempting to introduce structural reforms into the country’s tax system, administrative reforms must be given priority. Numerous reform measures are being lined up to improve tax administration. These measures include the following:

1. Establishing a tax registry comprehending all taxpayers;

2. Using comprehensive third-party data to determine the potential tax base;

3. Maintaining a transparent and productive tax audit program;

4. Fully staffing the BIR and BOC with competent and adequately trained personnel;

5. Formulating transparent and consistent tax rulings;

6. Revitalizing the RATE, RATS and RIPS programs of government;

7. Establishing appropriate performance standards and evaluation; and

8. Instituting a more effective system of rewards and penalties under the Lateral Attrition Law backed up by performance standards.

The overall strategy in the fiscal sector in the medium term is to increase tax effort to 15.6 percent of GDP.


Tax Policy Reforms

To complement the efforts to improve tax administration and to ensure that revenues are adequately protected, priority policy reforms need to be instituted, namely: the rationalization of the fiscal incentives system and the enactment of a fiscal responsibility law. The rationalization of fiscal incentives will save revenues for the government by doing away with redundant incentives (e.g., those directed at investments that would have taken place even with the absence of such incentives). At the same time, rationalization will allow the government to direct the incentive system at the export sector so that its full potential can be realized.

A fiscal responsibility law is necessary to hasten the fiscal consolidation process and enforce fiscal discipline at all levels of government. The fiscal position of government should be kept on an agreed deficit path. Such a law is also necessary to keep the country’s debt at a manageable level.

With proper timing, other tax reforms need to be undertaken in order to improve the revenue take of the tax system while promoting equity and a level playing field for all stakeholders. Priority must be given to adjustments in the excise tax on alcohol and tobacco products, as well as the excise tax on petroleum. The use of the so-called PAYGO system as a collection handle must also be maximized.

The distortions of the tax system caused by the enactment of piecemeal exemption laws must be corrected. A reversal of these unnecessary tax exemptions must be pursued in order to restore the integrity of revenues and make the tax system more efficient and equitable.

Nontax Revenue Reforms

Fees and charges collected by government agencies have not been adjusted since a decade ago. Consistent with the sound principle of cost recovery, these fees must be adjusted to cover the cost of administering government services.

Government must aggessively pursue the auctioning of its assets such as air frequencies and permits to develop renewable energy resources. GOCCs must also be made to contribute their fair share to the revenue effort by, among others, promptly remitting dividends.

Expenditure Policy Reforms

The key challenge in the area of expenditure policy is how to substantially increase productive expenditures, such as those for infrastructure and social services (e.g., education and health) – and catch up with the accumulated investment deficits in these areas – while at the same time aggressively reducing wasteful and inefficient expenditures. Public expenditure on infrastructure, as a share of GDP, went down from an average of 2.4 percent in 1995-2000, to an average of 1.8 percent in 2001-2011. By comparison, China, Vietnam, and Thailand spent upwards of 7 percent, 8 percent, and 14 percent of GDP, respectively, on public infrastructure during the last decade. Similarly, public spending on basic education was 3.4 percent of GDP in 1998, but decreased to 2.9 percent in 2002 and continued to slip reaching 2.2 percent in 2008. In other East Asian countries public expenditure on education averaged 3.9 percent of GDP in 2007.5

The key challenge in the area of expenditure policy is how to substantially increase productive expenditures, such as those for infrastructure and social services (e.g., education and health) – and catch up with the accumulated investment deficits in these areas – while at the same time aggressively reducing wasteful and inefficient expenditures.

5 In the health sector, the country’s public expenditure per capita on health was US$39 in 2006, compared to the median of US$88 per capita expenditures for comparable East Asian countries. Overall, the Philippine NG spending on social safety net programs was a mere 0.3 percent of GDP in 2007 and 0.8 percent of GDP in 2008, which is less than half of the mean expenditure on social welfare programs of 1.9 percent of GDP in a group of 87 countries.


In order to address this challenge, the Plan envisions the implementation of several major public expenditure management reforms not only to help narrow the fiscal deficit over the medium term but also ensure that resources are allocated to priority investments, such as human capital and infrastructure. Toward this end, expenditure reforms that have been introduced in the recent years will be strengthened and in some cases, revitalized, in order to improve resource allocation and build results-orientation into the government service. Among these reforms are the following:

1. Medium-Term Expenditure Framework (MTEF). The continued adoption of the multiyear budgeting system (the MTEF) will improve the predictability of funding, and integrate policy with resource allocation. The main components of the MTEF are the Paper on Budget Strategy (PBS) and the Forward Estimates (FEs).

• The Paper on Budget Strategy will link budget allocation with the national agenda of the government to identify the priority areas for spending, and to incorporate the sectoral and regional implications in the dimension and distribution of the budget; and

• Forward Estimates (FEs) are the estimated annual costs of ongoing programs and projects. These will help ensure the continuous funding of program requirements beyond a given fiscal year, and help provide a sound basis of future years’ budget trends. In order to adopt more rigid and realistic FEs, the government will pursue automation that is linked to existing budget application systems and to the PDP and PIP.

2. Organizational Performance Indicator Framework (OPIF). This enables the channelling of resources to where it best produces the desired results and outcomes, as indicated by agreed upon performance indicators. The implementation of the OPIF will be cascaded to the operating units of the agency, in order to sustain the restructuring of government expenditures to the priority sectors. The linking of the OPIF and Performance Management System-Office Performance Evaluation System (PMS-OPES) being spearheaded by the Civil Service Commission, will allow the institution of a performance-based compensation system.

3. Fiscal Responsibility Bill (FRB). The DBM and DOF shall work together to revive the FRB initiative dating back to 2004 and shall push for its approval. The bill aims to strengthen fiscal discipline in the public sector by prescribing principles of responsible fiscal management, establishing control mechanisms on spending, and adopting preventive measures against the erosion of the tax base of the government. One of its prominent features is ensuring that proposals to grant fiscal incentives or permanent increases in national government expenditures must be offset by permanent increases in revenue or permanent reductions in other expenditures.

4. Government Rationalization Program (RP). Executive Order (EO) No. 366 issued on October 4, 2004 aims to build a smaller bureaucracy and improve public service delivery through the strategic review of the mandates, operations, organizational structures, functions, programs and activities of national government agencies; the elimination of overlapping or duplicating functions; and the focusing of government efforts and resources towards its core or vital functions. Given the current progress

The Plan envisions the implementation of several major public expenditure management reforms not only to help narrow the fiscal deficit over the medium term but also ensure that resources are allocated to priority investments, such as human capital and infrastructure.


in rationalizing half of the agencies in the Executive Branch, its continuation is expected to lead to the elimination of 12,549 regular positions, saving the government some PhP2.4 billion in annual salaries and compensation.

5. Procurement Reforms. Significant progress was made in reforming the procurement system through the passage in 2003 of Republic Act (RA) No. 9184 or the Government Procurement Reform Act. Aside from standardizing and modernizing the procedures in government purchasing, the law also requires the use of the Philippine Government Electronic Procurement System (PhilGEPS) by all government entities, which serves as the sole portal hosting sources of information on all government procurement. From 2011, the following functionalities in the PhilGEPS will be implemented: (a) virtual store for electronic purchasing; (b) expanded supplier registry as a centralized electronic database of all manufacturers, suppliers, distributors, contractors and consultants registered in the system; (c) introduction of charges and fees to sustain operations and maintenance of the system; (d) e-payment system to enhance the functionality of the virtual store; (e) e-bid facility for electronic bid evaluation of all types of procurement for goods, infrastructure projects and consulting services; and (f ) uploading of the individual Annual Procurement Plan (APP) of each government procuring entity. Public procurement in the country shall continue to adapt to improvements in modern technology through introduction of future functionalities in the PhilGEPS that will facilitate service delivery, transparency and competitiveness in the public procurement system

6. Stronger Internal Control System (ICS). Along with procurement reforms, the internal control system of government entities is being

strengthened to reduce waste and corruption. The DBM, in partnership with the Office of the President-Internal Audit Office has issued the National Guidelines on Internal Control System (NGICS). The NGICS serves as a guide to departments/agencies in redesigning, installing, implementing and monitoring their respective ICS, taking into consideration the requirements of their organization and operations. A government Internal Audit Manual (PGIAM), consistent with the NGICS, will soon be finalized in order to assist the government in establishing fully functioning internal audit offices in the public sector.

The government will find more ways to further strengthen public expenditure management with the following expenditure reforms and initiatives:

7. Zero-Based Budgeting (ZBB) Approach. Anchored on the good governance thrust of the Aquino administration, the Department of Budget and Management (DBM) led the review and evaluation of ongoing programs and projects through the ZBB approach in preparing the 2011 Budget. Complementing the MTEF and the OPIF, the ZBB approach is geared towards assessing the continued relevance and priority of programs; ascertaining whether the program objectives and outcomes are being achieved; identifying alternative or more effective and efficient ways of achieving the objectives; and guiding decisions whether the resources for the program or project should continue to be provided at present levels, increased, reduced, or discontinued.

In succeeding budget processes, the government shall widen the scope of the evaluation of the major programs or projects under the ZBB approach to build up capacity, and to institutionalize program evaluation in the government.


Initial findings and recommendations from the conduct of ZBB exercises during the preparation of the 2011 Budget include:

• Termination of programs no longer delivering intended outputs and outcomes;

• Holding of the funding for some programs pending removal of bottlenecks in project implementation and procurement;

• Expansion of well-performing programs to alleviate or mitigate critical gaps in social and economic services;

• Recommendation on the implementation of difficult reforms in GOCCs;

• Stricter controls in the use of lump-sum funds following master plans and government priorities; and

• Deactivation of selected agencies and GOCCs.

In succeeding budget processes, the government shall widen the scope of the evaluation of the major programs/projects under the ZBB approach to

build up capacity, and to institutionalize program evaluation in the government.

8. Transparency and Accountability Safeguards in the Budget Process. The overarching goal is to enhance transparency and enforce accountability in government operations by incorporating general and special provisions in the General Appropriations Act (GAA). Under the 2011 GAA, all departments and agencies, including those enjoying fiscal autonomy, are required to post their approved budgets on their websites and the status of their programs/projects starting 2011. Special provisions in the budgets of agencies and GOCCs with key programs and projects require the posting of the details of program beneficiaries and locations of projects on their websites for better information and appreciation of the public. This practice also allows the public to verify agency outputs vis-à-vis targets.

9. Public Financial Management (PFM) and the Government Integrated Financial Management Information System (GIFMIS). This initiative aims to harmonize and integrate the budgeting, accounting, and auditing systems of the government. Reforms in the PFM

2011 2012 2013 2014 2015 2016

Fiscal Balance (% of GDP) -3.2 -2.6 -2.0 -2.0 -2.0 -2.0

Inflation rate (%) 3.0-5.0 a/ 3.0-5.0 b/ 3.0-5.0 b/ 3.0-5.0 b/ n.a. n.a.

Exports (US$Bn) c/ 55.3 – 55.8 62.5 71.3 81.3 94.3 109.4

Growth rate (%) 9.0 – 10.0 12.0 14.0 14.0 16.0 16.0

Imports (US$Bn) c/ 71.5 – 72.1 85.1 100.4 118.5 141.0 167.8

Growth rate (%) 17.0 – 18.0 18.0 18.0 18.0 19.0 19.0

Table 2.5 Selected Fiscal, Monetary, and External Medium-Term Targets

a/ Approved under DBCC Resolution No. 2009-10 dated 27 November 2009.b/ Approved under DBCC Resolution No. 2010-3 dated 09 July 2010. The BSP shifted from a variable annual inflation target to a fixed medium-term inflation target of 4 ± 1 for 2012-2014.c/ Approved by the Monetary Board on 24 March 2011.


system will make it more transparent, accountable, and performance-oriented. A Memorandum of Agreement (MOA) has been executed between the DBM, Commission on Audit (COA) and BTr to develop the GIFMIS.

10. Contingent Liability Management (CLM). Considering the fiscal impact of realized contingent liabilities (CL) from existing BOT and GOCC projects that are guaranteed by NG, a joint ICC-DBCC resolution will be issued to strengthen CLM through the preparation of the CLM Plan by implementing agencies, training for value analysis/value engineering and CL assessment, evaluation by the DOF of CL for every financing/procurement option, and full disclosure of required budget for CL that will become real liabilities and will thereby need funding.

11. Timely Approval of the Annual Budget. Addressing the urgent needs of agencies in a timely and predictable manner is the main reason that the government pushes for the passage and approval of the GAA before the fiscal year starts. To be able to do this, the government revised its budget schedule in anticipation of early budget preparation activities to give ample time for the DBM and the agencies to conduct consultations with sectoral groups, civil society organizations (CSOs), and Regional Development Councils (RDCs). The new schedule, coupled with improved budget documents submitted to Congress, will facilitate the budget legislation process, hence ensure timely enactment of the annual budget.

12. Rationalization of GOCCs and GFIs. To better streamline the budgetary support given to GOCCs/GFIs, the government has embarked on instituting reforms to reduce their financial vulnerability and improve

service delivery. The DOF and the DBM are collaborating in the passage of a law to strengthen oversight functions on GOCCs/GFIs, and to create a Government Corporate Council that will effectively manage and supervise the operations of these entities. Administrative and legislative measures will also be proposed to amend or restructure GOCC charters. A review of the compensation granted to board members, officers, and employees of GOCCs and GFIs will also be undertaken to control costs of personal services in GOCCs and make compensation equitable relative to that in the National Government.

Debt Management Reforms

Reforms in the management of debt must also be implemented. A dedicated unit in the DOF needs to be set up to consider more aggressive options such as debt exchanges and swaps at the most opportune times to optimize savings. There needs to be a greater diversification of modes, instruments used, and currency mix, as well as more innovative terms and features.

Likewise, all types of projects funded from borrowing, whether these are government-to-government arrangements, automatically guaranteed under GOCC charters, and under BOT or PPP arrangements, should be subject to the rigid test of project viability and procurement processes and conducted with the highest standards of transparency. During the project evaluation process, the extent of contingent public exposure to liability should be clearly identified and appropriate allocations in the budget should be made in future years.

Monetary policy will remain committed to the achievement of low and stable inflation that is conducive to a balanced and sustainable growth of output and employment.

This stance entails continuous macroeconomic surveillance efforts for a more effective management of risks. At the same time, monetary authorities will continue to improve their communication of policy intentions and actions.


Monetary Policy and External Sector Reforms

Monetary policy will remain committed to the achievement of low and stable inflation that is conducive to a balanced and sustainable growth of output and employment. Monetary authorities will be alert to signs of emerging inflation pressures to consolidate the hard-won price stability that has contributed to policy predictability and enabled households and businesses to make better informed decisions. This stance entails continuous macroeconomic surveillance efforts for a more effective management of risks. At the same time, monetary authorities will continue to improve their communication of policy intentions and actions.

In recent years, monetary authorities have implemented a number of reforms to enhance the effectiveness of the monetary policy framework. In 2006, the way the inflation target was arrived at was changed from specifying a range to specifying a point with a tolerance interval which effectively widened the BSP’s target band. A broader target band provides added flexibility to monetary authorities in steering inflation, particularly in the domestic setting where consumer prices are subject to large supply shocks because of the sizeable share of food items in the consumer basket. The economic policymakers also announced in 2010 the shift to a fixed medium term inflation target from a variable annual inflation target. The adoption of a fixed medium term inflation target aims to promote a long-term view of inflation, help better anchor inflation expectations, and support consumption and investment by fostering greater predictability in economic decisions (Table 2.5).

The monetary authority’s reform agenda will focus on improving the institutional set-up and fine-tuning the procedures of inflation targeting. Key measures to be pursued for more effective inflation management include the following:

a. Given the interdependent real and financial markets across the globe and the risks involved, the BSP shall pursue the expansion of its monetary policy toolkit to enhance the flexibility and efficiency of its monetary operations with a view to safeguarding both price and financial stability.

b. Pursuant to the provisions of RA 7653, the monetary authorities will request the full capitalization of the BSP to ensure that financial losses from time to time do not deter the BSP from fulfilling its mandate of maintaining price stability. A bigger capital base will enhance the BSP’s financial autonomy and credibility, giving more confidence to the market.

Enhancing the link to financial stability. The economic downturn resulting from the recent global financial crisis brought to light the importance of policy coordination in promoting macroeconomic stability. The close coordination of monetary, regulatory, and fiscal policies was critical to the restoration of global financial stability. This, in turn, paved the way for business confidence to improve and ultimately, for economic recovery to take root. Interaction of different policies is likely to remain the new modus operandi for economic policy markers. In this regard, promoting closer coordination of macroeconomic and financial sector policies could be explored,

The monetary authority’s reform agenda will focus on improving the institutional set-up and fine-tuning the procedures of inflation targeting.


including through a wider representation in the Financial Sector Forum (FSF) . 6

On the external sector, policymakers will continue to adopt appropriate measures that will cushion the economy from external shocks as well as ensure the health of the country’s external payments position and the sustainability of its external debt over the medium-term.

The monetary authorities will continue to adopt a flexible exhange rate policy to help the economy to be better insulated against external shocks.

The foreign exchange regulatory framework will be further reviewed to keep it responsive to the needs of an expanding and increasingly integrated economy. Since 2007, the monetary authorities have undertaken four major phases of foreign exchange reforms. The reforms brought greater access to foreign exchange resources for trade, investment and other foreign transactions. The measures also facilitate the diversification of investment portfolios and help reduce the economy’s vulnerability to shocks.

The country’s external debt shall be maintained at more manageable and sustainable levels. This shall entail appropriately designing the external debt structure to minimize risks emanating from currency and maturity mismatches. With respect to the NG, it will review the country’s sovereign bonds and debt profile to identify which instruments shall be eligible for its bond exchange program. This program aims to boost liquidity sourced from longer-dated securities and to provide long-term financing for government initiatives promoting PPP for infrastructure and economic development.

The monetary authorities will also endeavour to maintain the external debt stock and the external debt service burden at sustainable levels. This will entail continuing the comprehensive and regular monitoring of the level and maturity profile of the country’s external debt and the conduct of debt sustainability assessments.

Complementing the sound management of external debt level, the monetary authorities will also build cushions against shocks by promoting an adequate level of international reserves.

Furthermore, policymakers will need to focus on leveraging remittances as a tool for economic development. While remittances are private transfers, the government can ensure that the policy environment is conducive to the use of remittances for investment in well-considered financial products, in productive activities such as entrepreneurial undertaking as well as in better housing, education, and healthcare for remitters and their beneficiaries. Improving the financial education of the overseas Filipino community and implementing measures to further promote the flow of remittances through the financial system would help catalyze the developmental role of remittances.

6 The Financial Sector Forum (FSF) in an interagency body composed of the BSP, Securities and Exchange Commission (SEC), Insurance Commission (IC), and the Philippine Depository Insurance Corporation (PDIC). The FSF principally provides an institutionalized framework for coordinating the supervision and regulation of the financial system, for strengthening the exchange of information among the different regulators, and for the promotion of better consumer protection.

The monetary authorities will continue to adopt a flexible exchange rate policy to help the economy to be better insulated against external shocks.

61Competitive Industry and Services Sectors03Competitive Industry & Services Sectors


Several measures of competitiveness reveal fundamental weaknesses in major development aspects compared to the rest of the world. Compared with its neighbours, the country’s economic performance in terms of investments, exports and competitiveness is unsatisfactory and need to be reversed. The Philippine economy over the past years has been characterized by a reduced share of manufacturing sector in the country’s gross domestic product (GDP) and declining gross domestic investment rate.

Enabling the industry and services sectors to contribute significantly to economic growth and employment requires addressing a number of constraints to their development. Strategies shall therefore be pursued to help raise the competitiveness of industries by improving the business environment; raising productivity and efficiency and inculcating quality consciousness among manufacturers and producers to offer quality goods and services comparable with global brands.

Business competitiveness will be enhanced by improving governance, strengthening economic zones, and strengthening national brand identity/awareness. To increase productivity and efficiency, government shall focus interventions on key priority areas, provide firm level support to MSMEs, increase market access, expand industry cluster development and intensify the culture of competitiveness. Proactive measures to empower consumers, promote competition and enforce trade regulations shall also be pursued.

Competitive Industry & Services Sectors

By addressing the country’s problem of low competitiveness, this Plan aims to promote higher growth in per capita GDP and boost employment. The focus shall be to enable the industry and services sectors to contribute to massive job generation, provide opportunities for Filipinos to rise above poverty, and ultimately offer a meaningful choice for Filipinos to pursue gainful employment here or abroad. The Plan shall adopt a deliberate, focused approach that addresses the country’s business environment, anchored on investments in human capital and implementation characterized by a “back to basics” approach coupled with innovation and “whole of government” as underlying principles.

The chapter focuses on three medium-term goals: (i) improved business

environment, (ii) increased productivity and efficiency and, (iii) enhanced consumer welfare.

For a better business environment, government and the private sector shall work to improve governance, as well as investment promotion areas and amplify a National Brand and Identity Awareness. Business competitiveness will be enhanced by promoting a consistent, predictable, and responsive policy environment, streamlining bureaucratic procedures and fostering transparency, promoting e-commerce and ICT-enabled automation, and encouraging partnerships with the private sector. The system of licensing, registration, and issuance of permits shall be improved to reduce the cost of doing

63Competitive Industry and Services Sectors

business. To promote investments, government shall give priority to key policy concerns, namely: labor, telecommunications, transport (aviation and domestic shipping), energy, peace and order and the rule of law. A national branding or marketing awareness campaign will be launched to bring pride in quality Philippine-made products and to give a distinct identity to the country as a source of products that are valued worldwide.

To increase productivity and efficiency, government shall give priority to the development of areas that have the highest growth potentials and generate the most jobs. These include: tourism; business process outsourcing (BPO); mining; agri-business and forest-based industries; logistics; shipbuilding; housing; electronics; infrastructure; and other industries with high growth potential. Likewise, the government will also increase its market access and further promote Philippine goods and services abroad. A culture of competitiveness shall be intensified, whereby the country’s human capital shall be developed through market-sensitive education and training. Government shall work to promote mutually agreed work arrangements between employers and the labor sector and to strengthen tripartite councils to achieve industrial peace. More importantly, an entrepreneurial culture will be fostered by encouraging Filipinos to invest in their own businesses and become successful and innovative entrepreneurs. A two-pronged approach shall be adopted, consisting of firm-level assistance to potential/new and existing micro, small, and medium enterprises (MSMEs) and the use of the industry-cluster approach. Government shall promote sustainable livelihood and micro enterprise development, harnessing the Overseas Filipinos (OFs) community as a source of capital.

Program interventions shall be supported to develop the core values needed to form an enterprising nation.

The final key strategy is inculcating quality-consciousness among manufacturers and producers to offer quality goods and services comparable with global brands. Consumer expectations shall be promoted as the impetus for suppliers to deliver quality goods and services that give value for money. The concerns of both businesses and consumers shall be balanced through proactive measures to empower consumers, promote competition, and enforce trade regulations. Government shall: (1) promote consumer education and consumer advocacy; (2) intensify consumer protection and trade regulation; and (3) develop product and service standards. In addition, the entire supply chain shall reduce production and distribution cost particularly on basic and prime commodities


Competitiveness Competitiveness indicators have for some time now been used to measure the country’s business landscape. From 1994 to 1999, the Philippines ranked between 32 to 35 in the International Institute for Management and Development (IMD) Global Competitiveness Report but slipped to 49 from 2000 to 2007.

Several measures of competitiveness reveal weakness in major development aspects compared to the rest of the world. In the World Economic Forum (WEF) Global Competitiveness Index Ranking, the Philippines ranked 87th out of 133 countries, and last among the ASEAN-6 subset of countries for the period 2009-2010. In specific categories, the Philippines ranked 113th in institutions; 113th in labor market efficiency; 99th in innovation; and 98th in infrastructure.


In 2009, the Philippines ranked 43rd out of 57 countries and last among five ASEAN members; next to last in infrastructure; and 51st in economic performance in the IMD Global Competitiveness Report; and placed 139th out of 180 countries (6th among the ASEAN-6) in the Transparency International’s Corruption Perception Index. In 2010, the country ranked 144th among 183 countries and also last among the ASEAN-6 in the International Finance Corporation/World Bank’s (IFC/WB) Doing Business 2010 Report. 1

Compared with its neighbors, the country’s economic performance in terms of investments, exports, and competitiveness is unsatisfactory and needs to be improved. Over the past years, the Philippine economy has been characterized by a reduced share of the manufacturing sector in the country’s GDP and declining gross domestic investment rate. The country continues to lag behind its neighbors in terms of foreign direct investments. (FDI). The Arangkada Philippines 2010 report noted that inflows of FDI into the Philippines were lowest among six ASEAN countries, and that “many multinational firms not already present in the Philippines bypassed the country”.2

In the 2010 IMD Global Competitiveness Report, the country’s overall infrastructure quality ranked below that of Singapore, Malaysia, and Thailand and was closer to Indonesia and Vietnam. The inadequate and poor quality of infrastructure diminished the country’s overall competitiveness and its capacity to attract investments.

Aside from cumbersome business procedures and high cost of power, inefficient transport network raises production cost, all causing a higher cost of doing business. Infrastructure and communication problems also hinder access to raw materials and distribution of goods and services to consumers.

The Doing Business survey of the IFC/WB also consistently identifies the high cost of doing business in the Philippines as a major obstacle to competitiveness. (Table 3.1). The IFC/WB Doing Business Report 2011, on the other hand, reported the 148th ranking of the Philippines in terms of ease in doing business, a finding related to the difficulties of transacting with the local government units (LGUs) and national agencies in terms of length of time, steps, signatories, costs and other indicators. There is broad agreement that the process of applying for a business renewal registration is a long, difficult, and tedious process. Starting a business in a Philippine city involves an average of 15 procedures, takes 38 days, and costs 29.7 percent of income per capita. The country was listed among the countries with high number of procedures for starting a business, although wide differences exist across different Philippine cities3.

Measured competitiveness affects the country’s capacity to attract trade and investments. The economic situation remains a challenge for the Philippines, which is seen as falling short of its true potential for

Several measures of competitiveness reveal fundamental weakness in major development aspects compared to the rest of the world.

1 The Annual Meeting of the Global Federation of Competitiveness Councils held in Washington D.C. in December 2010 agreed to adopt new paradigm metrics beyond the existing competitiveness reports and surveys. Metrics of competitiveness substantially different from current indicators will be used in future surveys. The new measures, due by the end of 2011, will focus on the creation of a sound business environment for firm-level productivity.2 The same report notes that in the period 1970-2009, Indonesia, Malaysia, and Thailand each received twice or three times as much FDI as the Philippines, and that only 4.5 percent of total FDI in six ASEAN countries came to the country.3 Such variations could be due to differing procedures and practices at the local government level, differential performance of local branches of national agencies, and variations in local taxes and fees.


Country Number of start-up procedures

Time to start a business (days)

Cost to register business

Procedures to enfore a contract

Time to enforce a contract (days)

Rigidity of employment index: 0 (less rigid) to 100 (very rigid)

(% of GNI pc)

2004 2009 2004 2009 2004 2009 2004 2009 2004 2009 2004 2009

Philippines 15 15 60 52 25.4 28.2 37 37 862 842 29 29

PR China 13 14 48 37 15.9 4.9 35 34 406 406 28 31

Malaysia 9 9 30 11 25.1 11.9 30 30 600 585 10 10

Hong Kong 5 3 11 6 3.4 1.8 24 24 211 280 0 0

Indonesia 12 9 151 60 131 26 39 39 570 570 40 40

S Korea 10 8 17 14 15.7 14.7 35 35 230 230 27 38

Singapore 7 3 8 3 1 0.7 21 21 120 150 0 0

Thailand 8 7 33 32 6.7 6.3 35 35 479 479 11 11

Vietnam 11 11 56 50 30.6 13.3 34 34 356 295 33 21

Table 3.1: Cost of Doing Business Indicators

Source: World Bank, Doing Business 2005 and 2010 (http://www.doingbusiness.org)

attracting both domestic and foreign investment, given its human, natural, and capital endowments4.

Policies that distort competition are the main impediments to economic growth. Protectionist paradigms were embodied in flawed policies manifested through market power or the extent to which a firm can influence the price of an item by exercising control over its demand, supply or both, barriers to entry, and rent-seeking practices. Clearly, some businesses do not get level playing fields.

Philippine products and services face some challenges in the international market. For instance, there is lack of information on the standards of other countries. A certification system for exported products is still not fully in place. Laboratory and common service facilities are either incomplete

and outdated or inadequate. The costs of ISO certification can be borne only by the more liquid traders and producers.

With tariffs reduced, difficulties experienced by manufacturers, exporters/traders will increasingly pertain to technical barriers such as standards and conformity assessment. Standardization, a component of the technical infrastructure, protects consumers and accelerates product integration into the global trading system. Other components of the technical infrastructure, such as metrology, accreditation, certification and testing, are dispersed with different agencies involved in conformity assessment, spreading government resources thinly. A robust and harmonized technical infrastructure would not only help the country overcome trading barriers and protect the buying consumers, but also cut redundant overhead costs due to many regulatory bodies.

4 See, for example, the World Bank’s Country Assessment Report 2005.


But for the global economic crisis, the last five years would have been a favorable period for exports.

Table 3.2: Export Performance (2004-2010)

FOB Value (US$ billion) Growth Rate (%)

2004 2005 2006 2007 2008 2009 2010 2004 2005 2006 2007 2008 2009 2010

Goods & services

Plan target 43.1 47.4 52.3 58.2 65.4 74.3 84.3 10 10 10 11 12 12 13

Actual 42.8 44.8 52.9 59.2 57.9 48.6 63.9 10.6 4.6 18.3 11.9 -2.2 -16.1 31.5

Percent to target (%) 99.3 94.5 101.3 101.9 88.6 65.4 75.8

Of which: goods

Plan target 39.8 43.8 48.2 53.5 60.0 67.1 75.8 10 10 10 11 12 12 14

Actual 38.8 40.3 46.5 49.5 48.3 37.6 50.7 9.8 3.8 15.6 6.4 -2.5 -22.1 34.8

Percent to target (%) 97.5 91.9 96.5 92.5 80.4 56.1 66.9

Source: Bangko Sentral ng Pilipinas with basic data from the National Statistics Office

Exports of Goods and Services

If not for the global economic crisis, the last five years would have been a favorable period for exports. The country’s exports grew by an average of 10.65 percent from 2004 to 2007, supported by continued strong growth in global trade. The expected negative effect of the 9/11 terrorist attacks in 2001 was mitigated by the renewed confidence on safer trade as ensured by more stringent export regimes of the European Union (EU) and the United States (US).

Export growth peaked in 2006, when exports surpassed targets and grew by 18.3 percent, driven by rising sales to the country’s traditional trading partners, the US and Japan, as well as China, the Netherlands, Germany, Singapore, Malaysia and Korea. This pace could not be sustained in the following years, owing to the slowdown in the US market, high production costs, particularly in energy and logistics, and a strong peso.

In the fourth quarter of 2008 the sector felt the effects of the global economic

crisis, actually contracting by 2.19 percent relative to 2007. As the global recession dragged on in 2009, export value fell drastically, contracting by 16.1 percent compared to 2008. In 2010, however, exports began to rise again, surging ahead with two-digit growth rates in line with the expectations of global economic recovery (Table 3.2).

For 2010, merchandise exports amounted to US$48.3 billion, growing 34.8 percent over exports in 2009. This was supported by increases in exports of manufactured goods and total agro-based products, both at about 36 percent. The country’s top ten export commodities also registered increases particularly coconut oil, communication/radar and semiconductor devices. Exports registered positive growth with the recovery of global trade.

The movement of Philippine electronic exports has followed global trends. Electronic products still account for the bulk (61 %) of Philippine merchandise exports


during the period. Semiconductor shipments, making up 77 percent of electronics exports, grew 53 percent in 2010.

The country’s traditional trading partners, Japan and the US, remain as the country’s top export destinations, followed by Singapore, China, Hong Kong, Germany, Netherlands, Republic of Korea, Thailand and Taiwan in the top ten destinations.

Exports of services meanwhile grew by 150 percent from US$4 billion in 2004 to US$13.2 billion in 2010. Other business services, travel, and computer and information services account for 48 percent, 21 percent, and 16 percent, respectively, of total services exports.

Globally, the evolution in technology, prioritization of business strategies, migration, innovation and trends, environment-consciousness, and value for money have influenced the emergence of technology based sectors, strengthened hospitality services and increased the capability for borderless transactions. The Government has been vigilant in the growth of these industries, two of which are the BPOs and tourism.

Business Process Outsourcing (BPO)

The BPO industry is acknowledged as a driving force for economic growth and employment in the country. Two distinct drivers largely contributed to the growth of BPO demand: (1) increasing globalization which led to the lowering of barriers to trade that allowed companies to explore alternative locations to lower operating costs without sacrificing the quality of service; and (2) advancements in information and communication technology (ICT) which enhanced service delivery using the internet in a cost efficient and timely manner.

Typical outsourced services include the operation of human resources departments, telephone call centers, distribution centers, research needs, computer departments or services, and the design and/or engineering of components or end-products. The Philippines introduced BPO services in the country through the call centers or ‘voice’ services. However, the industry has evolved to higher value, non-voice BPO functions such as finance & accounting, human resource and administrative services, and transcription services. The years 2007 to 2008 marked the turning point and remarkable growth in the back office and knowledge process outsourcing (KPO) such as research, analytics and legal services; with more than two-fold growth in revenues from US$400 million to US$830 million.

In 2010, the BPO industry has attained its US$9 billion revenue target while employing about 530,000 full-time employees (FTEs) (Figure 3.1). The US remains the prime source for outsourcing activities and opportunities for the Philippines as well as the major supplier of outsource work to the European and Japanese companies.

Because of its ready supply of professionals equipped with the required language skills, cultural affinity with the US and UK markets, and strong customer

The BPO industry is acknowledged as a driving force for economic growth and employment in the country.

Source: Business Processing Association of the Philippines

Figure 3.1. BPO/IT Outsourcing 2004-2011


service orientation, the Philippines has gained considerable traction as a BPO destination. For the years 2007, 2008 and 2010, the country has been recognized by the National Outsourcing Association of UK and cited it as the “Offshoring Destination of the Year”.

In 2010, the Philippines posted almost US$5.70 billion of pure voice-based revenues, which is even higher than India. Thus, in stand-alone voice business, the country ranks number one globally. However, India continues to be the leader in the global BPO industry mainly with its strong presence and capacity in information technology (IT) such as software development. On the supply side, while the country produces 480 thousand graduates per annum, the number of available workforce is undersized compared to India’s 3 million talent pool. The country would need to enhance the capability of its professionals in the IT sector to capture opportunities from India’s BPO market in the IT sub-sector.

Aside from labor resource, the country also needs to develop suitable locations to ensure that BPO investments and expansions can be accommodated. Physical and IT infrastructures are key solutions to address growth of the industry.

The National Capital Region dominantly houses majority of the BPO companies in the country. In 2009, the government and the private sector collaborated on a project dubbed as the “Next Wave Cities” wherein focus will be directed on locations with high-growth potential in the BPO services. Ten cities were identified namely: Davao; Santa Rosa, Laguna; Bacolod; Iloilo City; Metro Cavite (i.e. Bacoor, Dasmariñas, Imus); Lipa, Batangas; Cagayan de Oro; Malolos, Bulacan; Baguio City, and Dumaguete. In 2010, five cities are being eyed as BPO-potential destinations, namely: Dagupan, Legaspi, Metro Subic, Metro Naga, and General Santos.

Tourism

From 2004 to 2009, the average shares of tourism in GDP and in total employment were 6.12 percent and 9.68 percent, respectively. In the midst of global and national economic, political and social upheavals, the tourism sector remained resilient. Visitor arrivals in the past six years grew at an annual average of 8.21 percent from 2.29 million in 2004 to 3.01 million in 2009. The threat of terrorism and financial crisis has

Tourism Contribution Visitor Arrivals Tourism Receipts

Year % Share to GDP

% Shareto National Employment

Growth Rate% Share to Global Arrivals

% Share to Asia and the

PacificGrowth Rate % Share to

Total Exports

2004 6.17 9.62 20.1 0.30 1.61 30.7 4.25

2005 6.16 9.55 14.5 0.33 1.71 12.3 3.98

2006 6.15 9.54 8.4 0.34 1.71 23.1 5.18

2007 6.18 9.66 8.7 0.34 1.70 7.4 4.31

2008 6.05 9.77 1.5 0.34 1.71 -17.87 3.62

2009 6.03 9.96 - 3.9 0.34 1.67 - 7.9 4.09

Average 6.12 9.68 8.21 0.33 1.69 7.96 4.23

Table 3.3: Percent Share of Tourism to GDP, Employment and Total ExportsVis-à-vis Visitor Arrivals Globally and in the Asia Pacific

Sources: National Statistical Coordination Board, Department of Tourism and World Tourism Organization

In the midst of global and national economic, political and social upheavals, the tourism sector remained resilient.


not dampened the industry as it demonstrated moderate improvement in its market share to the global and Asia and the Pacific arrivals from 0.30 percent in 2004 to 0.34 percent in 2009 and from 1.61 percent in 2004 to 1.67 percent in 2009, respectively (Table 3.3).

Tourism receipts from inbound expenditure of foreign visitors from 2004 to 2009 also expanded at an average of 7.96 percent from US$ 1.99 billion in 2004 to US$ 2.23 billion in 2009. Consequently, the share of tourism receipts to total exports in the

economy grew at an annual average of 4.94 percent during the same period.

These receipts have driven private and foreign investments in the accommodation, transportation, recreation, entertainment and miscellaneous services sectors of the tourism industry. Tourism is regarded as the fourth largest contributor to foreign exchange receipts. The top three are electronics and semiconductors, overseas Filipino remittances, and BPO.

Outside Manila, the most frequented destinations visited by foreign tourists included: Boracay Island, Tagaytay,

Countries 2009 2008 2007 2006 2005 2004

Malaysia 23,646 22,052 20,973 17,547 16,431 15,703

Thailand 14,146 14,584 14,464 13,822 11,567 11,737

Singapore 7,488 7,7778 7.957 7,588 7,079 6,553

Indonesia 6,324 6,234 5,506 4,871 5,002 5,321

Vietnam 3,747 4,236 4,229 3,584 3,468 2,928

Philippines 3,017 3,139 3,092 2,843 2,623 2,291

Cambodia 2,046 2,001 1,872 1,591 1,333 987

Table 3.4: Visitor Arrivals to ASEAN Countries (‘000)

Source: World Tourism Organization

Country Regulatory Framework Business Environment and Infrastructure

Prevalence of Foreign Ownership

Property Rights

Time Required to Start a Business

Cost to Start a

Business

Quality of Air

Transport Infra

Number of Operating Airlines

International Air

Transport Network

Quality of

Roads

Quality of Ground

Transport Network

Cambodia 75 118 124 124 87 75 86 80 116

Indonesia 24 117 122 114 75 37 57 105 51

Malaysia 67 38 33 73 20 27 33 17 21

Philippines 98 92 114 94 89 48 76 94 115

Singapore 3 4 4 8 1 28 2 3 4

Thailand 89 61 90 39 28 13 26 32 31

Vietnam 104 75 112 77 92 39 91 102 58

Table 3.5: Philippines Travel and Tourism Competitiveness in comparison with selected ASEAN Countries, 2009

Source: World Economic Forum, and Travel and Tourism Competitiveness Report 2009


Cebu, Laguna, Batangas, Cavite, Bohol, Pampanga, Palawan and Davao. Among the activities undertaken by most tourists during their visit in the country were shopping for local crafts and delicacies; sightseeing, beach holiday, scuba diving, visiting friends and relatives, honeymoon; attending business meetings; and looking for investment opportunities. Many tourists also engaged in various cultural, nature and adventure experiences to complement, perhaps, their medical and health activities. In 2010, foreign tourists spent an average of US$ 83.93 per day and stayed an average of eight nights during their visit.

However, the Philippines ranked only sixth in attracting foreign tourists vis-à-vis its ASEAN neighbors, whose market shares have rapidly grown, while that of the Philippines expanded modestly. Visitor arrivals in Malaysia in 2009 totaled 23 million; Thailand, 14 million; Singapore, 7.5 million; Indonesia, 6.3 million; and Vietnam, 3.7 million. (Table 3.4).

More work is needed to enhance the country’s competitiveness as a tourist destination. The country’s attractiveness hinges on the availability of support infrastructure (air, land and water), a healthy business environment, and transparent and proactive rules and regulations. The WEF 2009 Report ranked the Philippines lowest among comparable ASEAN neighbors in terms of the number of airlines with scheduled flights originating in the country and the availability of good air connections to overseas markets to provide access for more foreign visitors. The Philippines also lagged behind in terms of quality of roads and ground transportation network that offers efficient accessibility to major tourism centers and tourist attractions (Table 3.5).

Restrictions on foreign ownership of companies and property rights remained a handicap in attracting tourism investments, especially from

international chains and the network of accommodation operators. The time and cost needed to start a tourism enterprise also deserve attention.

The Philippines contributes actively to global policy-making as well as observes and promotes international agreed principles and norms in the domestic setting. As global and regional economies become more integrated, internal policy decisions will inevitably influence decisions and policies of other countries, and vice-versa. This reality enhances internal coordination and cooperation mechanisms and external country-team representation protocols among government instrumentalities and various stakeholders in society. An outward-looking orientation must be complemented by an alignment of laws and regulations that facilitate the expected benefits and lessen any adverse effects of interfacing closely with the world economy. Internal processes and legal framework must be strengthened to take advantage of opportunities presented by the global economic environment. At the same time, small and medium enterprises need to be informed of how these policies will benefit them in trading their goods in the international community.


Investment

Total approved local and foreign investments increased from 2004 to 2008 but declined in 2009. The top two sectors, i.e. manufacturing and

electricity, accounted for more than half of the total approved investment. The top four sectors (manufacturing, electricity, finance and real estate, and private services) account for 78 percent of the total (Table 3.6). In 2004, the mining

Industry 2004 2005 2006 2007 2008 2009 2010

Agriculture 212 770 4,734 1,856 2,498 2,873 2,272

Communication - 2,079 47,042 14,222 2,186 6 -

Construction 1,140 83 3,857 14,090 216 179 1,080

Electricity 8,564 21,659 45,403 139,078 131,923 32,296 189,920*

Finance & R. Estate 7,158 10,019 28,833 54,927 114,088 89,111 72,108

Gas 106,521 269 - 561 - 17 -

Manufacturing 54,330 150,161 151,984 94,677 75,518 106,300 215,153

Mining 1,512 8,294 16,147 13,776 48,269 2,019 8,108

Private Services 41,006 15,344 29,105 37,631 71,417 29,353 40,255

Storage 388 26 35 1,340 1,059 - -

Trade 517 357 26,332 780 531 2,155 1,461

Transportation 467 22,172 3,530 10,329 16,516 3,830 12,248**

Water - - - 2,537 - 45,975 -

Total 221,815 231,233 357,002 385,804 464,221 314,114 542,605

Table 3.6: Total Approved Investments of Foreign and Filipino Nationalsby Industry, In Million Pesos (2004 – 2010)

Source: National Statistical Coordination Board * Data lumped for Electricity, Gas and Water**Data lumped for Transportation, Storage and Communication

BOI PEZA TOTAL

2010 2009 % Change 2010 1/ 2009/2 % Change 2010 2009 % Change

Project Cost (P) 302,100 124,171 143.29 204,395 175,365 16.55 506,494 299,537 69.09

Foreign (P) 22,329 10,397 114.76 142,167 103,421 37.46 164,496 113,818 44.53

Local (P) 279,771 113,775 145.90 62,227 71,944 (13.51) 341,998 185,719 84.15

No. of Projects 246 248 (0.81) 518 502 3.19 764 750 1.87

Employment 36,751 95,372 (61.47) 84,340 79,435 6.17 121,091 174,807 (30.73)

Table 3.7: BOI-PEZA Approved Investments (2009-2010)

Source:Board of Investments and Philippine Economic Zone Authority1/ Locator investments - PhP 176.753billion; Developers - PhP 27.641 billion2/ Locator investments - PhP 140.987billion; Developers - PhP 34.378billion


industry was revitalized as the Supreme Court ruled on the constitutionality of the Philippine Mining Act of 1995.

A review of share by sector/industry shows no trend in increase or decrease of particular sector, with approved

investments in most sectors fluctuating annually.

From 2004 to 2009, direct investments grew by 7.8 percent5, although 2009 saw investment flows decreasing by 32.3 percent, reflecting the effects

Country 2004 2005 2006 2007 2008 2009 2010

Japan 26,596 27,539 20,066 38,587 16,116 70,737 58,333

USA 27,108 14,913 8,199 36,089 19,721 12,947 13.159

Korea 3,260 10,828 4,327 12,076 39,954 9,624 31,182

Netherlands 1,473 19,208 188 14,401 45,354 2,070 36,784

Singapore 1,524 889 396 44,246 6,565 3,468 7,283

UK 1,683 195 5,887 10,182 25,272 3,439 1,065

China (PROC) 127 195 7,935 1,822 2,307 2,392 5,657

Br. Virgin Islands 208 658 450 670 2,111 1,176 7,654

Others 111,916 21,382 18,432 56,010 25,281 15,963 48,098

Total 173,895 95,807 65,880 214,083 182,681 121,816 196,069

Table 3.8: Total Approved Foreign Direct Investments by Country of InvestorFrom 2004 - 2010, In Million Pesos

Source of basic data: National Statistical Coordination Board

5 Based on compounded annual growth rate

Figure 3.2. Investment by Industry Sector in PEZA Economic Zones (1995-2010)

Source: Philippine Economic Zone Authority

Electronics/Semiconductors 42.88%Basic Metals (Minerals) 9.29%Information Technology Services 7.69%Transport (Shipbuilding, Car Parts, Equipment) 6.78%Electrical Machinery and Apparatus 5.46%Tourism 3.31%Medical, Precision and Optical Instruments 2.84%Medical Tourism 2.11%Fabricated Metal Products 2.03%Rubber and Plastic Products 1.40%Chemical and Chemical Products 0.99%Garments and Textiles 0.76%Other Manufactures 14.47%

(See separate .TIF file)

Electronics/Semiconductors

42.88%

Basic Metals (Minerals)9.29%

Information Technology Services7.69%

Transport (Shipbuilding, Car Parts, Equipment)

6.78%

Electrical Machinery and Apparatus

5.46%

Tourism3.31%

Medical, Precision and Optical Instruments

2.84%

Medical Tourism2.11%

Fabricated Metal Products

2.03%

Rubber and Plastic Products

1.40%

Chemical and Chemical Products

0.99%

Garments and Textiles0.76%

Other Manufactures14.47%


of the global crisis, there were hopeful signs of a rebound. In 2010, investment commitments from both foreigners and Filipinos increased to PhP542.6 billion compared to PhP314.1 billion in 2009. More than 60 percent of investments approved during the period came from Filipino investors with PhP346.5 billion worth of pledges.

Of the PhP542.6 billion worth of investment pledges of both foreigners and Filipinos in 2010, 39.7 percent or PhP215.2 billion are intended for projects in manufacturing. Electricity, gas and water garnered 35.0 percent share or PhP189.9 billion, and finance and real estate at 13.3 percent or PhP72.1 billion. These industries have been consistent recipients of investment commitments from foreign and Filipino investors. Potential investments in manufacturing as well as in electricity, gas and water increased significantly compared to finance and real estate, which dropped to PhP72.1 billion from PhP89.1 billion.

Total BOI-PEZA-approved investments for 2010 amounted to PhP506.5 billion, a 69 percent surge over approvals in 2009 (Table 3.7). This was brought about by resurgent investor confidence, which reached an all time

high in the second quarter of 2010. These approved investments generated 121,091 jobs.

By country of origin, the US and Japan have been the two top sources of FDI in the Philippines. In recent years investments from the Netherlands, the United Kingdom and South Korea have also increased (Table 3.8).

Investments with the Philippine Economic Zone Authority (PEZA) in 2009 posted an increase of 13.3 percent over the previous year despite the global financial crisis. Direct employment in PEZA zones also grew slightly (by 0.44 percent) notwithstanding layoffs in many business establishments in the country and worldwide during the same period.

From 1995 to 2010, investments in enterprises located inside PEZA-registered economic zones came mostly from the electronics/semiconductor industry. Locators from the electronics/semiconductor sector contributed 42.88 percent of total investments in the ecozones. Following this was the basic metal/mineral industry (9.29%); information technology services (7.69%); transport (shipbuilding, car part, equipment) (6.78%) and electrical machinery and apparatus (5.46%). These comprise the top five sectors garnering the largest number of investments over the past 15 years of PEZA’s existence (Figure 3.2).

The Philippine MSME sector is a critical driver for the country’s economic growth. However, the growth of the MSME sector has not been vigorous enough to propel the economy.

Operating Economic Zones 2004 2005 2006 2007 2008 2009 2010

Manufacturing 53 51 53 60 62 63 64

IT 16 28 37 88 112 127 148

Tourism 1 2 5 7 9 12

Medical Tourism Park 1 1 1 1

Medical Tourism Center 1 1 1

Agro-Industrial EZ 6 13

Total Operating 69 80 92 154 183 207 239

% of Growth Over Previous Year 16% 15% 67% 19% 13% 15%

Table 3.9: PEZA Operating Economic Zones (2004 – 2010)

Source: Philippine Economic Zone Authority


The majority of PEZA-registered enterprises are owned by foreign nationals. The Japanese, owning 25.97 percent of total PEZA-registered locator enterprises in 2010, top the list of foreign owners. These are followed, in order, by Koreans (10.62%), Americans (10.12%), Singaporeans (3.96%), British (2.99%), Taiwanese (2.23%), Dutch (2.15%), Chinese (1.77%), Australian (1.69%), Malaysian (1.39%), German (1.35%), and various other nationalities (7%).

In 2010, the economic zones operating under PEZA management totaled 239 (Table 3.9). In the next six years, initiatives will be pursued to enhance and increase the number of economic zones following the observed growth patterns. Efforts shall include exploration of new areas such as agro-industrial and tourism zones, opening to new markets such as the Middle East, Germany, Australia and New Zealand, and strengthening priority markets of Japan, USA and Korea.

Since ecozone applications are private sector initiated and market-driven, prospective locators may locate in certain areas for as long as they meet the criteria stipulated in Section 6 (Criteria for the Establishment of Other Ecozones) of The Special Economic Zone Act of 1995.

Opportunities for investments also are attributed to sound policies and reforms to attract investors. Policies for investments such as exhibiting sound incentives to distinct industry have been unstable.

Reforms are required to appropriately offer incentives to investments in sectors that will have high impact on employment as well as influx of reserves in the country. However, it is also important that sectors are reviewed and monitored to determine industry sectors that should be prioritized in providing incentives. Likewise, reforms are necessary to foster public and private partnerships in boosting investment areas, programs and projects.

Micro, Small and Medium Enterprises (MSMEs)

The Philippine MSME sector is a critical driver for the country’s economic growth. The sector serves not only as potential supplier and subcontractor to large enterprises and exporters but is also a part of the support system for logistics services.

The MSME sector accounted for 99.6 percent of total establishments in the

Total Micro Small Medium Large MSMEs

2008 Number of Enterprises

761,409 697,077 58,292 3,067 2,973 758,436

% Distribution 91.6 7.7 0.4 0.4 99.6

2008 Employment 554,4590 1,663,382 1,314,065 418,058 2,149,085 3,395,505

% Distribution 30.0 23.7 7.5 38.8 61.2

2006 Value Added (in million pesos)

2,108,546 103,918 431,340 216,685 1,356,603 751,943

% Distribution 100 4.9 20.5 10.3 64.3 35.7

2006 Value added per worker (in pesos)

380,289 62,474 328,248 518,313 631,247 221,452

% of large enterprises 9.9 52.0 82.1

Table 3.10: Micro, Small and Medium Enterprise Profile

Source: National Statistics Office


country, and contributed 61.2 percent of the country’s total employment and 35.7 percent of total value-added. However, the growth of the MSME sector has not been vigorous enough to propel the economy (Table 3.10).

The size-distribution of firms has changed little in the past two decades, with the proportion accounted for by medium sized enterprises remaining small. As a result, the country’s industry structure is often characterized by a missing or hollowed middle.

The performance of MSMEs was constrained by various factors. These include high cost of doing business, lack of access to finance and market information, and low productivity and competitiveness. Poor business conditions are a greater challenge for MSMEs given their limited resources. Many are unable to qualify for bank loans for lack of the necessary track record and collateral. The lack of credit information also makes it more difficult for banks to determine MSMEs’ creditworthiness. With limited management and financial capabilities, many MSMEs are unable to respond dynamically to the domestic and export markets.

MSMEs have a low ability to meet the threat of local and global competition because of lack of information needed for market access and business environment; failure to attain scale economies needed to produce quality goods and services; and the sector’s laid-back approach to seeking new markets and responding to market needs.

The low productivity of MSMEs can be attributed to the sector’s lack of access to new technology, weak technological capabilities, and its failure to engage in innovation and research and development (R&D) activities. The result is wasteful

duplication and non-optimal use of limited resources. Furthermore, lack of awareness for science and technology (S&T) and scarcity of S&T human resources are limits to production optimization.

While the value-system of workers and employees undoubtedly affects the total productivity of firms, low productivity in the industry and services sectors may also be due to their inflexible organizational set-up and processes. Firms cannot easily adjust to the fast-changing needs and demands of their clients, consequently affecting their level of productivity. In addition, the country’s domestic manufacturing is not strongly linked with its exports manufacturing compared to its neighboring countries.

Employment

Rise in employment in industry and servicesIn 2008 the number of employed persons increased from about 31.6 million in 2004 to around 34 million in 20086. This meant almost three million persons joined the Philippine labor force over a period of four years.

The agricultural sector continues to play an important role in employment and in jobs creation as it has employed about 10.6 million Filipinos in 2008. In addition, the fishing sector employed about 1.42 million persons in 2008. Most Filipino workers therefore, are still in the agriculture and fishing sectors while the rest are in non-agricultural sectors such as industry and services.

Nonetheless, workers and employees in the industry and services sectors combined outnumber agricultural workers and comprise more than half of the employed from 2004 to 2008. The economic role of nonagricultural workers, especially those in the services sector, is therefore crucial, especially in the era of

6 2009 Yearbook of Labor Statistics.


the knowledge- and skills-based economy, the most evident local manifestation is the booming outsourcing industry.

As of 2010, a total of 38.9 million were reported to be in the labor force from among the 60.7 million population over 15 years of age. Of the three sectors (i.e. Agriculture, Industry and Services), Services accounts for the biggest share of total employment (Table 3.11). The current Plan calls for total employment to grow by six million by 2016.

The MSME contribution to employment in 2008 totaled 3.4 million. Ranked by subsector, wholesale and retail trade contributed the bulk of employment at 35.1 percent, followed by manufacturing with 18.7 percent and hotels and restaurants with 12.46 percent (Figure 3.3).

Among microenterprises, wholesale and retail trade contributed 47 percent of total employment,

Table 3.11: Employment per Major Industry GroupMajor Industry Group 2008 2009 2010

Ave Jan Apr Jul Oct Ave Jan Apr Jul p Oct pALL INDUSTRIES 34,089 35,061 34,262 34,997 35,508 35,478 36,047 36,000 35,413 36,285 36,489Agriculture 12,030 12,043 11,846 12,313 11,940 12,072 11,974 11,804 11,512 12,317 12,261 Agriculture, Hunting and Forestry

10,604 10,582 10,446 10,841 10,476 10,563 10,505 10,346 10,073 10,835 10,765

Fishing 1,426 1,461 1,400 1,472 1,464 1,509 1,469 1,458 1,439 1,482 1,496Industry 5,048 5,093 4,856 5,088 5,273 5,154 5,394 5,323 5,487 5,391 5,373 Mining and Quarrying 158 166 152 166 177 169 199 193 212 193 197 Manufacturing 2,926 2,894 2,849 2,841 2,947 2,937 3,031 3,009 3,063 2,995 3,057 Electricity, Gas and Water Supply

130 142 134 130 145 160 150 157 137 140 164

Construction 1,834 1,891 1,721 1,951 2,004 1,888 2,014 1,964 2,075 2,062 1,955Services 17,011 17,925 17,560 17,595 18,294 18,250 18,680 18,874 18,414 18,577 18,855Wholesale & Retail Trade, Repair of Motor Vehicles, Motorcycles and Personal and Household Goods

6,446 6,736 6,635 6,681 6,725 6,901 7,040 7,063 6,885 7,050 7,161

Hotels and Restaurants 953 1,010 988 976 1,064 1,012 1,063 1,104 991 1,034 1,121 Transport, Storage and Communications

2,590 2,679 2,660 2,628 2,694 2,735 2,721 2,736 2,741 2,697 2,709

Financial Intermediation 368 369 337 389 376 375 399 384 383 419 411 Real Estate, Renting and Business Activities

953 1,064 1,044 1,023 1,090 1,100 1,147 1,120 1,061 1,164 1,243

Public Administration & Defense, Compulsary Social Security

1,676 1,749 1,659 1,794 1,772 1,771 1,846 1,823 1,959 1,831 1,771

Education 1,071 1,138 1,157 1,068 1,157 1,168 1,175 1,146 1,156 1,234 1,165 Health and Social Work 392 421 435 408 428 412 450 432 447 456 464 Other Community, Social and Personal Service Activities

833 877 857 907 876 868 913 950 984 862 855

Private Households with Employed Persons

1,729 1,880 1,785 1,718 2,110 1,908 1,925 2,114 1,804 1,829 1,954

Extra-Territorial Organizations & Bodies

1 2 3 3 2 - 2 2 3 1 1

Notes:1. Details may not add up to totals due to rounding.2. Based on past week reference period.3. Industry classification is based on the 1994 Philippine Standard Industrial Classificationp PreliminarySource of basic data: National Statistics Office, Labor Force Survey


followed by manufacturing with a 15 percent share, and hotels and restaurants with 13 percent. This is the same employment pattern for small enterprises with wholesale and retail trade accounting for 26 percent, followed by manufacturing and hotels and restaurants with contributions of 19 percent and 13 percent, respectively. The pattern is somewhat different for medium enterprises, where manufacturing makes the biggest contribution (31%) followed by wholesale and retail trade (14%) and real estate, renting and business activities (12%). This pattern is repeated for large enterprises, with manufacturing contributing almost 37 percent of employment, followed by real estate, renting and business activities (21%) and financial intermediation (10%. )

A survey by the Bureau of Labor and Employment Statistics reports that employers have difficulty filling up vacancies because of a shortage of applicants with the right job

competencies and qualifications, although two million Filipinos were unemployed. The 2006 National Manpower Summit emphasized that unemployment in the country arose mainly from a mismatch between skills needed for available jobs and skills possessed by job-seekers; and a geographic mismatch between locations of job opening and job seekers. While shortages of skills are evident in certain occupations and areas in the country, oversupply of other skills are likewise observed.

To date, there are reported shortages in medical and health services, as Filipino nurses are in high demand abroad. High turnover rates and low hiring rates meanwhile continue to worry stakeholders in the BPO industry. On the other hand, an oversupply of skills in certain occupations is also reported. For instance, the educational system continues to produce large numbers of liberal-arts graduates for whom the demand is either not encouraging or still to be identified.

Increasing the national awareness of consumer rights, responsibilities and options for redress encourages a vibrant sector that will demand better products and services.

Figure 3.3: MSME 2008 Employment Share by Sector


Wholesale and Retail Trade 35.1%Manufacturing 18.7%Hotels and Restaurants 12.5%Real Estate, Renting and Business Activities 7.2%Education 6.4%Financial Intermediation 5.3%Other Community, Social and Personal Service Activities 4.5%Health and Social Work 2.8%Transport, Storage and Communications 2.8%Agriculture, Hunting and Forestry 1.8%Construction 1.3%Electricity, Gas and Water 1.2%Fishing 0.5%Mining and Quarrying 0.1%

Wholesale and Retail Trade, 35.1%

Manufacturing, 18.70%

Hotels and Restaurants, 12.5%

Real Estate, Renting and Business Activities, 7.2%

Education, 6.4%

Financial Intermediation, 5.27%

Other Community, Social and Personal Service Activities,

4.48%

Health and Social Work, 2.8%

Transport, Storage and Communications,

2.81%

Agriculture, Hunting and Forestry,

1.76%

Construction, 1.25%

Electricity, Gas and Water, 1.2%

Fishing, 0.5%

Mining and Quarrying, 0.1%


In addition, the country’s low labor productivity due to mismatched or deficient skills relative to available jobs contributes to the low productivity in output of goods and services. This also affects compensation, since some company owners are unable to raise wages and salaries owing to missed revenue opportunities which in turn are caused by low production.

Reports during the consultations for the DOLE Project Jobsfit 2020 also noted a concentration of hard-to-fill occupations in the high-end categories, such as accountants and engineering professionals. Hard-to-fill vacancies were also noted for associate professionals and clerks.

This “square pegs-round holes” phenomenon, which has affected efficiency in the labor market, may be aggravated by the fast-changing demand for skills in the global labor market.

Consumer Policy

Consumers have a vital role in the economy. When they are empowered, consumers can improve economic performance by helping drive competition, productivity and business innovation.(OECD Toolkit, 2010)

In the Philippines, emphasis is made on policies and programs that promote consumer welfare and protection. Republic Act (R.A.) 7394 or the Consumer Act of the Philippines states the policy of the State to protect the interest of the consumer, promote his /her general welfare and establish standards of conduct for business and industry. Thus, Government is mandated to pursue the following objectives:

a. protection against hazards to health and safety;

b. protection against deceptive, unfair and unconscionable sales acts and practices;

c. provision of information and education to facilitate sound choice and the proper exercise of rights by the consumer;

d. provision of adequate rights and means of redress; and

e. involvement of consumer representatives in the formulation of social and economic policies.

Empowered consumers are aware of their rights and are informed of fair trade laws. Product quality and safety standards have become effective stimuli for manufacturers to improve their products and consequently enhance competition among firms. Increasing the national awareness of consumer rights, responsibilities and options for redress encourages a vibrant sector that will demand better products and services.

In 2007, an Awareness, Knowledge, Attitude and Practice Study was commissioned by the Department of Trade and Industry (DTI) to determine the public’s concern for their rights and responsibilities as consumers. The study showed that half of the respondents were aware of the programs for consumers and said these were satisfactory but needed improvement. The study recommended a more creative message development, coordination and closer partnerships with LGUs and consumer-advocates in each region, strengthening the role of the consumer welfare desk/customer service in addressing consumer complaints, and integration of consumerism in the schools and communities.

In 2010, consumer complaints received by Consumer Welfare Desks both in government field offices and in business establishments reached 75,000, majority of which were about consumer products and service


warranties, liabilities on products and services, and product quality and safety. While 99 percent of the complaints were eventually resolved, there is a clamor for a shorter resolution period.

Responsibility for developing and implementing consumer policy and programmes rests on the National Consumer Affairs Council composed of the DTI, DepED, DOH, DA, several consumer groups and business organizations, tasked to improve the management, coordination, and effectiveness of consumer programs.

Strategic Framework

The Plan seeks to enable the industry and services sectors to contribute significantly to economic growth and employment. This requires interventions that address the country’s competitiveness by improving the business environment; increasing productivity and efficiency; and promoting a dynamic consumer sector that demand globally competitive/quality goods and services offering best value for money.

Figure 3.4. Strategic Framework for Industry and Services


Vision

A globally-competitive and innovative industry and services sector that contributes significantly to inclusive growth and employment generation.

Ten-point Agenda

Clear and concrete strategies and action plans are necessary to achieve doable goals and targets.

Goal 1: Create a better business environment

The government shall continuously work for an environment characterized by transparent and predictable public policies. Processes shall be streamlined, business procedures standardized; and quality of transactions ensured. This competitive advantage influences the decision to invest in the Philippines; as well as raises the capability to promote and channel local products and services in various global markets. Thus, to ensure a better business environment, the government shall aim to be in the upper third in the global competitiveness ranking (i.e. IFC/WB Doing Business Report).

Improve Governance

1. Streamline bureaucratic procedures and foster transparency

Improvements in the Business Registration/Permits and Licensing System (BPLS) shall be pursued both at the national and local government levels. The BPLS will help standardize the procedures for acquiring permits and licenses to operate new business. It will not only reduce the time to secure permits but also eliminate corruption by limiting face-to-face contacts between the applicant and regulator. The government will implement a customer-oriented approach to policies, rules and regulations on procedures. Public service quality standards for all frontline services of the government and international-based

management systems throughout the government shall be adopted. The National Government shall strengthen LGUs’ capacity for good governance and LGU commitment in promoting a unified approach. To lower transaction costs and promote better transaction flows, Government shall enhance collaboration between the public and private sectors (Refer to Chapter 7: Governance).

2. Promote a consistent, coherent, cohesive, predictable, and responsive policy environment To address investor confidence and retain existing investors, government shall give priority to key concerns, namely: labor, telecommunications, transport (aviation and domestic shipping), energy, peace and order, and disaster risk-reduction programs. Government shall address the facts and the reality behind the country’s lagging competitiveness indices, particularly those pertaining to: (1) international investments, (2) basic infrastructure, (3) scientific infrastructure, (4) education (5) business legislation, (6) energy, (7) exports, (8) ethics, (9) labor, and (10) barriers to entry and exit.

As the world recovers from the global economic crisis, competition for opportunities is bound to tighten. The Philippines is among nations vying for a strategic place in the global market. Considerable challenges confront the country’s efforts to compete for tourists, capital, entrepreneurship, and links to global supply chains.

In the medium term, the following policy reforms shall be pursued:

• Amendments to Executive Order (E.O.) No. 226 or the Omnibus Investment Code of 1987- to strengthen the investment promotion and industrial development functions of the Board of Investment (BOI).


• Enactment of an Anti-Trust/Competition Law - to level the business playing field by strengthening the legal and institutional framework to combat unfair trade practices, prohibit cartels and monopolies and sanction key officials of companies that violate fair competition.

• Amendments to the Export Development Act - to incorporate significant changes in the global trading environment as well as establish lasting solutions to recurring export development issues, with emphasis on sanctions, enforcement, and the privatization of export promotion functions.

• Reforms in the Aviation Sector- full implementation of E.O. No. 219 providing for an open and competitive international aviation sector that allows local and foreign air carriers to expand their operations, maintain a strong aviation industry, and ensure international connectivity.

• Land Use Plan - to provide a sound basis for the local tourism development, including the designation of tourism enterprise zones by the Tourism Infrastructure and Enterprise Zone Authority (TIEZA).

• Amendments to the Tariff and Customs Code of the Philippines- to support fair trade and oppose all unfair trade policies and practices, especially on smuggling and to be compliant to the international standards on customs procedures under the Revised Kyoto Convention to which the Philippines acceded.

• Amendments to the Local Government Code- to provide an environment conducive to business.

• Amendments to the Labor Code- to address labor-related issues, and harmonize and strengthen labor force and management and ensure that country’s labor policies is aligned with international treaties and ratified International Labor Organization Convention.

• Reforms in public research and development (R&D) prioritization and funding system and full implementation of the Technology Transfer Act of 2009 (R.A. 10055)- to ensure social return on public R&D investments. Measures to be considered include a systematic national research inventory; a clearinghouse for new major research investments; and a systematic effort to translate outputs of completed research into actionable policy measures or into potential product developments or innovations.

• Reform of the R&D tax incentive under R.A. 8424- to encourage innovative and collaborative behavior among private firms.

• Amendments to the Intellectual Property Code- to serve the needs of the copyright-based industries as well as strengthen the enforcement capability of the Intellectual Property Office.

• Passage of the Data Privacy and Anti-Cybercrime Bills- to ensure the security, integrity, and dependability of the country’s information and communications structure.

• Amendments to the Standardization Law- to strengthen the national standards body.

• Amendments to the “Barangay Micro Business Enterprises (BMBEs) Act- to support the growth and development of microenterprises.


• Amending and transferring the function and mandate of the Philippine Council on ASEAN and APEC Cooperation to the Philippine Council on Regional Cooperation.

Government shall formulate a comprehensive national industrial strategy that spells out opportunities, coordinates and promotes the growth of forward and backward linkages in priority areas and high-potential growth sectors as well as prepares other industries to attract investments and generate jobs. This plan entails a regular review of national investment incentives to examine their thrust, adequacy, and consistency with local regulations especially those pertaining to priority sectors i.e., mining, tourism, agribusiness and BPO-IT. The government shall include programs to implement disaster-mitigating measures, sustain socio-political stability, and create necessary conditions to ensure safe and peaceful business environment for investors.

Furthermore, government shall support policies and legislation that shall:

a. promote a working balance between the interests of labor and capital as well as provide avenues for dialogue and cooperation based on mutual benefit;

b. pursue anti-corruption, anti-red tape, anti-smuggling and integrity initiatives;

c. provide a fertile landscape for Philippine domestic and foreign investments (i.e. power regulation, cabotage principle, etc.). The problem of high cost energy must be addressed by achieving a price range comparable to energy costs among ASEAN peers (i.e., Indonesia, Vietnam and Malaysia); and

d. mainstream Disaster Risk reduction (DRR) and Climate Change Adaptation (CCA) in industry and services sectors by:

• Establishing compliance mechanisms for business sector on DRR standards.

• Strengthening implementation of or reform existing laws on land-use and related laws such as building code for disaster-resilient industry and service sectors.

• Assessing the level of DRR awareness and activities among the private sector and disseminate information, education and campaign (IEC) materials on DRR to ensure their support, participation and cooperation

The following programs will also be pursued to support DRR and CCA:

• Develop and operate innovative financing schemes to secure sustainable financing for programs on climate change. This can take the form of payment for ecosystem services including collection of fees for water consumption by industries and fees from tour organizers, lodging and other tourist facilities for ecotourism.

• Design and implement DRR and CCA measures for mining companies. Areas suitable for mineral resources development shall be defined based on scientific information on climate change risks and vulnerability of ecosystems and communities.

• Develop synergy between small-scale, medium and large-scale mining operations taking climate change and prudent mineral resources development into consideration.

The Philippines needs to be known as a country offering vast opportunities for trade and tourism and will be promoted as a conducive investment haven that is now open for business.


3. Promote e-commerce and ICT-enabled automationAutomation and computerization of government processes shall be pursued to reduce transaction costs and make public service more efficient. The e-Commerce Law shall be fully integrated in the policy environment for business.

4. Encourage Public-Private Partnership (PPP)The government shall provide an enabling business environment for private sector investments and partnerships by pursuing a stable macroeconomy and sound public policies. Government shall recognize the essential role of the private sector as the engine of the country’s growth and development. The government shall provide for the transparent bidding of PPP projects for the period 2011-2014. It shall also promote the Philippines as an ideal partner in PPP-infrastructure development; and closely monitor and ensure transparency in the management of PPP projects. Planning, implementation, financial accountability, and evaluation shall ensure that such investments are safeguarded.

Strengthen Economic Zones The government shall continue the promotion of private sector-led development of economic investment promotion areas by both foreign and local investors. Moreover, government shall also provide the needed support in the setting up of investment locations.

Economic zones shall be promoted and special economic zones shall be strengthened. Experience has shown that facilitating economic zone development by the private sector is effective in attracting export enterprises to locate in said zones, given the support facilities, infrastructure and services available in

such areas. The development of economic zones generates employment and business opportunities by establishing linkages among industries in and around the economic zones.

In addition, the government shall pursue the issuance and full implementation of the rules and regulations for the designation of tourism enterprise zones, envisioned to expand the current room capacities and diversify products in tourist destinations.

Strengthen National Brand/Identity Awareness Government will initiate and implement a national branding and marketing campaign to promote the Philippines not only as an investment site and tourist destination but as producer and supplier of quality world-class products and services. The Philippines needs to be known as a country offering vast opportunities for trade and tourism and will be promoted as a conducive investment haven, now open for business.

The Plan intends to pursue the development and promotion of “Brand Philippines”. The aim is to achieve among global buyers a “Philippine First” mindset by creating a distinct “Philippines” brand widely accepted and recognized in the global export market connoting quality, value and reliability. Moreover, to be known as Asia’s trendsetter in export products and services, and setting the highest standards of creativity, innovation and excellence.

A new tourism marketing campaign/ branding shall be developed in consonance with the country’s international image and trade promotion thrust, with emphasis given to our country’s vast retirement potential and epicurean attractions.

Moreover, judicious selection and programming shall be undertaken in mounting a compelling and meaningful Philippine participation in various cultural, tourism, fairs and trade

The government shall pursue innovation as an essential factor in harnessing culture of competitiveness.


expositions worldwide with preference for those sanctioned by foreign governments, global associations and inter-government organizations.

Goal 2: Action agenda to improve productivity and efficiency

Higher productivity and efficiency of industry and services sector must be manifested in increased levels of exports, investments, tourism revenues, and entrepreneurship. By 2016, the following targets are laid down: (a) US$ 91.5 billion in annual merchandise exports; (b) US$28.9 billion in annual services exports; (c) PhP3,796.47 billion in cumulative approved investments (d) a doubling of annual visitor arrivals to 6 million by 2016; (e) US$4.5 billion in annual tourist receipts by 2016; (f ) a national goal of six million jobs cumulatively generated by 2016, about 4.6 million of which will come from industry and services. Of these, two million will come from MSMEs.

Intensify the Culture of CompetitivenenssA culture of competitiveness pursues the development of a positive, innovative, and creative mindset through training, paving avenues for enhancements, reinforcement of shared values, and emphasis on linkages of skills and development as contributor to economic growth. It will make the fullest use of PPP wherein results directly impact on competitiveness. Efforts shall be pursued to instill a national consciousness that appreciates the significance of achieving competitiveness in process and quality.

Because the delivery of any product or service should respond above all to the needs of the customers, policies that foster a customer-centric business environment will be given close attention. An aggressive education and information campaign through productivity and quality-related training, seminars, and promotional materials, in print and mass media, are necessary. Development

of customer-service standards sets the norms. Incentives, recognition schemes and quality awards can serve as rewards and inducements to high-performing, customer-focused organizations.

In addition, the government shall pursue innovation as an essential factor in harnessing culture of competitiveness. Along these lines government shall: (1) review the role of higher education institutions in the country’s innovative system; (2) review investments in science, technology and innovation (STI) human resources to directly link them with strategies in retaining the “best” and “brightest” Filipino STI talents; and (3) promote a culture of multi-disciplinary collaboration, knowledge sharing, open dialogue and cross-fertilization of ideas as extremely relevant and important in the emerging global competitiveness environment.

Government shall promote a national culture of competitiveness by instilling customer focus and a sense of pride in job well done. A culture of competitiveness is a national psyche toward achieving excellence in the delivery of products and services that respond to the needs of the customers. Embodying a culture of competitiveness requires the following initiatives:

1. Developing Human ResourcesGovernment shall develop human resources that instill a national culture of excellence by developing and harnessing a broad range of vocational, clerical, technical, managerial and entrepreneurial skills, propagating firm-level productivity and boosting competitiveness awareness. Harnessing skills and human capital as asset, propagating firm-level productivity and competitiveness shall be promoted in line with full human development. Program interventions

With its limited resources, Government shall focus its interventions on key areas that are job generating, where the country enjoys comparative advantage, and with high growth potential.


shall be pursued to develop the core values for an entrepreneurial mindset.

Such a mindset is one that will bolster for an enterprising mindset and a proactive attitude will be pursued. This mindset leads to constant improvement and innovation, creativity in offerings and processes and therefore becoming competitive at all times. Individuals become self-driven, resourceful, always positive and optimistic, opportunities and solution-oriented.

To ensure market-responsive education and training, the supply side of the labor equation should be addressed through quality education/training and effective assessment and certification systems. The government shall undertake and maximize capacity-building programs with the support of foreign governments and intra-government organizations under the framework of various bilateral and multilateral engagements. Likewise, linkages among Filipino skilled workers and their business network, technical experts and Filipinos involved in epistemic communities abroad shall pursue various multi-stakeholder talent-sharing and brain-gain and skills enhancement initiatives (e.g. Science and Technology Advisory Council, the Balik-Scientist Program and ERDT).

In addition, “sunrise” industrial or service activities with global potential shall be identified by roadmaps that forecast and prepare initiatives for skills requirements on employment needs. From 2007 to 2010, four roadmaps were developed for such industries: (a) electronics, (b) BPO/IT enabled-services, (c) medical tourism, and (d) health and wellness ( including the retirement ) sectors. By 2016, roadmaps for the remaining sunrise industries namely agribusiness, eco-mining, value chain materials,

and manufacturing, shall be developed to complement the employment requirements. In cooperation with higher education institutions and the private sector, niches shall be identified and matched with the employment needs and strategic positioning of local firms and industries.

2. Mutually agreed-upon working arrangementsMutually agreed-upon working arrangements increase efficiency and streamline operation. Thus, they are essential for the competitiveness of enterprises. These must be consistent with the promotion of employment and protection of basic rights of workers accompanied by adequate social safety nets to protect the vulnerable workers. The government shall establish facilitation mechanisms and services accessible to workers and enterprises alike.

3. Strengthen existing Tripartite Industrial Peace CouncilsIn line with democratic institutions and traditions, policies should encourage the strengthening and reactivation or creation of more industry tripartite councils nationwide and firm-based dispute settlement schemes that are geared toward self-regulation governed by voluntary codes of good labor-management practices. In addition, the government will adopt conciliation-mediation and alternative dispute resolution mechanisms at different levels (LGU, industry, and national); implement a less than 30-day mandatory conciliation-mediation of all labor cases under the single-entry approach; and campaign for less industry-based voluntary code of good practices.

Focus Interventions To Increase Exports/ Investments/ TourismWith its limited resources, Government shall focus its interventions on key areas that are job generating, where the country enjoys comparative advantage, and with high growth potential.


1. Investment promotion, industry development in job-generating areasTo increase exports and encourage foreign and domestic investments, the government shall pursue intensive promotion and industry development as well as offer a more focused incentives package to stimulate the economy and allow all development partners an opportunity to take advantage of the gains from increased economic activities. The Philippine Export Development Plan 2011-2013 and 2014-2016 shall provide detailed strategies to implement the over-arching strategy of Moving Up the Value Chain to Double Exports. With more investments pouring in and more revenues from exports and tourism,

consumption is boosted by higher purchasing power from a vibrant economy. With the fundamentals in place, this whole process becomes a cycle that leads to growth. To maximize the gains from targeted and holistic interventions, the following key areas will be pursued in the medium term:

a. Tourism Tourism is a powerful driver for economic growth, infrastructure modernization, local area development, and employment generation. The increase in visitor expenditure and investment arising from tourism activities create livelihood and jobs in

Figure 3.5: Strategic Destination Area for Tourism

Source: Department of Tourism and Japan Bank for International Cooperation- Sustainable Management Plan for Central Philippines.


many local communities, which helps reduce poverty.

Tourism development will be pursued in a sustainable manner to continuously create jobs and livelihood for local communities and generate foreign exchange for the economy while ensuring a high level of visitor satisfaction. Adherence to sound and manageable environmental practices in the development and promotion of tourist destinations as well as enhancement of tourism products and services will serve as cornerstones for planning, product development, human resources development, and marketing. Aiming to make the Philippines a destination of choice for tourism in the Asia-Pacific region, the government shall take the following measures:

• Encourage the diversification of existing destinations, and creation of new tourism areas and products including the expansion in room capacities through the implementation of the rules and regulations for the designation of Tourism Enterprises Zones (TEZs).

• Mobilize the enormous capacity of the country’s LGUs at the provincial, city and municipal levels by strengthening their capacity to plan, regulate and guide tourism development so that it is environmentally and socially sustainable as well as economically inclusive and viable. Moreover, increase the competitiveness of the country’s tourism enterprises and products by implementing partnership with the LGUs and the private sector to implement a mandatory system for the accreditation of tourism enterprises, including the formulation of a national standards and certification program for tourism facilities and services to ensure the highest quality and

international comparability of the country’s tourism products.

• Formulate a national tourism development plan (NTDP) as the framework for the identification of tourism destinations and products, domestic and international markets, marketing and promotion as well as prioritization of tourism infrastructure requirements by the Department of Public Works and Highways and the Department of Transportation and Communications, and designation of TEZs by the TIEZA. This will also provide the basis for LGUs to subsequently formulate their local tourism development plans. (Figure 3.5)

• Encourage LGUs to develop tourism related-products and services using the community-based and ecotourism approaches as implemented by innovative and entrepreneurial local governments in Bohol, Palawan, and Bicol, and have contributed to poverty reduction, protection of the environment, and gender equality in local areas. To this end, LGUs can seek the assistance of capable public and private higher education institutions in their areas, whose academic, research and extension programs in tourism-relevant disciplines and technical expertise can be tapped for local tourism/culture planning, tour guide services, standards-setting and quality assurance for the hospitality sector, site and institutional development, and the showcasing of cultural heritage.

• Undertake a focused and sustained international and domestic tourism promotion campaign and programs using both traditional and the new social networking media targeting existing and new markets as well as OFs.

• Launch focused and sustained international and domestic tourism


programs using the new media with the support of OFs. Likewise, the support and cooperation mechanism for private sector and nongovernment organizations participation shall be enhanced. Efficient intra-government coordination system shall be put into practice in tourism promotional and planning activities. These shall involve the Tourism Promotions Board (as mandated by the Tourism Act of 2009) and the respective tourism related promotional units of the Department of Foreign Affairs (DFA), Department of Health (DOH), Philippine Retirement Authority (PRA), BOI, DTI, Department of Environment and Natural Resources (DENR), National Commission for Culture and the Arts (NCCA), and the various agencies and councils supporting culture and the arts (i.e. CCA, FDCP, and so forth). The entry of tourists under thematic programs (e.g. health and wellness and employment generation) shall be further facilitated in coordination with the DFA, Department of Justice (DOJ) and the BOI. Such a multi-dimensional stakeholder approach shall maximize the promotion of medical tourism; retirement; meetings, incentives, conventions and exhibitions (MICE); adventure and ecotourism; film production, and Philippine cultural and culinary diversity.

• Develop and implement a new tourism marketing campaign/ branding in consonance with the country’s international image and trade promotion thrust.

• Promote public- private-sector partnerships both in infrastructure development and capacity expansion and modernization in the accommodation and recreation sectors, among others. The private sector will be engaged in extensive consultation to identify gaps, policy reforms and programs that will assist

the tourism sector achieve its goals and objectives in the medium term. The Tourism Coordinating Council shall be the vehicle to strengthen such partnerships.

b. Business Process Outsourcing The Philippines is now the second-largest destination for outsourcing and is soon expected to lead the global industry in terms of revenue earnings in voice/call center operations. The Philippines is projected by foreign analysts to lead in all aspect of BPO operations worldwide in the next five years. Thus, it is imperative to build the right value proposition to sustain both prevailing and prospective global positions.

• BPO, IT and IT related services comprise both voice (e.g., call centers) and non-voice (e.g., back office/knowledge process outsourcing (KPO), IT outsourcing, Engineering Services Outsourcing (ESO) and design process delivery, transcription, animation, and game development. Even as the Philippines takes the top position in the contact-center segment of the BPO industry, there is a need to nurture the growth in the KPO segment of the BPO industry, further enhance wage and work conditions, and strengthen the multi-stakeholder support framework. Thus, an average annual export growth of 20 percent shall be achieved from the following strategies: (1) development of a sustained data collection system for the services sector; (2) implementation of a comprehensive export branding program; and (3) legislation for data privacy and against cyber-crime in order to reduce risk perception of Philippine


BPO services as well as pursue legislation of the Magna Carta for Call Centers Workers.

• In addition to BPO, Services and Creative Industries shall be promoted and enhanced. This will include other services such as accounting (professional services and outsourcing), education, engineering, franchising, interactive media with focus on animation, and gaming, health and wellness, and shipcrewing/ship management.

To support the industry, there is a need to nurture the talent pool, develop the infrastructure and regulatory support, and improve the socioeconomic environment. To this end, government shall:

• Enhance investment promotion and industry development strategies by synergizing initiatives and programs of the government and private sector to maximize resources;

• Harmonize the educational system with the changing needs of the industry;

• Advocate talent development through training and opportunity building, creating awareness that BPO provides high-paying jobs/careers, and focusing on expanding the talent pool;

• Sustain government commitment thru fiscal and non-fiscal incentives and facilitate the conduct of industry-focused road shows overseas;

• Improve the long-term risk perception and overall business environment; and

• Expand the development of “Next Wave Cities” in partnership with private sector.

c. ElectronicsThe electronics sector is a major driving force of the Philippine economy and has consistently been a source of high-value, high-impact investments preferred Original Design Manufacturer (ODM) and Original Equipment Manufacturer (OEM). Likewise, the country also houses some of the world’s top electronic companies. There are two major players in the electronic components sector: the third-party subcontractors, which are mainly Filipino-owned, and the multinational plants which cater to the requirements of their parent companies.

The electronics industry will continue to be the driver of growth of Philippine merchandise exports. Shipments are foreseen to exceed US$30 billion by 2010. At an annual growth rate of 10 percent, electronics exports are expected to hit more than US$ 50 billion by 2016.

The priority sub-sectors for promotion for electronics are: (1) components/devices (semiconductors); (2) electronic data processing; (3) automotive electronics; and (4) solar power or photovoltaic cells.

To show the reliability of Philippine electronics and increase exports, country image branding and investment are significant. Likewise, this would entail aggressive promotion by: targeting emerging markets; conduct of high-level investment missions; integration of the electronics industry; establishment of human competencies throughout the value chain such as continuously growing talent pools in MS and PhD levels as long term strategy; and attract new players in potentially competitive sub-industries such as solar cells, growing capacity in IC design and the country’s collaboration with Taiwan.


d. Mining The Philippines is situated along a well-defined belt of volcanoes called the Circum-Pacific Rim of Fire making it one of the most mineralized countries in the world.

The Mines and Geosciences Bureau (MGB) estimates that some nine million hectares of the Philippine total land area of 30 million hectares are geologically prospective for metallic minerals. Some of these areas may be developed further, particularly large ore bodies and linked with downstream processing industries. The operation of processing plants and value-adding activities which have a demand-pull effect on primary production will serve as a catalyst for the development of other industries and sectors generating economic activities. The multiplier effects of these industries will foster the growth of the mining industry throughout the country.

The Philippine Mining Act is regarded as among the first worldwide to mandate corporate social responsibility in mining projects and activities.

The current export oriented mining industry should aim at producing manufactured goods and industrial products based on an industrialization framework and supported by a strong R & D program on efficient and state of the art technologies. For instance, copper production should be linked with smelting and refining operations down to the manufacture of cable wires and other high value finished products. The Iron and Steel Industry should be rationalized to address not only the local requirements but should also compete in the export market.

Generation of more investments in mining and mineral processing and mineral based manufacturing industries is the key to doubling exports by the sector by 2016. Policies, goals, objectives, strategies and programs of both national and local government entities need to be

in sync and focused on promoting mining and mineral processing to establish industrial zones in identified areas with substantial mineral deposits.

In the short-term, investment promotion activities of the BOI, DFA (and its Foreign Service Posts), and DTI (and its Foreign Trade Service Corp) may focus on pre-identified mining projects determined by both the BOI and the MGB as “problem-free” in terms of mining permits, in collaboration with the LGUs, and in consultation with local community. Other recommendations to further increase the sector’s competitiveness and contribution to economic development are the following:

• Develop the framework for the industrialization of the Philippine Mining/Mineral Industry to support the country’s export activities and vertical integration to stimulate downstream and upstream industries and encourage domestic processing of minerals for the export markets;

• Strictly enforce compliance with environmental and social development commitments;

• Cleanse inactive mining applications and non-performing mining contracts;

• Continue public information campaigns and increase dialogues with concerned groups. Inform the public about responsible mining that minimizes environmental impact;

• Harmonize national and local government policies, goals, objectives, strategies and programs; and


• Ensure international linkages to relevant global sustainable extractive industry standards and best practices and benchmarks (e.g. Extractive Industries Transparency Initiative or EITI).

e. HousingInvesting in mass and socialized housing will enable investors to enjoy incentives, as the government seeks to address the housing gap of 5.8 million units from 2010 to 2016 or about 800,000 units per year. The government has also increased the target number of housing loans from 75,000 to 150,000 housing units. This is in line with the government’s thrust of facilitating access to a variety of housing options that are decent, affordable, and responsive to the diverse and changing needs of the people by providing incentives to low-cost mass housing developers.

f. Agribusiness/Forest-based IndustriesAs one of the identified priority areas, market-driven and competitiveness-led agribusiness/forest-based and livestock industries shall be continuously promoted in both inbound and outbound investment missions, and shall be included in promotional activities such as business matching and investment briefings.

To further raise investment in agro-based industries, the government shall provide incentives as well as identify lands that are adequate for certain agricultural products. These lands should have already been covered by agrarian reform and the agro-based industries will respect the security of tenure of the agrarian reform beneficiaries (ARBs) and will work to improve the income and livelihood of the ARBs. The domestic economy shall be strengthened through asset reforms, development of agriculture and promotion of industrialization. (See Chapter 4: Competitive and Sustainable Agriculture and Fisheries)

Among agro-based products exported by the Philippines, the exports of fresh and processed foods are seen growing at 10 percent annually, a performance that will come mainly from fresh fruits such as banana, pineapple, mango, papaya, and okra; preserved fruits; beverages; and processed marine products (e.g. tuna, shrimps, etc.). Markets of these products shall be expanded and diversified through international promotional events, inbound business matching and addressing the market access issues resulting from new requirements of target and growth markets. Government shall strengthen the certification system for Good Manufacturing Practices (GMP), Hazard Analysis Critical Control Point (HACPP), and ISO 22000 as well as halal and kosher food standards and certifications. The DOST and DTI shall assist food processors in improving the packaging of food products.

The DA shall ensure the production of specific varieties required by the market and other agri-products which are raw materials for processed food, e.g. allocation of sugar. Moreover, new Free Trade Agreements (FTAs) will be utilized to increase Philippine agricultural exports.

Coconut, which is widely available in the country, is an immense source for food and non food products. Non food-based products such as coconut oil account for a significant portion of Philippine exports of coconut products with crude coconut oil accounting for most of coconut oil exports. To double exports of coconut products by 2016, value-added products such as refined coco oil, coco biodiesel and oleochemicals shall be promoted. Technology shall be developed to collect coconut water from the production of coconut oil. It is also imperative that supply of coconut should be available to processors.


Refined coco oil is used for both food and industrial/external applications. To promote the use of refined, bleached and deodorized (RBD) coco oil in the international food processing market, the government shall help in information campaigns to counter the negative publicity about coco oil (allegedly perpetuated by producers of competing products), and create an awareness of coconut oil’s health benefits.

The Philippines already figures prominently in almost all categories and products of the worldwide coconut industry, but efforts shall be undertaken to further develop the coco-coir and coco-peat segments to export higher value products such as geo-textile for soil erosion control or green architecture projects, rubberized coir products for car seats, mats, bed mattresses, air filters, among others. Investments in technology shall be promoted and issues concerning material supply aggregation and consolidation shall be addressed.

Through a trilateral undertaking, the DA, DFA and the DTI, shall continue to source breeders for cattle and water buffalo in order to enhance the supply of beef and milk products in the market.

g. Logistics The Philippines’ international logistics activity is relatively small compared to nearby countries. Together with the growing MSMEs potentials and global supply chain relations, this low base indicates a potential for high growth for logistics and supply chain activities.

To expand the sector, the government shall encourage investments in the development and expansion of logistics infrastructure in the international market. It will also promote other existing ports such as those located in Batangas and Subic not only to decongest the Manila port but also to open opportunities to worldwide shipping in the new areas.

Furthermore, the government shall review and develop/reform policies and rules, such as customs practices; transshipment of cargoes in various modes (i.e. air-air, sea-air, and air-sea); and foreign shipping services along the entire multi-modal transportation chain.

h. ShipbuildingThe Philippine shipbuilding sector, which now ranks fifth in the industry, covers building, ship repair and shipbreaking, and accounts for two percent of the total world market. By 2014, investments are expected to grow by PhP93 Billion. Investment growth will be focused on serving identified markets, such as South Korea and Japan, although other markets opportunities will also be considered.

In addition, support for shipbuilding shall also come from promoting the country’s human capital and continuously providing enhancement programs.

The export market, which is dominated by three foreign shipbuilders, accounts for more than 98 percent of the total turnover, with the number expected to increase. Under good management and with skilled human resources matched by capital, technology and global market opportunities, the industry is moving forward to make the Philippines the fourth largest shipbuilding nation in the world in the next five to ten years.

i. InfrastructureInfrastructure plays a vital part in the country’s economic development and growth. Investment shall be directed towards the development of air and sea ports; roads; agricultural support facilities such as irrigation systems and systems for water supply; commercial infrastructure for trade and exposition; waste management systems (i.e. solid and liquid waste); and energy


source facilities for power supply. (Refer to Chapter 5: Accelerating Infrastructure Development).

j. Other High-potential Industries

While there are priority areas that will be focused on, the government will also be vigilant in nurturing industries that post potential in (1) domestic and export market demand; (2) job generation; (3) utilization of local talents and creativity; and (4) maximization of the total value chain. Prospective areas perceived as high-growth potential include: homestyle products; wearables; motor vehicle parts and components; garments; and construction and related materials, among others.

Homestyle Products. Annual growth of 7 percent is targeted in the design-driven homestyle products, which includes furniture and furnishings, holiday décor, houseware and ceramics, woodcraft, giftware (excluding toys), shellcraft, and basketwork. The booming outdoor market in China and India and non-traditional markets such as South America (Brazil), Eastern Europe and the Middle East shall be the target markets. Aggressive export promotion through international trade fairs shall be pursued. The strong design capability of exporters, capitalizing on the mixed-media furniture, shall be continuously developed and sustained.

Wearables. Fine jewelry is the major export product of this industry. It also covers costume jewelry, fashion accessories such as headgear, scarves, gloves, belts and bags. To attain the 10 percent annual growth target, the government shall help the industry gain international exposure through trade fairs and shall put in place uncomplicated export and import policies and regulations.

Motor Vehicle Parts and Components. This industry targets an average annual export growth of 12 percent for parts and components and up to 5 percent for completely-built up (CBU) exports. Wiring harness exports, driven by rising global market demand, are expected to grow in volume by 97 percent through more efficient operations, or almost US$ 24 million in additional annual export earnings. Earnings are also expected beginning 2012-2013 from projects with the U.S., Korea, Thailand, U.K. and Australia.

To attain the targets for CBU exports, government and the private sector shall aggressively encourage global car manufacturers to assign specific car models to be supplied by Philippine original equipment automotive parts manufacturers/exporters.

The Replacement Parts Market will be tapped in addition to the original equipment parts market. Products with high potential are: electric fuel system parts; substrates for catalytic converters, anti-lock brake system, leafsprings, radiators, exhaust system and mufflers, automotive rubber parts, alternators, automotive carpets, tempered safety glass, windscreen, weather–strips, automotive plastic parts, nuts and bolts, and aluminum alloy wheels.

Subcontracting for customized orders of various automotive metal and plastic fabrications such as casting, forging, stamping, machining, and tooling will be pursued.

Garments. The garments industry is one of the country’s foreign exchange earners, exporting a total of US$1.67 billion in 2009. Top export markets include the US, Japan, Great Britain, Germany and Canada. For 2011, exports are estimated to increase by as much as US$2 billion. Employment in the industry, currently at 150,000 workers, is foreseen to increase considerably over the next five years.


Construction and Related Materials. The construction sector consists of (a) wood-based products (e.g. doors, windows, plywood and veneer, joineries/moldings); (b) metal-based products such as iron and steel, aluminum and copper products; (c) nonmetal-based products (except marble); and (d) chemical-based products (e.g. PVC plastic, vinyl, paints and varnish). By 2013, the construction industry is expected to reach a total of US$ 1.37 billion in export sales, with a 12 percent annual growth.

The formulation of a Construction Industry Strategic Plan for the 21st Century or CI21 is intended to provide a framework for the industry’s accelerated growth.

2. Development and implementation of programs that will enhance productivity and efficiency through green programs and sustainable consumption and production patterns.

Programs will include PPP initiatives; projects in the countryside such as eco-efficiency and eco-design programs (i.e. Bayong Development, Bamboo and coconut, among others); advocacy programs that will be enhanced through LGU, community, and media partnerships; and funding of projects and programs through international grants shall be explored. Domestic efforts shall include the granting of incentives (i.e. through the BOI Investments Priorities Plan or IPP) to green projects and programs.

3. Development and implementation of technology development projects in various priority areas/sectors to boost its innovativeness and competitiveness (i.e. the design of an ICT-based English language learning to increase the human resource uptake of call centers).

4. Review indicators on the number of new technology-based firms created.

5. An integrated high-impact export promotion program that will enhance country branding will be adopted and

implemented at the initiative of the DFA, DTI, DOT, DA, pooling their resources with other relevant stakeholders.

6. Industry and services shall be induced to ascend the value chain to develop higher local value-added products and services through a well-conceived and comprehensive industrial strategy.

Market diversification shall be achieved by: targeting high-economic growth markets such as China and India, participating in global supply chains with ASEAN; maximizing the benefits existing Free Trade Agreements; and strengthening our international trade policy negotiation structures.

Provide Firm-Level Support To Potential, New, And Existing Micro, Small And Medium Enterprises.

1. Facilitate access to BDS

Government shall create a favorable environment for MSMEs to thrive and ease their access to financing, facilitate their entry to larger markets and increase their productivity and efficiency. Almost half of MSMEs are engaged in wholesale and retail trade. Given this large number, government shall carry out programs to maximize their participation in supply and distribution systems within value chains for identified industry clusters. Business development services (BDS), including enhancements needed to boost productivity, will be provided for promising MSMEs. The government shall also build on existing programs, specifically the One Town, One Product (OTOP) Program, information campaigns, provincial caravans, and SME Centers.

In addition, government shall encourage the formation of new MSMEs. LGUs shall facilitate business registration, provide enabling environment in support of enterprise

The government shall continue to implement the national innovation strategy called Filipinnovation.


development, and fully implement MSME-related laws (e.g. Magna Carta for MSMEs, BMBE Law).

To complement the existing strategies identified under the SME development plan, four thematic areas shall be adopted: corporate social responsibility, climate change, gender, and migration. This approach shall also foster economic activity in the countryside. Government shall also assist in the development of programs that will encourage MSMEs to produce green products, and use environment-friendly processes. Business development services will maximize the use of local and sustainable sources such as waterlily, bamboo, coconut among others, and utilize materials in producing and marketing domestic and exportable products from these resources. Likewise, BDS will also educate MSMEs in processes that are non-threatening to the environment.

2. Improve access to financingGovernment Financial Institutions such as the People’s Credit and Finance Corporation, Land Bank of the Philippines, and the Small Business Corporation — the main wholesale finance institutions catering to microfinance institutions (MFIs) — shall collaborate with DTI, DOT and viable MFIs in developing innovative market-based financing schemes to support micro-enterprises. Government will collaborate with MFIs to use microfinance as a tool for inclusive growth by expanding access by microenterprises and poor households to credit, savings, and other financial services.

3. Develop livelihood programs for sustainable micro-enterprise Government shall support the transformation of livelihood activities of the poor into sustainable microenterprises. To this end, DTI and DSWD shall collaborate in

providing business development and productivity enhancement services to existing livelihood projects. With closer collaboration between DTI and DOT, community-based and ecotourism projects will be implemented to provide alternative and supplemental livelihood for local communities as well as help in poverty reduction, raise family income, and promote a better quality of life in the rural and far-flung areas, which are considered desirable tourism destinations.

4. Promote Entrepreneurship among OFsA more aggressive campaign to tap OFs as sources of capital shall be pursued. Government shall utilize media and various forums, including presidential and official trips, in encouraging entrepreneurship among OFs and/or their dependents. DTI and DOLE shall review and strengthen existing programs and consider ways to maximize the brain gain derived by OFs from foreign deployment. The DFA, DOLE, DOF, Commission on Filipinos Overseas, and the Bangko Sentral shall conduct financial literacy campaign overseas to educate and orient OFs regarding their investment and remittance options which may include special bond issuances and related financial instruments.

5. Advancing through Science, Technology and Innovation (STI)A “whole-of-government” approach will be pursued to achieve competitiveness. Thus, the government will strengthen vital factors that highly contribute to the advancement, distinction, satisfaction and demands in the domestic and international markets “Science, Technology and Innovation” (STI), and “Quality”.

a. The government shall continue to implement the national innovation strategy called Filipinnovation. This will enable the country to achieve (1) a competitive and multi-disciplinary work force competent in producing value-added knowledge-based services of global standards; (2) competitive

The industry clustering strategy is vital for linking manufacturing with other sectors.


local firms driven by or borne out of constant innovations brought about by increased R&D; and (3) a public policy environment that ensures continuous innovation not only through executive, legislative and judicial initiatives but through local government programs. It will promote the usage of Information and Communications Technology (ICT) in enterprises. Filipinnovation focuses on: (1) strengthening human capital investments for STI; (2) stimulating STI; (3) enhancing management of the STI system; and (4) upgrading the Filipino mindset in S&T. Since the strategy/policy imperatives are interconnected, it shall be coordinated and harmonized to create necessary conditions to deepen and consolidate STI capacity.

b. The government shall set up a National Quality Infrastructure to integrate and coordinate series of activities involving metrology, standardization, testing, and accreditation and certification. It will provide procedural landscape for products and services of enterprises, particularly SMEs, to meet quality requirements. It will guarantee competitiveness in the national and

international markets through quality certification.

c. STI, a crucial factor for productivity, competitiveness, job creation, sustainable development and poverty alleviation will also pursue R&D initiatives:

• Address opportunities for STI professionals;

• Address structural gaps in the STI and R&D sectors such as inefficiencies in the structure of incentives and allocation of R&D resources that are obstacles to new programs and activities which could help attain STI and R&D goals;

• Facilitate new STI policies needed to boost productivity, economic growth and job creation through increased knowledge-intensive economic activities while maintaining social cohesion;

• Foster tie-ups between industry and the higher education institutions to

The government shall pursue market access through effective bilateral, multilateral and regional engagements and representation, and maximize opportunities offered by existing trade agreements.

Figure 3.6: Industry Cluster Map


strengthen the effective transfer of appropriate technology and advanced skills needed by the industry and for the production of higher value goods and services;

• Facilitate and utilize sufficient information on the scientific and technological experiences and know-how of other countries;

• Establish e-centers to enhance access to knowledge and technology, particularly in rural and remote areas;

• Implement programs and tools to support and respond to climate change and disaster risks incidents especially for fishers and agri/marine farmers; and

• Policy backup and enforcement mechanisms for existing laws require bolstering and institutionalizing in close collaboration with neighborhoods.

Cluster DevelopmentIn developing identified industries, government shall pursue an industry cluster program to foster inter-enterprise linkages among MSMEs and strengthen collaborative networks.

Industry Clusters are geographic concentrations of competing, collaborating and interdependent businesses, working on a similar regional infrastructure and creating wealth of regions through exports. It fosters the transfer and adoption of new technologies, creates risk capital, and attracts foreign investment

It breaks down organizational, geographical and sector boundaries, all needed for creating a cycle of

sustainable economic growth. The industry clustering strategy is vital for linking manufacturing with other sectors (e.g. mining, agriculture, tourism, construction, etc.), particularly as these affect raw material needs of manufacturing and the manufactured-product requirements of other sectors. (Figure 3.6)

Industry clusters provide benefits such as:

• Maximizes capacity through shared hard and soft infrastructure, human resources, R&D and safety standards;

• Provides access to all players, attracting expertise and local suppliers;

• Ensures that top export products or revenue streams are sustained through the development of its value chains down to the provinces and municipalities;

• Offers a focus to attract new investments, encourage local expansion and stimulate start-up of new companies;

• Promotes horizontal collaboration and strategic partnership;

• Enhances productivity by providing firms access to specialized inputs and skills, as well as unique information, knowledge and technology; and

• Promotes product complementation that enables longer visitor stay and higher expenditure in tourism destinations.

The government shall maximize PPP as a strategy in industry clustering. On a larger scale, growth centers or regional hubs shall be identified to synchronize the mobilization of public and private resources. These hubs shall unlock

Proactive measures to empower consumers, promote competition, and enforce trade regulations shall be pursued.


productive capacity in the countryside by providing a critical mass of resources in support of private businesses even outside the capital. The integrated international air and sea connectivity of Clark-Subic, Cebu, Cagayan de Oro (with the upcoming PPP project for the Laguindingan airport), and Davao shall be highlighted to enhance the profile of these growth centers among foreign and local investors.

For IT-enabled clusters such as technology business incubators, technology parks and clusters of knowledge-based industries, the creation of shared infrastructure and the provision of business support services for innovators and developing entrepreneurs shall be promoted. The establishment of technology business incubators across the country will be pursued, taking into consideration commercial sustainability, careful matching of target markets with the strengths and ambitions of potential firms, and proximity and linkages to research institutes and universities. The provision of business support services shall be private sector-led and demand-driven. The clustering of knowledge-based industries through science and technology parks shall be stimulated

Global And Regional Integration (Increase Market Access) The government shall pursue market access through effective bilateral, multilateral and regional engagements and representation, and maximize opportunities offered by existing trade agreements. The government commits to engage all possible stakeholders in undertaking proactive participation in international engagements geared at keeping the country in the radar screen of international business. This initiative will particularly benefit and maximize trading potential of MSMEs.

Preferential Trade Agreements (PTAs) contribute to the competitiveness of Philippine export products and services. The low utilization rate of these agreements in the country shows the need to conduct the orientation and capacity-building workshops for manufacturers, enterprises, and service providers to enhance their capability to avail themselves of the benefits of these PTAs. The government shall therefore initiate the following programs and activities:

• International trade strategyThe government shall pursue the following programs to complement its international trade strategies and provide more opportunities for market access: (1) National Single Window will be opened to improve trade facilitations and logistics; (2) support shall be afforded to infrastructure and quality of trade facilitations to improve the efficiency of logistics services; (3) to further assist MSMEs integrate into global production networks, government shall formulate and implement an industrial strategy, as well as enhance SMEs’ capabilities; and (4) the negotiation process shall be reviewed and enhanced through reforms of trade policies, the formulation of a negotiation process, and capacity building of the Trade Related Matters (TRM) Committee, and trade-negotiators. Best-practice models shall be adopted for trade analysis to get more robust cost-benefit analyses of proposed measures and reforms.

• Economic diplomacy and consular commercial and economic representation overseasThe coming years will see the redefinition of globalization, as the global economic system continues to integrate with the domestic economy.

The entire supply chain shall be improved to reduce production and distribution cost of basic and prime commodities


The government will therefore: (1) maintain and safeguard economic security in multilateral, regional, and bilateral economic engagements; (2) maintain and safeguard national and economic security through strategic partnerships within the Asian region to ensure that Philippine foreign policy decisions are taken in the context of Asian Regionalism and Asian Community; (3) continuously evaluate multilateralism and the stability of international organizations; and (4) work to attain the Millennium Development Goals (MDG) targets by 2015 and reduce poverty through intensified international cooperation.

In line with the ASEAN Tourism Strategic Plan and the Multilateral Agreement on Full Implementation of Passenger Air Services, greater collaboration will be undertaken to realize the potential of the ASEAN region as a source market for tourism. In addition, tour programs shall be developed through twinning and dual destination with other ASEAN countries, attracting more international tourists and foreign direct investments in tourism.

To inform the public including private industries/firms engaged and/or potentially capable to trade outside the country, the government will continue its information, education and communication campaigns on PTAs. The information campaign sessions will be conducted in 12 key cities nationwide to cover discussions of the benefits of the agreements as well as administrative procedures for availment. The sessions will also feature businesses, which have so far benefited from a PTA to entice and encourage others to leverage said agreements to their advantage. Using mass and digital media as a tool, each information session will be supported by campaigns such as press releases and radio and television coverage.

Goal 3: Action agenda to enhance consumer welfare

A consumer sector that is vibrant and dynamic demand better products and services and encourages the production of high quality products and services that are globally competitive. It shall be a key strategy under the Plan to raise consumers’ consciousness of their rights and responsibilities, and their options for redress. The objective is to intensify consumer education, starting from the young. Hence by 2016, the Plan envisions 100 percent integration of consumer welfare in the education curriculum; and resolution period of consumer complaints reduced by half.

Encourage Consumer Products And Services Satisfaction. To encourage the production of competitive products and services, government shall encourage a consumer sector that is vibrant and dynamic and demands better products and services.

1. Intensive consumer education and advocacy An informed consumer is an empowered consumer; hence, government shall intensify its consumer advocacy efforts through a more aggressive awareness and information campaign. The government shall pursue consumer education by integrating product quality and safety based on internationally accepted standards in the high school curricula as well as in alternative learning systems. Likewise, the government shall expand its links with media and utilize available media channels such as radio, print, television, and out-of-home advertising and tools, as well as actively network with various organizations. Also, it will advocate consumer programs that will merit public and private satisfaction.

2. Consumer protection and trade regulationThe government shall help maintain reasonable prices and availability of supply of basic and prime commodities. To achieve this, the government will intensify and expand programs that will address affordability of basic necessities


and prime commodities. To address consumer concerns, a sustained mechanism for speedy resolutions of complaints will be implemented in collaboration with the private sector. The government shall work at the development of a national comprehensive competition policy, pursue the legislative agenda on competition law, product liability and other consumer related laws.

3. Development of products and services standards

The government shall encourage the manufacture of products to conform to internationally accepted standards. By 2016, an additional 2,000 Philippine National Standards will be developed, adopted and harmonized, while 100-percent compliance by companies on standards that are developed for mandatory certification will be enforced.

Improve Supply Chains Of Basic And Prime Commodities The Price Act of the Philippines declares the policy of the State to ensure the availability of basic necessities and price commodities at reasonable prices at all times without denying legitimate business a fair return on investment. It is also a declared policy of the State to provide effective and sufficient protection to consumers against hoarding, profiteering and cartels with respect to the supply, distribution, marketing and pricing of said goods, especially during periods of calamity, emergency, widespread illegal price manipulation and other similar situations. In this regard, government is mandated to: (1) develop, adopt and promulgate measures to promote productivity in basic necessities and prime commodities; (2) develop an improved and efficient transport and distribution system; and (3) develop, adopt and promulgate measures to stabilize prices at reasonable levels.

Under the Plan, government will intensify and expand programs that will maintain the affordability of basic necessities and prime commodities. A review of the supply chain will be implemented to determine effective points of interventions to make enhancements and eliminate deficiencies. This requires infrastructure support and logistics mechanisms that shall result in lowering of price with the elimination of middlemen and other barriers to bring the goods and services to the market. Producers, manufacturers, traders, retailers, and consumer organizations shall be consulted so that the supply chains of basic goods and services may be improved, reducing costs in production and distribution and thereby checking rise in prices.

101Competitive and Sustainable Agriculture and Fisheries Sector04Competitive and Sustainable Agriculture and Fisheries Sector


The agriculture and fisheries sector provides food and vital raw materials for the rest of the economy. It is itself a significant market for the products and services of the non-agricultural economy. As the sector grows and modernizes, it releases surplus labor to the industry and services sectors. Rising productivity and efficiency in the sector are critical in maintaining the affordability of food and purchasing power, especially among the poor. The sector’s development is therefore vital in achieving inclusive growth and poverty reduction as well as attaining the targets under the MDGs.

The country, however, exhibits a slower structural transformation than other East Asian countries. The shares of agriculture in GDP and total employment have continued to decline, but the transfer of the labor released from this sector to higher-productivity jobs in industry and services has lagged owing to low skill levels among agricultural workers and distortions in other economic sectors.

Increasing demands on the sector’s output have also put pressure on its natural resource base. Unsustainable practices employed to improve yields have resulted in land degradation and problems of water availability. Climate change has exarcebated the inherent vulnerabilities of the sector. Development efforts need to focus on transforming the sector into one that is not only highly productive but also climate-resilient, environment-friendly, and sustainable.

Competitive & Sustainable Agriculture & Fisheries Sector

Assessment

Sector Performance

The sector remains an important part of and contributor to the economy.

Contribution to output and employment. From 2004 to 2010, agriculture and fisheries contributed an average of 18.4 percent to GDP and the sector grew at an average rate of 2.6 percent annually. This performance was significantly below the target of the previous Plan. Among the regions, the top contributors in 2009 have been Region 4-A (12.1%) followed by Region 3 (11%), Region 6 (10%), Region 10 (8.2%) and Region 12 (8.0%). In terms of employment, the sector

employed an average of 11.8 million people. These account for almost 35.1 percent of the total work force (Table 4.1). If the whole agriculture value chain is considered, the contribution to GDP and total employment would reach 35 percent and 50 percent, respectively.

Contribution of subsectors. The sector’s growth was driven primarily by fishery (1.21%), palay (0.40%), corn (0.31%), banana (0.22%) and poultry (0.22%) as shown in Table 4.2 in the next page.1 Growth in the fisheries sector is partly due to the expansion of aquaculture and robust demand for commodities such as seaweeds. The productivity of municipal fisheries, such as small-scale capture fisheries (less than 3 gross ton boats), has

1 The values in parenthesis reflect growth rate as weighted against commodity share in the Agriculture, Fishery and Forestry (AFF) gross value added.

103Competitive and Sustainable Agriculture and Fisheries Sector

AFF Sector 2004 2005 2006 2007 2008 2009 2010 Average

Performance (in %)

MTPDP Target 4.0 - 5.0 4.2 - 5.2 4.2 - 5.2 4.0 - 5.0 4.3 - 5.2 5.1 - 6.2 5.2 - 6.2 4.4 - 5.4

Actual Growth 5.2 2.0 3.8 4.9 3.1 0.01 (0.5) 2.6

Agri Gross Value Added (in Php M) 226,417 230,954 239,777 251,495 259,410 259,424 258,081 246,508

% share to GDP 19.6 19.1 18.8 18.4 18.3 18.1 16.8 18.4

Agri Employment (in '000 persons) 11,381 11,628 11,682 11,785 12,030 12,043 11,974 11,789

% share to total employment 36.0 36.0 35.8 35.1 35.3 34.3 33.2 35.1

Table 4.1. Agriculture and Fishery (with Forestry) Performance and Contribution to Economy: 2004-2010

Source: BAS, NSCB, 2011Note: Revised growth target for 2008 and 2009 based on August 2008 DBCC Meeting

Sector% contribution to growth

Average2004 2005 2006 2007 2008 2009 2010

Palay 1.3 0.1 0.8 1.0 0.6 (0.5) (0.5) 0.40

Corn 1.0 (0.2) 1.0 0.7 0.2 0.1 (0.6) 0.31

Coconut 0.0 0.1 0.0 (0.0) 0.1 0.1 (0.0) (0.02)

Sugarcane 0.2 (0.2) 0.2 (0.2) 0.5 (0.2) (0.4) (0.02)

Banana 0.1 0.3 0.2 0.3 0.5 0.1 0.0 0.22

Other crops 0.1 0.2 (0.02) 1.3 (0.3) (0.4) 0.4 0.16

Livestock (0.1) 0.3 0.3 0.3 (0.1) 0.1 0.2 0.13

Poultry 0.5 0.0 (0.0) 0.0 0.5 0.2 0.4 0.22

Agricultural Activities 0.2 0.1 0.2 0.2 0.1 0.1 (0.1) 0.11

Fishery 1.9 1.3 1.3 1.6 1.3 0.6 0.4 1.21

Table 4.2. Contribution of Sub-Sectors in Agriculture and Fishery Growth: 2004-2010

Source: BAS, 2011

been declining, however. This can be partly attributed to overfishing and poor enforcement of fishery laws. The national stock assessment of the Bureau of Fisheries and Aquatic Resources (BFAR) suggests that two-thirds of the 12 major fishing bays in the country are already overfished.

The positive performance of palay and corn is due to the use of quality seeds, increase in yield, and rehabilitation of irrigation facilities. For banana, this is due to an expansion in area, an increase in yield, and good demand in the local and export markets.

Contribution to global trade. Between 2004 and 2010, agriculture and fisheries sector exports rose from US$2.5 billion to US$4.1 billion. The top agricultural exports, in terms of value are coconut oil, fresh banana, tuna, pineapple, tobacco, and seaweeds. The overall balance of trade in agriculture has become increasingly passive, with the deficit widening from US$837 million in 2004 to US$3.2 billion in 2010. The country recorded a favorable trade balance in some items, however, namely, vegetable and fruits (US$634 million), fishery products (US$497 million), and crude rubber (US$31.7 million) in 2010 (Table 4.3). There was no significant change in the structure of exports in the period.


Item2004 2010*

Export Import Trade Balance Export Import Trade Balance

Meat and Meat Preparations 4.3 150.9 (146.5) 39.4 381.6 (342.3)

Dairy Products and Bird's Eggs 75.1 482.5 (407.4) 142.1 743.7 (601.6)

Fish and Fish Preparations 413.4 37.0 376.4 633.8 136.8 497.0

Cereal and Cereal Preparations 44.5 659.2 (614.7) 98.5 2,446.3 (2,347.8)

Vegetables and Fruits 783.4 102.9 680.5 916.6 282.7 633.9

Sugar and Sugar Preparations 102.3 70.2 32.1 105.1 369.5 (264.4)

Coffee, Tea, Cocoa, Spices 14.1 90.0 (75.9) 13.0 237.6 (224.7)

Crude Rubber 36.1 31.9 4.1 55.9 24.2 31.7

Fixed Vegetable Oils and Fats 581.3 71.0 510.2 1,269.8 39.1 1,230.7

Others (e.g., tobacco, fertilizer, machinery etc.) 452.1 1,647.7 (1,195.6) 823.6 2,669.6 (1,846.0)

Total Agricultural Exports/Imports 2,506.7 3,343.5 (836.8) 4,097.6 7,331.2 (3,233.6)

Table 4.3. Value of Philippine Agricultural Exports and Imports: 2004 and 2010 (in million $US)

Source: BAS, 2011Note: *2010 figures are preliminary

Share to total land area and number of farmers. In terms of land area, a total of 4.8 million agricultural farms in the country occupy 9.7 million hectares (2002 Census of Agriculture and Fisheries). These account for almost 32 percent of the total land area of the country. The top four crops with the highest hectarage are coconut (3.33 million hectares), followed by rice (2.47 million hectares), corn (1.35 million hectares), and sugarcane (0.36 million hectares). In terms of number of farmers and fisherfolk, about 1.61 million farmers are engaged in fishing (25.1%), 1.4 million are in coconut (21.7%), 1.35 million in rice (21.0%), 0.68 million in corn (10.6%), 0.07 million in sugarcane (1.0%) and around 1.32 million in other commodities (20.6%).

Agribusiness land development. Through the efforts of three rural development agencies, namely the DA, DAR and DENR, under the National Convergence Initiative (NCI), over 1.83 million hectares of land have been developed for agribusiness, generating about 2.67 million jobs between 2005 and 2010 (Table 4.4).

The NCI is a strategic development approach that can contribute to sustainable development in the countryside through complementation of efforts in the rural sector. In December 2010, the three agencies signed the Joint Memorandum Circular ( JMC) adopting a shared “Policy and Implementation Framework for the

Agency

2005-2007 2008 2009 2010 Total

Areas Jobs Generated Areas Jobs

Generated Areas Jobs Generated Areas Jobs

Generated Areas Jobs Generated

DA 812,096 1,334,678 335,948 479,747 295,524 436,677 30,408 52,767 1,473,976 2,303,869

DAR 247,493 237,387 19,579 27,492 31,605 41,981 2,106 2,106 300,783 308,966

DENR 8,759 8,759 1,967 1,967 50,024 50,024 - - 60,750 60,750

TOTAL 1,068,348 1,580,824 357,494 509,206 377,153 528,682 32,513 54,873 1,835,508 2,673,585

Table 4.4. Agribusiness Lands (including Agroforestry) Developed: 2005-2010

Source: National Convergence Initiative Secretariat, December 2010


Enhanced National Convergence Initiative among DA, DAR, and DENR”.

Extension of land reform. The accomplishment of land acquisition and distribution (LAD) for the period 2004-2010 compared to the funded target is at 88 percent. On the other hand, the accomplishment in terms of the previous Medium Term Philippine Development Plan (MTPDP) 2004-2010 target is around 65 percent (Table 4.5). The target projection in the previous Plan states the commitment to finish land distribution by the end of 2008, the last year of the 10-year extension provided under the Comprehensive Agrarian Reform Program (CARP). A total of 807,298 hectares were distributed to 524,749 agrarian reform beneficiaries (ARBs) during the period. From 1987, the cumulative area distributed has now reached 4,113,347 hectares.

Extending the CARP for the second time was a challenge unlike the first when RA 8532 was passed by the legislative branch before the Ramos Administration ended on June 30,

Year MTPDP Target

Funded Target*

Accomplishment

Hectares No. of ARBsin %

Per MTPDP Per Funded Target

2004 212,121 110,046 104,069 71,682 49 95

2005 122,931 130,000 131,069 88,152 107 101

2006 214,000 130,000 125,177 72,280 58 96

2007 214,000 130,000 134,041 94,807 63 103

2008 220,453 130,000 146,275 90,738 66 113

Sub-total 983,505 630,046 640,631 417,659 65 102

2009 - 85,764 59,488 43,792 - 69

2010 - 200,000 107,179 63,298 - 54

Total 915,810 807,298 524,749 88

Table 4.5. Land Acquisition and Distribution Performance: 2004-2010 (in hectares)

Source: DAR, 2011Note: *Targets based on approved/reenacted budgets

1998. This time, no second extension law was passed by Congress after the 10-year extension period. From July 1, 2008 to June 30, 2009, CARP continued to be implemented only under a Joint House-Senate Resolution. On August 7, 2009, RA 9700, otherwise known as the CARP Extension with Reforms or CARPer, was signed into law mandating the completion of land distribution in five years. It also provided an additional appropriation of PhP150 billion for the implementation of the major components of CARP.

Gains in the sector have been achieved, but its full potential is unrealized.

Growth below target. During the period 2004-2010, the average growth, while positive at 2.6 percent annually, has been below the target of the previous Plan, which is a sustained growth of 4.4 percent to 5.4 percent. The occurrence of the global financial crisis, a fuel price spike in 2008, and climate-related events in 2009 (e.g., El Niño, typhoons) all contributed to the non-attainment of the target. The devastation from the typhoons Ondoy and Pepeng resulted in damage to agriculture and fisheries estimated at

During the period 2004-2010, the average growth, while positive at 2.6 percent annually, has been below the target of the previous Plan, which is a sustained growth of 4.4 percent to 5.4 percent. The occurrence of the global financial crisis, a fuel price spike in 2008, and climate-related events in 2009 (e.g., El Niño, typhoons) all contributed to the non-attainment of the target.


PhP24.7 billion in 2009 pulling down the sector’s growth to only one-tenth of a percent in the same year.

Declining productivity and competitiveness. While the productivity of the agricultural workforce has increased annually by an average of 1.66 percent from PhP19,894 in 2004 to PhP21,553 in 2010, land productivity in terms of yields of traditional crops (e.g., rice, corn, sugarcane and coconut) has stagnated or declined.

CommodityLand Productivity, 2009

Indonesia Malaysia Philippines Thailand Vietnam

Rice (paddy) 5.0 3.7 3.6 2.9 5.2Corn 4.2 5.6 2.6 4.2 4.0Coffee (green) 0.7* 0.6* 0.8 1.0 2.2*Banana 59.7 21.8 20.2 13.6 14.3*Coconut 6.6* 2.8 4.6 5.8 7.9*Mango, mangosteen & guava 11.6 4.1 4.1 8.0 7.1Abaca 1.0* no data 0.5 no data no dataPapaya 85.1 10.0 19.6 17.0 no dataPineapple 74.2 34.7 37.4 20.9 13.0Sugarcane 63.1 46.7 56.8 71.7 58.6Vegetables (fresh) 10.6 13.2 8.0 8.4 12.6

Table 4.6. Land Productivity in Selected Southeast Asian Countries (in mt/hectare)

Source: Food and Agriculture Organization Corporate Statistical DatabaseNote: *2008 data; 2009 is preliminary data

The Philippines ranked fourth in rice, coconut, sugarcane and fifth in corn out of five ASEAN countries namely Indonesia, Malaysia, Philippines, Thailand and Vietnam (Table 4.6). In terms of price (producer price), rice in the Philippines is the most expensive (US$318.8/MT), which can be attributed to the lack of factor endowments such as a contiguous land area and big river systems. Furthermore, the growth of total

CommodityRCA in 2007

Indonesia Malaysia Philippines Thailand Vietnam

Rice (milled) 0.002 0.000 0.001 23.423 37.510

Corn 0.117 0.002 0.010 0.507 0.003

Coffee (green) 4.173 0.005 0.002 0.085 30.556

Banana 0.011 0.035 26.329 0.082 0.039

Coconut (desiccated) 11.618 0.472 66.303 0.033 0.000

Fruits (dried) 0.458 0.038 0.372 10.716 2.759

Tropical fruits (dried) 0.000 0.000 251.868 0.000 0.000

Mango, mangosteen & guava 0.145 0.058 11.972 3.834 0.162

Abaca 0.155 0.000 30.805 0.000 0.000

Papaya 0.007 1.754 7.417 0.157 0.000

Pineapple 0.050 0.241 47.533 0.628 0.038

Sugar (raw) 0.000 0.000 2.220 5.453 0.204

Vegetables (fresh) 0.110 0.807 1.598 5.163 0.504

Total Agri Products 2.393 1.003 0.975 1.880 1.854

Table 4.7. Revealed Comparative Advantage (RCA) in Selected ASEAN Countries: 2007

Source: Habito et al., 2010


factor productivity (TFP) growth in agriculture has remained at a low level in the Philippines, namely 0.2 percent per year over the past two decades, compared to 1.0 percent per year in Thailand, 1.5 percent per year in Indonesia, and 4.7 percent in China (WB, 2010).

Comparative advantage not fully exploited. The country actually has a revealed comparative advantage (RCA)2 not only in its lead exports such as coconut, banana, mango, pineapple, but also in sugar, abaca, papaya, dried tropical fruit, fresh fruit and fresh vegetables (Table 4.7). Despite the export potential of these commodities, however, particularly the emerging crops, the country’s share (8.3%) and value of agricultural products (US$3.2 billion) to total exports is among the lowest in comparable ASEAN countries.

The country also continues to be the only agricultural net-importer among comparable ASEAN members, with an agricultural trade deficit of US$2.4 billion in 2009 (Table 4.8). The total value of agricultural imports amounted to US$5.6 billion, the top six agricultural imports being rice, wheat, soya bean products, milk and cream products, tobacco, and

urea. The value of agricultural exports in 2009 for the Philippines was only US$3.2 billion3 (WTO, 2010). This is small compared to those of Indonesia, Malaysia and Thailand which had over US$20 billion each.

Elusive rice self-sufficiency. For the period 2004-2010, domestic rice production has met only 84.71 percent of the country’s annual average rice requirements, notwithstanding substantial public investments in the rice sector (DA, 2011). During the global food crisis in 2008, the Philippines imported some 2.4 million MT of rice valued at US$1.9 billion to supplement its domestic rice stocks.

Increase in food commodities prices. The average increase in the prices of rice and corn were the highest among basic commodities for the period 2004-2010, at 7.8 percent and 7.5 percent, respectively (Table 4.9). This is largely due to the global food crisis in 2008 which saw the retail price of rice increased by as much as 29.1 percent. The 6.4-percent inflation in selected food commodities prices is higher compared to the national headline inflation rate of 5.6 percent. Higher prices of food commodities erode purchasing power, especially among the poor, and highlight the grave threats to food security due to extreme shocks, affecting not only production, but also marketing systems.

Country Export Import Trade

Balance 2009Value 2009

% ShareValue 2009

% Share2000 2009 2000 2009

Indonesia 25.3 11.9 21.1 11.4 13.1 12.4 13.9

Malaysia 20.9 8.2 13.3 12.3 5.6 10.0 8.5

Philippines 3.2 5.1 8.3 5.6 8.4 12.2 (2.4)

Thailand 28.0 17.7 18.4 9.4 7.2 7.0 18.6

Vietnam 10.7 27.3 18.7 9.3 8.1 13.2 1.4

Table 4.8. International Trade of Agricultural Products: 2000 and 2009 (value in $US billion)

Source: World Trade Organization

The country actually has a revealed comparative advantage (RCA) not only in its lead exports such as coconut, banana, mango, pineapple, but also in sugar, abaca, papaya, dried tropical fruit, fresh fruit and fresh vegetables. Despite the export potential of these commodities, however, particularly the emerging crops, the country’s share (8.3%) and value of agricultural products (US$3.2 billion) to total exports is among the lowest in comparable ASEAN countries.

For the period 2004-2010, domestic rice production has met only 84.71 percent of the country’s annual average rice requirements, notwithstanding substantial public investments in the rice sector. During the global food crisis in 2008, the Philippines imported some 2.4 million MT of rice valued at US$1.9 billion to supplement its domestic rice stocks.

2 RCA is the share of a product in total Philippine exports as a ratio of the share of the same product in total world exports.3 This is slightly higher than the value of exports in Table 4.8 since WTO category is broader than the figures released by NSO.


Stagnant poverty headcount. Despite positive growth and gains in productivity in some subsectors, there has been almost no change in the welfare of almost 6.4 million farmers, fisherfolk and other workers dependent on the sector. The poverty incidence of families has changed slightly between 2003 and 2009 at 20.0 percent and 20.9 percent, respectively (Table 4.10), while poverty in terms of population has increased from 24.9 percent to 26.5 percent, respectively. This is despite an increase in average income of the bottom 30 percent of families of 8.3 percent in real terms from 2006 to 2009.4

Challenges Growth in production and productivity faces formidable constraints.

High cost of production inputs

Inputs such as fertilizers and pesticides typically account for 20-30 percent of total production cost while livestock and poultry feeds account for as much as 70

ItemPoverty Incidence (%) Magnitude of Poor (in M) Change in Average Real

Income (bottom 30%) 2009 vs. 2006

2003 2006 2009 2003 2006 2009

Families 20.0 21.1 20.9 3.3 3.7 3.9 8.3

Population 24.9 26.4 26.5 19.8 22.2 23.1 no data

Table 4.10. Poverty Incidence and Magnitude on the Philippines: 2003, 2006 and 2009

Source: NSO, 2011

percent. As such, any variability in prices directly translates to an increase or decrease in the prices of agricultural commodities, especially at the farm level. The increase in international prices of commodities and the fuel price spike in 2008 contributed to the high prices of domestic fertilizer and corn. The price of fertilizer rose by as much as 135 percent in 2008 compared to 2007 and contributed to a decrease of 2.2 percent in palay production in the fourth quarter of 2008.

Inefficient supply chain and logistics systems

Inefficiencies along the agricultural supply chain result in postharvest losses, higher transaction and distribution costs, and lower productivity. The Philippine logistics system has been characterized as being cost-inefficient, unresponsive to customers and market requirements, and unreliable. Compared to developed countries, distribution and processing costs in the country are 20-30 percent higher with logistics costs

Country 2004 2005 2006 2007 2008 2009 2010 AverageRice 2.6 7.0 3.7 3.4 29.1 7.5 1.1 7.8Corn 10.7 5.5 4.7 4.4 23.2 6.1 -1.8 7.5Eggs 5.4 3.5 5.6 6.8 6.9 6.8 2.7 5.4Fish 8.0 6.6 5.2 3.3 9.1 6.1 3.1 5.9Fruits and Vegetables 6.0 5.0 8.8 2.9 11.7t 5.9 0.5 5.8Meat 13.0 5.9 2.4 2.6 8.9 5.4 4.1 6.0Average 7.6 5.6 5.1 3.9 14.8 6.3 1.6 6.4Philippines (headline inflation)

6.0 7.6 6.2 2.8 9.3 3.3 3.8 5.6

Table 4.9. Inflation Rates by Commodity for All Households (in percent)

Source: NSO, 2011

Despite positive growth and gains in productivity in some sub-sectors, there has been almost no change in the welfare of almost 6.4 million farmers, fisherfolk and other workers dependent on the sector.

4 The poverty estimation methodology was refined by the NSCB in February 1, 2011. However, urban-rural disaggregation is not yet available when the official poverty statistics was released last February 8, 2011.


accounting for almost 30-40 percent of total marketing costs (NEDA-UNDP, 2005).

The ineffective logistics services coupled with inappropriate postharvest handling have, likewise, resulted in huge postharvest losses. For rice and corn, about 14.75 percent and 7.2 percent of the total production are lost during postharvest operations, respectively. Losses are even higher in horticultural crops: losses in fruits range from 5 to 48 percent, while losses in vegetables range from 16 to 40 percent. These postharvest losses, when translated into monetary values, sizeably reduce the income of farmers and their households (BPRE, 2010).

Inadequate provision of irrigation infrastructure

As of 2009, the total area provided with irrigation service is 1.54 million hectares wherein 765,000 hectares are under the National Irrigation Systems (NIS). Communal Irrigation Systems (CIS) cover around 558,000 hectares. The total service area represents 49 percent of the potential irrigable area of 3.126 million hectares. However, the pace of irrigation development in the country has been estimated at less than 1 percent per year. While quick-gestating irrigation development activities such as rehabilitation and improvement of existing systems and facilities were envisioned to fasttrack irrigation development, the sector remains hampered by lack of funds to sustainably operate and maintain these irrigation systems, inadequate technical capacity of Irrigator’s Associations (IA) and the National Irrigation Authority (NIA) field personnel, as well as inadequate water supply. The succeeding Chapter 5, Infrastructure Development, offers a detailed assessment of rural infrastructure, particularly irrigation bottlenecks and narrates strategic directions to overcome these bottlenecks.

Low rate of adoption of technologies, including mechanization

Despite the availability of science and technology packages and products such as organic fertilizer, high-yielding varieties, cost-reducing farming practices, and value-adding technologies, adoption by farmers has been slow because of: (a) weak links between technology producers and extension workers and farmers/fisherfolk; (b) lack of media and public awareness of the benefits of the technologies; and (c) financial or capacity constraints of intended users.

Similarly, the use of mechanization in Philippine agriculture has been low. The current mechanization level of the sector, which is 1.68 horsepower (hp)/hectare, is far below other Asian countries such as Korea (4.11 hp/hectare) and China (3.88 hp/hectare). Among rice and corn farmers, only 21.7 percent have mechanized while the rest continue to use manual labor and farm animals in production activities (UPLB, 2009). The inadequacy of aftersales service, substandard machinery, and the sporadic, fragmented and disorganized implementation of agricultural and fishery mechanization have contributed to low mechanization in the sector.

Limited access to formal credit and financing

From 2004-2009, the annual proportion of agri-fishery and forestry (AFF) loans to total loans granted by banks was at a low average of 2.5 percent. The limited access to credit by small farmers and fisherfolk, despite the banking sector’s reported large amount of funds available for lending, has been due to: (a) the lack of track record among farmers; (b) lack of knowledge on accessing formal or bank financing, particularly putting together the required documents; (c) lack of acceptable collateral; delayed release of loans; and (d) numerous documentary requirements that formal lending institutions require from farmers upon commencement of

Inefficiencies along the agricultural supply chain result in postharvest losses, higher transaction and distribution costs, and lower productivity.


transactions. On the part of the banks, their aversion to high-risk and low-income agricultural projects, the high cost of administering small loans, and poor repayment performance of agricultural loans, among others, have constrained the provision of credit to farmers and fisherfolk (ACPC, 2010).

Competing uses of agricultural lands. Agriculture, together with the natural resource sector, has been adversely affected by shifts towards competing uses. Particularly sensitive for its implication for food security is the conversion of prime agricultural lands to nonagricultural uses (i.e., residential, commercial and institutional) and the rising demand for industrial crops (e.g., biofuel). Alternative land use activities have also encroached upon ecologically fragile lands. These point to the need for a national land use policy that will rationalize the optimal allocation of land among competing uses.

Households dependent on agriculture are especially vulnerable to climate variability and extreme events.

Climate change

The Philippines has long been vulnerable to weather risks, a fact exacerbated by climate change. Since the 1980s, the growth in agricultural gross value-added (GVA) has been erratic partly owing to the impact of severe weather risks and the periodic occurrence of the El Niño and La Niña phenomena. Aside from typhoons Ondoy and Pepeng, the El Niño in 2010 caused damages to agriculture and fishery estimated at PhP8.4 billion over a total area of 355,986 hectares.

The DOST-PAGASA scenarios for 2020 and 2050 project widespread warming in most parts of the country. Longer hot days and shorter cold days are expected. The number of days with maximum temperature of more than 35 °C is

expected to increase in all parts of the country in 2020 and 2050. Projected seasonal mean temperatures in the Philippines are expected to rise by about 0.5-0.9 °C for 2020 and 1.2- 2.0 °C by 2050. Extreme rainfall is also projected to increase in Luzon and the Visayas while a decreasing trend is projected in Mindanao (MDGF-1656, 2010).

These changes bring further pressures on agricultural production, which is already stressed by other resource scarcities and economic challenges. Changing rainfall patterns, rising temperatures, increasing frequency and intensity of typhoons and dry spells, and sea level rise are expected as a result of climate change. These impacts will spell a difference in terms of cropping calendars, unpredictability of yields, pest pressures, crop losses, livestock and fisheries production, and damages to existing infrastructure. Sea level rise is already being experienced in parts of the country, reducing the productive coastal areas for agriculture and fisheries. Salt water intrusion in the lowlands and in aquifers for irrigation and domestic uses is also already being experienced.

Environmental degradation

Of the country’s total land area, 5.2 million hectares (about 17%) are severely eroded and another 8.34 million hectares (27.3%) are vulnerable to drought, alternating with floods and typhoons on an annual basis. In the lowlands, continued use of unsustainable production practices such as the extensive use of chemical inputs, expansion of grazing lands, slash and burn practices, and deforestation especially in watershed areas have resulted in land degradation (i.e., erosion, declining soil fertility) and problems of water quality and availability. In the upland ecosystem, climatic drivers and human-induced activities have resulted not only in land degradation but also in the loss of biodiversity (BSWM, 2004).

The Philippines has long been vulnerable to weather risks, a fact exacerbated by climate change. Since the 1980s, the growth in agricultural gross value-added (GVA) has been erratic partly owing to the impact of severe weather risks and the periodic occurrence of the El Niño and La Niña phenomena. Aside from typhoons Ondoy and Pepeng, the El Niño in 2010 caused damages to agriculture and fishery estimated at PhP8.4 billion over a total area of 355,986 hectares.


Agricultural development is also undermined by flawed policies and institutions.

Weak agricultural extension service

Devolution of agricultural support services and extension, beset by lack of LGUs absorptive capacities, has resulted in weak extension services. The decentralization of the agricultural extension service was pursued on the premise that the constraints to production and service requirements of farmers and fisherfolk would be best addressed through an LGU-led, NG-supported agriculture service system. The devolution, however, has been beleaguered with poor absorptive capacities of LGUs to take on the task of extension service provision. With the social, infrastructure, and economic sectors, agriculture has been less prioritized in the development agenda of many LGUs. Hence, funding allocation is minimal and often times dependent on the support of the DA. This has resulted in inadequate manpower and weak extension services of local agriculture offices, both at the provincial and municipal levels (Balisacan, 2006).

Contradictory rice policy

Vested with the function of stabilizing the supply and prices of rice, the country’s staple, the NFA’s operations aim to raise farmgate prices to secure farmers’ profit, and at the same time, maintain retail prices at an affordable level for consumers. Government intervention on both sides of the market has led to huge public losses, increased the volatility of domestic prices, reduced the welfare of both consumers and producers, and discouraged the private sector from investing in distribution and storage facilities (Balisacan et al., 2006).

The NFA support price has on average led to an increase in consumer prices in ten regions of the country and contributed little to price stabilization (Purdue University, 2005). It is worth noting that among NFA rice consumers, only 46.6 percent are considered poor. In addition, among all poor households who are supposed to benefit from NFA rice, only 24 percent have been able to access them (Reyes et al., 2009).

Incomplete implementation of asset reforms

The long period of implementation and pending completion of the CARP has resulted in underinvestment in the sector, largely owing to the uncertainty faced by landowners. Landowners are reluctant to invest while their farms are undergoing acquisition processing. On the other hand, for lands that have been awarded, support services to the ARBs are insufficient to improve productivity. The implementation of asset reforms must therefore be completed in the next five years as provided in RA 9700, including the allocation and release of the PhP150 billion budget for the program. The full implementation of the CARPer will facilitate asset reform and serve as an incentive to farmers and other stakeholders to invest in rural areas (Habito & Briones, 2005).

Limited investments in public goods

Public goods are important because their benefits are shared by the community; they yield high social returns on investment and have long-term impacts, and they are not readily provided by the private sector but important to society as a whole. On the other hand, other interventions, such as subsidies on fertilizer have benefits limited to target groups, have impacts which are short-run, are costly to government, and do compete with or crowd out the private sector. The current spending on agricultural research and development (R&D), a public good of demonstrated benefits, is a mere 0.10

The current spending on agricultural research and development (R&D), a public good of demonstrated benefits, is a mere 0.10 percent of agriculture GVA. This is one-tenth of the 1.0 percent benchmark suggested by international practice.


percent of agriculture GVA. This is one-tenth of the 1.0 percent benchmark suggested by international practice. In the case of rice (which is indicative of the pattern for other products), the contribution of R&D, infrastructure and extension to rice production is estimated at 2.5 percent 40 percent, and 15 percent respectively, while returns on investments are: (a) 77.1 percent for R&D; (b) 80 percent for extension; and (c) 18 percent for irrigation (Balisacan, 2006).

Public good provision must consider quality. Many infrastructure and postharvest facilities deteriorate rapidly. Field reports document the poor quality of flat bed dryers and rice straw choppers for organic fertilizers. Graft and corruption eat up a large part of the outlays.

In 2004-2010, funds allocated for marketing assistance accounted for only 1.1 percent of the average annual budget of the DA. This is 7 percent lower than the prescribed allocation under the AFMA of 1997. The timely access and dissemination of market and market-related information is critical to making optimal business decisions that in turn impact on revenue, consumer prices, and supply conditions. Likewise, the availability of real-time market intelligence is useful in identifying potential markets as well as information on supply requirements.

Limited investments on commodities with comparative advantage

While public investment for the rice sector has been substantial in the past years, amounting to almost 60 percent (PhP22.56 billion) of the 2009 AFMA fund, the allocations for high value and export commodities such as fruit trees, vegetables, tree crops and fisheries have been inadequate. Net returns from vegetable and fruit tree production are higher than from rice production by a range of PhP5,000-100,000 (BAS, 2009).

The opportunity cost of underinvesting in other commodities is therefore very high. Focusing on commodities where we have comparative advantage will not only result in increasing income but also improving access to food, higher purchasing power, and enhanced overall welfare of the rural sector.

Incomplete implementation of the Strategic Agriculture and Fishery Development Zones (SAFDZs) and preparation of Integrated Development Plans (IDPs)

The identification of SAFDZs as provided under AFMA has not been fully implemented (AFMA Review, 2007). Programs in the sector should also focus on areas of high agriculture potential to avoid spreading investments too thinly resulting in small impact in the rural areas. The SAFDZs will also facilitate prioritization of investment programming in the sector. The identification of these areas should be initiated by LGUs, with technical support from the DA and DENR to ensure that priorities are consistent with local development thrusts and strategies, as well as aligned with the national policies.

Delay in the implementation of rationalization plans

Efficient and effective institutions and bureaucracy are essential to creating an enabling environment that encourages private, LGU and foreign investments in the economy. However, the country’s agricultural bureaucracy is continuously beset with problems related to overcentralization, fragmentation of agencies, weak coordination, overlapping of functions, politicization and corruption, making it ineffective in spurring growth and development for the sector (Habito and Briones, 2005). At the national level, there is a

Food security exists “when all people, at all times, have physical and economic access to sufficient, safe and nutritious food that meets their dietary needs and food preferences for an active and healthy life”.


need to rationalize the DA to focus its core functions on public goods and services, such as R&D extension, and regulation; and maintain its “steering” role in the development of the sector.

Strategic FrameworkVision

The Plan’s vision is a competitive, sustainable and technology-based agriculture and fisheries sector, driven by productive and progressive farmers and fisherfolk, supported by efficient value chains and well-integrated in the domestic and international markets, contributing to inclusive growth and poverty reduction.

Goals and Strategies

Within six years, through prudent use of resources, the agriculture and fisheries sector shall have attained the following: (a) improved food security and increased rural incomes; (b) increased sector resilience to climate change risks; and (c) enhanced policy environment and governance.

Goal 1: Food Security Improved and Incomes Increased

This Plan takes the view that food security exists “when all people, at all times, have physical and economic access to sufficient, safe and nutritious food that meets their dietary needs and food preferences for an active and healthy life” (FAO, 2002).

This goal will be further fleshed out with the release of the Food Staples Self-Sufficiency Roadmap (FSSR) 2011-2016. The FSSR aims to attain self-sufficiency in staples by focusing on irrigation and instituting reforms in the NFA.

For the sector to fulfill its role in reducing rural poverty and to achieve food security in the long term, increased incomes, productivity and production shall be prioritized. Increased investments and employment are to be fostered and ARBs transformed into profitable entrepreneurs.

Strategy 1.1 Raise productivity5 and incomes of agriculture and fishery-based households and enterprises.

Raising productivity and incomes is an important first step towards modernizing the sector. Productivity enhancements will make agriculture and fishery products more competitive, contributing to the growth of the other economic sectors. Chapter 3 on Competitive Industry and Services Sectors further reinforces the important linkage between the agriculture and non-agriculture sector, especially in the promotion of agribusiness and exports. The increased income of agriculture and fishery-based households and enterprises shall lead to the improvement of the quality of lives and capital accumulation for investments. Below are the measures that shall be taken to implement the above strategy:

a) Diversify production:

• Facilitate and promote diversification of production and livelihood options;

• Update SAFDZs as bases for identifying investment areas;

b) Complete the delineation of municipal waters for better fishery resource management;

c) Improve rural infrastructure and facilities:

• Establish climate-resilient agriculture infrastructure through enhanced technical design of irrigation and drainage systems and facilities, farm-to-market roads (FMRs), postharvest

Raising productivity and incomes is an important first step towards modernizing the sector. Productivity enhancements will make agriculture and fishery products more competitive, contributing to the growth of the other economic sectors.

5 Productivity refers to land, labor and capital.


facilities (PHF), trading posts, among others;

• Provide irrigation services and facilities focusing on rehabilitation and restoration of national irrigation systems; maintain existing systems and establishment of small scale irrigation systems; enhance cost-sharing/counterpart mechanisms for financing with LGUs; and adopt an integrated water resource management approach to ensure water supply;

• Increase the effectiveness6 and efficiency of the rural infrastructure system, including agricultural logistics and various facilities such as farm-to-market roads (FMR), postharvest and information systems (see also Chapter 5: Infrastructure Development); based on a master plan, identify priority FMR projects that strategically link production and consumption areas; and

• Tap private sector participation in the construction of the needed support infrastructure for the sector;

d) Develop markets and sharpen regulatory competence:

• Provide effective market assistance, marketing support and information systems, product development, market intelligence, and encourage participation in product promotion activities, both in the domestic and international markets;

• Provide trade facilitation, including provision of trade and fiscal incentives to encourage participation and investments from the private sector. This will, likewise, entail reforms and law enforcement of agriculture trade policies, and strengthen market access initiatives and technical assistance to SMEs and cooperatives, among others; and

• Sharpen regulatory competence through technical and legal training, improvements in laboratories and equipment, and alignment of domestic with internationally accepted standards, including those for organic inputs, food, and Halal certification;

e) Strengthen Research, Development and Extension (RD&E):

• Update databases and information systems for the formulation of a reliable and responsive National RD&E agenda;

• Increase investments in integrated RD&E programs that promote productivity enhancement, develop environment-friendly and efficient technologies throughout the value chain, in partnership with selected higher education institutions, LGUs, private and business sector;

• Harmonize all agricultural and fisheries mechanization programs and projects of all concerned national government agencies, LGUs, and higher education institutions;

• Rationalize and strengthen the extension system to improve complementation of national, local and private sector entities along the value chain in the provision of extension services;

• Expand and sustain the sector’s human resource base (see also Chapter 8: Social Development); and

• Encourage the participation of farmers, fisherfolk and their organizations in research and promotion activities;

6 Effectiveness refers to cost effectiveness, applicability in the area or suitability with the needs of end-users.


f ) Improve the sector’s credit access:

• Form stronger partnerships between government and private financial institutions;

• Strengthen the AFMA-mandated Agro-Industry Modernization Credit Financing Program (AMCFP);

• Implement capacity building programs to improve the credit-worthiness of farmers, fisherfolk and their organizations;

• Promote long-term financing for long-gestation crops such as coconut, rubber, oil palm, coffee, cacao and fruit trees similar to Indonesia, Malaysia and Thailand;

• Develop and pilot test innovative financing schemes that would target farmer and fisherfolk who have no collateral and credit track record; and

• Intensify information dissemination of credit, guarantee and insurance programs.

g) Secure food availability and affordability:

• Ensure the availability of food staples (rice, white corn, and other starchy food) at reasonable prices at all times;

• Focus on long-term productivity-enhancing measures for agriculture and fisheries such as irrigation, R&D and extension services instead of short-term interventions (i.e., direct input subsidies);

• Engage proactively with LGUs and the private sector to provide strategic agricultural infrastructure and services;

• Optimize productivity in mariculture parks and broaden the aquaculture base;

• Transform the NFA into an agency focused on addressing extreme shocks to food supply and prices, while maintaining a predictable regulatory environment for rice trade; and

• Management of consumption and diversification of staples.

Strategy 1.2. Increase investments and employment across an efficient value chain.

New investments are particularly important since the sector employs a large share of the labor force and accounts for a majority of the poor population. Making the sector competitive and modern, however, may render some workers redundant, as in the case of mechanization. For the released rural workers to find gainful employment in the industry and services sector, capital accumulation must rise sufficiently such as in agro-industries and agricultural services (e.g., marketing and logistics). In addition, complementary education and training can make rural workers more adaptable and flexible. Expanding the markets of agriculture and fishery products through value-adding and scaling-up of operations can also provide additional employment opportunities.

a) Create job opportunities by expanding existing markets, aggressively exploring new markets and promoting private investments on agro-industries, agri-services (i.e., custom-hiring), agro-forestry and fisheries, in both PPP and private sector-led modes;

b) Localize agricultural promotion and development in accord with the subsidiarity principle. Regional strategies must take precedence in championing local commodities and promoting sector competitiveness;

New investments are particularly important since the sector employs a large share of the labor force and accounts for a majority of the poor population.


c) Promote more value-adding into products and develop the capacities of stakeholders for value-chain management;

d) Promote vertical and horizontal integration of input, production, and marketing (e.g., agro-industry clustering);

e) Strengthen the country’s agricultural exports by focusing resources on high-value crops (fruits and vegetables, ornamentals, rubber, oil palm, coffee, coconut, etc.) and fishery products (e.g., grouper, seabass, seaweeds, etc.), where comparative advantage is high; and

f ) Expand investments in aquaculture and other food production areas.

Strategy 1.3. Transform agrarian reform beneficiaries (ARBs) into viable entrepreneurs.

The CARP intends to improve the living conditions and wellbeing of the ARBs, lifting them out of poverty and empowering them to improve their socioeconomic future. Awarded agricultural lands, the ARBs’ basic input for their economic activities, must therefore be harnessed for this purpose, taking into consideration ecological sustainability and gender equality/equity. It is important to strengthen ARBs’ capacities for agricultural production and transform them into entrepreneurs capable of improving the productivity of the awarded lands, adding substantial value to their produce, engaging in off-farm endeavors, and improving their access to the markets:

a) Achieve land tenure stability of the ARBs in the CARP-awarded lands, preferably through individual certificates of land ownership award

(CLOA) or at least through collective CLOA;

b) Strengthen the organizational capacity of ARBs and ARB organizations to develop and manage agri-enterprises;

c) Scale-up microenterprises into formal and viable SMEs through the clustering of ARCs and establishing networks of enterprises;

d) Liberalize access to credit by ARBs;7

e) Provide enterprise-based legal support for ARBs and ARB organizations to strengthen their structures and mechanisms; and

f ) Establish physical infrastructure (FMR, irrigation systems and postharvest facilities, among others) in strategic ARCs and clusters.

Goal 2. Sector Resilience to Climate Change Risks Increased

The resiliency of the country’s agriculture sector is threatened by climate change and extreme weather events. Damage to rural infrastructure and losses to crops, livestock and fishing grounds, water allocation and the competing priorities in the use of water supply are a few emerging problems that should be dealt expediently. Sound scientific advice is needed regarding appropriate crop varieties, cropping patterns, and climate-vulnerable structures, including irrigation systems.

7 In compliance with Section 14 of Republic Act 9700

It is important to strengthen ARBs’ capacities for agricultural production and transform them into entrepreneurs capable of improving the productivity of the awarded lands, adding substantial value to their produce, engaging in off-farm endeavors, and improving their access to the markets.


Strategy 2.1. Reduce climate change-related risks and the vulnerability of natural ecosystems and biodiversity through ecosystem-based management approaches, conservation efforts, and sustainable environment and natural resources-based economic endeavors such as agri-ecotourism.

a) Adopt Integrated Water Resource Management (IWRM) and Sustainable Land Management (SLM) Technologies in the development of water, land, and related resources;

b) Promote environment-friendly and sustainable production systems that use the farming systems approach, employ good agriculture/aquaculture practices, and promote organic agriculture, as embodied in RA10068 or the Organic Agriculture Act of 2010;

c) Improve the climate change resilience of fisheries through the restoration of fishing grounds, stocks and habitats and through investment in sustainable and climate change-responsive fishing technologies and products; and

d) Strengthen sustainable, multisectoral and community-based resource management mechanisms.

Strategy 2.2. Increase the resilience of agriculture communities through the development of climate change-sensitive technologies, establishment of climate-resilient agricultural infrastructure and climate-responsive food production systems, and provision of support services to the most vulnerable communities.

a) Strengthen R&D for the improvement of crop, livestock and fishery varieties (i.e., resistant

to temperature increase, drought-tolerant, resistant to stresses such as water logging and pests);

b) Promote viable and competitive crop, livestock and fishery varieties that can tolerate climate variability;

c) Establish climate-resilient agriculture infrastructure through enhanced technical design of irrigation facilities, FMR, PHF, etc. that take climate risks and extreme climate events into account; and

d) Strengthen agricultural extension and support services to raise farmers’ knowledge and capacity to adopt climate-sensitive farming and fishing technologies.

Strategy 2.3. Strengthen the agriculture and fisheries insurance system as an important risk sharing mechanism.

a) Improve risk-reducing mechanisms (i.e., guarantee, insurance) to encourage more banks and other lending conduits such as cooperatives and NGOs to lend to agriculture and fisheries; and

b) Introduce innovative risk-transfer mechanisms such as weather-based/index insurance systems.

Strategy 2.4. Incorporate natural hazards and climate risk in the agricultural land use plan or the Comprehensive Land Use Plan (CLUP)

a) Pursue the passage of a National Land Use Law as a basis for effective land use policy and planning; and

b) Use land use planning at national and local levels to identify hazardous areas and as a basis for implementing adaptation and mitigating measures in climate risk- and disaster-prone areas.

The NCI is a multisectoral and integrated planning approach adopted by the DA, DAR, and the DENR towards more efficient use of resources. Through the NCI, the three rural development agencies undertake joint planning, programming and budgeting as well as monitoring and evaluation in the achievement of the sectoral goals and targets of the Plan.


Strategy 2.5. Strengthen the capacity of communities to respond effectively to climate risks and natural hazards.

a) Conduct IEC campaigns and capacity building activities for the purpose at the local level; and

b) Establish community-based early warning systems, agrometeorology stations, automatic weather stations (AWS) and climate field schools.

Strategy 2.6. Continue vulnerability and adaptation assessments especially in food production areas.

a) Produce updated weather-based dynamic cropping calendars to address the irregularity of wet and dry seasons, and develop optimal planting windows based on medium-range weather forecasts; and

b) Undertake a study to assess groundwater resources availability and vulnerability to ensure food security during period of drought.

Goal 3. Policy Environment and Governance Enhanced

As a complement to the preceding goals, the policy environment and governance shall be enhanced through: (a) the NCI; (b) the use of an effective common management strategy among agencies concerned; (c) budgetary reforms; (d) PPP; and (e) a review of laws and policy issuances.

Strategy 3.1. Reaffirm the mechanisms and objectives of the National Convergence Initiative (NCI).

The NCI is a multisectoral and integrated planning approach adopted by the DA, DAR, and the DENR towards more efficient use of resources. Through the NCI, the three rural development agencies undertake joint planning, programming and budgeting as well as monitoring and evaluation in the achievement of the

sectoral goals and targets of the Plan. The objectives of the NCI include:

a) Accelerating the completion of the CARPer up to 2014;

b) Rationalizing land use policies and strengthen the system of land property rights;

c) Promoting sustainable agriculture and preserve the land resource base;

d) Enhancing the investment and opportunity climate for agribusiness;

e) Promoting sustainable upland development and forest management; and

f) Initiating CCA and mitigation measures.

Strategy 3.2. Adopt Managing for Development Results (MfDR) as a common approach among rural development agencies.

MfDR is a management strategy that focuses on development performance and sustainable improvements in outcomes, providing both framework and practical tools for strategic planning, risk management, progress monitoring, and outcome evaluation (OECD Policy Brief, March 2009). By focusing on clear and measurable results, government resources are translated into programs and projects that deliver development outcomes.

Strategy 3.3. Implement budgetary reforms.

The current budget system for the sector is commodity- and production-oriented and is not geared to promoting competitiveness. Funding for key functional areas under the AFMA, such as market and information services, regulatory functions, research, etc., is currently allocated to commodity programs, which are centrally managed


and lack the ability to prioritize strategically across the entire sector.

A revised budget format shall correct this shortcoming by introducing a system based on priorities, functional responsibilities and market needs, consistent with the AFMA’s goals. The revised format will also provide for a greater alignment between the planning and budget processes. This budgetary reform is also inherently linked with the MfDR strategy.

Strategy 3.4. Pursue PPP especially for infrastructure and value chain development.

The private sector will be tapped to participate in government’s efforts in delivering immediately the needed infrastructure and services in the agricultural and fisheries sectors. Among the projects that may be eligible under PPP include irrigation infrastructure, food supply chain and postharvest services (i.e., bulk handling facilities, food/grains terminals and processing, storage, handling and port/transport facilities), production centers for various farm inputs, fish farming infrastructure, and market and trading centers.

Strategy 3.5. Review critical legislation (i.e., AFMA, Fisheries Code) and policy issuances (i.e., sugar trade).

A review of laws and policies shall be a continuing activity to ensure the responsiveness of such issuances to current developments in the sector. The AFMA of 1997 and Fisheries Code of 1998, mandates a mandatory review every five years. Corn and sugar trade policies will also be reviewed, to take into account the latest global trends and market forces, and to ensure supply adequacy supply, price stability, and affordability.

Legislative AgendaPursue the Passage of a National Land Use Law

The passage of the bill, pending for two decades now, is expected to provide legal and other mechanisms not only for land reform areas, but also zoned areas for water and water uses, especially for agriculture. This is especially important in anticipation of the end of the agrarian reform program and the subsequent opening of the land market. Further, it is envisioned that the policy shall serve as guide to the optimum allocation of land among competing uses within the framework of sustainable development. It shall also provide a mechanism for resolving land use policy conflicts taking into consideration the principles of social equity and economic efficiency.

Institute Reforms in the NFA

The NFA Reorganization Act will further rationalize grains-sector trading. It restructures the agency by separating its regulatory and proprietary functions. The NFA shall grant import permits for rice to all applicants as a ministerial function, subject to the payment of applicable taxes, duties, and service fees. The quantitative restriction on rice must be reviewed in light of the WTO exemption that expires in 2012. The proposed law enables NFA to engage in activities consistent with its renewed mandate.

Rationalize DA, DAR and DENR

The agriculture bureaucracy should be rationalized through the efficient and effective convergence and complementation of the agriculture, agrarian reform and natural resources (AARNR) service agencies and related offices by taking measures to sort out institutional overlaps. The convergence effort will operationalize sustainable development by integrating the social, economic, and environmental aspects of rural development. The proposed legislation will rationalize and strengthen


the provision of extension services towards improving national, local and private sector complementation.

Work for the Accelerated Irrigation Act

Under this law, the NIA shall undertake a six-year accelerated irrigation program to construct irrigation projects in the remaining unproductive but potentially irrigable lands nationwide to an extent to be determined in a full inventory of potential areas for irrigation, and of potential irrigation projects in accordance with technical, economic, and environmental criteria.

Work for a Food Safety and Food Labelling Law

This measure puts in place a coordinated food safety and certification system, clearly defining the functions and mandates of the agencies concerned; establishing a system for public laboratories to ensure the credibility of test results; and strengthening the participation of food supply industries in the global food trade, among others. Consumers’ right to information should also be protected through proper labelling of raw materials and ingredients of processed food products, including those sourced from genetically-modified organisms.

121Accelerating Infrastructure Development05Accelerating Infrastructure Development


The Plan’s infrastructure development program aims to contribute to inclusive growth and poverty reduction. It will support the performance of the country’s economic sectors and ensure equitable access to infrastructure services, especially as these affect the people’s health, education, and housing. Toward these ends, the government will accelerate the provision of safe, efficient, reliable, cost–effective, and sustainable infrastructure.

Accelerating Infrastructure Development

Crosscutting StrategiesThe country’s inadequate infrastructure has been identified as a critical constraint to economic growth1. This inadequacy, in both quantity and quality, is the result of low levels of public and private sector investments in infrastructure, which fall short of the requirements of a progressive economy and a growing population. Moreover, inequitable access to basic infrastructure services has also become an obstacle to poverty reduction and, more generally, to inclusive growth because it limits the opportunities for economic and social advancement available to marginalized sectors.

To accelerate infrastructure development and offer equitable access to infrastructure services, the following objectives and strategies shall be pursued across all infrastructure subsectors:

To optimize resources and investments

Low levels of investment in infrastructure are directly caused by the country’s tight fiscal situation. Notwithstanding the measures to address the narrow

fiscal space discussed in Chapter 2, the following strategies need to be implemented to make the most of available resources and investments in infrastructure:

Improve project preparation, development, and implementation

Inadequate project preparation, poor project quality-at-entry, and poor project execution cause delays and changes in project scope and raises costs in the course of implementation. All of these significantly reduce the project’s value and hamper the attainment of project objectives.

To address this problem, the following policy reforms2 shall be implemented:

• Strengthening the capacity of NEDA and other government agencies in Value Engineering/Value Analysis (VE/VA) and Risk Analysis and Management to ensure that infrastructure projects are not overdesigned or overspecified and to minimize cost-overruns, project

1 See ADB. Philippines: Critical Development Constraints, ADB Publications, December 2007, p.1-62 and C.F. Habito. An Agenda for High Inclusive Growth in the Philippines. ADB Publications 2010, p. 1-61.2 These reforms were recommended under the 2009 Philippines-Australia Partnership for Economic Governance Reforms (PEGR)-funded Reform Agenda 006-07 on Institution Strengthening of the NEDA and other oversight agencies on value engineering, contract preparation, and performance monitoring of infrastructure projects

Low levels of investment in infrastructure are directly caused by the country’s tight fiscal situation.

Inadequate project preparation, poor project quality-at-entry, and poor project execution cause delays and changes in project scope and raises costs in the course of implementation.

123Accelerating Infrastructure Development

implementation delays, and changes in scope of works;

• Incorporation of VE/VA and Risk Analysis in the guidelines and processes of the NEDA Investment Coordination Committee (ICC);

• Development of Model Transaction Documents/Contracts that may be uniformly applied to PPP projects of national government agencies (NGAs) and LGUs3; and

• Monitoring, management, and evaluation (MME) of PPP projects for the immediate mitigation of potential problems during contract implementation, while maintaining clear lines of accountability between contracting parties and the oversight agency.

To assist agencies in project preparation, a fund to support the conduct of feasibility studies may be established. This fund will ensure that feasibility studies are undertaken in a timely and correct manner.

With regard to PPP projects, NEDA-ICC approval of business cases shall be secured before proceeding to a full feasibility studies to save on project preparation costs. This shall include the “go or no-go” decision on a project at an early stage and shall be required of all PPP projects irrespective of modality.

Synchronize planning and budgeting

The MTEF and the OPIF represent substantial progress in ensuring the

consistency and responsiveness of the expenditure program with the national development agenda of the government. Despite these, there is still a need to guarantee that only those infrastructure programs and projects that will generate genuine economic benefits and are consistent with established development plans will be adequately funded for timely implementation.

By synchronizing the prioritization of programs and projects on one hand and allocating appropriate funding across government agencies on the other, the government ensures that only programs and projects that are strategic and critical to the realization of developmental goals shall be prioritized for funding. As a prior step, however, government agencies must demonstrate that proposed projects indeed make positive net contributions to national economic and social welfare.

Coordinate and integrate infrastructure initiatives

Development initiatives across infrastructure subsectors shall be coordinated and integrated. This ensures that the requirements of these subsectors are addressed within the fundamental levels of the infrastructure sector and that their contributions are fully utilized. Intended outcomes are better realized if there is a coordinated and integrated strategy for infrastructure initiatives.

LGUs play a key role in infrastructure development. While local autonomy is duly recognized, the financial and technical capacity of LGUs must be enhanced if they are to become more effective development partners. Their capacity for planning must also be improved so that local and national plans can be harmonized.

Development initiatives across infrastructure subsectors shall be coordinated and integrated. Intended outcomes are better realized if there is a coordinated and integrated strategy for infrastructure initiatives.

3 Specific BOT/PPP model transaction documents/contracts have already been developed for four subsectors namely: (a) urban mass rail; (b) bulk water supply; (c) solid waste management (SWM); and (d) ICT. A contract drafting tool which aims to encompass all other projects and sectors not covered by the four model contracts has also been developed. The model contracts and the contract drafting tool are both posted on the NEDA website under the “Programs and Projects” section.


To aid planning and project development, the collection, management, and integration of key infrastructure and related data both at the national and local levels will be improved.

To attract investments in infrastructure

Improving investor confidence is necessary in order to generate additional financing and attract service providers. Both, in turn, ease the burden of government in providing infrastructure. The following strategies aim to make the country an attractive destination for investments by establishing a stable, consistent, and transparent policy environment and by reducing the money- and time-cost of doing business:

Improve the institutional and regulatory environment of the infrastructure sector

Regulatory agencies play a vital role in infrastructure development since they strongly influence, for good or ill, the provision of existing infrastructure services and the levels of forthcoming investments. They also affect the accessibility of such services, particularly the rates at which these are made available.

Improving the regulatory environment for infrastructure therefore becomes contingent on institutional reforms, which will involve:

a. the separation of operation and regulatory functions of agencies in order to remove conflicts of interest that arise naturally when such functions are performed by a single entity;

b. the establishment of an independent body that consolidates in itself all regulatory functions to support the provision of public infrastructure services in subsectors with multiple regulators;

c. the creation of a regulatory framework where this is lacking and necessary; and

d. the strengthening of regulatory institutions through capacity building and reinforced independence.

Regulatory agencies should pay special attention to vertical integration trends in supply and distribution utilities. These may facilitate transfer-pricing and result in inefficiencies from the supply side to the distribution side. This issue becomes critical in sectors where natural monopolies are present, such as energy and water, where returns on investment are guaranteed and where distribution is regulated while supply is not.

Encourage PPPs

The huge investment requirements of the infrastructure sector, coupled with the government’s need to observe fiscal discipline, means that government shall tap the private sector for the financing, construction, operation, maintenance, and rehabilitation of major infrastructure in high-priority areas, such as transportation, power and water.

To this end, the environment for the implementation of PPPs shall be improved by revisiting the following guidelines and policies:

a. RA 7718 and its Implementing Rules and Regulations (IRR);

b. Guidelines and Procedures for entering into Joint Venture ( JV) Agreements between Government and Private Entities; and

c. RA 9184 or the General Procurement Reform Act.

The objective of the review shall be to clarify ambiguous provisions and streamline the procedures and processes of project approval and implementation.


Experience during the global financial crisis and constraints encountered by concerned agencies in processing and implementing PPP projects will also be considered to make these guidelines and policies more responsive and attractive to the private sector.

To foster transparency and accountability in infrastructure development

Encourage stakeholder participation

Government shall encourage the active participation of the public and civil society in governance, monitoring, and feedback. Transparency and accountability are integral to a predictable policy environment conducive for investment.

To adapt to climate change and mitigate the impacts of natural disasters

Institutionalize CCA and DRRM in infrastructure development.

The impacts of climate change and natural disasters add to the country’s infrastructure problems and hamper resolution of the constraints earlier discussed. Hence, CCA and DRRM will be institutionalized in infrastructure development.

Plans and designs should include the possible effects of climate change and natural disasters in order to develop disaster–resilient infrastructure a n d help mitigate the adverse impacts of climate change. LGUs should also incorporate CCA and DRRM strategies into their respective plans, programs and budgets to allow timely, efficient and effective mitigation and disaster response at the local level.

To provide productive employment opportunities

Adopt a labor-intensive scheme where applicable

Infrastructure can contribute significantly to local employment generation and can harness skills and technical expertise of the workforce. To provide productive employment opportunities that will contribute to inclusive growth, the infrastructure sector shall adopt an employment–intensive or labor–based scheme whenever it is most optimal in infrastructure development. Safety and health in public works undertakings shall be ensured at all times.

Infrastructure SubsectorsTransport

Assessment, Issues, and Challenges4

In the MTPDP 2004–2010, the development of the country’s transport infrastructure was principally aimed at the decentralization of progress and development by providing opportunities for growth, especially in regions and areas adjacent to Metro Manila. Towards that end, the following major thematic areas in transport were pursued and became the primary focus of both public and private investment: (a) the development of the nautical highway system and road-roll-on/roll-off (RORO) terminal system linking the entire country; (b) the development of tourism infrastructure to provide access to major tourism destinations; (c) the affirmative action for peace and development in Mindanao and other deeply impoverished areas; and (d) the decongestion of Metro Manila and the spread of development to adjacent regions.

4 Source: Updated MTPDP 2008–2010

The impacts of climate change and natural disasters add to the country’s infrastructure problems and hamper resolution of the constraints earlier discussed. Hence, CCA and DRRM will be institutionalized in infrastructure development.


Facilities for RORO have been built or rehabilitated in 22 ports identified under the Strong Republic Nautical Highway (SRNH), with 42 RORO ships operating in the identified SRNH routes run by 25 shipping operators as of the end of 2009. Economic gains have been recorded in connection with the intermodal road-RORO terminal system (RRTS) connecting Mindanao, Visayas, and Luzon, with a reduction in travel time by around 12 hours and a reduction of transport cost by 37-43 percent for passengers and 24-34 percent for cargo. The Subic Bay Port Development Project was also completed and was expected to generate significant benefits with the increase in the port’s container capacity from 100,000 to 600,000 TEUs (20-foot equivalent units).

The Subic–Clark–Tarlac Expressway (SCTEx), linked to the existing North Luzon Expressway (NLEX), was also completed and has been operational, reducing travel time from Subic to Manila and from Tarlac to Manila. The construction of the Tarlac-Pangasinan-La Union Toll Expressway (TPLEx) extending the SCTEx from Tarlac to La Union is ongoing and is expected to relieve traffic congestion along the existing Manila North Road. In the Southern Luzon Corridor, the completion of the Batangas Port Development Project and the Southern Tagalog Arterial Road (STAR) Expressway will pave the way for the development of the industrial belt south of Metro Manila.

With respect to roads and bridges, the completion of substantial improvement and rehabilitation is expected to reduce transport costs and induce economic activities, particularly in the rural areas. As of December 2009, 22,468 km. (75.15%) of all national roads had been paved, of which of 13,525 km. were national arterial roads and 8,943 km. national secondary roads. Meanwhile 93 percent of the total 314,456 linear meters of national bridges have been made permanent. As for local roads, of the 30,924.76 km. of existing provincial roads, 30.2 percent or 9,345.15 km. have been

paved, while 69.5 percent, or 21,464.50 km, are unpaved, with 0.4 percent or 115.11 km. of still undetermined condition. Of the 14,810.44 km. of city roads, 61.7 percent, or 9,138.348 km. have been paved and 35.8 percent, or 5,308.220 km, are unpaved, with 2.5 percent or 363.872 km. of undetermined quality.

Major tourist destinations identified in the previous Plan included Cebu–Bohol–Camiguin, Clark–Subic, Cordillera, Davao, Ilocos, Boracay, and Palawan, among others. To serve Panay Island and its immediate environs, the New Iloilo Airport was completed in June 2007. The New Bacolod (Silay) Airport for Negros Island destinations was inaugurated and opened for operations on January 18, 2008. The Caticlan Airport is currently being rehabilitated, and the Kalibo Airport’s terminal building was initially expanded to cater to the increasing visitor traffic to Boracay Island and nearby destinations. To serve the Cordillera area, the facilities of the San Fernando Airport in La Union were upgraded, while the first phase of improvements on the Busuanga (Coron) Airport in Palawan was substantially completed.

On the goal of developing Subic–Clark as an Asian logistics center, the Civil Aeronautics Board (CAB) approved and published the IRR of EO 253 expanding air services at Diosdado Macapagal International Airport (DMIA) and Subic Bay International Airport (SBIA). Developments at DMIA include the expansion and rehabilitation of the existing passenger terminal and the installation of radar equipment to enhance the safety of flights, as well as to ensure round-the-clock airport operations even in adverse weather. The CAB and the RP Air Panel negotiated air services agreements (ASAs) from 2006 to 2010 with Singapore, Turkey, Oman, Russia, Libya, Cambodia, United Kingdom, Spain, Brunei, Australia, Kuwait, UAE,


Qatar, Malaysia, Finland, Iran, Thailand, Netherlands, Hong Kong, Canada, Macau, Palau, Bahrain, People’s Republic of China, India, Japan, Republic of Korea, Nepal, and New Zealand. These agreements resulted in increases in capacity entitlements, new routes, more access points, multiple airline designation, and airline cooperative arrangements. The CAB was able to negotiate an average of 200–300 tons capacity per week for cargo, which covers Manila, Subic, Clark, and other points in the Philippines.

While there are completed and ongoing transport projects implemented through PPP under the BOT Law, private-sector participation in transport infrastructure development has been continually enhanced to augment the government’s budgetary support for capital investment. This effort included the development and construction of expressways, railways, and airports; the privatization of individual ports or groups of ports; and the operation and maintenance of transport facilities. For the roads subsector, the JICA-assisted Master Plan on High Standard Highway Network Development, which identified a long list of potential PPP expressway projects, was completed in July 2010. In addition, the Preparatory Survey for PPP Infrastructure Development Project, which aims to identify bottlenecks in PPP project implementation and select priority infrastructure projects, is underway and close to completion.

Some of the maintenance of land transport assets (i.e., maintenance of national, provincial, and city roads nationwide; improvement of drainage; installation of adequate traffic lights, and road safety and pollution monitoring devices) had been undertaken in the last few years using revenues from the Motor Vehicle Users’ Charge (MVUC). Objectivity in the prioritization and allocation of resources for national road maintenance was also enhanced using a

computerized system with comprehensive and up-to-date technical and economic criteria and data. For local roads, an incentive-based policy reform program is currently underway. This uses incentives or grants to finance road maintenance and rehabilitation to motivate LGUs to institute policy reforms in local government systems and processes, and improve performance in road rehabilitation and maintenance and other service delivery.

Despite notable accomplishments in the transport sector, the institutional and bureaucratic reforms proposed under the previous Plan seeking to separate the operation and regulation functions of transport agencies have not been achieved. This notwithstanding, the civil aviation subsector underwent a degree of reorganization with the enactment of RA 9497 on March 4, 2008 creating the Civil Aviation Authority of the Philippines (CAAP). RA 9497 grants the new body fiscal autonomy through the corporatization of the preceding civil aviation agency, while retaining its technical regulation functions over the civil aviation industry. The economic regulation functions meanwhile rest with the CAB. There is a need to pursue a full restructuring of the air transport organizations as well as those for the ports and for rail transport.

To become globally competitive and address safety issues, especially those raised by civil aviation stakeholders, the government is implementing the Communications Navigation Surveillance/Air Traffic Management (CNS/ATM) system in accordance with International Civil Aviation Organization (ICAO) standards. A similar project was completed in 2004—the Nationwide Air Navigation Facilities Modernization Project (Phase 3)—to replace ageing air navigation equipment.

Likewise, maritime safety measures have been pursued in domestic shipping in compliance with International Safety Management (ISM) and National Safety Management (NSM) codes and the Maritime Industry Authority (MARINA)


Ship Safety Inspection System. Ship inspection has also been enhanced through the Japan International Cooperation Agency ( JICA)-assisted Project on the Enhancement of Ship Inspection completed in 2005. A MOA between MARINA and the Philippine Coast Guard (PCG) to implement ship safety inspection was signed on September 14, 2005. To strictly monitor compliance by ships and to enforce maritime safety rules and regulations by deputized maritime enforcers, MARINA, on March 16, 2009, signed a memorandum of understanding (MOU) with the PCG, Philippine National Police-Maritime Group (PNP-MG), the Union of Local Authorities of the Philippines (ULAP), and the Liga ng mga Barangay (LNB). In 2010, a total of 356,831 mandatory predeparture inspections (MPDI), 992 port state control inspections, and 5,476 Safety of Life at Sea (SOLAS) compliance inspections were conducted by the PCG.

Compliance with international maritime security standards has been implemented through the adoption of the International Ship and Port Facility Security (ISPS) Code. Vessel Traffic Management Systems (VTMS) have been installed in the Port of Manila, Corregidor Island, and the Port of Batangas following the security provisions of the Code. There are plans for the installation of similar standards in other major ports.

In 2005, the Study on Wooden-Hulled Ships (WHS) recommended standards, rules, and regulations for the continued operation of existing wooden-hulled ships, and the construction, safety, and operation of new ones. On October 27, 2010, the Rulebook on the Construction and Repair of Wooden-Hulled Ships and Wooden-Hulled Boats with Outriggers was approved by the MARINA Board. As part of the domestic shipping fleet modernization program, MARINA entered into a MOA with the Development Bank of the Philippines (DBP) Maritime Leasing Corporation (now, DBP Leasing Corporation) on June 2, 2008. The aim is to provide loan facilities to qualified ship

owners or operators who are interested in the acquisition of RORO ships to be deployed in SRNH routes. As of June 2010, seven companies have availed of the said facility involving the acquisition of 12 RORO ships. EO 588, entitled “Strengthening the Philippine Shipbuilding and Ship Repair Sector and Instituting Measures to Promote Its Growth and Development”, was issued on December 8, 2006. This mandated the formulation of a Comprehensive Development Plan for the Philippine Shipbuilding and Ship Repair Industry that was completed on October 16, 2007 and subsequently endorsed to the Office of the President on December 3, 2007 together with the draft memorandum circular directing the implementation of the Plan.

To further promote the development of domestic shipping, RA 9295 entitled an “Act Promoting the Development of Philippine Domestic Shipping, Shipbuilding, Ship Repair and Ship Breaking, Ordaining Reforms in Government Policies towards Shipping in the Philippines and for Other Purposes” was enacted on May 3, 2004. The law deregulated the domestic shipping industry by allowing domestic operators to set their own passenger or cargo rates, hence promoting investments in the industry.

Notwithstanding the accomplishments in the transport sector, several issues and challenges still remain to be addressed, such as the following:

Lack of integrated and coordinated transport network

A major shortcoming of the sector is the absence of an integrated and well-coordinated national transport plan that will guide the prioritized funding and implementation of transport projects, as well as the physical planning and intermodality of transport infrastructure. This situation is likely a consequence of the current institutional setup


characterized by weak coordination, regulation, and oversight for transport policies and plans.

The lack of integration between national and local government plans and programs/projects is also a major problem that results in gaps in the transport network, contributing to the low capacity and quality of infrastructure facilities. This is partly a consequence of the insufficient capacity of LGUs to finance and manage local projects, particularly roads, and the lack of national government funds to maintain the existing national transport infrastructure base.

Global assessments of the country’s transport infrastructure network indicate that its quality and capacity remain low. These deficiencies stem mainly from inadequate and unreliable funding for construction and development of transport infrastructure, as well as for the management and maintenance of existing transport infrastructure assets.

To promote productivity and trade competitiveness, seamless multimodal transport networks and logistics systems are needed. The MTPDP 2004–2010 recognized the need for a transport logistics system that will decongest Metro Manila by ensuring efficient linkages between its business centers and nearby provinces. In 2007, the Subic–Clark–Manila–Batangas (SCMB) Corridor, which connects the three regions accounting for two-thirds of the country’s GDP, was envisioned as a major transshipment and logistics hub in the Asian region following the creation of the Luzon Urban Beltway (LUB) Super Region. The SCMB Corridor handles more than 80 percent of the volume of the national cargo throughput, but its potential is constrained by inefficient logistics operations and infrastructure support. This has primarily resulted in high transport costs of goods and services that has made the corridor less

competitive. What is needed is a seamless multimodal logistics system along the SCMB Corridor to support intraregional trade and investment, an increase in the level of services of an integrated transport system, and an efficient flow of commodities, supplies, and inputs to tourism areas and various economic and industrial zones. Other strategic logistics corridors need to be identified and developed in a similar manner.

Overlapping and conflicting functions of transport and other concerned agencies

The institutional structure of the transport sector needs to be studied thoroughly to determine the most efficient institutional setup and the corresponding institutional reforms to improve the quality of transport service, and to prevent conflicts between different modes of transport that serve the same purpose. A requisite, however, is a long-term policy framework to achieve an integrated and well-coordinated national transport plan. This policy framework would also address governance issues in the sector by raising the level of accountability of decision-makers and serve as the basis for a multimodal transport plan to guide investment planning, programming, and prioritization, among others. Specific policies related to governance may be included in the policy framework to ensure that the public sector is performance-oriented and that outcome-based services are promptly delivered.

Transport safety and security concerns

Road accidents are now the fourth leading cause of death in the Philippines according to the DOH. The ADB Regional Safety Program published in 2005 estimated the national cost of traffic accidents for the Philippines at US$1.9 billion (or roughly 2.8 % of GDP). In addition, truck overloading continues to be a problem. According to a JICA-DPWH axle load survey in 2004 and


A safe, secure, efficient, viable, competitive, dependable, integrated, environmentally sustainable, and people-oriented Philippine transportation system.

a DPWH survey in 2005, about 11 percent of the 3-axle trucks and 12 percent of the 4-axle semitrailers were overloaded.

On the other hand, the maritime subsector’s record in the area of safety is alarmingly bad, with an average of more than 160 accidents per year over the last decade. Maritime accidents are a major problem owing to a combination of factors such as: (a) a mostly retro-fitted and aging fleet; (b) underappreciation of cargo balancing on-board vessels; (c) loss of experienced crews to foreign shipping; and (d) natural disturbances.

Additionally, the Federal Aviation Authority (FAA) of the US has downgraded the category of the Philippines’ aviation capability in providing safety certification and oversight for international carriers, citing technical and regulatory deficiencies, among others.

Underdeveloped transport facilities in conflict-affected and impoverished areas

As a result of armed conflict and inequity in the distribution of income, economic activity and investments have been constrained in some areas of the country. In particular, conflict-ridden areas have experienced damages in their transportation network and have suffered from the disrupted delivery of basic services, thereby adversely affecting the people’s welfare and the quality of life.

Strategic Plan and Focus

The current state and performance of the transport sector indicates gaps and bottlenecks that need to be addressed to support the government’s thrust toward competitiveness and its development goals. What is envisioned is “a safe, secure, efficient, viable, competitive, dependable, integrated, environmentally sustainable, and people-oriented Philippine transportation system” that will focus

the sector’s development objectives and strategies on resolving identified issues and challenges.

To ensure an integrated and coordinated transport network

1. Adopt a comprehensive long-term National Transport Policy (NTP)

To guide the accomplishment of transport objectives and goals and to improve governance in the sector, a comprehensive long-term NTP must be put in place. This will guide the restructuring of the transport sector into a well-coordinated and integrated multimodal transport system. The NTP should clearly establish the government’s policies in the areas of resource generation and allocation; the criteria for the preparation of agency plans, programs and projects; cost recovery and subsidies; regulations for passenger transport services; urban transport and settlements; transport logistics; and governance. In the interim, the NTP shall be operationalized through an executive order, and in the medium-term, through a legislative enactment. The NTP would eliminate uncertainty and lend predictability and consistency to government decisions, thereby promoting accountability.

With regard to PPP project implementation, policies related to risk allocation (e.g., allocation of regulatory risk), delivery of ROW, and government financial support for viability gap funding of transport projects will be established. Additionally, the NTP will institutionalize CCA and DRR strategies in recognition of the major impacts of environmental, geologic, and meteorological hazards on the development and preservation of transport infrastructure. It will also promote a people-oriented transport system that mainstreams gender considerations.


The “user-pays” principle shall be applied at the very least for the purpose of asset preservation.

The SCMB Corridor and other strategic logistics corridors must be developed to become seamless intermodal logistics corridors.

The roles of the private sector vis-à-vis those of government agencies and other authorities as well as LGUs in the development, operation and management of various transport infrastructures will be defined in conjunction with the crafting of a NTP. For rail transport, for example, the government can be the primary developer of the railway infrastructure, while the private sector can be responsible for the operations and maintenance of the facility including the provision of rolling stock.

Likewise, the NTP shall consider the definition of the roles of national government entities and LGUs in transport infrastructure development and management (e.g., cost sharing policy/subsidy), notwithstanding the Local Government Code of 1991, including scope of duties and responsibilities, as well as the linking of national and local plans, and budget allocation.

The government will also address the inadequate linkage between the planning and budgeting processes to ensure that resources are allocated to their most important uses for transport infrastructure and management.

2. Develop strategic transport infrastructure and maintain/manage transport infrastructure assets

a. Prioritize asset preservation

While transport connectivity is of utmost importance, the upgrading of the quality and capacity of existing transport infrastructure will be prioritized before expanding the coverage of the networks. The latter will be based on a strategic plan that takes modal complementation into account. For rail transport, the quality of the existing railroad tracks and services must be upgraded.

In the allocation of resources, higher priority shall be given to

asset preservation or maintenance and rehabilitation of the existing transport infrastructure network rather than new construction or development.

The “user-pays” principle shall be applied at the very least for the purpose of asset preservation. This principle may be invoked whenever pricing of the service is possible and potential users unwilling to pay for the service can be excluded. The same argument may be invoked for full investment-cost recovery. The focus shall be the upgrading of the quality and capacity of existing ports, roads, airports, and rail lines.

Additional funding for maintenance should be provided to heighten and effectively maintain existing infrastructure assets. The previous annual appropriation of PhP4 billion for road maintenance on top of the Road Fund should be reinstated. Budgetary allocation may be further augmented through the GAA. The government shall also enhance a “user-pays” culture in infrastructure management. As proposed under the previous Plan, RA 8794 (“An Act Imposing a Vehicle User’s Charge on Owners of All Types of Motor Vehicles and for Other Purposes”) may be amended to include a fuel levy or some other form of road user contribution in order to expand the Road Fund. For long-term sustainability, the stability of available and adequate maintenance funds shall be ensured. To ascertain the sustainability of local transport networks, an incentives-based reform agenda for LGUs shall be put in place, where applicable, to help LGUs improve their performance in transport infrastructure management and maintenance.

b. Provide access to major and strategic tourism destinations and production areas

Dependable transport access will be facilitated in coordination with LGUs to support major and strategic tourism destinations. National and local coordination will be fostered to provide the necessary transport infrastructure to link production and agricultural areas to major roads leading to markets and population centers.


The dual roles of that simultaneously serve as regulators and operators shall be addressed by establishing a separate and independent regulator (or regulators)

c. Promote environmentally sustainable and people-oriented transport

The government will continue to promote an environmentally sustainable and people-oriented transport system. The shift from the use of fossil fuel to renewable energy sources to power vehicles shall be pursued. Non-motorized transport facilities such as sidewalks, footbridges, underground walkways, and bicycle ways will be provided to ensure safety of pedestrians and bicycle users. Transportation design and systems shall consider the frail, elderly and differently–abled persons, among others.

3. Develop an integrated multimodal logistics and transport system

a. Identify and develop strategic logistics corridors based on a National Logistics Master Plan

The SCMB Corridor and other strategic logistics corridors must be developed to become seamless intermodal logistics corridors. In support of this, a Logistics Master Plan shall be completed to guide overall development. This plan shall consider the intermodality of the transport network system, the industrial and area development plans and the identification of the necessary initiatives, programs, and projects. It will promote subregional economic-cum-logistics cooperation and will fully utilize the logistics systems that link the regions traversed by the logistics corridor (e.g., Central Luzon, Metro Manila, and Southern Tagalog for the SCMB corridor). The aim shall be an “economic corridor” where development benefits not only large cities but also smaller towns and rural areas along the corridor.5

The extension of the SCMB logistics corridor farther to the north and to the south will also be pursued. To support this, the viability of establishing an efficient long-distance, high-speed mass rail transit system, integrated with the mass transit commuter rail system in Metro Manila, shall be explored alongside the rationalization

of the roles of various government agencies and entities concerned with mass rail transport development. The feasibility of freight-rail services for all strategic logistics corridors will also be considered.

b. Improve the RRTS

Interisland logistics shall be enhanced by further developing the RRTS. Studies on the domestic shipping industry shall also be undertaken to identify concrete measures to lower interisland shipping costs. Where needed, the maritime regulator shall intervene to ensure competition in the industry pursuant to RA 9295. Efforts to improve performance and efficiency in port operations shall likewise be pursued.

c. Explore ASEAN connectivity through sea linkages

The Philippine archipelago’s proximity to other Asian countries is an obvious reason to explore the establishment of an ASEAN RORO Network, a Philippine initiative adopted as one of the “flagship” programs in the ASEAN Connectivity Masterplan during the 17th ASEAN Summit in Ha Noi, Viet Nam. In support of this initiative, the government shall study the development of existing RORO ports to accommodate international RORO ships as well as the necessary regulatory framework to promote such service. The development of port facilities through PPP to cater to cruise tourism, both servicing interisland and international cruise vessels, may also be explored.

d. Expand the Air Services

Full implementation of EO No. 219 shall be pursued. The Philippines shall allow airlines from foreign countries to fly to any airport in the country except Ninoy Aquino International Airport (NAIA), which is currently congested.

5 National Competitiveness Council (NCC)


Water is a basic need and everyone has the right to be provided with access to basic services related to water. In addition, economic growth itself must be supported, specifically by meeting the needs of priority growth and production centers for water supply, sewerage, sanitation, irrigation and flood management.

The Government shall ensure that each participating foreign country shall reciprocate by allowing airlines from the Philippines to fly to any of its airports. Each foreign country may also exclude one of their major airports during the period of exclusion of NAIA. (Please refer to Chapter 2: Competitive Industry and Services Sectors).

To address the overlapping and conflicting functions of transport and other concerned agencies

4. Separate the regulatory and operation functions of transport and other concerned agencies

In line with the goal of separating the operation and regulation functions of transport agencies, the port, rail and air transport organizations shall be restructured. The dual roles of air, water, and rail transport sector agencies, as well as other government entities involved in the provision of transport infrastructure and services that simultaneously serve as regulators and operators shall be addressed by establishing a separate and independent regulator (or regulators) with jurisdiction over all airports, ports, or railways.

In rail transport, the policy, planning, and regulation functions shall be separated from the delivery of train services, which also serves to allow private sector participation. In the previous plan, the interim institutional strategy for the rail subsector was to establish a Strategic Rail Authority in the Department of Transportation and Communications (DOTC) for policy, strategy, and regulation. However, the long-term plan calls for an independent rail regulator. To encourage private sector participation, ROW acquisition and infrastructure shall be subsidized by national government appropriations, while private concessionaires provide the rail services.

To ensure transport safety and security

5. Comply with safety and security standards

Standards on safety and security shall be regularly upgraded and updated in keeping with international standards and practices and strictly implemented and enforced. Maritime safety and security will be enhanced through the ratification of maritime safety and security-related conventions. Road safety will be promoted through the implementation of the Road Safety Action Plan.

To promote development of conflict-affected and highly impoverished areas

6. Provide linkages to bring communities into the mainstream of progress and development

Transport networks in underdeveloped regions and conflict-affected areas shall be improved to open up economic opportunities and help solve peace and order problems.

Water

Water is a basic need and everyone has the right to be provided with access to basic services related to water. In addition, economic growth itself must be supported, specifically by meeting the needs of priority growth and production centers for water supply, sewerage, sanitation, irrigation and flood management. The water sector’s greatest challenge is to balance equity and efficiency in the management of water resources to “ensure adequate, safe and sustainable water for all.” Efficient and effective management of water resources is fundamental to achieving inclusive economic growth while ensuring a sustainable environment.


Crosscutting Issues and Strategies in the Water Sector

Assessment, issues, and challenges

Access to potable water and basic sanitation

MDG 7 commits the country to halving the number of people without access to water and basic sanitation by 2015. Meeting this target is a major challenge for a number of reasons. One, the lack of sector data presents a logistical challenge in the determination of priority waterless areas. Two, investments in water supply and sanitation have also been significantly low relative to overall public spending (World Bank 2005), which may be due to the lack of a coherent financing framework in the sector. Three, public infrastructure spending by the national government shows a bias for Metro Manila and other urban areas, including spending for water supply, sewerage and septage management. And four, the absence of a clear monitoring system makes it difficult to assess and address the sustainability of developed infrastructure.

Inefficient and insufficient support for growth and production centers

The absence of a single lead agency to coordinate development in the water sector is one of the major hurdles to the efficient implementation of strategic water infrastructure. There are at least 30 agencies involved in the water sector, with specific but often overlapping or conflicting mandates for water supply, irrigation, flood management, pollution control, watershed management, financing, policy formulation and coordination, among others. This situation presents difficulties for effective coordination and implementation of projects and programs to sustainably meet water use and management. (e.g., in

meeting the needs of competing users of water; linking water service provision with basic sanitation services; and ensuring effective and efficient flood risk reduction and management).

While the National Water Resources Board (NWRB) has the legal mandate for water governance, its existing structure and budget limit the exercise of its functions. To address the existing leadership gaps, the mandate of the Subcommittee on Water Resources (SCWR), initially created under the Committee on Infrastructure (INFRACOM) to ensure the implementation of the Philippine Water Supply Sector Roadmap, was expanded to become the key policy coordination body for the water sector. 6 Despite this, however, the sector remains weak in terms of regulation and allocation of water resources.

Furthermore, effective planning, target-setting, monitoring and implementation are impeded by the lack of up-to-date, integrated, harmonized and comprehensive data on the sector. Such data is significant in the development of new water sources; and in the design of CCA and DRRM mechanisms. But initiatives to establish a knowledge-sharing network among stakeholders in water have so far proved unsustainable since there is no clear framework and reliable financing for the continuous updating and improvement of access to information.

6 The SCWR is an inter-agency committee for the Water Resources Sector established through NEDA Board Committee on Infrastructure Resolution No. 2, Series of 2008 composed of representatives from key national government agencies, leagues of cities and municipalities, academe and civil society. Its key function is to advise the NEDA Board and INFRACOM on policies and issues related to the Water Sector.

The absence of a single lead agency to coordinate development in the water sector is one of the major hurdles to the efficient implementation of strategic water infrastructure. There are at least 30 agencies involved in the water sector, with specific but often overlapping or conflicting mandates for water supply, irrigation, flood management, pollution control, watershed management, financing, policy formulation and coordination



To address issues on equity and efficiency of access to water

1. Practice Integrated Water Resources Management (IWRM) in the sector

IWRM7 has been identified as the over-all strategy for: (a) the effective protection and regulation of water for security and ecosystem health; (b) the provision of responsive services for present and future needs; (c) the improved effectiveness, accountability and synergy among water-related institutions and stakeholders; and (d) adaptive and proactive responses to emerging as well as future challenges, such as CCA and DRRM. While the concept is widely accepted, however, IWRM practices have not been mainstreamed in policies, plans and programs. Similarly, integrating the ecoefficient approach8 to the development of water infrastructure to support the desired transgenerational outcomes in the sector has yet to be realized. The experience of numerous recent instances of disasters, nonetheless, has raised awareness and increased the acknowledgement of the benefits of IWRM. Now is an opportune time, therefore, to implement coordinated activities to mainstream IWRM practices and promote the development of ecoefficient water infrastructure.

Because of the fragmented nature of the water sector, the establishment of a comprehensive and accessible information management system is necessary to ensure coordinated

planning and implementation. Data collection methodologies have to be synchronized to support planning and budgeting of key programs and projects. Mechanisms that allow consistent updating and harmonization of raw data should be put in place alongside the sharing of such data among the relevant stakeholders, project developers, and key policy-makers.

2. Rationalize financing in the water sector to fulfill MDG commitments

The low level of investments in the water supply and sanitation sector hinder the achievement of the MDGs of the sector. The lack of a coherent financing framework must be addressed by rationalizing financing in the water sector to make the fullest use of limited public funds and encourage concessional financing, and private sector investments.

3. Work towards a lead agency for the water sector

A lead agency for the entire water sector should be ultimately developed. The lead agency should be able to assume the functions of policy making, coordination, and resource regulation for the sector. It shall be provided with sufficient capacity and authority to implement key policies, plans, and projects in the water resources sector. In the meantime, NWRB should be strengthened so it can continue its function as the sector’s overall economic and resource regulator.

4. Develop capacities of NGAs, LGUs, and water-service providers (WSPs) for the sustainable management of infrastructure and better service provision

7 IWRM promotes the coordinated development and management of water, land and related resources in order to maximize the resultant economic and social welfare in an equitable manner without compromising the sustainability of vital ecosystems.8 Ecoefficiency is having “more value with less impact on the environment”; it emphasizes monitoring of material and energy flows of stocks and life cycle assessment. While ecoefficiency has been successfully integrated in industrial and business processes, its application in water infrastructure development will require the establishment of both physical and nonphysical infrastructures (i.e., policies, institutional framework, financing, etc).


The capacities of planning and implementing institutions must be developed to improve the performance of various structural and nonstructural infrastructures for the water sector. NGAs and LGUs should enhance their capacities in effective water governance, sustainable use of water resources, and planning for CCA, among others. LGUs and WSPs should be assisted in developing relevant, practical, and up-to-date management tools that support integrated water resources management and technologies. Service providers should likewise be capacitated in plan development, budgeting and operations, among others, in order to improve coverage, efficiency and sustainability of infrastructure.

Water Supply

Assessment, Issues, Challenges

Limited access 9

Most assessments show a limited overall coverage and low level of access to safe drinking water in many areas of the country. Among others, the World Bank (2005) noted a decline in access to improved water services from the late 1990s to 2002. The 2010 Report of the WHO/UNICEF Joint Monitoring Program on the MDGs10 observed minimal

increases in coverage over the past two decades, particularly in urban areas. Moreover, there is a wide disparity in coverage between urban and rural areas (see Table 5.1). Regional data further reveals a broad inequity of access even among rural areas.

The Philippines Progress Report on the MDG 2010, on the other hand, suggests that the sector is on track to attain its MDG commitment (Figure 5.1). Nonetheless, achieving 100-percent coverage remains a challenge, since 15.73 million people continue to have no access to a safe water supply.

Data on the number of service providers remain inconsistent and have not been consolidated. Notwithstanding this, Table 5.2 shows the approximate proportion of the population with access to clean drinking water within the scope of certain groups of formal service providers. Approximately 20 percent continue to rely on informal access, which are generally not considered sustainable.

9 Reasonable Access – availability of at least 20 liters per day from a source within 1 kilometer of the dwelling (World Bank and UNICEF Joint Measurement Programme: www.wssinfo.org, accessed 22 November 2010)10 The WHO/UNICEF Joint Monitoring Programme ( JMP) for Water Supply and Sanitation is the official United Nations mechanism tasked with monitoring progress towards MDG-7 or halving the proportion of the population without access to water and basic sanitation.

Table 5.1. Estimated Coverage of Access to Water

Source: WHO/UNICEF JMP 2010 Report

YearURBAN AREAS (in %) RURAL AREAS (in %)

Total Household Connections Total Household

Connections

1990 93 40 76 8

1995 93 46 79 13

2000 93 51 82 18

2005 93 57 85 23

2008 93 60 87 25


Table 5.2. Levels of Access to Safe Drinking Water

Note:WDs: Water DistrictsPO: Private Operators (e.g., concessionaires, private developers, etc.)CBOs: Community-based Organizations (e.g., rural or barangay water service associations, cooperatives, etc.)SSIPs: Small Scale Independent ProvidersSource: WB Report, Philippines: Meeting Infrastructure Challenges, 2005, as quoted in the NEDA Philippine Water Supply Sector Roadmap, 2010(Footnotes)/a As defined in NEDA Board Resolution No. 12, Series of 1995: Level I (point source) - a protected well or developed spring system without a distribution system; Level II (communal faucet system or standpost) - a system composed of a source, reservoir, distribution system and communal faucets; and Level III (waterworks system or individual household connections) - a system composed of a source, reservoir, piped distribution system and household taps

Access to FORMAL levels of service/a Informal Access

Level 3: 45%

Level 2: 10%

Level 1: 25%

Self-provision through private wells, tanked or vended water supply or piped supply provided by SSIPsWDs:

20%P O s : 5%

LGUs and CBOs: 20%

LGUs and CBOs: 35%

Low investment levels and lack of financing for waterless areas

Investment levels are too low to meet the growing demand for water. Among the key constraints to expanded coverage and improved quality of service are the low tariffs which hinder cost recovery and prevent the accumulation of funds for new capital expenditures. While cost recovery has been identified as a principle of regulatory policy, there has been minimal progress to achieve it. Regulatory oversight has been highly fragmented, as exemplified by the existence of: (a) three entities–NWRB, LWUA and the different LGUs–that exercise primary regulatory functions; and (b) specialized regulatory bodies such as the Subic Bay Regulatory Board and Metropolitan Waterworks and Sewerage System–Regulatory Office

(MWSS-RO). These institutions have different regulatory practices, processes, tariff-setting methodologies, and more importantly, overlapping functions or jurisdictions, resulting in variances in regulatory rules and enforcement across types of service providers. The lack of a single independent regulator for the water supply sector is a major reason for the absence of a clear regulatory framework with a credible and effective tariff methodology that is shielded from political intrusion, founded on accountability to consumers, and conducive to new investments to meet supply needs.

The program for waterless areas, which aims to provide water to 212 waterless barangays in Metro Manila and 432 waterless municipalities outside Metro Manila, has been allotted an annual budget of PhP1.5 billion. Because the administration of the

The Philippines Progress Report on the MDG 2010, on the other hand, suggests that the sector is on track to attain its MDG commitment. Nonetheless, achieving 100-percent coverage remains a challenge, since 15.73 million people continue to have no access to a safe water supply.

Figure 5.1. Percentage Access to Safe Water

Source: Philippines Progress Report on the Millennium Development Goals 2010

Figure 1. Percentage Access to Safe Water

Series 11991 73.81994 77.51997 76.71998 77.91999 79.12000 78.72002 79.72003 79.12004 77.92006 80.62007 81.52008 81.42015 85.9

70

75

80

85

90

1990 1995 2000 2005 2010 2015

PERC

ENTA

GE

(%)

YEAR

PERCENTAGE ACCESS TO SAFE WATER


funds was largely discretionary, 40 percent (212 municipalities) of 432 municipalities identified as beneficiaries of the fund were not even part of the original list.

Moreover, there is no clear policy framework to guide the financing of water supply programs and projects. Currently, financing originates from a variety of sources. National government financing is primarily administered through LWUA and MWSS or onlent through GFIs or the Municipal Development Fund Office (MDFO). Additionally, congressional funds for water supply projects are significant but uncoordinated and largely allocated to areas based on political considerations. Local government funding, on the other hand, has mostly been for operation and maintenance rather than capital expenditures. (World Bank 2005) Private-sector financing has been skewed towards Metro Manila, and, there has been limited private investment by water utilities and private households outside Metro Manila.

Lack of new water sources to meet existing and future demand in growth centers

The rapid increase in population resulting in the pollution of water systems and, in some areas, the exhaustion of groundwater reserves has quickly widened the gap between supply and demand for potable water, especially in tourism destinations, industrial areas and highly urbanized cities. Furthermore, extended dry seasons as a result of climate change are expected to exacerbate the demand for water. New water sources must be identified and developed to address this gap. The existence of financially viable areas for water supply means there is a good opportunity for the private sector to be engaged in source development.


To address equitable provision of water supply and to ensure timely provision of water to key growth centers

The following strategies11 will be pursued:

1. Strengthen Economic Regulation

The creation of a single, independent economic regulator for water supply services is a priority strategy to address institutional fragmentation and the low level of investments in the sector. Legislative action is required to resolve the conflicting mandates of various agencies involved in the regulation of water services. Pending positive action from Congress, however, NWRB must be strengthened to allow partial resolution to the current situation. This interim action must also be supported by the formulation of a National Water Resources Policy (NWRP) to provide a policy framework for both economic and resource regulation in the water supply subsector.

2. Implement a priority program for waterless areas

Consultations with stakeholders affirm the need for a specific program that will ensure the achievement of MDG 7 by 2015 and continuing 100-percent access to water in the medium term. Critical to the new program for water supply, however, is identifying key beneficiaries based on an updated assessment and identification of remaining waterless municipalities in the Philippines and ensuring sustainability of water service provision.

The rapid increase in population resulting in the pollution of water systems and, in some areas, the exhaustion of groundwater reserves has quickly widened the gap between supply and demand for potable water, especially in tourism destinations, industrial areas and highly urbanized cities.

11 The strategies herein identified are consistent with the Philippine Water Supply Sector Roadmap (PWSSR). The PWSSR is the water supply sector plan and guide with long-term development outcomes supported by medium-term strategies and annual operational plans formulated and subscribed to by the different national government agencies, along with other stakeholders. Implementation of the strategies stated therein is crucial to achievement of the development goal to provide “access to safe, adequate and sustainable water supply for all.”


3. Develop sustainable new water sources to meet demand

A comprehensive approach, adhering to the IWRM framework for projecting the demand-supply gaps across the country and for planning the development of new water sources should be developed not only to support the growing population, but also economic activity in growth centers -based on a viable national land-use plan. Extended dry seasons because of climate change would further exacerbate the demand for water, so that new water sources must be developed in a timely manner to ensure domestic water supply. This may adopt ecoefficient12 measures, including the reuse of excessive rainwater and recycled wastewater for nonhousehold purposes to rationalize water distribution.

Resource regulation shall be strengthened to ensure that surface and ground water supply sources are sustainably developed and utilized. Alternatives should also be identified and prioritized based on a value-engineering perspective, which optimizes options and timing of development to provide value for money and minimize cost to consumers.

4. Localize national policies to support sustainable extension of water services

Since LGUs are on the frontline in the provision of services each local government should be able to develop its own local plans, strategies and corresponding budget allotments, consistent with national policies and targets, including those identified in the PWSSR and the MDG. This should help harmonize and operationalize programs to address existing implementation issues and ensure the

sustainable and efficient delivery of water supply to waterless and remote areas.

Sanitation, Sewerage, and Septage Management

Assessment, Issues, and Challenges

Weak sanitation governance

Many institutions are armed with sanitation-related mandates, but not one of them takes the lead in pushing for reforms in the sector. Although the DOH plays a key role due to the impacts of poor sanitation on health, only a small unit in the agency is concerned with sanitation. Its role is limited to policy formulation, thereby causing significant gaps between policy implementation and enforcement. In particular there is an inability to deliver commitments made under existing laws. Moreover, the Sanitation Code formulated in 1975 may no longer be appropriate for the requirements of a rapidly urbanizing population, particularly increasing population densities. The said code also does not consider the anticipated complications caused by climate change.

Inequitable access to basic sanitation facilities and sewerage and septage management services

As in the water supply subsector, statistics on sanitation are uncoordinated and conflicting. This notwithstanding, WHO/UNICEF JMP on the MDGs show a general trend of improving13 coverage from 1990 to 2008, with corresponding reductions in open defecation. From a 1990 baseline coverage of about 55 percent, the MDG target is to increase coverage to 84 percent by 2015. The

Many institutions are armed with sanitation-related mandates, but not one of them takes the lead in pushing for reforms in the sector. Although the DOH plays a key role due to the impacts of poor sanitation on health, only a small unit in the agency is concerned with sanitation. Its role is limited to policy formulation, thereby causing significant gaps between policy implementation and enforcement.

12 Ecoefficiency is having “more value with less impact on the environment”; it emphasizes monitoring of material and energy flows of stocks and life cycle assessment. While eco-efficiency has been successfully integrated in industrial and business processes, its application in water infrastructure development will require the establishment of both physical and non-physical infrastructures (i.e., policies, institutional framework, financing, etc).13 For MDG monitoring, an improved sanitation facility is defined as one that hygienically separates human excreta from human contact.


DOH, however, sets a higher national target of 91 percent, with 96 percent for urban areas and 86 percent for rural areas. Similar to access to water supply, access to sanitation is much lower in rural areas compared to urban areas with a visible disparity amongst regions as well.

Based on WHO/UNICEF JMP estimates, the Philippines is on track to meeting its MDG target for sanitation. Data from the DOH and 2010 Progress Report on MDGs, however, show fluctuating year-on-year coverage due to low investment levels, combined with a rapidly increasing population and the increasing frequency of natural disasters that affect the sustained operations of existing facilities.

For sanitation facilities to be sustainable and make an impact on health outcomes, sewerage or septage management support is required. Unfortunately, there have been

few investments in proper sewage collection and treatment, especially outside Metro Manila. Less than 10 percent of the population has access to sewerage services. Outside Metro Manila, selected highly urbanized cities (HUCs) provide services to less than 3 percent of their respective area populations. (WB 2005) This situation poses major health and environmental problems, especially in HUCs and during or after natural disasters (i.e., at evacuation centers and during rehabilitation of affected areas).

Low investment and financing

Despite several national sewerage and sanitation policies like the Sanitation Code of 1975 and the Clean Water Act, demand for sanitation, sewerage and septage facilities, as well as related investments, remain low.

The Philippines is on track to meeting its MDG target for sanitation. Data from the DOH and 2010 Progress Report on MDGs, however, show fluctuating year-on-year coverage due to low investment levels, combined with a rapidly increasing population and the increasing frequency of natural disasters that affect the sustained operations of existing facilities.

Table 5.3. Estimated Coverage for Sanitation: 1990-2008

Source: WB/UNDP JMP 2010 Report

YearURBAN AREAS (in %) RURAL AREAS (in %)

Improved Open Defecation Improved Open Defecation

1990 70 8 46 23

1995 73 7 52 21

2000 76 6 59 18

2005 78 5 65 15

2008 80 4 69 14

Source: Philippines Progress Report on the Millennium Development Goals 2010

Figure 5.2. Percentage Access to Sanitary Toilets

Figure 2. Percentage Access to Sanitary Toilets

Column1 Column21991 71.81994 74.91997 77.31998 80.41999 82.32000 82.92002 862003 81.72004 85.42006 84.22007 87.92008 88.62015 86.9

70

75

80

85

90

1990 1995 2000 2005 2010 2015

PERC

ENTA

GE

(%)

YEAR

PERCENTAGE ACCESS TO SANITARY TOILETS


Open defecation is still practiced in many areas, especially is highly populated ones, resulting in polluted waterways and the spread of fatal and infectious diseases. Only 3 percent of public investments in water supply are used for sanitation. (PSSR 2010) Investments, by LGUs are limited since few of them have the capacity to implement, operate and maintain these systems. Low investment is also due in part to the low demand, which arose from a lack of popular understanding on the dangers of open defecation and open sewers. Official development assistance (ODA) for sanitation, septage and sewerage is largely administered by DPWH, DENR or MWSS for Metro Manila. Private sector investments are likewise limited because sanitation, sewerage and septage are perceived to be nonrevenue services, with high capital requirements relative to any projected returns. Ideally, these services should be linked to revenue-generating water service provision to facilitate cost recovery. Without a strong regulator for water, sanitation, sewerage and septage management services, there is no imperative or incentive for water service providers to extend the coverage of sewerage services.

Lack of awareness of the value of sanitation and its services

Most LGUs accord the lowest priority and allot only minimal budgets for sanitation, septage and sewerage services because the benefits are indirect at best. The low demand for sanitation at local levels also extends to wastewater collection and treatment, thus further deferring the development of necessary infrastructure.

Furthermore, research on innovative technologies to provide economically and ecologically efficient sanitation, sewerage and septage facilities is lacking. Technical capacity to plan, implement, operate, and maintain these facilities is also limited both at national and local levels. Capacities to monitor the extent and level of service are likewise limited thereby adversely affecting effective planning and budgeting for the subsector.


To improve health outcomes and effect a sustainable environment through improved sanitation, septage, and sewerage provision

The following strategies14 will be pursued:

1. Develop effective national leadership and sanitation governance

An empowered lead entity at the national level must be established to ensure that sanitation, sewerage and septage targets and plans are met and that critical policies, including the National Sanitation Code, are strictly implemented.

Furthermore, necessary reforms are needed to pull in investments in sanitation, sewerage and septage facilities throughout the country, especially in highly urbanized cities (HUCs). Thus, any amendment or revision to existing national policies should articulate specific national targets and detailed strategies that can eliminate open defecation as well as facilitate local planning and budgeting for expansion of coverage, among others. This could be accompanied by legislative action, if required.

Only 3 percent of public investments in water supply are used for sanitation. Low investment is also due in part to the low demand, which arose from a lack of popular understanding on the dangers of open defecation and open sewers.Without a strong regulator for water, sanitation, sewerage and septage management services, there is no imperative or incentive for water service providers to extend the coverage of sewerage services.

Most LGUs accord the lowest priority and allot only minimal budgets for sanitation, septage and sewerage services because the benefits are indirect at best.

14 The strategies herein identified are consistent with the Philippine Sustainable Sanitation Roadmap (PSSR), Similar to the PWSSR, the PSSR was developed and subscribed to by the different national government agencies, along with other stakeholders. It presents the plan and guide with long-term development outcomes supported by medium-term strategies and annual operational plans to be able to “provide safe and adequate sustainable sanitation for all and ensuring a clean and healthy Philippines.”


2. Develop a regulatory framework

A single, independent economic regulator for water supply, sewerage and septage management should be established to ensure the following: (a) accountability of service-providers to their customers; (b) sustainability of facilities through improved tariff methodologies; and (c) increased coverage through the provision of incentives and impetus for expansion of services within their areas. (See also strategies for water supply).

3. Rationalize investments and financing to provide infrastructure in strategic areas.

Because of the high capital requirements of sewerage and septage management projects, government intervention is needed to support the private sector in increasing service (septage and sewerage) coverage. Thus, a financing framework should be developed to support sustainably the expected increase in demand for sanitation, septage and sewerage. Alternative PPP packages may be considered, among others.

In the light of current constraints, it is necessary to be deliberate, especially in the implementation of septage and sewerage programs and projects including the development of septage/sewerage treatment plants. Highly vulnerable areas such as HUCs, which are population-dense and susceptible to sanitation problems, should be prioritized. However, it would also be advantageous to include priority tourism spots given their potential for economic development.

The PSSR requires the formulation of programs by other key NGAs and LGUs to support the achievement of the envisioned outcomes. This includes the incorporation of sanitation measures in the design of significant infrastructure, such as school buildings and housing structures.

4. Mainstream sanitation in emergency/disaster response

Water-induced or related calamities resulting from climate change increase the vulnerability of communities that lack proper sanitation facilities. Hygiene promotion, coupled with sanitation response measures, should be mainstreamed in disaster relief and rehabilitation efforts.

5. Improve service delivery through vigorous communication

To increase the effectiveness of national policies, a comprehensive and vigorous communication strategy must be undertaken to educate the public and decision-makers and increase demand for these services. Information, education, and communication (IEC) campaigns among others, are to be developed. This includes dissemination of information on sanitation technology options and standards among LGUs and service providers. These campaigns aim to change behaviors towards proper hygiene in order to increase utilization of household sanitation infrastructure, such as sanitary latrines and septage collection tanks. Development planners and managers should also be provided similar IEC materials with added information on wastewater treatment and disposal methodologies.

Irrigation

Assessment, Issues and Challenges

Inadequate provision of irrigation

Irrigation plays a vital role in the development of agriculture as well as in the attainment of food sufficiency. As of the end of 2009, irrigated agriculture comprised about 1.54 million hectares of land or about 49


percent of the estimated irrigable area of 3.126 million hectares. Around 765,000 hectares are served by national irrigation systems (NISs), while communal irrigation systems (CISs) and private irrigation systems (PISs) serve around 558,000 and 217,000 hectares, respectively. According to the National Irrigation Authority (NIA), it spent about PhP119 billion from 1983 to 2009, representing around 78 percent of its total approved appropriations for the same period. Despite this, only less than half of the total potential productive areas have been irrigated (see Table 5.4)

While over 1.6 million hectares remain undeveloped for agriculture, these same areas are threatened by ongoing changes in land use (e.g., conversion into housing developments, golf courses, etc.). It is unclear whether such conversions are warranted by real long-term

development trends or these are merely responses to the artificially repressed state of agriculture and the protractedly unsettled status of property rights in agricultural land. Therefore, it may be a prudent course to protect productive land from rapid and irreversible conversions to nonagricultural uses.

Unsustainable use of irrigation water

Because irrigation is the largest use of water in the country, a primary concern should be to optimize the productive use of water in irrigated agriculture to attain its full benefits and minimize waste. There is currently no incentive to conserve irrigation water, although payments are made on a per-hectare basis regardless of the actual water consumption needs of the crops. Subsidies disguise the true cost of providing irrigation services. In order to promote conservation and the sustainable use, treating water as an economic good provides the basis for putting into place

Irrigation plays a vital role in the development of agriculture as well as in the attainment of food sufficiency.

Irrigation is the largest use of water in the country, a primary concern should be to optimize the productive use of water in irrigated agriculture to attain its full benefits and minimize waste.

Table 5.4. Status of Irrigation Development as of 31 December 2009

Source: NIA as of June 2010

Region

Estimated Total

Irrigable Area (ha)

Service Area (ha) Remaining Potential

Area to be Developed

(ha)

National Irrigation System

Communal Irrigation System

Private Irrigation System

TotalIrrigation

Dev’t(%)

CAR 99,650 22,622 35,351 22,912 80,885 81 18,7651 277,180 57,567 96,654 27,329 181,550 65 95,6302 472,640 142,530 41,775 23,095 207,400 44 265,2403 498,860 202,311 78,008 20,555 300,874 60 197,9864 246,960 53,146 53,133 17,962 124,241 50 122,7195 239,660 20,530 70,050 29,484 120,064 50 119,5966 197,250 53,191 20,372 5,499 79,062 40 118,1887 50,740 10,040 22,529 2,539 35,108 69 15,6328 84,380 19,104 29,748 4,466 53,318 63 31,0629 76,080 15,162 19,739 1,972 36,873 48 39,20710 120,700 26,419 23,564 14,764 64,747 54 55,95311 149,610 33,971 15,639 25,915 75,525 50 74,08512 293,610 62,437 22,255 17,296 101,988 35 191,622ARMM 156,720 16,520 7,095 225 23,840 15 133,440CARAGA 162,300 29,427 21,719 3,316 54,462 34 107,838TOTAL 3,126,340 764,977 557,631 217,329 1,539,937 49 1,586,963


mechanisms that capture its economic value, since water is a finite and limited resource with competing uses and users.

NIA’s delicate system and financial performance

NIA’s operation has rarely been profitable as the agency’s operating expenses far exceed its operating income. In order to improve the agency’s fiscal position, strategies to increase collection efficiency of irrigation service fees (ISFs)15 were implemented, particularly instituting incentive policies on ISF back-account collections. The net effect of such schemes resulted in a steady increase in NIA’s corporate income, and although the agency still runs annual net deficits (cash and noncash expenses), the deficits decreased from PhP648 million in 2000 to only PhP24 million in 2009.

With respect to the agency’s organizational restructuring, the DBM-approved Rationalization Plan is in its third year of implementation (part of a five-year phased implementation period). This saw the gradual turnover of operation and maintenance (O&M) activities, partially or wholly, from NIA to irrigators’ associations (IAs). Despite significant achievements over the years, NIA still has to maintain momentum in order to achieve the sustainable fiscal stability needed to perform its mandate.

Weak performance of irrigation systems

The performance of most of the NISs and CISs has remained poor. Causes include inadequate O&M, lack of routine repair and ineffective management of available irrigation water sources due to financial, technical and institutional deficiencies. Irrigated cropping intensity of NISs nationwide averaged far less than the

200-percent target applied in project preparation. In addition, most of the service areas are dysfunctional and badly need rehabilitation.


To provide basic support services and infrastructure as well as critical governance reforms in shaping a sector responsive to the challenge of ensuring food security for Filipinos across generations

The following strategies will be pursued:

1. Rehabilitate existing irrigation systems and construct new small-scale systems

Support services and infrastructure shall be geared towards the rehabilitation, repair and maintenance of existing irrigations systems. A rationalized fund mechanism should be implemented, specifically for the immediate rehabilitation of damaged irrigation facilities and systems, over and above the allocation intended for regular maintenance activities. Funding mechanisms envisioned shall include a National Irrigation Management Fund (NIMF), a Communal Irrigation Development Fund (CIDF) and a Patubigayan Trust Fund (PTF). These shall serve as repositories of irrigation funds intended for repair, rehabilitation and improvement as well as extended financial assistance to the irrigation sector. For immediate rehabilitation works resulting from disasters, calamity funds as a part of NIA’s appropriations may also be considered for national systems.

Construction of new infrastructure

The performance of most of the NISs and CISs has remained poor. Causes include inadequate O&M, lack of routine repair and ineffective management of available irrigation water sources due to financial, technical and institutional deficiencies.

15 ISF is a means to generate revenues to cover operations and maintenance (O&M) costs. Personnel costs account for around 80 percent of NIA’s operating expenses. Substantial staff resources (up to 40 percent of field staff time) are spent on collecting ISF from individual farmers.


shall focus on small-scale irrigation and water impounding systems (except multipurpose systems) based on a viable national land use plan. These systems are easier to implement and are more cost-efficient than large irrigation systems (except multipurpose systems). The determination of locations for new irrigation systems also factor in CCA and DRRM considerations.

2. Protect irrigated and potential irrigable lands

With the government’s thrust to ensure food sufficiency as well as the recognition of the alarming rate of depletion of irrigable lands due to conversion, a review of government policies protecting productive land shall be undertaken. To complement such initiative and to clearly identify gaps, land-use mapping indicating the extent of irrigable areas vis-à-vis irrigated areas is required. (Cross reference with Agriculture Chapter.)

3. Develop a volume-based pricing mechanism

As part of a long-term strategy to ensure its efficient use, wholesaling of water at the resource at the headgate to IAs is expected to drastically cut down collection expenses. This would entail IAs paying only a single fee, with the IAs taking responsibility for collecting ISF from its members. Volumetric (volume-based) pricing at the headgate enhances accountability, since it provides: (a) greater contract assurances for service delivery by the water supplier/s to the IAs and (b) incentive to properly maintain the distribution system, improve the equity of head- and tail-end distribution and conserve water resources. Pilot-testing of volumetric pricing has revealed constraints to implementation for open canals, as such, therefore, this will initially be introduced in NISs where secondary irrigation facilities or its components have been fully turned over to IAs through the

IMT program. In the interim, NIA may adopt and improve socially-acceptable demand-management strategies.

4. Implement irrigation management transfer (IMT)

IMT aims to transfer to IAs the complete O&M responsibility on secondary canals and on-farm structures in larger systems, and of entire systems covering more than 3,000 hectares. Under such a scheme, it is estimated that the NIA will be left to manage less than 10 percent of the total NIS area, which should substantially reduce the subsidies/operational costs extended by the government. IMT facilitates stakeholder participation in decision-making and planning, provides better access to services and training for its members, produces some income from ISF shares and ensures the equitability of irrigation water delivery and distribution, among others.

Flood and Drainage Management


Inadequate disaster mitigation and response

The country devotes a substantial portion of its resources in the recovery efforts from the effects of flooding. The cumulative impact of floods on the loss of lives and damage to properties and livelihood (see Table 5.5) results in a deceleration, if not a setback, of social progress and economic activity in affected areas.

Furthermore, the country’s archipelagic character, with many small islands, makes it highly vulnerable to the effects of climate change. Climate data for the past 50 years shows rising temperatures trends, changing changes in rainfall patterns, and an increasing number of extreme climate events like cyclones, flooding, and drought. (Philippine Strategy on Climate Change Adaptation 2010)

The country devotes a substantial portion of its resources in the recovery efforts from the effects of flooding. The cumulative impact of floods on the loss of lives and damage to properties and livelihood results in a deceleration, if not a setback, of social progress and economic activity in affected areas.


Recent events like typhoons Ondoy and Pepeng in 2009 which resulted in massive damage to lives and properties were wrought by unpredictable weather patterns resulting from climate change. Existing flood control structures in identified high-risk areas nationwide have proved inadequate in handling the unexpected increase in stormwater discharge, which often results in massive flooding both in HUCs and rural areas.

Lack of financing

DPWH has identified several critical flood control projects nationwide which, owing to insufficient funds, cannot be immediately implemented. This perennial funding problem not only affects the implementation of the hard infrastructure component of projects, but also affects the inherent activities such as the relocation of informal settlers and the acquisition of ROW. This also affects the implementation of complementary nonstructural measures such as flood forecasting, warning, and monitoring systems, evacuation plan, hazard mapping and watershed management activities. Additionally, O&M spending that depends heavily on government allocation are not exempt from funding constraints.

LGUs and other implementing agencies also lack funds for regular O&M of existing flood control programs. Since flood structures are exposed annually to the brunt of typhoons, regular maintenance works have to be carried out to maintain optimal capacities of said structures.

Unsustainable operations and maintenance of structural and nonstructural infrastructures

Coordination among government agencies and LGUs is a problem that affects the implementation, operation and maintenance of flood control structures. Once completed, flood control structures should ideally be managed and maintained by the LGUs, and for the case of Metro Manila, MMDA, who have territorial jurisdiction over the project, since these directly benefit from them. However, owing to inadequate financial support and capacity to conduct O&M, not all LGUs and

Table 5.5. 25-year Flood-related Impacts: 1980-2005

Source: Flood Risk Management Project Along Selected Principal Rivers, Implementation Program, DPWH, September 2010*Total damages in infrastructure, agriculture and private property in million pesos.**Department of Social Welfare and Development (DSWD) data.

YearCasualties** Damage Value*

(PhP M)Dead Missing Injured

1980 36 4 55 1,472

1981 484 264 1,922 1,273

1982 337 223 347 1,754

1983 126 168 28 523

1984 1,979 4,426 732 416

1985 211 300 17 3

1986 171 43 155 1,838

1987 1,020 213 1,455 8,763

1988 429 195 468 8,675

1989 382 89 1,088 4,494

1990 676 262 1,392 11,713

1991 5,201 4,278 357 74

1992 145 95 51 7,359

1993 814 214 1,637 25,038

1994 266 54 260 3,401

1995 1,255 669 3,027 57,781

1996 124 49 97 10,109

1997 199 28 66 4,842

1998 498 116 873 17,823

1999 56 3 25 1,555

2000 338 59 370 7,217

2001 431 134 418 6,924

2002 169 33 71 829

2003 139 28 182 4,567

2004** 1,046 437 836 7,679

2005** 62 36 51 2,487

Total 16,594 12,420 15,980 198,609


The adoption and mainstreaming of the eco-efficiency concept in water infrastructure is an example of such an adaptation strategy. Excess water during rainy seasons can be impounded, stored and then released for future use in sectors such as irrigation and water supply.

Equally important are immediate post-disaster response and interventions. LGUs and implementing agencies alike are encouraged to adopt a proactive approach in the conduct of DRRM. Emphasis shall be given to preventive measures and structures as well as in raising disaster-preparedness among stakeholders to minimize damage to lives and properties should a natural disaster occur. Furthermore, nonstructural measures such as flood forecasting and warning systems as well as LGU preparedness plans, should be developed accordingly.

3. Develop a mechanism to expedite immediate financing for the rehabilitation of flood management structures

A hindrance to prompt response is the slow disbursement of funding to implement immediate measures. To expedite the process, it may be prudent to provide annual appropriations within DPWH’s budget. Likewise, DPWH and affected LGUs may opt to avail of various financing mechanisms and instruments designed especially for post-disaster rehabilitation and repair work.

4. Increase local government and community participation

Since flood-related risks and damages are the immediate concern of local communities, their cooperation and participation in O&M of flood management structures and measures as well as disaster response should be enhanced. Programs should incorporate the participation of stakeholders and the identification of their corresponding roles in watershed protection, flood mitigation and disaster preparedness and response measures. With advocacy and capacity-building assistance from the DILG, LGUs are expected at the forefront of implementing localized CCA and DRRM

even MMDA can fully commit to this responsibility. The actual mandate for O&M also remains unclear since no law or guideline exists that lays down the sharing of responsibility between the LGUs and government agencies.


To reduce adverse effects of flooding occurrences by maintaining watersheds and providing efficient and adequate infrastructure

The following strategies will be pursued:

1. Prioritize the construction of flood management structures in highly vulnerable areas

Available financing for disaster risk reduction and management of infrastructure in the event of floods must be optimized. This involves the development of hazard maps so that vulnerable areas with high population concentrations and important economic and agricultural activities can be prioritized in the provision of flood management infrastructure.

2. Apply CCA and DRRM strategies in the planning and design of flood management structures

Recognizing the effects of climate change on the frequency of storms and rainfall intensity, design criteria for flood control structures should be revisited to ensure that capacities of structures are adequate to handle the expected increase in floodwater volume. Protocols on dam-water release during typhoons should also be reviewed. Moreover, downstream interventions will have to be complemented by upstream activities such as watershed management to minimize siltation which significantly reduces effectiveness of flood control structures, especially when left unabated.


plans. The government would be required to appropriate the resources needed for both manpower and funding to facilitate smoother operationalization. Financing frameworks should also be developed to provide for the necessary capacity development programs as well as O&M activities of flood control structures and facilities.

Finally, the responsibilities among stakeholders should be clearly defined to promote greater coordination among implementing agencies and LGUs, particularly during the implementation and O&M phases of flood control projects, and to enhance accountabilities.

Energy


On Energy Security

Total primary energy supply (TPES) in 2009 reached 39.6 million tons of oil equivalent (MTOE), with the production of indigenous energy (oil, coal, natural gas, geothermal, hydro, wind, solar, biomass, coco-methyl ester [CME] and ethanol) increasing by 2.0 percent from levels of 2008. The country’s self-sufficiency16 level thus increased from 56.7 percent in 2008 to 59.2 percent in 2009.

For 2009, oil accounted for the biggest share of 34.0 percent in the energy supply mix, followed by geothermal energy with its share of 22.4 percent. Coal contributed 15.3 percent, while biomass added 13.59 percent. The remaining shares in TPES were divided between natural gas, hydro, wind, ethanol and CME.

On the demand side, total final energy consumption (TFEC) will grow to 24.9 MTOE by 2013 and 27.7 MTOE by the end of 2016 from the 2009 demand level of 23.6 MTOE. TFEC for the period 2009-2016 is expected to grow annually at 2.3 percent on average.

The transport sector accounts for the highest share of the total demand, with an average of 36.5 percent in 2009, while the industry sector is projected to grow the fastest at an annual average growth rate (AAGR) of 5.1 percent as reflected in Table 5.6.

Power Generation

As of December 2009, the country’s installed capacity stood at 15,610 megawatts (MW). Fossil-fuel power plants, mostly located in the Luzon grid, are still the dominant source. The Mindanao grid is heavily dependent on hydroelectric power plants. Coal-fired power plants contributed 27.40 percent, followed by oil-based ones with 20.46 percent and those on natural gas, 18.14 percent. The installed capacity from renewable energy increased slightly with an additional 8 MW expansion of Northwind Power Phase II in Bangui, Ilocos Norte, which became operational in September 2008; the 2.5 MW Sevilla minihydro in Bohol commissioned in November 2008; and the two biomass plants in Negros Occidental with an aggregate capacity of 29.3 MW. Total dependable capacity of the entire grid was at 13,319 MW, or 85.32 percent of the total installed capacity.

Gross power generation in 2009 reached 61,934 gigawatt-hours (GWh), 1.83 percent higher than 2008 level of 60,821GWh17. Natural gas-fired power plants remain the top producer of electricity, accounting for 32.11 percent of the country’s total gross generation. Coal-fired plants are second, with 26.60 percent share of the mix. Oil-based generation only accounted for 8.69 percent of the total gross generation in 2009.

In mid-2010, the country was again hit by several hours of rotating brown-outs

As of December 2009, the country’s installed capacity stood at 15,610 megawatts (MW).

The Mindanao grid is heavily dependent on hydroelectric power plants.

The transport sector accounts for the highest share of the total demand, with an average of 36.5 percent in 2009, while the industry sector is projected to grow the fastest at an annual average growth rate of 5.1 percent

16 Self-sufficiency level refers to the use of indigenous energy composed of oil, coal, natural gas, geothermal, hydro, wind, solar, biomass, Coco-Methyl Ester (CME) and ethanol17 GWh converted in MW is multiplied by the following factor: (1000)*(1/24)*(1/365)


because of a power supply shortage equivalent to 185 MW. The supply deficit was due to the decrease in dependable capacities of hydro plants caused by El Niño and preventive maintenance schedule of some power plants.

Petroleum products

The country’s total demand for petroleum products in 2009 rose 6 percent from 101,199 million barrels (MB) in 2008 to 107,299 MB, with diesel accounting for the largest share with 40.7 percent of demand mix. The transport sector is the highest petroleum product consumer followed by industry, as shown in Figure 5.6. To lessen the dependence on imported petroleum products, government has been continuously promoting the development and utilization of alternative fuels.

Alternative Fuels

Biofuels Program. As of the first half 2010, the DOE had accredited 14 biofuel producers (12 for biodiesel and 2 for bioethanol). The 12 biodiesel producers have a combined production capacity of 395.6 million liters per year. The total sales of biodiesel (CME) blend was 130.9 million liters in 2009 and 54.2 million liters in 2010. Actual diesel fuel displacement from biodiesel in 2009 translates to an equivalent foreign exchange savings of US$34.9 million.

On the other hand, Leyte Agri Corporation, the country’s first ethanol facility, and San Carlos Bioenergy Inc., Southeast Asia’s first dedicated ethanol distillery with an integrated co-generation power plant, have a combined production capacity of around 49 million liters of ethanol annually. Both plants together sold 23.1 million liters in 2009, equivalent to foreign exchange

The country’s total demand for petroleum products in 2009 rose 6 percent from 101,199 million barrels (MB) in 2008 to 107,299 MB, with diesel accounting for the largest share with 40.7 percent of demand mix.

Figure 5.3. 2009 Primary Energy Mix: 2009

Figure 3. 2009 Primary Energy Mix

SalesImported Oil 31.61%Imported Biofuels 0.10%Imported Coal 9.06%Oil 2.43%Natural Gas 8.11%Coal 6.24%Hydro 6.15%Geothermal 22.40%Biomass 13.59%Wind/Solar 0.01%Biofuels 0.30%

Imported Oil, 31.61%

Imported Biofuels, 0.10%

Imported Coal,9.06%

Oil, 2.43%

Natural Gas, 8.11%

Coal, 6.24%

Hydro, 6.15%

Geothermal, 22.40%

Biomass, 13.59%

Wind/Solar, 0.01%Biofuels, 0.30%

Indigenous Energy,59.23%

Table 5.6. Projected Final Energy Consumption: 2009-2016

Sector 2009-2016 (%) AAGR (%)

Transport 36.5 2.1

Industry 28.1 5.1

Residential 24.1 -0.2

Commercial 9.7 1.4

Agriculture, fishery and forestry (AFF) 1.6 3.4


savings of US$10.1 million from gasoline displacement. In the first half of 2010, 9.2 million liters of ethanol were sold to oil companies. By end-2010, Roxol Bioenergy’s ethanol plant would have provided an additional capacity of 30 million liters per year, bringing total annual ethanol production to about 79 million liters.

To meet the technical requirements of the program and ensure continuous research and development support, the DOE provided counterpart funding of PhP50 million for the establishment of a vehicle-testing facility located at the Department of Mechanical Engineering Laboratory, UP-Diliman.

Auto-LPG Program. In support of the government’s Auto-LPG Program, the Development Bank of the Philippines (DBP) has included the auto-LPG initiative in its “Clean Alternative Transport Fuel Financing Program,” which provides reasonable financing packages for auto-LPG related activities such as acquisition of auto-LPG vehicles. The Land Transportation Franchising Regulatory Board (LTFRB) also extended by two years the franchise of taxis that converted to auto-LPG. These

schemes promote large-scale conversion of taxi fleets and encourage new player participation in the program.

As of first half of 2010, there were about 18,731 converted vehicles nationwide running on LPG and 217 auto-LPG dispensing stations (72 garage-based). The sales growth of auto-LPG products registered an equivalent reduction of CO2 emissions by 214,664 metric tons (MT) and 48,789 MT for 2009 and the first quarter of 2010, respectively. Moreover, the 293 LPG-converted tricycles nationwide have an equivalent reduction of 495,521 kilograms (kg.) of carbon dioxide.

Natural Gas Vehicle Program for Public Transport (NGVPPT). The alternative use of natural gas in the transport sector is being pursued through the NGVPPT. From a minimal volume of CNG utilization in 2007 following the inauguration of the pilot mother and daughter refueling system, the total consumption of natural gas for the transport sector already reached 18.1 Million Standard Cubic Feet (MMSCF) in 2009.

Figure 5.4. Philippine Capacity and Gross Generation: 2009Figure 4. 2009 Philippine Capacity and Gross Generation, in MW

ColumInstalled CapacityWind 0.21%Solar 0.01%Bioma 0.19%Coal 27.40%Oil-ba 20.46%Natur 18.14%Geoth 12.51%Hydro 21.09%

15,610 MW 7,070.10 MWIncludes embedded generator (61,934 GWh)

Includes off-grid generation

Wind0.21%

Solar0.01%

Biomass0.19%

Coal27.40%

Oil-based20.46%Natural Gas

18.14%

Geothermal13%

Hydro21.09%

INSTALLED CAPACITYWind0.10%

Solar0.01% Biomass

0.02%

Coal26.60%

Oil-based8.69%

Natural Gas32.11%

Geothermal16.67%

Hydro15.80%

GROSS GENERATION


As of first half of 2010, there were 7 accredited bus operators and 34 CNG buses plying the routes of Southern Luzon and Metro Manila. An additional 27 buses are under testing and evaluation. The CNG daughter refueling station operates in Barangay Sto. Tomas, Biñan, Laguna.

To sustain developments in the industry, a joint undertaking with the Polytechnic University of the Philippines (PUP) was initiated to establish the first Natural Gas Institute in the country. The said Institute is envisioned to develop the industry and enhance local capacity to support the emerging natural gas industry and provide the necessary capacity building needs of the industry.

Renewable energy

The “Renewable Energy Act of 2008,” (RA 9513) sought to accelerate the exploration and development of the country’s renewable energy (RE) sources. It also seeks to strengthen the DOE policies on renewable energy programs and expand the provision of fiscal and nonfiscal incentives to encourage private sector investment in the renewable energy industry. The Implementing Rules and Regulations (IRR) were signed on May 25, 2009. Consequently, the National Renewable

Energy Board (NREB) was convened pursuant to Section 27 of RA 9513 to promulgate the said law and other related policy and regulatory mechanisms such as the Renewable Portfolio Standard (RPS), Feed-in Tariff (FiT) System and the National Renewable Energy Program (NREP).

As of end-2009, total installed capacity from RE stood at 5,309 MW. Figure 5.6 shows the breakdown of the RE contribution to total power-generating capacity for on-grid areas. Total dependable capacity from RE resources for ongrid areas stood at 4,278 MW.

RE technologies are relatively expensive for local investors/developers. On the other hand, foreign investments have been slow to take up the slack because of the issue of project ownership, which is by law, stipulates majority Filipino ownership.

The goal of reducing fossil fuel consumption and promoting the development and utilization of renewable energy remains a major challenge. To benefit fully from RA 9513, government must institute certain changes, create new and additional units of infrastructure, and introduce new systems. Among the cross-cutting issues raised on renewable energy development during various energy consultations are the following:

As of end-2009, total installed capacity from RE stood at 5,309 MW. Total dependable capacity from RE resources for ongrid areas stood at 4,278 MW.

The goal of reducing fossil fuel consumption and promoting the development and utilization of renewable energy remains a major challenge.

Figure 5. 2009 Sectoral Oil Consumption, in KTOE

SECTORCONSUMPTION

(KTOE)% share

Industry 1,359.40 10.17%

Transport 8,749.50 65.45%

Residential 937.6 7.01%

Commercial 826.4 6.18%

Agriculture 204.8 1.53%

Non-energy use 111.6 0.83%

Power Generation 1,177.90 8.81%

TOTAL 13,367.20

Industry Transport Residential

Commercial Agriculture Non-energy use

Power Generation

Figure 5.5. 2009 Sectoral Oil Consumption; 2009


Electricity rates in the Philippines are deemed among the highest in Asia.

a. high cost of RE development due to limited number of local manufacturers, fabricators and suppliers of RE equipment and components which are mainly imported;

b. limited options to optimize the development of resources because of a lack of an up-to-date database on RE resources;

c. lack of capacity-building and training opportunities to enhance technical capabilities of stakeholders and potential developers;

d. need for stronger R&D on RE;

e. limited infrastructure support (i.e., transmission lines and submarine cables);

f. limited information and education campaign activities on RE that includes advocacy on its benefits;

g. absence of direct policy linkages with grassroots groups; and

h. dependence on government initiative and resources for the development of energy projects.

Fossil fuels

Oil and Gas. The country has 16 sedimentary basins with a combined potential of 4,777 million barrels of fuel oil equivalent (MMBFOE) or 689.8 MTOE of oil and gas reserves.

An additional 150 billion cubic feet (BCF) of gas have been recovered from the seventh well of the Malampaya which could fuel a 300 MW natural gas power plant for a period of 12 years. Existing oil and gas fields yielded an output of 2.92 MMB of oil coming mostly from the Galoc Field, which began producing in October 2008. With two production wells, Galoc Field has an average daily production of 14,000 barrels. Production for the first semester of 2010 was registered at 1.75 MB of oil, 56.51 million standard cubic feet (MMSCF) of gas and 2.16 MB of condensate.

Despite a favorable business experience in the upstream energy sector, the social acceptability of these projects still needs to be addressed.

Coal. The Philippines currently has 13 coal basins with a total resource

Figure 5.6. RE Contribution to Total Power Generating Capacity: 2009Figure 6. RE Contribution to Total Power Generating Capacity

SalesNatural Gas 2831Oil 3193Coal 4277Geothermal 1953Hydro 3291Biomass 30Wind 33Solar 1

NOTE:

The above graph should look like this >>>

If it does not, try reselecting the datain the table above. Just click&drag.

Thanks.

Natural Gas2,831 MW(18.14%)

Oil3,193 MW(20.46%)

Coal4,277 MW(27.40%)

Geothermal1,953 MW(12.51%)

Hydro3,291 MW (21.08%)

Biomass30 MW (0.19%)

Wind33 MW (0.21%)

Solar1MW (0.01%)

Renewable Energy

5,309 MW(34.01%)


potential of 2.4 billion metric tons (BMT). Indigenous coal production in 2009 reached 4.7 million metric tons (MMMT or 10,000 BTU/lb), a 29.9 percent increase over the 3.6 MMMT produced in 2008. This is due to the robust output of Semirara Mining Corporation, which contributed 4.36 MMMT or 93.1 percent of the total coal production. As of the first half of 2010, coal production had reached 3.6 MMMT, which was 38.2 percent higher than the coal output during the same period in 2009.

Social acceptability, environmental sustainability, and the country’s low-grade coal are challenges that need to be addressed.

On Power

Electricity

Electricity rates in the Philippines are deemed among the highest in Asia. Economic growth has been impeded by an unreliable power supply as indicated in the annual average growth rate of -0.4 percent of electricity to GDP18 from 1999 to 2009.

Power demand and supply

With peak demand assumed to grow annually at 4.5 percent for the planning period 2009-2030, a total of 11,900 MW is needed for the Luzon grid; 2,150 MW for the Visayas grid; and 2,500 MW for the Mindanao grid.

The liberalized and market-based power industry put in place by EPIRA relies on the private sector to construct generation plants to meet demand. Private sector investments in power generation, however, have been lower than expected vis-a-vis projected energy demand. Moreover, the usual gestation period to build

new electric power plants is three to five years.

A 60-percent level in energy independence is conservative given the country’s natural resource endowments. Electricity generated from indigenous and renewable energy sources, however, is more expensive despite being accorded priorities in light of their environmentally benign characteristics.

Establishment of the Wholesale Electricity Spot Market (WESM)

The WESM began commercial operations in Luzon on June 26, 2006 to create a competitive electric power industry for better and more efficient electric service at a reasonable cost to consumers. To date, 13 generating companies participate directly in the WESM with 11 distribution utilities (DUs) and five registered direct suppliers. WESM operations in the Visayas region, while hindered by inadequate capacity in both transmission and generation facilities, nonetheless commenced in December 2010. Market rules for Mindanao have yet to be laid down.

Privatization of at least 70 percent of NPC generating assets in Luzon and Visayas.

As of June 2010, the government was able to privatize 26 of its generating or operating plants and four decommissioned assets. 20 of these assets comprise 91.7 percent of PSALM-owned capacities in the Luzon and Visayas, thus surpassing the 70-percent condition for open access and retail competition. The latest successful bid was of the 150-MW Bac-Man geothermal power plant.

Transfer of management and control of at least 70 percent of total energy output

A total of 11,900 MW is needed for the Luzon grid; 2,150 MW for the Visayas grid; and 2,500 MW for the Mindanao grid.

18 Electricity to GDP (watt-hour/Php) is an Intensity Indicator


of power plants under contract with NPC to Independent Power Producer (IPP) Administrators

The government successfully bid out 3,345.75 MW of NPC-contracted capacities to IPP Administrators, equivalent to US$3.228 billion in proceeds. This amounts to a cumulative 68.22 percent of total capacities privatized, towards the 70 percent required for the start of open access.

Privatization of the National Transmission Corporation (TransCo)

The government on January 15, 2009 formally turned over the 25-year concession of the National Transmission Corporation (TransCo) to the NGCP. The NGCP remitted US$987.5 million to PSALM as its upfront payment for the operation of the transmission system and in compliance with the provisions of the sale transaction. This amount is 25 percent of the US$3.95 billion purchase price paid for the concession contract. This concessionaire of TransCo is in charge of development, upgrading, and rehabilitation of the electricity grid.

Divestment of Transco’s sub-transmission assets

The sale of TransCo’s subtransmission assets involves some 131 sale packages covering 107 interested DUs, mostly electric cooperatives. In cases where more than one DU is connected to a transmission line, the connected and qualified DUs must form a consortium to buy and thereafter operate the asset. These subtransmission assets include about 6,200 circuit kilometers (ckt) comprising mostly 69kV transmission lines and 1,600 MVA of substation capacity. The cost of these assets is placed at about PhP7.6 billion (based on December 31, 2007 net book values).

As of October 31, 2010, TransCo had divested itself of PhP3.55 billion (69 sale packages) worth of subtransmission assets

including 325 MVA transformers in favor of 57 DUs. Included in the sale packages are 40 Lease Purchase Agreements with 32 cooperatives under concessional terms amounting to about PhP2.4 billion. The balance of over PhP1.150 billion represents sales to private distribution utilities. Thirty-three sale contracts have been approved by the ERC amounting to PhP1.75 billion as of October 31, 2010.

Use of privatization proceeds to reduce borrowings

As of June 2010, actual privatization proceeds collected by PSALM from the sale of generation and transmission assets has amounted to US$4.42 billion. This includes other privatization-related fees such as lease rental, assignment of ROW, purchase price for land, and forfeiture of bonds.

The proceeds from the sale of National Power assets are used to service the financial obligations of National Power (e.g., prepayments of maturing debts, regular National Power debt servicing, servicing of IPP obligations).Of the privatization proceeds collected so far, PSALM has utilized US$4.089 billion for the following (as of June 30, 2010):

Prepayments US$1.297 billion

Regular NPC Debt Servicing

US$1.600 billion

Servicing of IPP Obligations

US$1.095 billion

Privatization Related Expenses

US$0.097 billion

Total US$4.089 billion

Condonation of loans

The national government, through PSALM, condoned the loans of electric cooperatives (ECs) used for electrification purposes amounting

As of June 2010, actual privatization proceeds collected by PSALM from the sale of generation and transmission assets has amounted to US$4.42 billion.


The delay in implementation was due to limited funds, ROW problems for transmission and substation projects, deferment of T/L and S/S projects since NPPs preferred distributed generation, and failed biddings for the purchase of equipment.

to PhP18.1 billion. This resulted in a reduction in ECs’ rates in the range of PhP0.0578/KWh to PhP1.3507/KWh. As of October 31, 2010, the government through PSALM had paid a total of PhP10.696 billion worth of financial obligations to LGUs and other government agencies.

Mandatory Rate Reduction

From January to March 2010, NPC granted a total of PhP358.1 million for the Mandatory Rate Reduction (MRR), in which the Luzon residential customers accounted for 27 percent. Residential customers of the Manila Electric Company (Meralco) account for 20 percent. From 2001 to March 2010, NPC has already spent a total cost PhP25.65 billion for the grant of MRR.

Regulation

As stipulated in the EPIRA, members of the Energy Regulatory Commission (ERC) are appointed by political authorities. This arrangement, however, has brought up issues of transparency and independence. The previous Plan (2004-2010) already contained a planned reassessment of the ERC’s performance and processes, suggesting the creation of an independent search committee as a mechanism for ERC appointments. To date, no such assessment and evaluation of the ERC has been conducted. An independent monitor of the regulatory setup of the sector is necessary as part of a system of checks and balances, especially once the generation and transmission sectors are privatized.

On Electrification

Electric Cooperatives are private entities but receive sizeable

government subsidies. Some provisions of the Magna Carta for Residential Electricity Consumers have weakened the implementation of the Anti-Pilferage Law, leading to an increase in system losses and inefficiencies among ECs. An example is Article 19 of the Magna Carta, giving the consumer the right to tender payment at the point of disconnection or provide a deposit representing the differential billing. Article 20, moreover, obliges the utility to continue providing service despite arrears of previous occupants of a building/dwelling place. Parts of Articles 16-25 give the consumer a reprieve from disconnection during holidays, funerals, or if the consumer is sick.

As of December 2010, the ERC has been in the final stages of amending both the Magna Carta for Residential Electricity Consumers and the IRR of the Anti-Pilferage Act. Earlier in 2009, the ERC had issued the Rules to reduce systems losses of ECs from 14 percent to 13 percent, and of private distribution utilities (PDUs) from 9.5 percent to 8.5 percent. The Rules for Setting EC Wheeling Rates (RSEC-WR) were issued to encourage efficiency and provide incentives for the ECs performance.

Barangays. As of July 31, 2010, 99.87 percent of all barangays were electrified, up from 99.39 percent in 2009 leaving only 54 barangays programmed for electrification until the end of 2010. From January 2009 to July 2010, the ECs provided electricity to 847 rural barangays. The 119 ECs in the country have achieved 99.94 percent energization relative to their respective franchise areas. The Mearlco and private investor-owned utilities (PIOUs), together with LGUs, have 27 and 7 remaining unenergized barangays, respectively.

Households. As of July 2010, the household connection level in the country had reached 74.0 percent. This means 14.204 million out of a total 17.534 million


households19 have electricity connections.

Missionary areas. Large portions of the remaining unenergized barangays are mostly remote and with dispersed households that are difficult to energize, requiring extensive resources, time and effort. Electrification in some barangays, particularly those covered by solar projects, was found to be short-lived owing to the absence of a strong sustainable mechanism.

Based on the 2009 Missionary Electrification Development Plan (MEDP), the total projected capacity addition for Small Power Utilities Group (SPUG) areas was 26.69 MW, of which only 6.61 MW was added in 2009. For transmission and substation projects, a total of 226.01 km. of 69kV transmission lines and 50-MVA substations were projected. However, only 22.41 km. transmission lines were put up while the rest were in preconstruction stages. Likewise, no substation was put up in 2009. As for remote area electrification, 130 of 133 areas were electrified, an accomplishment of 97.74 percent.

The delay in implementation was due to limited funds, ROW problems for transmission and substation projects, deferment of T/L and S/S projects since NPPs preferred distributed generation, and failed biddings for the purchase of equipment.

The NPC Main Grid is no longer able to advance funds to finance the operations of SPUG, including project implementation, since the main grid plants were already sold. SPUG’s funds come from its revenues and the UCME subsidy. In 2009, the UCME was approved only on the latter part of the year and was used for SPUG’s operations and payments for the subsidies of New Power Providers (NPPs).

Of the latest approved UCME equivalent to PhP2.7 billion for each year from 2010-2013, only PhP533 million is allotted for capital spending. This amount is not enough to fund all projects and additional funding is required. SPUG is now looking for other sources of funds.

Under Rule 13 of the EPIRA-IRR, the DOE in coordination with NPC, NEA, NPPs, DUs and QTPs has prepared the MEDP 2011 with two major components, namely, missionary generation and remote area electrification, which includes the barangay and household electrification. This outlines the government’s plan to implement policies and programs that will sustain the provision of adequate, reliable, and efficient supply of electricity in missionary or offgrid and remote areas and to enable these communities to receive the benefits of electrification.

SPUG covers 284 plants in 214 areas, with 14 areas being candidates for privatization. Of these 14 areas, the generation function of two areas was successfully taken over by private parties.

Missionary generation. Missionary generation includes the existing generation and associated delivery systems being managed by SPUG, NPPs and QTPs in small islands and isolated grids. The program involves improving reliability and efficiency through the replacement of old generating units and limiting the rental of units during emergency.

Remote area electrification. Consistent with the overall objective of total barangay electrification and household electrification, all remaining unelectrified barangays in small islands and isolated grids will be provided with electricity

The Energy Reform Agenda for 2010-2016 is guided by the vision of “Energy access for more”.

Accelerate exploration and development contracts through the Philippine Energy Contracting Round

Intensify development and utilization of renewable energy and environment–friendly alternative energy resources/technologies

19 Total number of households is based on 2000 Census


Increase utilization of alternative fuels.

Implement higher biofuels blend from B2 to B5 to diesel, and E10 to all gasoline and corresponding standards in phases subject to availability of supply.

service. A total of 1,760 households are programmed for remote area electrification amounting to PhP169.714 million for the different missionary areas.


The Energy Reform Agenda (ERA) for 2010-2016 is guided by the vision of “Energy access for more”. Government’s key priority is to ensure sustainable, diverse and reliable energy sources through consultation and the participation of multiple stakeholders. Increased economic efficiency in the use and distribution of energy services is critical to achieving energy access for the majority at competitive rates.

The ERA will utilize PPPs to implement critical infrastructure projects of the government that will address the growing energy needs of the country. Through PPPs, the DOE can benefit from the technical and financial support of its partners in the private sector, including businesses, investors, and nongovernment organizations (NGOs). PPPs will cover all phases of energy development and utilization.

To ensure energy security

Accelerate exploration and development contracts through the Philippine Energy Contracting Round (PECR)

First launched in 2006, the PECR shall be continued. Aggressive promotion of indigenous oil and gas resources and coal prospect areas via competitive contracting scheme under the PECR will be pursued.

Through PECR, the oil and gas sector is expected to yield an additional 23 Service Contracts (SCs) and drilling of 35 wells by end of 2016. From 2010 to 2016, production targets for the oil and gas fields are projected at 36.3 MMB of oil, 1,029.5 BCF of gas and 37.8 MMB

of condensate. The biggest contribution will be provided by the Malampaya oil and gas fields, which will contribute 23.1 MMB of oil, 1,022 BCF of gas and 37.2 MMB of condensate. New geophysical data will also be acquired to cover a total of 18,550 line/km. and 3,750 sq./km. of 2D and 3D seismic data, respectively, by the end of 2016.

Intensify development and utilization of renewable energy (RE) and environment–friendly alternative energy resources/technologies

RE development is targeted with the government gearing to be the world leader in geothermal energy, the largest producer of wind power, and the solar manufacturing hub in Southeast Asia. In addition, the harnessing of the country’s hydropower and biomass energy potentials shall be continued.

The National Renewable Energy Program (NREP), to be drawn by DOE in consultation with other concerned stakeholders, will provide the overall strategic policy directions in the RE industry.

The government will pursue the research and development of untapped RE available such as ocean thermal energy conversion (OTEC). To date, the country’s potential sites for deep-ocean power consist of 910 blocks equivalent to 73,710 hectares. Deep Ocean Power Philippines, Inc. (DOPPI) has already filed its application for OTEC Pre-Development Contract for 36 areas.

Existing RE-based power generation capacities shall be increasingly utilized. From the generation expansion exercises used in the formulation of the country’s power development program, out of the 8,156.7 MW of total RE potential, 4,701.96 MW is expected to come in the next 30 years, broken down as follows: (a) hydropower with 2,113.1 MW; (b) geothermal with 1,475 MW; (c) wind with 930 MW; (d) biomass with 112.8 MW; and (e) solar with 71 MW. Of these capacities, around 57 MW is expected in the short


term, 130 MW in the mediumterm; around 775 MW is expected to come in between 2014 and 2016. The remaining capacity is expected beyond 2016 and up to 2030. The committed capacities expected to be commercially operated within the short term are: (a) 70 MW from geothermal; (b) 50.5 MW from hydro; and (c) 17.5 MW from biomass.

Harmonization is a critical factor in the exploration and development of geothermal resources, especially those located inside protected areas, hence the need to unify provisions of RA 7586 (National Integrated Protected Areas System [NIPAS] of 1992) and RA 8371 (Indigenous People’s Rights Act [IPRA] of 1997), with relevant energy policies and programs for an integrated response to environmental and sociocultural concerns.

Increase utilization of alternative fuels

The government’s policies and programs on alternative energy are geared towards reducing the country’s dependence on price-volatile oil imports and diversifying from conventional fuels towards indigenous renewable and environment-friendly energy resources. The development of other feedstocks for biodiesel and bioethanol (i.e., jatropha) is also encouraged through research and commercial production. It is important to develop alternative energy sources, especially indigenous and renewable forms, with an end view of providing security of supply as well as realizing savings from importation.

a. Implement higher biofuels blend from B2 to B5 to diesel, and E10 to all gasoline and corresponding standards in phases subject to availability of supply20

The National Biofuels Board (NBB) is set to recommend the levels of biofuel blends based on supply availability, price and quality of biodiesel, including blending

infrastructure and logistics.

b. Conduct RD for other nonfood feedstock in coordination with concerned agencies, academe & research institutions

The government will broaden the coverage of the Biofuels Program to identify other feedstocks. Techno-economic studies on palm and algae as potential biodiesel feedstocks will be pursued, while cellulosic technologies will be used to produce bioethanol.

The academe and other research institutions, which are among the partners in research and study by the DOE, shall be encouraged to continue their undertakings on nonfood feedstock R&D activities.

c. Continuously promote the use of alternative fuels (i.e compressed natural gas, auto liquefied petroleum gas) as well as other emerging energy technologies such as electric vehicles in the transport sector

The promotion of natural gas use in industrial, commercial, residential and agricultural sectors will continue to be encouraged. The conversion of existing and decommissioned power plants to natural gas shall be pursued. Active interaction with the downstream energy sector shall be prioritized through gas-to-market projects. The use of CNG in vehicles will also be encouraged.

Given the benefits of CNG and LPG over fossil fuels, the DOE will also renew its efforts to promote the former in the transport sector. The DOE will facilitate the required policy support as well as the availability of critical supply infrastructure and facilities. The infrastructure of major gas pipeline networks needs to be strengthened and expanded to reach commercial establishments and households.

DOE will work with the 15th

Conduct RD for other nonfood feedstock in coordination with concerned agencies, academe & research institutions.

Continuously promote the use of alternative fuels (i.e compressed natural gas, auto liquefied petroleum gas) as well as other emerging energy technologies such as electric vehicles in the transport sector.

20 B2: 2% bio-diesel (coco-methyl ester [CME]) blend; B5: 5% bio-diesel (CME)blend; E10: 10% bio-ethanol


Congress for the passage of the Natural Gas Bill. With regard to auto-LPG conversion, the DOE will conduct technology validation for dual fuel jeepneys and other motorized diesel/gas engines and conduct capability building for regulators and implementers to develop available manpower expertise. Studies will be conducted to determine the viability of expanding the use of auto-LPG to other types of engines, together with studies on the necessary safety standards.

Pursue the enactment of a law on energy efficiency and conservation

An Energy Efficiency and Conservation Law is a critical measure to economize the energy requirements of growth. The proposed legislation should incorporate policies and measures to develop local energy auditors and energy managers, develop the ESCO industry, encourage the development of energy-efficient technologies/ buildings and provide incentives for the effective promotion of efficiency initiatives in the energy market sector.

To achieve a reliable and secure supply of electric power

The government shall pursue the following strategies:

1. Diversify the country’s power sources, especially in Mindanao, to address the susceptibility of hydro power plants to climate-change impacts;

2. Study alternative technologies in power generation;

3. Assess the vulnerability of energy facilities to climate change and natural disasters (e.g. El Niño and La Niña);

Pursue the enactment of a law on energy efficiency and conservation

To achieve a reliable and secure supply of electric power.

Achieve 90 percent household connection by 2017

4. Conduct a comparative study of similar or related energy policies in the ASEAN;

5. Focus on demand aggregation and contracting from Electric Cooperatives;

6. Implement the Transmission Development Plan (TDP);

7. Revisit EPIRA and its IRR (e.g. the possibility of recommissioning of power plants under preservation, lifeline rates and cross subsidies among others; and

8. Establish triggers to allow government to build power plants in face of weak private sector interest.

To expand the government’s electrification program

The following strategies shall be pursued:

1. Pursue higher household electrification. The government intends to achieve 90 percent household connection by 2017 through the expanded rural electrification program using RE Systems.

2. Rationalize the Universal Charge for Missionary Electrification (UCME) rates approved by ERC in order to cover missionary electrification;

3. Engage LGU support for the missionary areas; and

4. Strengthen LGU capacity in power project development and in accessing available funds (i.e., ER 1–94).


Information And Communications Technology (ICT) Infrastructure


Technological innovations and commercial developments have expanded growth opportunities in the ICT sector, with private sector players continuing to invest in developing the country’s ICT infrastructure. The government, for its part, has been promoting the spread of ICT as a means to interconnect the country, even out social opportunities, raise overall living standards and attain global competitiveness.

The growth and dynamism of the ICT sector has accommodated the existence of 7 mobile operators, 73 local-exchange carriers, 14 intercarrier service providers, 11 international gateway facility (IGF) operators, and 471 value-added service (VAS) providers21. The availability of ICT services has facilitated development through more efficient and effective delivery of both existing and novel applications in business and commercial transactions, general government, education and health services, among others.

Current state of ICT deployment and use

Service Coverage

The scope of ICT technologies and services in the country includes fixed telephone lines, wireless communications, and broadband Internet, among others. Cellular mobile telephone service

(CMTS) is by far the dominant telecommunications service in the market, covering 94.7 percent22 of total municipalities, as compared with 53.9 percent23 coverage for fixed telephone lines. Despite the continued expansion and success in CMTS, a number of unserved municipalities still exist. Coverage gaps need to be addressed to achieve universal access and service for telephony.

Meanwhile, the country’s fiber-based backbone network provides for domestic and international broadband connectivity with about 63 provinces (79%) in the country having fiber-based infrastructure. Further, at least 761 cities and municipalities (about 50%) are considered to be covered with fixed or mobile broadband Internet services.24 However, the presence and geographic reach of mobile broadband (usually 3G wireless technology) in said areas is still very limited and only covers urban centers and boundaries.

ICT Penetration (Access and Subscription)

The increase in the number of CMTS subscribers has been phenomenal, especially as the short messaging service (SMS) or more popularly known in the country as “text messaging,” has become a way of life for many Filipinos. Over two billion text messages (sending and receiving) are being handled daily by cellular mobile operators. More advanced services are also becoming prevalent, such as the multimedia messaging service (MMS) and the third generation (3G) mobile communication technology, which

21 Source: National Telecommunications Commission (NTC), figures as of end of 200922 Source: COMELEC data, used as of last 2010 Automated Election, where 5.26 percent of municipalities were identified to have not been covered by any mobile network service. It should be noted however that CMTS coverage in some municipalities may only be referring to the town centers, with remote barangays and schools of such municipalities still having no connection yet.23 Source: NTC, 200924 Source: CICT


were rolled out in 2004 and 2006. The greater challenge, however, is for Internet, particularly broadband access and subscription, to also catch up and achieve the same level of service with that of mobile telephony, be it through wired (e.g., Digital Subscriber Line connection) or wireless broadband access (e.g., 3G/ High Speed Packet Access technology). Figure 5.7 shows signs of market concentration in the sector with the continuous growth in mobile telephony services, leaving other forms of ICTs such as Internet and broadband access far behind.

In terms of Internet connection speed, a recent global broadband speed analysis test shows that the Philippines’ average download speed (i.e, the speed at which data is sent from the Internet to your computer) is at 2.34 megabits per second (Mbps), while the average upload speed (i.e., the speed at which data is sent from your computer to the Internet) is at 0.65Mpbs.25 This ranks the Philippines at 72nd in worldwide download speed and 65th in worldwide upload speed.

At present, penetration of personal computers (PC) in the country is still considered low, especially in rural areas, which may be attributable to infrastructure limitations, availability of electricity access, and cost of ownership or household financial constraints. Since many Filipinos still do not own PCs, other alternative places such as Internet cafes, WiFi hotspots, offices, and schools, among others, serve as common Internet access points. There are currently some 30,000 to 40,000 registered Internet cafes and an estimate of 2,000 WiFi hotspots throughout the country. The increase in number of Internet cafes and the availability of free WiFi access in public spaces has led to competition and cheaper rates. Although PC ownership levels are quite low, utilization rates are much higher considering that the country’s social networking penetration rate is at 83.1 percent, which is higher than the global average of 57.5 percent.26

The use of shared access facilities has also helped increase Internet usage, and made access to Internet services more affordable, especially in poor and underserved communities. Based on the

Based on the concept of shared facility, the national government, in collaboration with LGUs has established the Philippine Community e-Center Program, which to date has successfully connected over 1,200 communities to the Internet.

Figure 5.7. Growth in Number of Users/Subscribers of Major ICT Services:2006-2010

Source: CICT, NTC

Figure 7. Growth in Number of User/Subscribers of Major ICT Services, 2006-2010

CMTS (mobile

telephony)Internet Users

Household with access to broadband service

Fixed telephone line

2006 42.869 8.105 0.397 3.6172007 57.345 13.706 0.774 3.6332008 68.095 14.000 1.775 3.7422009 77.043 24.000 3.600 3.8502010 89.324 32.779 7.301 3.982

0.000

10.000

20.000

30.000

40.000

50.000

60.000

70.000

80.000

90.000

100.000

2006 2007 2008 2009 2010

Use

r/Su

bscr

iber

s, in

mill

ions

CMTS (mobile telephony) Internet Users

Household with access to broadband service Fixed telephone line

25 Source: Speedtest.net, 20026 Source: Universal Mccann International Social Media Research Wave 3, March 2008


concept of shared facility, the national government, in collaboration with LGUs has established the Philippine Community e-Center (CeC) Program, which to date has successfully connected over 1,200 communities to the Internet. The CeCs also serve as common access points for e-Government services.

Internet Connection in Public High Schools

As of 2009, only 29 percent of the country’s public high schools had an Internet connection. Table 5.8 shows that the least number of connected public high schools are in the Cordillera (CAR), Cagayan Valley (Region II) and Bicol (Region V) regions. This can be largely attributed to budgetary constraints or the high cost of setting up infrastructure, especially over difficult terrain or geographical locations. Many unconnected public high schools are also located in areas not served by private telecommunications companies (telcos), which could indicate the digital divide between urban and rural areas across regions.

Broadcast Communications

As of end 2009, the broadcast sector comprised 306 television (TV) stations, 905 cable television (CATV) operators, 386 AM stations, 676 FM stations, and 5 direct-to-user (DTU) satellite providers.

At present, the transition from the traditional analogue to digital television broadcasting is already progressing in many developed nations, or is otherwise being carefully studied in many other countries all over the world. To facilitate growth in the broadcast sector, the country is planning and preparing for the entry of Digital Terrestrial Television (DTT) broadcasting. In 2010, the National Telecommunications Commission (NTC) released Memorandum Circular No. 02-06-2010 that issued the adoption of the Japanese digital broadcast standard called Integrated Services Digital Broadcast – Terrestrial (ISDB-T) for

the country’s impending migration to DTT broadcasting.

e-Government Systems

Current advancements in ICT services and applications have driven a trend towards new ways to link the government and its citizens. This has opened opportunities to improve the sharing of public information and to enhance the delivery of public services.

As an indispensable step, various government agencies have been developing and enhancing their accessibility in the Internet, among others. As of September 2010, 304 or 93.8 percent of NGAs had established their own websites or portals and were in various stages of enhancing their web-presence (see Figure 5.8). A total of 14 NGAs (4.3%) are in Stage 4 characterized as government portals allowing for two-way transactional interactions; 93 NGAs (28.7%), Stage 3 (with interactive features on the website, including downloadable forms); 150 NGAs (46.3 percent) are at Stage 2, with frequently updated or “dynamic” websites; and 47 NGAs (14.5%) are at Stage 1 (comprises of only an official website or “static” websites).

Issues, Gaps, and Challenges

Despite the significant progress in terms of wider access and availability of ICT services, a number of perennial issues and problems continue to affect the Philippine ICT sector.

1. Gaps in communications and information access/services, particularly, low coverage, penetration, and uptake of Internet and broadband

Despite growth in the ICT sector, the pattern of this growth, particularly the rate of catch-up, differs among


the types of ICT services and their deployment across the regions. Among the available ICT services in the market, CMTS has the biggest advantage in terms of coverage and subscription, while Internet, especially broadband access, still lags.

The current infrastructure (backbone network) already connects most of the Philippines, but there are still gaps in connecting a significant number of end users, such as communities, households, schools, as well as local units and agencies of government, especially in the rural areas. This suggests a wide disparity in the availability and level of ICT infrastructure and services, especially between major urban centers and rural areas. Profitability issues and situations in sparsely populated rural areas, including lack of important infrastructure support (e.g.,

availability of electricity and transport system) and possible risks of lower demand and subscriber base, preclude the entry of private operators.

It is recognized that the task of developing the country’s ICT infrastructure primarily resides with the private sector. If broadband connectivity, however, is fully left to market mechanisms, it likely will be deployed by the private sector to urban centers only, with very limited roll-out in rural areas. Moreover, there is also a need to ensure that the benefits of the Internet and related technologies, including participation in ICT investment and opportunities, is made available into all segments of the population, including those who are disadvantaged due to education, age, gender, disabilities, ethnicity, income and those who live in remote regions.

Table 5.7. Internet Connection in Public High Schools per Region: 2009

Source: Japan International Cooperation Agency ( JICA) Study

REGIONTOTAL NO. OF

PUBLIC HS

CONNECTED WITHOUT CONNECTION

No. of HS % Connected w/in Telco area out of Telco area % Unconnected

National 6650 1936 29.1 1150 3564 70.9

NCR 220 157 71.4 63 0 28.6

CAR 243 7 2.9 46 190 97.1

I 461 81 17.6 101 279 82.4

II 350 26 7.4 33 291 92.6III 502 115 22.9 81 306 77.1IV-A 578 214 37 118 246 63IV-B 340 34 10 39 267 90V 582 38 6.5 78 466 93.5VI 603 139 23.1 185 279 76.9VII 610 298 48.9 107 205 51.1VIII 397 70 17.6 88 239 82.4IX 330 144 43.6 21 165 56.4X 278 154 55.4 55 69 44.6XI 279 61 21.9 76 142 78.1XII 332 233 70.2 16 83 29.8XIII 297 64 21.5 34 199 78.5ARMM 248 101 40.7 9 138 59.3


A wide disparity in the availability and level of ICT infrastructure and services, especially between major urban centers and rural areas.

While the ICT sector is and should be private sector-led, government must continue to cultivate an enabling regulatory environment that ensures competition and a level playing field for the provision of ICT infrastructure and services.

There are still a number of issues and inadequacies in the current structure of government information network and state of e-government system.

The growth in the country’s population has also driven an increasing demand for high-speed bandwidth and high-capacity application.

2. The legal and regulatory environment may not be as conducive for investments in ICT infrastructure

There is a need to pursue various legal and regulatory reforms to ensure that these do not bar nor impede improved private sector investments in ICT. Furthermore, institutional reforms require that the policy and regulatory bodies of the government be strengthened and their independence and autonomy, including provision of well defined qualifications and fixed term of the commissioner, be reinforced as in the case of NTC.

While the ICT sector is and should be private sector-led, government must continue to cultivate an enabling regulatory environment that ensures competition and a level playing field for the provision of ICT infrastructure and services. The growing popularity and importance of Internet and broadband has also driven increased competition and thus, poses a greater challenge on how to make these services accessible to a larger market base.

There is also lack of “Green ICT” policies and initiatives to help manage the effects of ICT on the environment and climate change. With the rapid pace of technology adoption, the practice of green ICT should be more strongly instituted in all sectors, not only in ICT.

3. Inadequate infrastructure support for e-Government system

Despite previous e-government initiatives undertaken by the government, there are still a number of issues and inadequacies in the current structure of government information network and state of e-government system. While web presence among NGAs are continuously evolving through establishment of web portals, LGUs especially in the local areas are limited by lack of appropriate infrastructure, technical features and interface. For a developing country that has a low level of Internet and broadband access, the substantial benefits of true e-government system would still be difficult to capture.

Furthermore, various government bodies are currently developing and maintaining individual

Figure 8. State of Web Presence Among NGAs

Column1Stage 4: Transactional Web Presence 4.30%Stage 3: Interactive Web Presence 28.70%Stage 2: Enhanced Web Presence 46.30%Stage 1: Emerging Presence 14.50%Without Web Presence 6.20%

4.3%

28.7%

46.3%

14.5%

6.2%

Stage 4: Transactional Web Presence

Stage 3: Interactive Web Presence

Stage 2: Enhanced Web Presence

Stage 1: Emerging Presence

Without Web Presence

Source: National Computer Center (NCC)/a Stages of Web presence based on the United Nations and the American Society of Public Administration (UN-ASPA) standards

Figure 5.8. State of Web Presence among NGAs/a as of September 2010


While private sector investments will remain the key enabler, the government’s role is equally important in ensuring provision of ICT access and services for all, and in facilitating an enabling environment through appropriate policy measures and regulatory reforms to help sustain and further encourage private sector initiatives.

Since telephony, particularly though CMTS, has achieved a greater advantage in terms of access and usage, there is now a stronger focus on achieving universal access and service for Internet and broadband, especially for providing digital opportunities in the unserved and rural areas.

telecommunications networks, resulting in seemingly fragmented development of government ICT applications. The bigger challenge is to develop a more integrated government communications network that allows for connecting and accessing ICT systems of various regional, provincial and LGU government offices nationwide.


Developing the ICT infrastructure is significant to support the socioeconomic growth requirements and opportunities of the county. Under the current framework, ICT infrastructure and services are primarily provided by private telecommunications operators, driven mainly by user demand. There are areas, however, that are too remote or difficult for private sector players to enter. Thus, while private sector investments will remain the key enabler, the government’s role is equally important in ensuring provision of ICT access and services for all, and in facilitating an enabling environment through appropriate policy measures and regulatory reforms to help sustain and further encourage private sector initiatives.

To provide fast, reliable and affordable access to communications services and information

Driven by the increasing demand for high-speed and high capacity voice, video, and data services and applications, the private sector will continue to play a major role in the sectoral growth. It will still provide the bulk of investments towards the build-up and expansion of the ICT infrastructure networks and offer better and innovative services to the public. Equally important government interventions will include ensuring that digital opportunities from ICT

are enjoyed by all Filipinos in both urban and rural areas alike. Since telephony, particularly though CMTS, has achieved a greater advantage in terms of access and usage, there is now a stronger focus on achieving universal access and service for Internet and broadband, especially for providing digital opportunities in the unserved and rural areas. Hence, the following strategies will be pursued:

1. Provide incentives to facilitate ICT infrastructure investments, particularly in the rural and unserved areas

Providing universal access to areas not considered viable by the private sector is not a new challenge. In these areas therefore, the government can play a more active role in supporting and encouraging private initiatives.

Create a Universal Access and Service Fund utilizing spectrum user fees (SUF)

The NTC already collects SUFs, which telecommunications operators pass on to consumers through service fees (about PhP2 billion collected annually and remitted to the National Treasury). These funds can be used to build ICT infrastructure in rural areas by institutionalizing the use of SUFs to create a Universal Access and Service Fund (UASF).

Part of the UASF may be allocated for providing “smart subsidies”27 to aid prospective private operators in investing in the rural and unserved areas of the country. The fund may also be used in developing various broadband requirements of the public, particularly in education, health and for ICT awareness and capacity-building activities. In this initiative, mechanisms to ensure transparency and accountability, preferably with multisectoral participation, would have to be institutionalized.


2. Establish sustainable Community e-Center (CeC) Program

With the currently low level of broadband coverage and PC penetration, the government can support establishment of shared access facilities to cater for rural and unserved areas. The CeC is an example of a self-sustaining shared facility providing affordable access to ICT-enabled services and relevant content. While a number of CeCs have been successfully established across the country, the government shall further support their sustainability and further expand to other access points, with the objective of establishing a CeC in every barangay. The government will also push for capacity building programs for CeC workers to develop their business and entrepreneurial skills in maintaining the facilities as well as aggregating CeC needs and services to increase awareness and private sector interest.

3. Implement measures to ensure security and privacy of data in a network and the transmission infrastructure

With the rising number of people, institutions and organizations linked online, as well as the increasing number of ways by which people utilize the Internet, safety, security and privacy issues become of utmost importance. Hence, the following shall be pursued:

a. Improve the country’s cybersecurity threat prevention, detection and response capabilities for critical infrastructure, including reliability and robustness to withstand threats and damages caused by natural disasters, terrorism, and other threats

b. Constant audit of computer systems and resources that should be made mandatory by all institutions using ICT;

c. Issuance of technical guidelines, advisories and bulletins on the protection of computer systems from hacking and unauthorized access, among others; and

d. Maintain a pool of cybersecurity experts in government agencies to extend emergency technical assistance to solve reconstruction of damaged data/systems and possible reconstruction to prevent recurrence of cybersecurity-related events.

To cultivate an enabling environment to further attract and sustain private sector investments in ICT infrastructure development

Creating a legal and regulatory environment that is more consistent, transparent and conducive for investment will sustain current efforts in spurring economic growth and availing of digital opportunities in the country.

Consistency, transparency, and predictability of rules encourage investments that are critical in sustaining the efforts to deploy and promote ICTs for economic growth. Regulatory reform will also help engage the private sector, and enhance the prospects for financial sustainability and viability of ICT access points.

The regulatory environment should facilitate a level playing field through clear and updated policies, including review of existing regulations on frequency and proper spectrum allocation/distribution, to further promote competition for existing operators and new entrants. The following strategies will be pursued to this end:

The CeC is an example of a self-sustaining shared facility providing affordable access to ICT-enabled services and relevant content.

The government shall further support their sustainability and further expand to other access points, with the objective of establishing a CeC in every barangay.

27 Smart Subsidies are one-time financial incentives intended to help “kick-start” rural telecommunications roll-out. It is not meant to cover the full cost of infrastructure roll-out, but rather to merely support investment, without creating subsidy dependency.


Creating a legal and regulatory environment that is more consistent, transparent and conducive for investment will sustain current efforts in spurring economic growth and availing of digital opportunities in the country.

1. Pursue legal, regulatory and policy reforms

The following proposed legislations and other regulatory and policy reforms shall be pursued:

a. Establish the Department of Information and Communications Technology (DICT) (via the “DICT Bill”).The DICT shall be established to coordinate and implement the national ICT development agenda, policies, programs and projects. Transforming the CICT into the DICT should result in a thorough implementation of the national e-strategies cutting across other critical sectors such as e-education and e-health, and the country’s representation in international and regional ICT bodies.

b. Strengthening of the National Telecommunications Commission (NTC) through the “NTC Reorganization Bill”. The NTC shall be strengthened by making its charter responsive to technological and market changes .

It will also be strengthened by setting fixed terms for qualified members of the collegial body, vesting each member with authority independent of any political and personal influence during their term of office. The body’s fiscal autonomy in the implementation of sector plans and programs shall also be secured.

c. Competition Policy for the ICT Sector. A competitive market is said to be the most efficient mechanism for developing a modern, ubiquitous, and affordable information infrastructure. A competition policy framework for the ICT Sector shall be developed under the leadership of CICT and with the full participation and support of the sector stakeholders.

This framework can be used to correct the flaws in the regulatory environment that restrain competition and prevent markets from functioning efficiently.

This framework, moreover, will guide future initiatives and decisions of both the regulator and the private sector as they contemplate competition-related issues. It will also guide the NTC in the exercise of its regulatory functions and as it attempts to balance various public goals, including achieving universal service by making affordable ICT services available to all citizens, ensuring that consumers have access to high-quality products and services, and preventing the exercise of undue market power by firms.

d. Reassessment of Republic Act No. 7925 or the “Public Telecommunications Policy Act of the Philippines, 1995”. While RA 7925, which currently governs the ICT sector, is rightly credited with fostering competition and accelerating investments in the sector, it has become superannuated owing to new technologies (such as the Internet and Voice over Internet Protocol) and business models that were not anticipated at the time the law was passed. Other laws are similarly outdated. The Radio Law (RA 3846), for example, constrains the NTC in the issuance of licenses and assignment of radio spectra that could otherwise help bridge the last mile in rural and unserved areas. There is also a need to revisit pre-Internet laws that, in the face of rapid and continuing technological change, now handicaps the NTC as it struggles to respond to the sector’s needs and the public demand for competitively priced and a wider choice of ICT goods and services.

e. Convergence Bill / Information and Communications Policy Act. The passage of a Convergence bill must be pursued in order to rationalize all pertinent laws; provide a technology-neutral legal basis and tool to encourage investment into the ICT sector and the deployment of infrastructure and services to the rural and unserved areas; permit the continued


development of new technlogies; and criminalize cable theft, including theft of cable TV signals and other infrastructure.

f. Frequency Spectrum Management. There is a need for greater efficiency and transparency in spectrum regulation and allocation to better aid the private sector efforts in providing ICT infrastructure and services, particularly in unserved and underserved areas. This would also help facilitate allocating frequencies for players that would be interested in providing broadband (e.g., WiMAX) and other wireless technologies in unserved communities.

g. Intellectual Property Rights (IPR) Reform. A strong and demonstrated commitment to protect Intellectual Property Rights will enhance national competitiveness and encourage the development of local innovations and technologies. Efforts shall be undertaken to enhance protection for intellectual property thru antipiracy campaigns and amendments to the Copyright Law and the IP code. Such laws and campaigns will also provide for parallel support and initiatives to ensure universal access to and deployment of new technologies, applications and knowledge.

h. Digital Terrestrial Television (DTT) Broadcasting switchover. Subsequent to the recent adoption of the ISDB-T standard for the country, the government, in coordination with the broadcast industry and concerned stakeholders, will embark on DTT broadcasting migration, guided by the issuance of the implementing rules and regulations for the digital switchover. The digital transition is expected to help facilitate growth in the broadcast sector through improved quality of television broadcast systems and programming, as well as for a more efficient utilization of the broadcast frequency spectrum.

i. “Green ICT” Policies. The adoption of Green IT as a technology will reduce the ill-effects of unregulated ICT

particularly to human health and the environment. This includes exploring how ICT applications can be used in such a way as to conserve and optimize energy use. For instance, it uses computers that require lower power input thereby producing less radiation to the user and to the environment. Green IT also deals with the proper disposal of obsolete computers and IT equipment, and pushes for a paperless society.

Thus, crafting appropriate guidelines and policies to address the negative impacts of ICT infrastructures will be pursued, addressing appropriate disposal of ICT equipment, among others.

To achieve increased transparency, efficiency and trust in Government through enhancement of e–government systems

E–Government systems serve as important mechanisms for increased transparency, efficiency and trust in government. Thus, the following will be pursued:

Provide adequate and efficient infrastructure support to enhance e-government systems

Adequate and efficient infrastructure support must be provided to enhance an e-government system that will allow more effective exchange and processing of data across NGAs and to enhance government’s capability to deliver services electronically directly to citizens. This involves further enhancing e-government portals including the online payment facility. A secured data center and public key infrastructure (PKI) system for government transactions would also need to be established to encourage the use of the e-government Portal towards seamless transaction across agencies.

Adequate and efficient infrastructure support must be provided to enhance an e-government system that will allow more effective exchange and processing of data across NGAs and to enhance government’s capability to deliver services electronically directly to citizens.


E-government applications in the LGU level should be promoted so that applications such as those for real property, business permitting, treasury and accounting, and other applications would be used by all LGUs to provide better services to their constituents and increase their revenues.

Interoperability of information systems across government bodies will also be pursued, by adopting standards and policies for interoperability and integration strategies. This will enable easier, more efficient exchanging and processing of data across NGAs applications. (Please refer to Chapter 7, “Good Governance and Rule of Law” for a more comprehensive discussion on good governance).

Social Infrastructure

Waste Management

Solid Waste Management


In the pursuit of sustainable development, the protection of public health and the environment should not be neglected. The proper management of waste is meant to safeguard resources. To improve its management of solid waste, the Philippines enacted RA No. 9003, otherwise known as the Philippine Ecological Solid Waste Management Act (ESWMA) of 2000, which enunciates the government’s policy of “adopt[ing] a systematic, comprehensive and ecological program of solid waste management program”. Some of the salient provisions of the Implementing Rules and Regulations (IRR) of the ESWMA pertain to the following:

a. The creation of Solid Waste Management (SWM) Board in Metro Manila, every province,

city and municipality and a SWM Committee in every barangay;

b. The formulation of a National Waste Management Framework;

c. Submission of Local Government Solid Waste Management Plans;

d. Conversion of open dumpsites into controlled dumpsites;

e. Conversion of controlled dumpsites into sanitary landfills; and

f. Establishment of a National Solid Waste Management Fund.

The National Solid Waste Management Framework provides for the reduction, reuse, and recycling (3Rs) of municipal solid wastes and treatment of the hazardous components and residual waste management through sanitary landfills or the use of alternative technologies to process and or treat the waste. The policy is people-centered, where citizens are expected to play a major role in segregating solid waste at source (household level).

Compliance with the ESWMA, however, has been weak and the targets set therein have yet to be attained:

a. Only 338 LGUs have completed their Solid Waste Management Plans or 20.9 percent of the 1,610 cities and municipalities have completed their Solid Waste Management Plans. In Metro Manila, only eight out of 17 cities and municipalities (47 percent) have complete plans;

b. Nationwide, only 7,680 out of 42,000 barangays are covered by Materials Recovery Facilities (MRFs) for a compliance rate of 18.28 percent. In Metro Manila, 685 out of 897 barangays are covered by MRFs, or a compliance rate of 76 percent; and

c. Of 1,205 disposal facilities in the

Compliance with the ESWMA, however, has been weak and the targets set therein have yet to be attained.


country, 1,172 are open and controlled dumpsites, and only 33 are sanitary landfills serving 75 LGUs nationwide, for a compliance rate of only 2.7 percent. In Metro Manila, there are two disposal facilities. There is a controlled dumpsite in Payatas scheduled for closure by the end of 2010; the other is a sanitary landfill in Navotas. Most Metro Manila LGUs dispose of their residual wastes in sanitary landfills outside the metropolitan area.

Each Filipino generates between 0.30 and 0.684 kg. of solid waste daily, depending on where this occurs. NCR posted the highest waste generation rate of about 0.7 kg per capita per day, while ARMM is the lowest with 0.30 kg per capita per day. Total waste generation is 35,154 tons per day, or 12.83 million tons every year.

Upfront capital costs of SWM are high, thus limiting the financial capacity of LGUs to invest in such projects. The limited investment capacity of LGUs and the perceived low willingness of LGU constituents to pay for SWM services have been considered as the main reasons for the underperformance in achieving the ESWMA targets.

To augment the financial capability of LGUs, the revised NG-LGU Cost-Sharing Framework for SWM was approved in 2009 allowing NG to provide grants to LGUs of up to 40 percent of the total cost of a SWM project. Table 5.8 shows the NG-LGU cost-sharing framework.

Issues and Challenges

Notwithstanding various initiatives in the sector, several issues and challenges still remain to be addressed, notably the following:

a. the slow progress in the implementation of the ESWMA;

b. the lack of short- and long-term solutions to properly address problems on SWM;

c. overlapping national and local policies;

d. the need for massive implementation of 3Rs at the Household and Barangay level;

e. the need to improve and upgrade the national database for SWM;

f. the lack of sufficient trained personnel at the national and local level; and

g. the need to fully utilize the National Ecology Center (NEC) and the Regional Ecology Centers (RECs).


To implement the provisions of RA 9003, there is a need to address waste problems/issues holistically. Each concerned area should develop a concrete action plan to address the challenges of the sector, provide the necessary funds for the operation of SWM facilities, and educate the public on the impact of SWM not only as a means to protect the environment, but also as a way to sustain and support social development.

To ensure suitable/sustainable SWM

Fully implement the ESWMA

• Pursue the closure and rehabilitation of all open/controlled dumpsites and the construction of sanitary landfills to increase service coverage to more LGUs;

• Support the massive implementation of the 3Rs through the establishment of more MRFs and materials recovery systems (MRS);

The limited investment capacity of LGUs and the perceived low willingness of LGU constituents to pay for SWM services have been considered as the main reasons for the underperformance in achieving the ESWMA targets.


• Assist LGUs in formulating their respective 10-year SWM Plans; and

• Establish a start-up fund to accelerate the implementation of the ESWMA. National funds are needed to start the different tasks of the NEC and to implement the SWM approaches.

Generate basic information for SWM that can be used in different programs and projects to properly implement the provisions of RA 9003

• Develop a framework for setting-up baseline data/indicators on SWM at the LGU level. These shall include the establishment of a monitoring and evaluation system through the development of an accessible database on waste characteristics, diversion rate, LGU compliance, alternative technologies and other parameters that will foster better information exchange; and

• Fully utilize NEC and RECs to act as hubs for information, networking, and technology showcasing and advocacy.

• (Other detailed strategies are discussed in Chapter 10 on the “Conservation, Protection, and Rehabilitation of Ensuring Ecological Integrity Towards Sustainable Development”.)

Health Care Wastes


There are around 2,100 public and private hospitals nationwide with an approximate capacity of 96,000 beds, generating 28,000 kg. of health care wastes (HCW) per day at an average of 0.30 kg. per bed capacity per day. On the other hand, there are around 680 public hospitals with an approximate capacity of 44,000 beds generating 13,200 kg. of HCW per day. The NCR has the largest bed capacity (approximately 30,000 beds) which can generate 9,000 kg. of HCW per day. The volume does not include the amount of wastes from small clinics, stand-alone laboratories, research laboratories, municipal health centers and barangay health stations, which generate mostly general or domestic health care wastes.

The general distribution of health care wastes is as follows: general or domestic wastes (80%); pathological and infectious wastes (15%); chemical and pharmaceutical wastes (3% percent); sharps (1%); radioactive wastes, cystostatic wastes, pressurized containers, broken thermometers and used batteries (less than 1%).

As the lead government agency in the formulation of national guidelines for health care waste management, the DOH requires all health facilities to follow correct procedures in the five-stage process of health care waste management: (a) waste minimization and segregation; (b) waste handling and collection; (c) waste internal

Pursue the closure and rehabilitation of all open/controlled dumpsites and the construction of sanitary landfills to increase service coverage to more LGUs;

Table 5.8. NG–LGU Cost–Sharing Framework (in %)

LGU Income ClassMunicipalities and Provinces Cities

NG Grant LGU Share NG Grant LGU Share

1st and 2nd 20 80 40 60

3rd and 4th 40 60 25 75

5th and 6th 50 50 20 80


transport and temporary storage; (d) waste treatment; and (e) final disposal.

Complying with the five-stage process is a responsibility of HCW sources or generators themselves, consisting mostly of private and public hospitals. Private hospitals are responsible for their own investments in equipment operations and personnel for HCW management. Public hospitals, on the other hand, need to justify and apply for an annual budget for HCW.

Since the Clean Air Act (RA 8749) of 1999 and its IRRs were issued, the health sector has been limited to nonburn technologies for the treatment of HCW, such as wet thermal disinfection or autoclaving, microwave, chemical disinfection and the biological process. The first two technologies are largely imported and usually costly.

Hospitals must determine which technology best meets the needs of HCW management while minimizing the impact to the environment and enhancing the safety of the hospitals and the general public.

Public and private hospitals in the NCR contract out the treatment and final disposal of their HCW to private companies called Transport, Storage, Disposal (TSD) facility operators. At present, there are 10 accredited TSD facility operators serving public and private hospitals in the NCR and nearby regions. Elsewhere in the country, however, TSD facility operators are nonexistent and public and private hospitals must rely on inhouse options and technology for waste treatment and disposal.

Of the 72 hospitals managed by the DOH, 30 percent are located mostly in Metro Manila and contract out their waste treatment and disposal requirements. Most use chemical disinfection for waste treatment and have limited or no access to a sanitary landfill for the final disposal of treated wastes. Of these same 72 hospitals managed by the DOH, 90 percent have existing sewage treatment plants or are currently in the process of installing these facilities.


To ensure hygienic/sanitary disposal of health care waste

1. Minimize the spread of health care wastes at the source

Institutionalize HCW management system in health facilities through investment in training and communications. Schools that include HCW management processes in their technical curricula should be given incentives; and

Ensure that mercury and other harmful metals are not released to the environment through the elimination of the use of mercury-based medical equipment and devices.

2. Enhance access of hospitals and health facilities to technologies, products and services to assure compliance with health care waste management guidelines

• Engage LGUs in PPP options and financial schemes for the establishment of large-scale waste treatment technologies. The development of BOT projects for cooperative waste treatment facilities and sanitary landfills is a viable option;

• Provide incentives to private investment for the promotion of research, development and manufacture of nonmercury-based devices and technologies used in health facilities and for health care; and

• Encourage the development and manufacturing of local waste treatment technology and ensure their availability in the market.

At present, there are 10 accredited TSD facility operators serving public and private hospitals in the NCR and nearby regions. Elsewhere in the country, however, TSD facility operators are nonexistent and public and private hospitals must rely on inhouse options and technology for waste treatment and disposal.

There are some 111 TSD facilities nationwide, most of which are in Luzon. Other urban and industrialized regions have only a limited capacity for treatment and disposal of hazardous wastes, hence the problem of their disposal.

Develop an interactive database to track chemicals and hazardous wastes.


The magnitude of housing need, defined as the housing backlog plus new households, is enormous and is estimated to reach about 5.8 million housing units in 2016.

Accelerate mass housing programs with alternative housing technologies, schemes and approaches to ensure decent and affordable homes.

Integrate basic infrastructure support to resettlement sites and emerging regional sustainable communities, such as provision of potable water, safe and sufficient electricity, access roads to the nearest commercial centers, and ICT, among others;

Toxic Chemicals and Hazardous Wastes


The DENR through the EMB regulates the movement and disposal of toxic chemicals and hazardous wastes in the country. There are 46,823 existing chemicals in the country in the updated Philippine Inventory of Chemicals and Chemical Substances (PICCS) and 48 toxic chemicals are not included in the Priority Chemical List (PCL) for strict monitoring.

There are about 11,162 registered hazardous waste generators (HWGs) and 262 registered transporters. The top three hazardous wastes generated are putrescible/organic wastes, waste oil, and wastes with cyanide. Based on export clearances issued by EMB, approximately forty percent of those exported hazardous wastes were sludge that contain copper, silver, etc. There are some 111 TSD facilities nationwide, most of which are in Luzon. Other urban and industrialized regions have only a limited capacity for treatment and disposal of hazardous wastes, hence the problem of their disposal.

The key challenge is how to properly track and monitor the handling and disposal of toxic chemicals and hazardous wastes.


To ensure proper and sustainable disposal of toxic chemicals and hazardous waste

1. Improve the hazardous waste management of industries/establishments and increase compliance with regulatory policies pertaining to the importation of toxic chemicals and substances and the transportation, storage, handling and disposal of hazardous wastes

• Strengthen the enforcement and implementation of RA 6969 on the control of toxic chemicals and hazardous wastes through survey and monitoring activities; and

•Develop an interactive database to track chemicals and hazardous wastes.

2. Minimize chemical-related incidents and the risks to the environment and to public health posed by improper management of hazardous wastes by industries

• Develop a national plan for chemical incident prevention; and

• Embark on a massive information and education campaign and continuously coordinate with LGUs and other government agencies and

Housing


The National Urban Development and Housing Framework (NUDHF) 2009-2016 finds the housing problem to be serious and is a largely urban phenomenon. The magnitude of housing need, defined as the housing backlog plus new households, is enormous and is estimated to reach about 5.8 million housing units in 2016 (Chapter on Social Development). In Metro Manila, the total backlog has been projected to reach 496,928 housing units. Innovative and high-density housing strategies are required if the housing deficit is to be effectively addressed.

Beyond the public sector providing housing and the auxiliary services, new approaches are needed in the face of continuing rural-urban migration that is bound to exacerbate the housing problem. The affordability of and access to government housing programs by the poor will also continue to pose a major challenge in the near future.

The housing problem is evident in the proliferation of slums and informal settlements in the urban areas. Recent


estimates show that more than a third of urban populations are slum dwellers. In Metro Manila there were about 581,059 informal settlers (data from HUDCC as of July 26, 2010). These communities are characterized by unsanitary conditions, congestion, and limited access to basic urban services (e.g., health centers, schools, waste disposal, safe water supply). Resettlement and relocation programs have been implemented but have attained limited success in providing employment, livelihood opportunities, and adequate services to many of the relocatees.

Government has allocated less than 1.0 percent of the total government expenditures for the housing sector in recent years, or less than one-tenth of a percent of GDP on the average. This makes Philippine public spending on housing one of the lowest in Asia. (Habito, 2009)28

The role of government in providing access to housing opportunities and services must be clarified. In the last four decades, government response to the housing problem has failed to rectify the fundamental issues of providing shelter, especially for the poor.


The housing sector is guided by the theme: Gaganda ang buhay kung may bahay at hanap-buhay (Life will improve with housing and livelihood.) The vision is to provide a holistic framework of a home and eventually a harmonious community through provision of housing infrastructure, integration of basic services, and implementation of appropriate housing/construction standards. It targets the provision of some 1.47 million housing units for the Plan period 2011-2016.29

To address the housing needs and gaps in basic services, especially for the poor and marginalized

a. Accelerate mass housing programs with alternative housing technologies, schemes and approaches to ensure decent and affordable homes. In relation to this, the following will also be undertaken:

• Employ labor-intensive method in the implementation of housing projects wherever feasible to generate employment in the beneficiary communities;

• Develop and implement the appropriate standards in the construction of the housing units to incorporate DRRM and CCA;

• Explore vertical expansion in the construction of housing units taking into consideration the basic geographical location, soil quality and other environmental considerations; and

• Explore the use of indigenous and recyclable materials as environment-friendly alternatives to reduce cost in building houses.

b. Integrate basic infrastructure support to resettlement sites and emerging regional sustainable communities, such as provision of potable water, safe and sufficient electricity, access roads to the nearest commercial centers, and ICT, among others;

c. Ensure that all government infrastructure projects integrate the relocation and resettlement requirements of affected families

28 This is based on Habito’s 2009 paper for the Asian Development Bank (ADB).29 See Table 8.10 under Housing section of Chapter 7: Social Development.


into their plans and costing in collaboration with other concerned agencies;

d. Develop a financing framework for relocation and resettlement, including workable PPP schemes for socialized housing development; and

e. Support LGUs efforts to develop a system of land inventory to better identify areas for urban growth and planned areas for human settlements through their Comprehensive Land Use Plans (CLUPs).

Health Facilities


Although health facilities have become available and accessible in most communities, many remain unaware of the services offered and consequently seek more specialized care in hospitals rather than their Rural Health Units (RHUs) or Barangay Health Stations (BHS). Government primary health facilities are conveniently located, with 94 percent of households being within 15-minute walking distance to an RHU or BHS. Such facilities are frequently bypassed, however, for more specialized care. RHU resources remain underutilized, while higher level facilities are overcrowded, unnecessarily causing a state of inaccessibility.

In terms of health facility utilization, the Filipino Report Card on Pro-Poor Services in 2000 showed that 77 percent of households surveyed used health facilities of one type or another. Compared with rural households, urban households tended to use health facility services more. Because of the lower cost of health services, patients more frequently utilized government facilities than private facilities. Rich

households and urban dwellers were the predominant users of private facilities.

From 2007 to 2010, the government allotted PhP8.43 Billion to upgrade around 1,176 health facilities nationwide.


For 2011, infrastructure in the health sector will require additional funding because of limited funds for health facilities such as Basic and Comprehensive Emergency Obstretic and Neonatal Care (B/CEmONC) facilities, in addition to the DOH-retained and -maintained hospitals.

Table 5.9. Summary of DOH Infrastructure and Equipment: 2007-2010

Source: DOH

RHU-BHS Level 1 Level 2 Level 3 Level 4 Others TOTAL %

NCR 0 1 8 1 5 3 18 1.5

CHD 1 21 9 6 1 1 1 39 3.3

CHD 2 102 11 10 0 1 2 126 10.7

CAR 112 10 14 0 1 0 137 11.6

CHD 3 3 5 46 1 4 0 59 5.0

CHD 4A 14 3 10 1 2 0 30 2.6

CHD 4B 82 14 14 0 0 0 110 9.4

CHD 5 5 16 15 3 1 0 40 3.4

CHD 6 76 8 29 2 2 0 117 9.9

CHD 7 17 10 14 1 2 1 45 3.8

CHD 8 42 14 20 2 0 1 79 6.7

CHD 9 33 10 9 0 2 0 54 4.6

CHD 10 36 20 11 2 1 1 71 6.0

CHD 11 53 15 7 2 2 1 80 6.8

CHD 12 64 17 9 1 1 0 92 7.8

CARAGA 9 8 2 2 0 2 23 2.0

ARMM 27 12 5 0 0 0 44 3.7

MM HOSP 0 0 1 0 9 2 12 1.0

TOTAL 696 183 230 19 34 14 1176 100.0



To improve access to and quality of health facilities

1. Ensure coordinated and appropriate planning and development

• Invest in the Health Facility Enhancement Program (HFEP) that defines a unified and rationalized health facility blueprint covering both public and private health facilities;

• Link provincial or city plans to the national allocation of investments for health, including acquisition of ROW and lands set aside for the construction of health facilities;

• Improve access to specialized services in subnational health facilities and enhance the quality-assurance system for public health facilities like the RHUs and BHSs. Provision of necessary access road to the RHUs and BHSs, especially in the remote areas, must be considered in the planning and development of health facilities;

• Increase the percentage of public and private hospitals for Continuous Quality Improvement (CQI);

• Strengthen the gate-keeping function of lower level facilities; and

• Integrate the provision of proper waste-management systems (e.g.,

hospital, toxic and solid waste) in the plans of all proposed and existing health facilities.

2. Facilitate project/program financing

• Increase public investment for health and rationalize the use of all sources of funds for health, including the national and local government budgets and resources from Philippine Amusement and Gaming Corporation (PAGCOR), Philippine Charity Sweepstakes Office (PCSO) and other extra-budgetary resources for health. These resources should be utilized to ensure that available accredited facilities are accessible to each Filipino family while improving the health service packages provided to them, including catastrophic spending; and

• Enforce fiscal and administrative autonomy in all DOH-retained facilities in exchange for capital outlay support and progressive and well-calibrated re-allocation of hospital budgets to public health priorities. This will promote efficiency and improve healthcare services as well as secure investments. This can be achieved at the national level by pursuing corporate-style management in DOH-retained hospitals and promoting income retention at the LGU hospitals.

Invest in the Health Facility Enhancement Program that defines a unified and rationalized health facility blueprint covering both public and private health facilities.

Increase public investment for health and rationalize the use of all sources of funds for health, including the national and local government budgets and resources from Philippine Amusement and Gaming Corporation, Philippine Charity Sweepstakes Office and other extra-budgetary resources for health.

Table 5.10. 2011 DBM Budget Gaps

Purpose DOH Request (Required for MDGs)

(in PhP Billion)

DBM–Approved (within DOH ceiling

for 2011) (in PhP Billion)

GAP (in PhP Billion)

BEmONC, 2754 units 9.6 5.75 3.85

CEmONC, 300 units 9 0 9

DOH Hospital Upgrading (66 Hospitals) 9.6 1.39 8.21

28.2 7.14 21.06


3. Improve project implementation and encourage the use of alternative materials and technologies

• Explore the use of indigenous and recyclable materials that are environment-friendly to reduce costs and incorporate DRRM and CCA concepts in building health facilities;

• Employ labor-intensive methods in implementing health infrastructure projects as a means to generate employment in the beneficiary communities; and

• Explore the possibilities of entering into PPPs in the construction, structural retrofitting, rehabilitation, maintenance and management of health facilities.

Education


The country is exerting all efforts to attain its education targets under the MDGs to improve quality, access and efficiency of education. Even as education has been identified as the central strategy for investing in people, reducing poverty, and building national competitiveness, the country has been cited as a “particularly striking example of under-performance” in educational reforms in the 2010 Education For All (EFA) Global Monitoring Report. Current policies have been cited as failing to make a difference in improving the education of the poorest Filipinos.

Among its other challenges, the Department of Education (DepEd) has perennially confronted the problem of classroom shortage. In SY 2009-2010 alone, the Department has a total of 18.2 million enrollees but was deficient by more than 100,000 classrooms in both elementary and secondary public schools. Budget allocations for

classroom construction have never fully covered the needs of an increasing school population. The problem of shortage is exacerbated by damage to school buildings wrought by typhoons and other disasters. As the DepEd intensifies its campaign to enroll all school-age children, in line with its commitment to achieve universal participation, classroom requirements will rise even more. An additional challenge is the prospective passage of the bill on mandatory preschool education, which will require the construction of even more classrooms to accommodate incoming learners.


Adequate classrooms are necessary for quality education. Several means have been employed to address this concern, but with a fast-growing population, shortages have never been eradicated. Since 2004, a total of 76,710 classrooms (elementary and high school combined) have been put up. This was achieved through the combined efforts of DepEd, DPWH, the local governments, private sector donors, school principals and members of Congress. Another response to reduce the pressure on infrastructure has been the use of alternative delivery modes (ADM) of education, such as the use of

The problem of shortage is exacerbated by damage to school buildings wrought by typhoons and other disasters.

Figure 5.9. New Classroom Construction and Repairs Undertaken:FY 2004–2010

Figure 9. New Classroom Construction and Repairs Undertaken, FY 2004-2010

2004 2005 2006 2007 2008 2009 2010New Construction 12,490 9,407 14,887 15,215 9,835 13,750 4,343Repairs Undertaken 1,130 5,800 15,832 5,097 5,909 1,900

No. of inputs provided for the shortages

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

2004 2005 2006 2007 2008 2009 2010

New Construction Repairs Undertaken


ICT. The availability of a database on ADM (e.g., the share of ADM to the total number of all learning delivery modes) will facilitate in determining the number of classroom required.

Despite continuing efforts to build new schools and make the most of what is present, the shortage persists. This is especially true in far-flung and remote areas. The total classroom requirement is 152,569 for all levels. For next school year, the estimated requirement for public schools is some 113,000 new classrooms, with an estimated cost of over PhP77 billion. This does not include the need for major repairs on 14 percent of existing classrooms estimated to cost PhP14 billion in 2011. The large demand for new classrooms makes the need for innovative approaches to the provision of classrooms even more urgent.

The damage caused by various calamities hitting the country present a further challenge to maintaining an adequate number of classrooms. This is also related to the typical use of public schools as temporary shelters for those affected by disasters.

To date, not all schools have adequate sanitation facilities, a fact that may lead to the degradation of students’ health. This, in turn, may adversely affect the academic performance of students.

Closing the classroom gap and improving the quality of educational facilities will not only provide learners with the needed infrastructure for education, but also a conducive and suitable learning environment that will enhance the teaching-learning process, contributing to the improvement of their academic performance. Through this indirect but obvious way, addressing the infrastructure deficits in education contributes to economic growth and social development.

Strategic Plans and Focus

To ensure adequate and equitable provision of quality educational facilities

1. Close the classroom gap

• Sustain the DepEd School Building Program through the Basic Education Facilities Fund under the GAA and other funding sources.

• Provide continuing financial support for the construction of schoolbuildings in areas with acute shortages and for other programs under the Basic Education Facilities Fund; dilapidated or unusable school buildings, and those damaged by fire and other natural hazards, should also be rebuilt;

• Explore various procurement modalities under the government’s PPP Program;

• Explore NG-LGU matching schemes for school building construction. Under this scheme, every school building constructed by NG in a certain area will be matched by the concerned LGU with the same number;

• Maximize classroom use of through class-shifts. The adoption of double-shift classes must be continued as long as it is needed in order to alleviate overcrowding in classrooms and to support efforts at addressing the classroom gap; and

• Explore the use of indigenous and recyclable materials as environment-friendly alternatives to reduce the cost of building classrooms.

Despite continuing efforts to build new schools and make the most of what is present, the shortage persists.

Closing the classroom gap and improving the quality of educational facilities will not only provide learners with the needed infrastructure for education, but also a conducive and suitable learning environment that will enhance the teaching-learning process, contributing to the improvement of their academic performance.


2. Improve the quality of educational facilities

• Pursue the construction of disaster-resilient classrooms. It will be ensured that classrooms in areas prone to typhoons, earthquakes, and other natural hazards will be specially designed to withstand such calamities. This will minimize the need to rebuild and rehabilitate damaged classrooms, saving resources for other expenditures. In addition, schools are often used as temporary shelter for displaced, thus there is a need to strengthen and improve their design. School buildings shall be designed not only to be disaster-resilient but also so that these can be used as adequate evacuation centers to support the defense policy of providing tents and mobile trucks during calamities; and

• Provide for sufficient water and sanitation facilities in school construction. The recent outbreak of several diseases shows the need to focus on promoting proper hygiene and sanitation in schools. Schools should include adequate water and sanitation facilities to protect the health of children and teachers. Additional funding will be allotted for this purpose.

181Towards a Resilient and Inclusive Financial Sector06Towards a Resilient and Inclusive Financial Sector


Towards a Resilient and Inclusive Financial Sector

AssessmentThe Philippine financial system manifested its strength over the past decade, including the period of recent global financial crisis. After significant dislocations in prior crises in the 1980s and 1990s as well as the 1997 Asian Financial Crisis, the system saw a steady improvement in the balance sheet of the banking industry, the issuance and listing of corporate bonds, and the underwriting of insurance contracts. Moving forward, however, the system will need to address concerns about the sustainability of its performance if it is to contribute significantly to development.

Parallel to these, policymakers pursued broad-based financial sector reforms centered on restructuring the banking sector, institutionalizing corporate governance reforms, improving risk

management and strengthening the supervisory oversight of financial regulators1 in the early 2000s. Together with improved macroeconomic conditions, the steady inflow of remittances from OFWs, a minimal investment exposure to foreign structured products and a low dependence on exports, these reforms allowed the financial system to avoid the worst difficulties encountered by other economies during the 2007-2008 financial crisis.

The financial system’s performance has been positively reviewed by third parties.2 Stress tests conducted on banks also confirm the strength of the banking system’s capitalization even with extreme test parameters. For inclusive finance advocacy, local supervisory initiatives have also been repeatedly acknowledged

The financial sector intermediates claims between savings and investors. The credibility and stability of financial institutions and the relative attractiveness of various financial instruments to borrowers and lenders alike determine how much saving will mobilized, how much it stays in the country to be invested, and how this is to be allocated among the various firms and industries. Together with the state of confidence and long-term expectation, therefore, the stability and performance of financial institutions such as banks, equity and bonds markets, insurance companies, and other financial entities have an indirect but vital bearing on investment and the growth of output and employment in the country.

The Philippine financial system manifested its strength with a steady improvement in the balance sheet of the banking industry, the issuance and listing of corporate bonds, and the underwriting of insurance contracts.

1 These include the re-establishment Bangko Sentral ng Pilipinas (General Banking Law of 2000 or RA 8791) as the supervisor of the banking sector, Securities and Exchange Commission (Securities Regulation Code of 2001 or RA 8799, as amended) as the supervisor of the corporate sector and domestic capital market, Insurance Commission (PD 612) as the supervisor of the insurance and pre-need industries and Cooperative Development Authority (RA 6939) as the supervisor of cooperatives in the Philippines. The CDA Charter was enacted on March 10, 1990 and subsequent enhancements were similarly pursued in early 2000s but amendments of the Charter are still pending in Congress.2 This is evident from the Financial Sector Assessment Program (FSAP) report of the International Monetary Fund (IMF) in early 2010.

183Towards a Resilient and Inclusive Financial Sector

by international institutions.3 These external validations of the improvements in the financial sector culminated in the sovereign ratings or outlook upgrades from some the major ratings firms.

Current Structure of the Financial System

The Philippine financial system is primarily bank-based rather than capital market-based. The banking sector, whose total assets accounted for more than 80 percent of the total resources of the financial system4 and of GDP in 2010, plays the primary role in financial intermediation and is the main source of credit in the economy.

Across banking groups, universal and commercial banks continued to hold the lion’s share of key balance sheet

accounts of the banking system on account of their market maturity, branch network and capitalization. The comparative market shares of key banking groups are summarized in Table 6.1.

Meanwhile, the market share of non-bank financial institutions remains relatively small, accounting for about 18 percent of total assets of the financial system and 17 percent of economic output in 2010. The Insurance Commission (IC), for instance, reports that only 13.9 percent of the Philippine population has private life insurance coverage. In 2008, the private insurer’s penetration rate or the proportion of the premiums to the country’s GDP was only 1.1 percent. Among the reasons cited for the low insurance coverage is the lack of priority being placed on insurance products by the citizenry and the low financial literacy level among low income households including the informal sector.

The Philippine financial system is primarily bank-based rather than capital market-based.

Table 6.1. Comparative Market Shares of Key Banking Subgroups in the Philippines as of end-September 2010 2010*

Period Bank Category

Selected Performance Indicators Physical Composition

Assets

Core Loans(TLP, net of IBL and RRP with BSP)

Deposits Capital Net Profit Head Office Branches Total

End-

Sept

embe

r 20

09

Universal and Commercial Banks 88.5 83.8 88.2 86.8 91.3 4.8 57.3 52.4

Thrift Banks 8.7 11.6 9.2 9.2 3.3 9.2 16.1 15.4Rural and Cooperative Banks 2.8 4.6 2.5 4.0 5.4 86.1 26.6 32.2

All Banks 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

End-

Sept

embe

r 20

10*

Universal and Commercial Banks 88.3 83.8 87.8 87.9 90.2 5.0 57.4 52.8

Thrift Banks 9.0 11.9 9.6 8.5 5.7 9.6 16.6 16.0Rural and Cooperative Banks 2.7 4.3 2.5 3.6 4.1 85.5 26.0 31.2

All Banks 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0*Preliminary data; as of End-September 2010

3 The Economist Intelligence Unit (EIU), for example, has ranked the country’s inclusive finance policy framework as the best worldwide.4 Excludes the assets of BSP. Likewise, other non-bank financial institutions not under BSP supervision such as investment houses and financing companies without quasi-banking functions and/or trust authorities or are not subsidiaries or affiliates of banks and quasi-banks, lending investors, insurance companies and other government financial institutions (GFI) such as the Social Security System (SSS) and Government Service Insurance System (GSIS) are excluded in the computation of total assets of the financial system due to data constraints.


Figure 6.1. Comparative Market Share of the Insurance Industry as of end-December 2009

The insurance industry’s total assets reached P528.2 billion as of end-December 2009 with 122 market players. Life insurers captured the bulk of the insurance market at 79% while non-life insurers at 19% and professional reinsurers at 2 percent.

Meanwhile, the number of companies listed in the Philippine Stock Exchange (PSE) grew to 259 companies in 2011 from just 12 companies in 2003. Despite the rise in the number of listed companies, market capitalization as a percentage of economic output remained small (except Indonesia) compared to other ASEAN-5 economies. In 2009, market capitalization dropped to 45.8 percent of GDP from 54 percent in 2002. This reflects that the market remains illiquid and the free float of listed companies in the PSE still limited.

Mutual funds, with market size likewise smallest in Asia,5 are managed by broker-dealers and investment companies where largest of them in terms of asset size are either subsidiaries or affiliates of banks.

In view of this unbalanced development of the financial sector, the country’s M2-to-GDP ratio6 of less than 50 percent over the last decade has been below the ASEAN-5 average and second lowest to Indonesia since 2006 (Figure 6.2). Meanwhile, Malaysia and Thailand have financial depth ratios of more than 100 percent.

The domestic capital market and non-bank sector composed of investment houses, securities brokers or dealers, financing companies and insurance companies also remain small compared to regional peers.

5 Cf: April 2010 FSAP Report: An Update on the Philippines6 This refers to the measure of broad money which consists of currency in circulation, peso demand deposits or M1 and peso savings and time deposits. This is the ratio of which over economic output is a common measure of financial depth.


Foreign participation in the financial system remains limited. The banking sector was liberalized and opened to foreign participation following the enactment of the Foreign Banks Law or RA 7721 in 1994. Since then foreign banks have been allowed in principle to establish branches with full banking authority, to invest in up to 60 percent of the voting stock of a new banking subsidiary, or to invest in up to 60 percent of the voting stock of an existing domestic bank.7 The first mode of entry has been closed, however, while the second is also suspended pending a moratorium on the establishment of new banks, except for those engaged primarily in microfinance. In practice, foreign banks may only pursue the third route of foreign entry, which is the acquisition of 60 percent voting interest in an existing domestic bank. Notwithstanding the liberalization of the banking sector, foreign banks to date account for only 11.9 percent of the banking system’s total assets8 although they have a stronger foothold in country’s credit card business.

Table 6.2. Philippine Stock Exchange-Listed Companies: as of February 25, 2011

Company GroupTotal No. of Firms per

Sector

Banks 16

Chemicals 8

Construction, infrastructure & allied services

16

Diversified industrials 10

Diversified services 10

Education 3

Electricity, energy, power & water

13

Food, beverage & tobacco 23

Holding firms 41

Hotel & leisure 8

Information Technology 11

Media 5

Mining 17

Oil 5

Other financial institutions 14

Preferred 1

Property 41

SMEs 2

Telecoms 6

Transport 9

Total 259

Source: Philippine Stock ExchangeFigure 6.2. Financial Deepening in ASEAN-5

Source: IMF Statistics, NSCB

Foreign participation in the financial system remains limited.

7 Article 99, Chapter XIII of the Cooperative Code of the Philippines (RA 6938) limits the ownership of a cooperative bank to duly established and registered cooperatives in the Philippines, including another cooperative bank.8 Section 3 of the Foreign Banks Law or RA 7721 limits the aggregate share of foreign banks to 30 percent of banking system’s total assets.


EconomyDomestic Credit

Provided by Banking Sector

Equity Market Capitalization

(% GDP)

Foreign Currency Bonds Outstanding

Indonesia 54.0 26.6 2.0Malaysia 129.6 135.7 16.2Philippines 56.9 45.8 25.9Singapore 91.0 182.2 25.3Thailand 130.2 55.8 6.1

Table 6.3. Structure of Financial Systems in ASEAN-5 (Averages: 2000-2009)

Source: IMF, World Bank and Asian Bonds Online

Country Deposit accounts per 100,000 people

ATMs per 100,000 people

Branches per 100,000 people

Indonesia 504.7 14.4 7.7Malaysia 2,063.3 54.0 11.4Philippines 499.1 14.3 11.8Singapore 2,236.3 49.8 10.5Thailand 1,448.8 71.3 11

Table 6.4. Extent of Bank Access – Customer Reach (2010)

Source: World Bank

The current geographical distribution of financial service providers shows a growing concentration in the high-income and urbanized areas of NCR, Central Luzon and CALABARZON (Cavite, Laguna, Batangas, Rizal and Quezon). Bank density is heavily skewed towards these three regions and the nationwide density ratio of five banks per city or municipality has been largely unchanged for the last decade. Consequently, about 37 percent9 of municipalities in the Philippines do not even have a banking office and can be considered either unserved or underserved with respect to a broad range of critical financial services such as credit, savings, payment transfers, remittances and insurance. Compared to the ASEAN-5, the Philippines lags behind in terms of customer reach (Table 6.4.).

The agenda to develop a robust capital market is of long standing, and has been previously analyzed extensively, yet many of the critical components remain unresolved. To attain the objective of a regionally-responsive development-oriented financial system, there must be a clear acceptance that a thriving capital market is not an optional appendage but a crucial complement to the traditional bank deposit-loan market. The local bond market continues to be dominated by government securities and is largely fragmented, with the presence of too many tenor buckets and a longer maturity profile10 compared to other ASEAN economies (Figure 6.3).

9 The ratio may be lower if the client reach of non-bank microfinance institutions (MFI) and non-government organization/civil society organization (NGO/CSO)-oriented cooperatives are included.10 Largely used as a debt management tool of the government to ensure liquidity for its deficit financing needs.

The current geographical distribution of financial service providers shows a growing concentration in the high-income and urbanized areas of NCR, Central Luzon and CALABARZON.


Figure 6.3. Comparative Benchmark Yield Curves, ASEAN+3

Source: Bloomberg, Asian Bonds Online

Condition and Performance

Banking SectorThe Philippine banking system, which remains the core of the financial system and primary source of credit for the economy, continues to manifest sustained resilience for the last decade at par with its ASEAN-5 neighbors.11

Key performance indicators (Figure 6.4) showed steady growth in assets, lending, deposits and capital accounts. While credit expansion has been modest, averaging 6 percent in over a decade, this was due less to a lack of liquidiy in the system and more to developments in the capital market that allowed some highly rated companies to tap alternative funding. Alongside this, credit underwriting standards were strengthened, which ultimately allowed

The Philippine banking system continues to manifest sustained resilience for the last decade at par with its ASEAN-5 neighbors.

11 Cf: Attachment 1


Figure 6.4. Selected Performance Indicators of the Banking System

Source: Bangko Sentral ng Pilipinasbanks to improve their asset quality and maintain prudent loan-to-deposit ratios. Bank solvency remains above the BSP regulatory requirement of 10 percent and the international standard of 8 percent; the country fully adopted the risk-based capital adequacy framework12 under Basel II in 2007. Core earnings grew together with modest, credit expansion and a general improvement in asset quality.

Equities Market

The country’s stock market also showed signs of recovering from depressed global market sentiments in 2007-2009

particularly during the worst period of the U.S. subprime crisis in 2008. The Philippine Stock Exchange index (PSEi) surged 37.6 percent to close at 4,201 points at end-year 2010, the fourth biggest annual percentage increase in the last ten years.

For its performance in 2010 alone, the PSEi advanced by 1,148 points year-on-year from its level of 3,053 in 2009. During this period, the PSEi peaked at 4,413 points on November 5, 2010 while its lowest level was recorded at 2,788 on February 9, 2010. The broader All-Shares index

The country’s stock market also showed signs of recovering from depressed global market sentiments in 2007-2009.

12 Prior to the banking system’s adoption of Basel 1, Philippine banks were required to maintain a net worth-to-risk assets (NWRA) ratio of at least 10%. On July 1, 2001, the NWRA ratio was replaced by a 10 percent BIS-type risk weighted capital ratio when the banking system adopted the Basel 1 framework for bank capital (BSP Circular No. 280)


Figure 6.5. Selected Stock Market Performance Indicators

Source: Philippine Stock Exchange

NET FOREIGN TRANSACTIONS AND STOCK MARKET CAPITALIZATION(For End-Periods Indicated In Billion Pesos)

MARKET TURNOVER AND P/E RATIO(For End-Periods Indicated In Billion Pesos)

also rose by 56.7 percent to 3,006 points in 2010 from the previous year’s 1,910. All sector specific indices also increased, led by the Holding Firms index followed by the Industrials, Property, Financials, Mining and Oil, and Services, in declining order.

Other stock market indicators similarly showed positive sentiments on the local bourse with an uptrend in overall stock market capitalization and average price per earnings ratio.

Fixed Income MarketTotal volume traded at the Philippine Dealing and Exchange Corporation (PDEx) for 2010 amounted to P5.4 trillion year-to-date (YTD), more than double its previous YTD’s level of P2.6 trillion. This is composed of treasury bills, fixed income notes, retail treasury bonds, zero coupon bonds and special purpose treasury bonds.

On March 16, 2010, PDEx trading volume reached an all time high of

P53.8 billion (daily average) in its five-year history.

However, government securities accounted for 99.2 percent of all fixed income instruments in the FIE. It is composed of treasury bills (8.9%), fixed income notes (78.8%), retail treasury bonds (11.5%), zero coupon13 bonds and special purpose treasury bonds.14 Meanwhile, corporate bonds made up the remaining 0.8 percent.

Foreign Exchange and Bond Markets

Overall, the domestic financial market remains generally stable and has started to realize gains from improving market and investor sentiments. The peso strengthened against the US Dollar while sovereign credit spreads tightened during this period (Figure 6.6).

Also, figure 6.6 summarizes the performance of Philippine financial markets post crisis and improved investor sentiment as evidenced by the general

The domestic financial market has started to realize gains from improving market and investor sentiments. The peso strengthened against the US Dollar while sovereign credit spreads tightened.

13 Negligible share14 Negligible share


Figure 6.6. Summary of Financial Market Performance

Source: Bangko Sentral ng Pilipinas, Bloomberg and Philippine Stock Exchange

strengthening of the peso against the US dollar, rebound of the domestic equities market and tightening of sovereign debt spreads.

ChallengesNotwithstanding the improvements previously cited, some policy and structural issues continue to deter the further development of the financial system. If the financial system must positioned to serve the current and future needs of the public, these issues must be resolved:

Institutionalized generation of savings and mobilization of resourcesAs an archipelago the country must live with demographic and economic diversity across regions.15 To nurture a thriving financial system, the challenge is to mobilize local saving and deploy the resources as may be needed throughout the archipelago. This provides for a regionally-responsive, development-oriented financial system that nurtures saving at its source while recognizing how some regions may have greater credit needs than others. Further strengthening the financial inclusion framework and its infrastructure support are key elements in providing the necessary financial services and in bridging the spatial gaps between regions.

To nurture a thriving financial system, the challenge is to mobilize local saving and deploy the resources as may be needed throughout the archipelago.

15 Attachment 2


Available savings are primarily lodged in short-term instruments

Economic priorities and projects normally require long-term funds but available savings is placed mostly in short-term instruments such as savings deposits16 and treasury bills. This tenor gap cannot be addressed by a simple pricing solution. There is a need to develop an outright long-term funds market. Put differently, savers must be provided the opportunity to become investors, and this will require an enabling environment that includes prudential guidelines, infrastructure support, a robust capital market and a national financial education program.

Lack of a thriving capital market

The business of finance is impossible without the dynamics of trading. To establish an outright long-term funds market, the capital market must undergo fundamental changes. This includes defining a credible valuation benchmark, providing for forward markets, strengthening the cash market, and addressing the fragmentation of the government securities market. The latter raises the inherent tension between the market development function of government securities versus the mandate to minimize the cost of government debt financing.

Improving the financial governance framework

Rapidly changing market conditions and the public’s evolving requirements increase the pressure on the governance structure of the market. The supervisory framework must pro-actively stay ahead of these market pressures. Regulatory

and supervisory authorities must ensure that their mandates are aligned with international best-practice and standards applicable in a domestic context. In the current regime of multiple regulators, the authorities must ensure consistency and comparability across their respective governance frameworks. Some of these will require legislative intervention while the rest will depend heavily on the working relationship between regulators and regulated entities.

FIs concentration in urban areas

The uneven distribution of regional income and savings has led to the concentration of financial institutions and delivery of financial services in high-income and urbanized areas. Bank density, for instance, has remained at five banking offices per city or municipality for the last decade, leaving some 37 percent17 of the country’s municipalities either unserved or underserved.

Need for legislative support in critical reform areas

Critical financial sector reforms cannot be implemented by financial supervisors alone. Legislative support is necessary to provide for the required legal and regulatory environment for these reform objectives. Close coordination with Congress as well as active participation in the legislative process remain pivotal.

These policy and structural issues are known to most stakeholders. What is missing, however, is a holistic framework that ties them into a common strategic and tactical plan. This is ultimately a challenge of orderly execution and the need for an uncompromising commitment among stakeholders to adhere to the plan.

16 Attachment 317 Exclusive of client reach of non-bank MFIs and NGO/CSO-oriented cooperatives.


Strategic FrameworkVision for the Financial Sector

A regionally responsive, development-oriented and inclusive financial system which provides for the evolving needs of its diverse public. It is guided by the following precepts:

• Bottom-up development

• Top-down infrastructure support

• Prices that fully reflect relevant information

• Enabling environment for the effective management of risks

Medium-Term Development Plan for the Financial Sector (MTDPFS)

An array of reforms in the domestic financial system will be pursued to further deepen the financial system through a balanced development of the banking system and capital market. These shall be anchored on a conducive policy and regulatory environment, progressive adoption of international standards and best practices,18 good governance, and transparency for the effective delivery of financial services.

Key Reform Objectives and Targets

Over the medium term, the government aims to (1) achieve a 7 to 8 percent growth in the country’s economic output beginning 2011, with a minimum of 5 percent growth annually for six years, (2) increase per capita income to US$3,000 over the six-year period and (3) reduce poverty incidence by 10 percent per year.

In line with the national agenda and with Plan targets, a broad range of financial sector reforms will be pursued to further deepen the financial system and enable it to contribute to sustainable and inclusive growth. This shall be achieved by effectively mobilizing and intermediating funds within a framework of inclusive finance to best address the evolving needs of all constituents. Key reforms will focus on: (a) promoting savings generation at the regional level but institutionalizing deployment of resources at national level; (b) developing an enabling environment for long-term savings; (c) strengthening the governance framework of the financial system in line with international standards and best practices, and (d) establishing a strong legal framework for financial sector development.

Specific Reform Strategies

A. Promote a regionally responsive and inclusive financial system through institutionalized savings generation and resource mobilization.

The high-growth trajectory set for the macroeconomy puts pressure on the financial system to generate the necessary resources to support heightened economic activity.

This provides the strongest justification for positioning the financial system to be regionally-responsive and development-oriented.

In order to engender sustainable and equitable growth, those in the margins of society must be part and take benefit from the nation building process. As things stand, their access to financial services has

In line with the national agenda and with Plan targets, a broad range of financial sector reforms will be pursued to further deepen the financial system and enable it to contribute to sustainable and inclusive growth.

18 With prior consideration to applicability on domestic conditions.


been limited by physical incapacity,19 geographic distance, high cost of credit and stringent documentary requirements. Consequently, these sectors remain vulnerable and their need for consumption smoothing persists.

One way to address this is through the promotion of inclusive finance wherein everyone has access to all financial services including, but not limited to deposit account services, credit services, remittances, and insurance services.

To this end, the Philippines has already made great strides in its effort to make financial services available to everyone not only through banks and insurance firms but also through other institutions such as cooperatives and microfinance non-government organizations. Moreover, technological innovation in mobile and electronic delivery channels has also helped in improving efficiency and availability of financial services. All these have been made possible through the establishment of an enabling policy and regulatory environment that encourages a market-oriented approach to the provision of financial services to previously excluded segments of the population like the enterprising poor.

These notwithstanding, there remains to be room for improvement for Philippine financial inclusion and the following reform strategies shall be pursued to attain this:

1. Establish a conducive and regulatory environment that balances financial inclusion objectives with financial stability goals.

a) Institutionalize market-based policy through issuance of law anchored on the greater role of the private sector in the provision of financial services and market-oriented interest rates with the National Strategy for Microfinance as a foundation.

b) Craft a national financial inclusion strategy20 that officially defines financial inclusion, the medium-term strategies to be undertaken and the responsibilities or accountabilities of all stakeholders both government and private.

2. Promote the use of alternative products and delivery of financial services in underserved and unserved areas of the country such as:

a) Microinsurance21

The promotion of microinsurance products and services, for instance, aims to expand the delivery of simple and affordable risk protection oriented financial products to the less privileged and the informal sector against financial distress and other unfortunate events i.e., typhoon devastation on crops.

Specific action plans include the following:

•Formulate performance standards for microinsurance;

19 Refers to persons with disability (PWD)20 National Strategy for Microfinance was formulated in 1998 and initiatives to institutionalize microentrepreneurship for poverty reduction and inclusive economic development were reemphasized as a policy statement in the latest speech of President Benigno S. Aquino III before the PinoyME People Powered Markets on 22 February 2011.21 The Microinsurance Regulatory Framework (MRF) was launched in January 2010 to provide a policy and regulatory environment that will facilitate the participation of the private sector in providing risk protection for the poor and ensure that the rights and priveleges of the poor are protected.


•Foster public-private partnership on microinsurance product development; and

•Institutionalize microinsurance financial literacy program.

b) Credit Surety Fund Program (CSF)

The CSF is a program that involves the creation of a trust fund contributed by cooperatives from a province and its provincial government intended primarily to make micro, small and medium enterprises (MSME) bankable by giving them access to formal sources of financing by means of a surety cover as a substitute for collateral.

c) Microhousing

According to data from the Housing and Urban Development Coordinating Council (HUDCC), the projected housing needs of the Philippines plus projected new households by 2010 is 655,821.

It used to be that banks are not able to compete with the rates provided by government housing programs because they are subsidized, but lately, the government has been trying to shift towards a market-oriented housing finance system. Thus, the development of micro-housing finance schemes could help alleviate the situation of the homeless poor.

3. Explore other facets of inclusive finance framework such as agent banking and use of non-bank financial institutions as delivery channels.In pursuit of this specific reform objective, there is a prior requirement

to promote evidence-based policy making and impact measurement by establishing a systematic method of collection, monitoring and analysis of financial inclusion related data to address the need for accurate, reliable, and consolidated statistical data on various financial inclusion issues and required innovations. This shall integrate existing financial inclusion statistics as well as address gaps in the current statistical environment through information exchange and cooperative arrangements with other concerned agencies.22

4. Adopt a holistic approach to financial literacy and consumer education.

5. Encourage the continuing development of new loan products and other banking services aimed to address the special needs of the poor, women and persons with disability (PWDs).

Unlike other borrowers, the target market for microfinance products23 such as those belonging to the agriculture sector might have cash flows that are different from those observed from the usual borrower. Likewise, there is a wide variety in the purpose of their loan application: consumption smoothing, financing for educational needs and funds for migration purposes such as placement fees, document processing fees. Hence, these warrant the introduction of financial products specifically designed for this group of borrowers.

In terms of the delivery of financial services, the need to expand the number of ATMs and other banking products including announcements or

22 These include the National Confederation of Co-operatives (NATCCO), CDA, APPEND and other microfinance or cooperative related organizations involved in the inclusive finance agenda.23 Based on existing laws and BSP regulations, microfinance loans are those granted to farmer-peasants, artisanal fisherfolk, workers in the informal sector, migrant workers, indigenous groups of people and cultural communities, differently-abled persons, senior citizens, victims of calamities and disasters, youth and students, children and urban poor.


financial literacy materials in Braille24 to cater to the unique requirements of the blind remains a going concern. At present, most ATMs have a dot on the number “5” digit (middle digit in a 3x3 matrix consisting of nine numbers) of the ATM console to guide the visually impaired and only a small number of ATMS has the digits “1-9” in complete Braille. There is also a need for bank forms to be available in Braille or to be read aloud by a dedicated staff to a blind client. For the physically challenged, greater compliance of institutions, including banks to install facilities and devices within their premises that enhances the mobility of disabled persons pursuant to Batas Pambansa Bilang (BP) 344 needs to be ensured. This includes the installation of appropriate ramps and lowering the keypad console of ATM machines to aid the access of depositors who are in wheelchair.

B. Develop an enabling environment for long-term investments.In order to encourage long-term savings and investment, the following specific reform strategies shall be pursued:

1. Develop auxiliary markets through forwards and cash markets.The development of the domestic capital market cannot be fully consummated only by the presence of liquidity and higher investor participation reflected in the volume of transactions. A capital market that promotes price discovery mechanism, that allows investors to manage resources efficiently, and that provides the avenue to protect investments, is the necessary infrastructure to provide alternative financing to the country’s economic development. Toward this

end, there is a need to develop auxiliary market through forwards and cash markets.

Specific reform shall be pursued to:

a. Institutionalize repurchase agreements (repos) and securities lending and borrowing (SLB) as a second-layer platform for the trading of government securities (GS). Repos and SLBs provide another means for short-term financing and can provide the inventory of GS to avoid failed trades. Putting this in place would require an efficient infrastructure that would ensure proper tagging of securities (i.e., once used in a repo or SLB, it cannot be used for subsequent transactions unless released by the contracting parties) and would need common ground rules to govern the securities trading.

b. Develop a derivative forwards market to formalize the mechanism for investors to hedge their investments and manage their risk exposures. With the presence of a derivatives market, the volatility currently generated by abrupt spot trades can be addressed and provide the market with the necessary time to adjust to the required future volumes while using the forward rates as a valuation guide.

2. Establish a reliable capital market infrastructureThe flow of resources from those with excess funds to those with better use for funds will not be fully consummated in the absence or the lack of infrastructure that would ensure the sanctity of transactions, the protection of capital as well as encourage their economic use. It is therefore desirable to set in place a reliable market infrastructure as

24 The Braille system, developed by a blind Frenchman Louis Braille in 1825, is a widely used method of reading and writing for the blind.


foundation for saving and investment. This would require the development of legal and regulatory frameworks to govern the exchange of capital which entails crafting of appropriate enabling laws to encourage savings, disseminate credit information, strengthen regulatory supervision and protect the rights of investors.

As an archipelago, a market infrastructure that can integrate the physically segregated markets across regions is important. Technology is available to allow for a central board that can present a uniform price for an issue regardless of the location of the purchaser.

Thus, reforms shall be undertaken to create a market infrastructure that provides for the following: (1) default arrangement, (2) elimination of clearing and settlement risks and (3) availability of access to other retail clearing or settlement processes.

3. Support faster integration of the financial system into the ASEAN region.Increased exposure to the Asian-wide financial markets can serve as an additional momentum to further deepen the domestic financial markets. It can also encourage the rapid growth of the country’s economy by improving the efficiency of savings allocation and providing additional financing to the domestic industries and businesses.

Specific reform strategies on ASEAN financial integration shall be pursued to:

a) Liberalize financial products and services;

b) Further liberalize capital account25:

(1) Continue the assessment and formulation of measures or regulations in the Philippines for foreign direct and portfolio investments as well as other foreign exchange flows. This will further removal of restrictions in inward and outward capital flows while ensuring consistency with member countries’ national agenda and readiness of the economy and allowing adequate safeguards against potential macroeconomic instability and systemic risk that may arise from the liberalization process; and

(2) Participate in the mutual assessment process, identification and formulation of measures or rules to promote freer flow of foreign direct investments, portfolio investments and other foreign exchange flows, including the strengthening of monitoring and oversight systems to improve the management of large and volatile capital flows under the ASEAN Finance Process.

c) Support the regional capital market development through the following:

(1) Participate in the region-wide capacity building initiatives26 to collectively enhance liquidity and efficiency in Asian capital markets.

(2) Further develop long-term capital market infrastructure

25 Cf: eStandards Forum: Business Indicator Report (August, 2010). In its Country Commercial Guide, the US Department of Commerce describes the Philippines as “open to portfolio investment”.26 Participation in regional negotiations should be supported by regular consultations with domestic stakeholders such as the National Government, the private sector and non-government organizations.


comparable and attuned with those in other Asian countries.

(3) Enhance capital market access, linkages and liquidity by participating in proposed regional initiatives such as the ASEAN Exchange linkages and Bond Market linkages.

(4) Promote credit ratings comparability between domestic and international credit rating agencies.

d) Harmonize payment and settlement system.

This specifically includes participation in the harmonization of the payment and settlement systems in the region to facilitate efficient, secure and reliable cross border transactions.

e) Strengthen regional monitoring and surveillance initiatives.

This generally aims to support the strengthening of regional monitoring and surveillance initiatives within existing regional arrangements through the ASEAN Economic Community Blueprint27 to boost resilience against external shocks.

C. Strengthen the governance framework of the financial system in line with best practices and standards.Since the global financial crisis, there has been a growing consensus on the importance of international standards and codes, particularly on elements of good governance for financial regulators.

Specific reforms are to:

1. Pursue sustained capacity building for financial regulators.

This shall be done together with the passage of amendments to strengthen the legislative mandates of the BSP, SEC, IC and CDA charters.

2. Harmonize regulatory and supervisory oversight through cooperative arrangements among domestic and international financial regulators.

3. Promote mechanisms and processes such as stronger cooperative arrangements among domestic and international regulators of the financial system to address the growth of financial conglomerates.28

4. Develop the risk-based capital adequacy (RBCA) framework for providers of financial services and products under SEC and IC regulation and supervision.

Risk-sensitive approaches for determining minimum capital requirements for non-bank financial institutions will afford stronger protection to clients, and induce providers to better manage risk.

5. Promote market discipline and price discovery through effective corporate governance framework for all supervised and regulated financial institutions.

a) Expand the scope of duties and responsibilities of the Board of Directors and officers of supervised and regulated financial institutions of BSP, SEC, IC and CDA to make them fully accountable to shareholders and the public for their decision-making processes.

27 Cf: www.aseansec.org28 In its 2010 FSAP Report, the IMF cites financial conglomerates as an important feature of the Philippine economy. About 60 percent of bank assets and 75 percent of effective market capitalization of listed companies belong to conglomerates. Cf: International Monetary Fund (April, 2010). Philippines: Financial System Stability Assessment Update. IMF Country Report 10/90. Washington, D.C.: International Monetary Fund


b) Reinforce the proper rules governing the selection and appointment of officers, trustees and members of the Board of all supervised and regulated financial institutions of BSP, SEC, IC and CDA to effectively deal with interlocking directorships and connected party lending at the onset of increasing cross-ownership and growth of financial conglomerates in the Philippines. For government pension funds,29 adopt a merit system including a clear and de-politicized appointment process for the boards of directors of these funds;

c) Continuously align local accounting and reporting standards30 with international standards and best practices; and

d) Extend the use of corporate governance scorecard to all supervised and regulated financial institutions in the Philippines to promote a deeper culture of fairness, accountability and transparency in financial transactions and reporting.

D. Establish a strong legal framework for financial sector development.

An enabling regulatory and legal environment for financial sector development must give priority to financial stability, supervisory oversight, inclusive finance and capital market development. These reform priorities, however, require legislative support, which can be achieved only through close coordination with both houses of Congress and through active participation in the legislative process.

Reform priorities shall be phased in every two years based on the following considerations:

Phase 1 - Legislative and regulatory reforms with existing legal and regulatory framework but saddled with some implementations issues between 2011 and 2012.

Phase 2 - Legislative and regulatory reforms in the process of implementation or enacted between 2011 and 2014; and

Phase 3 - Legislative and regulatory reforms in the early developmental stage between 2011 and 2016.

Phase 1(2011-2012)

Phase 2(2011-2014)

Phase 3(2011-2016)

• Cooperative Code • CISA• CIMS• PERA• REIT• MSME• Agri-Agra• FRIA

• BSP Charter• Securities Regulation Code• IC Charter• CDA Charter• Corporation Code

• Financial Stability Framework• Financial Sector Neutrality

Tax• Payment System Act• CISL• Chattel Mortgage Law• Central Registry for Movable

Assets

Table 6.5. Legislative and Regulatory Priorities for the Financial System

29 Refers to the GSIS and SSS30 The Philippines aligned its accounting and reporting practices with international accounting standards and international financial reporting standards with the adoption of Philippine accounting standards and Philippine financial reporting standards in 2005.


1. Establish a framework for financial stability to limit the costs of financial distress to the economy in times of crisis by adopting a macro-micro approach to supervision.

Reforms shall be pursued to:

a) Include an explicit financial stability objective in the charters of financial sector supervisors. This will set a coordinated objective and shared responsibility among supervisors and regulators of the financial sector to keep the domestic financial system in good shape.

b) Adopt a macro and micro prudential approach to supervision. The existing micro-prudential approach needs to be supplemented with macro-prudential policies to ensure the resilience of the financial system. A consolidated and risk-based approach to supervision should be implemented to effectively supervise financial institutions and the financial system as a whole.

c) Improve existing macro and micro surveillance tools and technology. There is a need to upgrade examination approaches, revise or update rating systems of financial institutions, and implement necessary infrastructure for data and information warehousing. Technology must be harnessed to improve micro- and macro-surveillance of financial sector developments and other financial stability issues. Some innovations that can be immediately explored are the active use of online surveys in-between examinations

for macro and micro economic and financial variables, and the pursuit of new information-sharing agreements with knowledge-based participants such as the non-bank sector such as cooperative, CSO,31

NGO, informal, services and other corporate sectors, including inputs from national consultations.

d) Continue to align the existing regulatory and supervisory framework with international standards and practices. In the banking sector, elements of Basel II that have not been fully implemented, including features of the recently released Basel III reform package, should be adopted to promote convergence with the global regulatory framework for a more resilient banking system.

e) Provide institutional support for financial stability. Exchange of information and coordination among domestic and overseas regulators should be strengthened. Projects formulated by Financial Sector Forum members should be reinforced. These measures will ensure harmonized regulation throughout the system. The establishment of a more permanent and dedicated institutional support for financial stability shall be explored.

f ) Strengthen financial safety nets, such as the establishment of a crisis management framework for the financial system. A crisis management framework that is anchored on crisis prevention and crisis resolution is essential. This should provide liquidity and restore normality in the most expedient and transparent manner during a crisis.

31 Refers to civic-oriented organizations.


c) Review the rules on other collateral items such as quedan.

4. Provide an adequate legal framework to encourage greater investor participation, address financial taxation and effective oversight of the national payments systems.

Specific reform strategies are primarily geared at expanding non-bank initiatives through the passage of some important capital market development bills such as:

a) A Collective Investment Schemes Law (CISL) to broaden investor participation in the securities market, including participation by Overseas Filipinos;

b) A Financial Sector Tax Neutrality Act (FinTax) to minimize distortion costs in financial transactions; and

c) A Payment System Act (PSA) for the effective oversight of the country’s national payment and settlement system.

5. Create an environment for the efficient operations of cooperatives in the Philippines following the enactment of the Cooperative Code (RA 9520) on February 17, 2009.

The cooperative sector together with non-bank microfinance institutions33 has been involved in grassroots development and financial inclusion in the Philippines for the past decade. There is a lack of an effective legal framework and supervisory oversight. However, has led to the fragmentation of developmental efforts and a poor database on the actual performance and contribution of the sector.

2. Strengthen the supervisory oversight of financial regulators to enable them to keep pace with the increasing sophistication of the global financial services industry.Specific reforms shall be pursued to:

a) Strengthen BSP’s role as a supervisor of the financial system primarily through the amendment the BSP Charter (RA 7653).

b) Reinforce the SEC’s role as capital market regulator primarily through the amendment of the Securities Regulation Code (RA 8799);

c) Strengthen the IC as an independent and effective regulator of the insurance industry. An amendment of the Insurance Code (PD 1460, as amended); and

d) Strengthen the organization and regulatory or supervisory functions of the CDA to cover cooperatives engaged in savings and credit operations. This will be accomplished by amending the CDA’s Charter (RA 6939, as amended).

3. Provide a legal framework for the acceptance of movable assets as collateral. Specific reforms shall be pursued to:

a) Review and amend the more than century-old Chattel Mortgage Law in the Philippines.32

b) Establish a central registry of moveable assets offered as collateral, which are currently recorded in separate registries for real estate mortgages, chattel mortgages and quedans.

32 The country’s Chattel Mortgage Law or Act No. 1508 was enacted on July, 1906. The law defines chattel mortgage asa conditional sale of personal property as security for the payment of a debt, or the performance of some other obligation, the condition being that the sale shall be void upon the seller paying to the purchaser a sum of money or doing some other act named. If the condition is perfomed according to its terms, the mortgage and sale immediately become void and the mortgagee is thereby divested of his title. 33 Microfinance NGOs and microfinance-oriented banks offer loans, savings facilities, housing, community development projects e.g., insurance products in partnership with license insurance companies to less privileged Filipinos particularly in depressed and remote areas in the countryside.


6. Empower the IC to effectively supervise and regulate pre-need companies, including, among others, reviewing the management of pre-need companies for better protection of plan holders and beneficiaries following the enactment of the “Pre-Need Code” (RA 9829).

7. Address funding and other operational requirements for the establishment of the Central Credit Information Corporation to improve the ability of financial institutions to access credit history data for debtors, thereby bringing down the money and time cost of loan underwriting following the signing into law of the Credit Information System Act (RA 9510) on October 31, 2008.

Alongside this, there is a need to develop a system to monitor, control and manage collaterals submitted by banks and other financial institutions as security for their loans. One example of such system is the Collateral Information and Management System (CIMS) to be implemented within the BSP, which should allow authorized users to obtain information electronically on the status of collateral documents, particularly the collateral positions of borrower banks and end-borrowers.

8. Introduce alternative savings and investment products through the following specific reforms:

a) Encourage voluntary personal savings and investments through the establishment of a multi-pillar retirement income structure as embodied in the provisions of Personal Equity and Retirement Account Act of 2008 or PERA Law (RA 9505) enacted on August 22, 2008.

b) Address the needs of the resurgent real estate industry by providing funds for infrastructure projects, widening access to investment in real estate projects, broadening the participation of the public, including OFs, in the ownership of real estate, and protecting the investing public from abuses of real estate investment trusts pursuant to provisions of the Real Estate Investment Trust or REIT Act of 2009 (RA 9856).

9. Establish a policy framework in support of the government’s social agenda of reducing poverty through mandated credit to certain sectors of the economy such as MSMEs and the agriculture sector.

Specific reform strategies shall be pursued to:

a) Strengthen and encourage the growth and development of micro, small, and medium-sized enterprises (MSMEs) in all productive sectors of the economy, particularly rural and agro-based enterprises, through the effective implementation of the Magna Carta for MSMEs (RA 6977, as amended).

b) Enhance the access of the rural agricultural sector to financial services and programs that increase market efficiency and promote modernization in the rural agricultural sector through the implementation of the Agri-Agra Reform Credit Act of 2009 (RA 10000), passed into law on February 23, 2010.


10. Expand investor and creditor protection mechanisms cognizant of recent demands of modern banking and finance standards through the following specific reform measures:

a) Introduce improvements in company registration and monitoring rules or procedures, including the institution of stiffer penalties for corporate malfeasance through the amendment of the Corporation Code of the Philippines (BP 68); and

b) Ensure an effective and efficient rehabilitation of liquidation of debtors as embodied in the Financial Rehabilitation and Insolvency Act (FRIA) of 2010 or Republic Act No. 10142 which was lapsed34 into law on July 19, 2010.

11. Empowerment of Filipino consumers through strong consumer protection mechanisms and financial literacy or education programs.

a) Promote greater financial literacy of the population, including those in the countryside and OFW-rich areas abroad by encouraging the participation of non-government and private sector organizations in the delivery of financial education programs; and

b) Strengthen consumer protection by improving the implementation of existing consumer protection laws and regulations on transparency, disclosure, consumer assistance and redress or grievance mechanisms.

34 Op.cit.


Selected Financial Stability Indicators in ASEAN-5

Country Consolidated Capital Adequacy Ratio (CAR)

Non-performing Loan (NPL) Ratio of Commercial Banks

Indonesia 8.91/ 3.21/

Malaysia 14.4 1.91/

Philippines 16.03/ 3.34/

Singapore 16.71/ 4.4

Thailand 16.52/ 2.32/

Source: Asian Regional Integration Center, IMF and Central Bank websites 1/May 2010; 2/December 2009; 3/As of March 2010; 4/June 2010

Attachment 1

Attachment 2

Region2003 (in billions) 2006 (in billions)

Income Expenditure Saving Saving Rate Income Expenditure Saving Saving Rate

Philippines 148 124 24 16.2 173 147 26 15.0

NCR 266 218 48 18.1 311 258 53 17.0

CAR 152 126 26 17.1 192 151 42 21.9

I 124 102 22 17.7 142 124 19 13.4

II 126 99 27 21.4 143 118 25 17.5

III 160 138 22 13.8 198 170 27 13.6IV-A 184 158 26 14.1 210 186 23 11.0IV-B 103 84 19 18.4 109 93 16 14.7V 109 94 15 13.8 125 110 15 12.0VI 111 98 14 12.6 130 116 14 10.8VII 121 102 19 15.7 144 124 21 14.6VIII 103 84 19 18.4 126 104 22 17.5IX 93 75 18 19.4 125 99 27 21.6X 109 91 18 16.5 142 117 25 17.6XI 117 100 18 15.4 135 115 19 14.1XII 113 85 28 24.8 114 96 18 15.8XIII 90 78 12 13.3 118 100 18 15.3ARMM 83 67 16 19.3 89 75 14 15.7

Average Income, Expenditure, Saving and Saving Rate of Families, at Current Prices by Region: 2003 and 2006



FIES Year Highest Saving Rate Region Lowest Saving

Rate Region

1991 25.7 CAR 10.6 Western Visayas

1994 24.8 Eastern Visayas 9.7 Western Visayas

1997 22.9 Western Mindanao* 9.4 Western Visayas

2000 21.2 Eastern Visayas* 13.4 Bicol**

2003 21.5 Cagayan Valley 12.3 Western Visayas

2006 21.9 CAR 10.8 Western Visayas

Regions with the Highest or Lowest Saving Rates, by FIES year

Attachment 2 cont’d.

Notes: *The saving rates of CAR in 1997 and 2000 were close to the highest rate. **The saving rate of Western Visayas is hardly differed from the lowest rate.Source: For 1991-2003, Bersales and Mapa (2006); for 2006, FIES data.

2006 (in billion pesos) 2009 (in billion pesos)Income Expenditure Saving Saving Rate Income Expenditure Saving Saving Rate

Philippines 173 147 26 14.8 206 176 31 14.9First Decile 32 35 -3 -8.9 41 43 -3 -6.7Second Decile 51 52 -2 -3.4 64 66 -2 -3.4Third Decile 65 66 (*) -0.9 81 81 (*) 0.0Fourth Decile 81 79 2 2.1 100 97 3 2.7Fifth Decile 100 95 5 4.6 122 116 6 4.4Sixth Decile 124 116 8 6.1 150 139 11 7.2Seventh Decile 156 143 13 8.5 189 171 18 9.2Eighth Decile 205 181 24 11.5 244 216 28 11.5Ninth Decile 292 244 47 16.1 342 288 53 15.7Tenth Decile 622 460 162 26.1 728 535 193 26.5

Bottom 30% 49 51 -2 -0.0 62 64 -2 -0.0Upper 70% 226 188 38 0.2 268 224 44 0.2

Average Income, Expenditure, Saving and Saving Rate of Families at Current Prices by Income Decile: 2006 and 2009

Source: National Statistics Office, 2009 FIES Preliminary Results

Attachment 3

Deposit LiabilitiesPESO DEPOSITS FOREIGN CURRENCY DEPOSITS

End-June End-June2010 2009 2010 2009 2010 2009 2010 2009

Total 3,609.2 3,263.3 100.0% 100.0% 1,144.8 1,055.5 100.0% 100.0%

Time Deposits 1,015.6 999.9 28.1% 30.6% 672.9 649.2 58.8% 61.5%

Demand, NOW & Savings Deposits 2,593.5 2,263.3 71.9% 69.4% 472.0 406.2 41.2% 38.5%

Philippine Banking System, Deposit Mix

Source: Bangko Sentral ng Pilipinas

205Good Governance and the Rule of Law 07Good Governance and the Rule of Law


Good governance sets the normative standards of development. It fosters participation, ensures transparency, demands accountability, promotes efficiency, and upholds the rule of law in economic, political and administrative institutions and processes. It is a hallmark of political maturity but also a requisite for growth and poverty reduction, for there are irreducible minimum levels of governance needed for large-scale investment to occur and for social programs to be supported.

A cornerstone of good governance is adherence to the rule of law, that is, the impersonal and impartial application of stable and predictable laws, statutes, rules, and regulations, without regard for social status or political considerations.

This chapter assesses the quality of governance in the country and identifies key governance challenges that constrain development. It then lays down corresponding strategies to achieve good governance anchored on the rule of law, and provide an enabling environment for national development.

Good Governance and the Rule of Law


The country’s recent history has been plagued by questions of legitimacy, accountability, and allegations of grand corruption. The 1986 EDSA revolution established a framework of constitutional democracy and civil rights, but deep social and political divisions have persisted alongside problems of inefficiency and corruption in government. The failure to address governance issues has given rise in recent years to marked political instability, bordering on threats to constitutional government, and a deepening cynicism and mistrust of formal political institutions. Political instability and widespread corruption have also had serious repercussions on the investment climate. The successful and credible transfer of power in 2010 through the prescribed constitutional processes and a renewed public concern for government accountability and transparency are important first steps in restoring the

credibility of the nation’s institutions. But they are not enough.

Efforts until now have at best created “islands of good governance”1 in certain sectors, some national agencies, and LGUs. But these have failed to translate into improvements in the country’s overall state of governance, nor have any significant social impact. These “islands” are easily swamped by high tides of impunity and venality. The overall miserable state of governance in the country was attested by different measures. The country’s percentile rank in the six dimensions of governance in the Worldwide Governance Indicators (WGI) until 2009 remained mostly within the lower half. The worst performance was in political stability, as the conduct and results of previous national elections were sharply contested amid allegations of corruption. The result was an alienation of the people from their

Efforts until now have at best created “islands of good governance” in certain sectors, some national agencies, and some local government units. But these have failed to translate into improvements in the country’s overall state of governance, nor have any significant social impact.

1A phrase used by a former World Bank country director in an article of September 5, 2007.

207Good Governance and the Rule of Law

government and an open invitation to several extra-constitutional attempts to seize power.

The country also failed to hurdle major indicators under the Millennium Challenge Corporation (MCC), which relies on the WGI for measuring policy improvements in three dimensions of governance.2 This picture is repeated in the Global Competitiveness Index (GCI), where the country was ranked 87th in 2009-2010 and 85th in 2010-2011.3 Even though the country’s competitiveness slightly improved from last year, the country continues to lag behind most Southeast Asian neighbors. The Global Competitiveness Index Report for 2010-2011 listed corruption and

inefficient government bureaucracy as the top two most problematic factors for doing business in the Philippines. The country’s corruption problem is again highlighted in the 2010 Corruption Perception Index where the Philippines ranked below 75 percent of all the countries surveyed (134th out of 178 countries)4 and last among the ASEAN-6. The country’s standing from all these measures signals the need for more substantial actions to strengthen governance in the country. This only shows that good governance cannot be achieved partially or piecemeal, but must be attained decisively and systematically.

Political instability, corruption, and weak rule of law have had severe negative effects on investment,5 which partly

2 The MCC is a bilateral grant program of the US. Eligibility criteria include 17 different governance measures, among which, however, the “control of corruption” is the only “hard” or strictly binding condition. When the Philippines transited from the low-income to lower-middle-income category in 2010, it fell below the threshold of the corruption indicator appropriate for the new peer group, with a 26th percentile ranking. 3 The Global Competitiveness Report 2010-2011 (World Economic Forum)4 The Corruption Perception Index is a composite Report prepared by Transparency International which measures the perceived level of public sector corruption in 178 countries and territories based on 13 expert and business surveys.5 Philippines: Critical Development Constraints (ADB)

Figure 7.1. Philippines: Worldwide Governance Indicators

Source: World Bank (http://info.worldbank.org/governance/wgi/sc_chart.asp)


explains the country’s low rate of capital formation. Public investment is stymied when corruption in revenue-collection efforts deprives the government of needed funds. Overpricing and funds-diversion in spending distort priorities and wastes public resources. But even private investment is affected; first, by the uncertainty of administrations whose legitimacy is questioned, and second, by the prospect and reality of biased rules and extortive practices, which raise the costs of doing business and discourage new business entrants and contract-bidders from providing real competition. In the end, the resulting poor growth and fiscal inability to support social programs severely impair poverty-reduction programs. Corruption and lack of transparency are major constraints to the achievement of the MDGs.6 To say that corruption and poor governance abet and worsen poverty is no exaggeration. Kung walang corrupt, walang mahirap.

Public Service Delivery

The delivery of public services must be prompt and adequate to citizens’ needs. Cumbersome government procedures slow down the delivery of public service and increase transaction costs. The same arduous government processes also provide the venues for corruption, given the natural tendency to avoid the bureaucratic red tape. The Anti-Red Tape Act (ARTA) of 2007 already requires national departments, agencies, and LGUs to set up their respective service standards known as Citizen’s Charters (CCs), to simplify procedures, and to facilitate transactions. As of August 30, 2010, 74 percent of agencies (4,253 of 5,716) nationwide had complied with the drafting and promulgation of CCs. As a means to develop citizens’ awareness of their rights vis-à-vis government and encouraging citizens’ criticisms when aggrieved, this is one step towards cutting red tape and reducing corruption. However, This is unlikely to be sufficient.

Impersonal online services can reduce the face-to-face transactions that typically provide the occasion for extortion and corruption, and some agencies have provided such services. These include the Land Transportation Office (LTO), the Securities and Exchange Commission (SEC), the Bureau of Internal Revenue (BIR), and the Government Service Insurance System (GSIS). The government has also selected 120 LGUs to become “Sparkplugs for Governance and Economic Development” by, among others, streamlining their business permit and licensing system to reduce opportunities for bribery and other forms of corruption.7 These reforms need to be harmonized and well-

Figure 7.2. CES Occupancy

Source: CESB

Cumbersome government procedures slow down the delivery of public service and increase transaction costs. The same arduous government processes also provide the venues for corruption, given the natural tendency to avoid the bureaucratic red tape.

6 Philippine Progress Report on the Millennium Development Goals 20107 Philippines’ Policy Improvement Process Plan of Action 2010


established, however, for significant results to be achieved. Moreover, in the “Ease of Doing Business” index, the Philippines remained in the bottom fifth of the economies surveyed (rank 148 out of 183 economies surveyed).8

Various initiatives have also been undertaken to provide a more competitive compensation system in the government to improve the economic wellbeing of civil servants and raise their morale, with a view to better service provision. The pay of government personnel covered by the Compensation and Position Classification under RA 6758, as amended, was adjusted in 2007 and 2008 through an additional 10 percent increase in basic monthly salaries.

To rationalize the Government Compensation and Position Classification System, a Joint Resolution of Congress was passed in 2009 increasing the salaries of government workers by an average of 50 percent over four years. Increases in compensation were implemented to continually uplift the living standards and welfare of government employees. The new pay package aims to attract more qualified and upright people to work for government, address the compensation gap between the public and private sectors, and encourage qualified incumbents to stay longer in public service. It puts a premium on positions with more complex and difficult tasks and greater responsibilities. It also eliminates the overlapping of salaries between consecutive salary grades. Meanwhile, this effort is always threatened and undermined by legislation seeking to provide higher pay for specific agencies.

The integrity of the civil service has been perennially undermined by appointments based on political accommodation rather than on merit and fitness, a phenomenon that is partly an offshoot of the president’s vast powers of appointment and discretion. This is true across the board but particularly in third-level positions and in the appointment of teachers, police, and treasurers. The eligibility requirement is only weakly enforced in the career executive service, in which 47 percent of the occupied positions are held by noneligible individuals.

Local governments confront rising public expectations regarding the delivery of services. Despite almost two decades of implementation of the 1991 Local Government Code (LGC), however, local governments still face various challenges in the exercise of their devolved service delivery functions. Foremost among these is the raising of sufficient funds for local development. A majority of the local governments still lack the ability or the will to raise adequate local revenues. LGUs have become unduly dependent on Internal Revenue Allotment (IRA) transfers from the national government and have failed to manage their financial resources effectively and sustainably. These persistent issues are a significant hurdle in the realization of the goals of local autonomy and devolution through good local governance and effective service delivery. Owing to loopholes in the LGC, as well as the lack of capacities of local governments in assuming devolved functions, national government agencies (NGAs) continue to deliver certain services despite the transfer of these services to the local governments. The confused and overlapping performance of functions compromises the lines of accountability for local services.

8 Doing Business 2011 (IFC and WB); The “Ease of Doing Business” index measures business regulation relevant to the life of a domestic small to medium-sized firm: starting a business; dealing with construction permits; employing workers; registering property; getting credit; protecting investors; paying taxes; trading across borders; enforcing contracts; and closing a business. The Philippine ranking is based on the experience of firms dealing with Manila City Government on three dimensions – starting a business, dealing with construction permits, and registering property. The 2011 edition refers to the period June 2009 to May 2010.


The size and scope of the bureaucracy has expanded through time and has led to overlaps and redundancies in functions and operations of departments/agencies. The executive branch pursued a rationalization program in 2004, but this remains uncompleted. As of December 31, 2010, 177 (82%) of the 216 departments/agencies, other executive offices (OEOs) and GOCCs have submitted their Rationalization Plans (RPs) to the DBM, of which 85 have been approved. The abolition of 15,485 regular, contractual, or casual positions has resulted in savings in Personal Services (PS) amounting to PhP2.39 billion annually, while on the other hand incentives and terminal-leave benefits paid to those retiring or separated from government service amounted to PhP1.396 billion.

As long as staffing in some agencies is excessive and redundant, and the quality of existing personnel is poor, there will be political resistance and public cynicism about across-the-board attempts to improve the pay and morale of the civil service. On the other hand, RPs need to consider the real needs of front-line agencies especially in promoting the rule of law. While a “scrap and build” policy is sensible for addressing the internal structure, it cannot address the emerging personnel resource gaps to respond to increasing population and demand for higher-quality service delivery.

Integrity

The law assigns the Office of the Ombudsman (OMB) a pivotal role in ensuring integrity and deterring corruption in the public sector. The threat of prosecution and conviction of public wrong-doers is a potent sanction against corruption. This will not be regarded as a credible threat without a reliable and effective OMB that demonstrates credible leadership and publicly measurable success in a sustained anticorruption effort.

The OMB has far spearheaded the National Anticorruption Plan of Action (NACPA), the collective response of different sectors to the problem of corruption, integrating and strengthening the anticorruption initiatives and commitments of the OMB itself, other constitutional bodies, the three branches of government, LGUs, civil society, the business sector, non-government professional groups, and the foreign donor community. Its five programme components consist of: (a) public policy advocacy; (b) convergence development and management; (c) performance measurement and management; (d) knowledge management and capacity-building; and (e) resource mobilization. The NACPA is implemented through the Multi-Sectoral Anticorruption Council (MSACC), a multisectoral mechanism chaired by the OMB.9

No. of Organizations

No. of RPs Approved

No. of RPs Returned for

Revision

No. of RPs Being Evaluated

No. of RPs Not Yet Submitted

Departments/Agencies 134 47 7 71 9

OEOs 25 17 3 4 1

GOCCs 57 21 0 17 19

Total 216 85 10 92 29

Table 7.1. Status of Submission and Evaluation of Rationalization Plans: as of 31 December 2010

Source: DBM9 These include, among others, the Concerned Citizens of Abra for Good Government, Inc., the Northern Luzon Coalition for Good Governance, the Evelio B. Javier Foundation, Inc., Moral Recovery Officers Foundation, Inc., the Federation of Filipino Chinese Chamber of Commerce and Industry, and the Employers’ Confederation of the Philippines.


Priority NACPA programmes and projects include enhancing the framework of legislation and local policies against corruption, the adoption and customization of the APEC Code of Conduct for Business, an integrity development review of LGUs, capacity-building on UNCAC-compliant investigative techniques, anticorruption planning workshops for professional groups, including accountants and engineers, and the establishment of the Centre for Asian Integrity, an anticorruption learning center.

Such important efforts notwithstanding, the bureaucracy’s vulnerability to corruption appears only to have increased. The Commission on Audit (COA) in 2009 noted a “rising incidence of irregular, illegal, wasteful and anomalous disbursements of huge amounts of public funds and disposal of public property that it reinstituted the selective preaudit on government transactions”.10 Public clamor has also been loud and insistent for a speedy resolution and closure in a growing number of highly-visible cases of grand corruption involving high-level politicians and bureaucrats. This public sentiment has had political and electoral repercussions and cannot be ignored.

The deterioration is also evident in cross-country comparisons. Of six governance dimensions in the WGI, the country’s score in “control of corruption” has consistently been the second lowest, next only to political instability. In Transparency International’s “Corruption Perception

Index”, the Philippines ranked 134 out of 178 countries in 2010. Investors have pointed to corruption as the most problematic factor for doing business.11 In the 2008 Global Integrity Report, the Philippines received a moderate overall ranking, gaining a score of 71 points in its Integrity Indicator Scorecard, only four points better than its 2007 standing. Its lowest scores were in “Elections” (59), “Civil Society, Public Information and Media” (68), and “Government Accountability” (70).12

A massive rethinking and renewal of effort by all agencies involved in the fight against corruption is clearly needed if any real progress is to be made in this aspect.

Rule of Law

Justice is no less important a public good than basic education and primary health care. The framework of the rule of law serves as the foundation for a democratic society. Its effect on economic performance, social development and integrity infrastructure of the country is pervasive. Otherwise stated, the rule of law is a cornerstone to the improvement of public health, the safeguarding of citizens’ participation, of security and of the fight against poverty13 (World Justice Project). According to the World Justice Project Rule of Law Index 2010, however, the Philippines ranked last or close to the bottom among seven indexed Asian countries. The country ranked last in such factors such as “order and security”, “fundamental rights”, and “effective criminal justice”; it was second to the last in the “absence of corruption”, “clear, publicized and stable laws”, “regulatory enforcement”, and “access to civil justice”.14

Investors have pointed to corruption as the most problematic factor for doing business in the Philippines.

10 COA Circular No. 2009-00211 Global Competitiveness Report 2010-2011 (World Economic Forum)12 The Global Integrity Report is a tool for understanding governance and anti-corruption mechanisms at the national level. It is generated by local researchers and journalists. The scorecard contains various points that extensively measure the effectiveness of local policies and implementations. 13 World Justice Project Rule of Law Index 201014 Even the Philippines’ best score in “open government”, which is fifth of seven, was unremarkable and below expectations of one of the oldest democracies in the region.


The weak rule of law and an unresponsive justice system hinder economic development. Delays in resolving corruption cases, the high cost of litigation, and the long and arduous legal process have resulted in the diminution of public trust and confidence in government and the justice system. Another factor affecting investors’ confidence pertains to disputes arising from unmet contractual obligations and the proper enforcement of property rights, including those of foreigners.15 Major reasons for the lack of responsiveness of the justice system include its fragmentation, the presence of archaic laws and rules, and low funding support.

The first order of business must be to address resource constraints. High vacancy rates persist in law enforcement, prosecution, public defense despite efforts to increase compensation. Low salaries coupled with unrealistic qualification standards result in funded but unfilled positions. There is frequently no recourse but to hire casual and contractual employees who cannot be held accountable and do not benefit from the continuous training programs which are required and essential. Huge case backlogs and high case loads are direct consequences. Moreover facilities for justice-sector agencies and the courts are dispersed, inadequately staffed and supplied, and beset at times by cumbersome rules. Reforms in organization and logistics chains are needed to strengthen the support to regional or local offices, agencies, and courts, where the first line of defence is drawn.

In an attempt to reduce the load of the courts, the Alternative Dispute Resolution (ADR) Act (RA 9285) was passed in 2004. However, there is a need to continuously encourage and actively promote the use of ADR for it to live up to its promise as “an important means to achieve speedy and efficient resolution of disputes”.16

Citizens’ Participation

Citizens’ participation has been one of the strengths of Philippine governance. Partnerships between government and CSOs facilitate the promotion of good governance. The OMB collaborates with the Concerned Citizens of Abra for Good Governance and Government Watch for anticorruption efforts in government procurement and project monitoring; and with the Society of Jesus for the conduct of integrity seminars. The government also partners with CSOs in promoting transparency, accountability and public participation in the preparation, authorization, execution and monitoring of the national budget. These efforts must be sustained and, in some cases, deepened. It is also noted that while citizens’ participation in local development councils and special bodies is mandated, CSOs claim that most of these are either inoperative or nominal.17

While the country is famous for the large number of CSOs that could, in principle, play a leading role in anticorruption efforts, such organizations themselves are heterogeneous and face various hindrances that affect and challenge their development effectiveness. “Internal challenges include capacity-building, shortage of funds for CSOs’

The government also partners with CSOs in promoting transparency, accountability and public participation in the preparation, authorization, execution and monitoring of the national budget. These efforts must be sustained and, in some cases, deepened.

15 The country, for instance, has been in the US “watch list” of countries that inadequately protect intellectual property rights, a fact that has potential implications for the continued favorable treatment of Philippine exports to the US under the Generalized System of Preferences (Arangkada Philippines 2010: A Business Perspective, Joint Foreign Chamber of the Philippines, published by The American Chamber of Commerce of the Philippines, December 2010).16 Section 2, RA 928517 Citizens’ Roadmap for Poverty Reduction and Achieving the MDGs, 2010 (CODE-NGO, FDC and UNDP)


continuous operation and sustainability of programs, ensuring priority and reach of sectors most in need. There is also a need for lifestyle check as well as drawing lessons on the best practices where other CSOs can learn from. External challenges include: (a) conflicts of policies and laws with actual practice; (b) weak human rights protection and culture of impunity; (c) intervention of some local government units in CSO affairs; and (d) the threatening presence of military that deters people’s participation to their own programs and CSO initiatives.”18

Although citizens have a legal right of access to communication, there is no established legal route for citizens to petition to obtain government records. The actual practice of many citizens testifies to the highly uneven willingness or preparedness of government offices to provide information as well as the poor quality of the information provided, if at all. This is also seen from the country’s low score for the 2008 Global Integrity Report under the category of Civil Society, Public Information and Media category, which even dropped one point from the 2007 score of 69. The proposed Freedom of Information Act is an important step towards addressing this problem.

Political Processes and Systems

Various scholars and other impartial observers19 have long observed that the problems of lack of accountability and corruption in governance are ultimately traceable to the country’s historically evolved political processes and traditions. These include: (a) the dominance of elite interests – both local and national – in politics and political contests; (b)

the absence of political parties that exact accountability from individual politicians based on principled party platforms; (c) the weakness and subservience of the bureaucracy relative to the political class; (d) the unprecedented power and discretion of the executive branch that encourages both patronage politics and grand corruption; and (e) the corruption of elections through patronage and money politics. As the President stated in his Social Contract, it would appear that the country “has no vision of governance beyond political survival and self-enrichment”, which is why the country is in “need of transformational change”.

But while constitutional changes to institute crucial political and economic reforms may be in order, it is inadvisable to do so in an atmosphere of public mistrust and suspicion that such changes will be self-serving to the incumbents. As the government performs creditably, the matter of constitutional reform may be taken up. Even short of constitutional change, however, important reforms should be put in place by statute. A first priority must be to restore and maintain the record of peaceful, efficient, and credible popular elections, which already happened in 2010. Legislation to encourage the formation of stable political parties and organizations may also be considered, including campaign-finance reforms and stricter minimum formal numerical and reportorial requirements for political accreditation. Reforms in the disbursement of discretionary funds of both Congress and the executive can help weaken the culture of patronage. A reform of the internal revenue allotment (IRA) scheme which is currently a very passive and automatic mechanism, to elicit greater local revenue effort among local governments will also help reduce fiscal mendicancy among local leaders, and make them more accountable to their own constituents instead.

The problems of lack of accountability and corruption in governance are ultimately traceable to the country’s historically evolved political processes and traditions.

18 Report of the Philippine Open Forum on CSO Development Effectiveness, August 201019 For a recent example of such an assessment, see “Philippines Country Report” (2009) Gütersloh: Bertelsmann Stiftung. See also B. Anderson (1988) “Cacique Democracy in the Philippines”, New Left Review 3-31; P. Hutchcroft (1995) Booty capitalism. Ateneo de Manila Press; and E. de Dios (2007) “Local Politics, Local Economy”, in A. Balisacan and H. Hill. The Dynamics of Regional Development. Edward Elgar.


Gender Roles in Governance Structures

The fact that women remain politically marginalized is both an indicator of their failure to advance as well as a reason for it (UNDP 2000). For the ability to claim entitlements and exercise rights is itself based on gender roles and relations of unequal power. Women’s “gendered interests” (for example health needs, the raising of children, and the prevention of domestic violence) cannot be interpreted generically as the community or nation’s “common good” but as issues arising from the specific inequality of power between men and women (Sever 2005).20 These needs and deprivations cannot be addressed therefore without redressing gender inequality itself.

The Philippines has made some progress in reducing gender inequality, particularly with the passage of RA 7192 or the Women in Nation Building Act of 1992, which set forth the indispensable role of women in all aspects of national development and asserted the fundamental equality of women and men. With the enactment of the Magna Carta of Women (RA 9710) in August 2009, the gender and development (GAD) budget became a key institutional mechanism to mainstream gender and promote women’s human rights, and eliminate gender discrimination. The same law requires monitoring and evaluation of GAD programs through annual audit by COA.

Major progress has been slow, however, as seen in more recent international gender assessments. The Gender Development Index in the 2009 Human Development Report of the UNDP and the Country Gender Assessment of the ADB in 2008 showed similar findings that the Philippines’ workforce continues to be dominated by males, despite increasing numbers of women having higher educational attainment.

Women continue to be burdened by the debilitating impact of poverty and the lingering economic crisis and out-migration among women remains high, with many in service and domestic occupations. The challenge remains for government to ensure that statutory mandates relating to gender and development concerns are observed and implemented efficiently and effectively by all concerned sectors.

This assessment of governance and the rule of law easily yields a wide-ranging and disparate set of issues and concerns. How these challenges are to be met and addressed requires a governance framework and a plan of action for the rule of law.

Strategic FrameworkIn response to these challenges, this Plan aims to promote effective and honest governance to create an enabling environment for citizens and the private sector to reach their full potential. Effective and honest governance will be promoted and practised through the following four strategies:

1. Ensure high-quality, efficient, transparent, accountable, financially and physically accessible and nondiscriminatory delivery of public service;

2. Curb both bureaucratic and political corruption;

3. Strengthen the rule of law; and

4. Enhance citizens’ access to information and participation in governance.

The delivery of public goods and services essential to citizens’

20 The Gender, Poverty, Governance Nexus: Key issues and current debates, Charlie Sever, BRIDGE, September 2005


development will be enhanced in terms of physical and economic accessibility, availability, acceptability, quality and safety, and without discrimination. This will be done by: (a) integrating services according to the needs of the citizens; (b) professionalizing the bureaucracy as duty-bearers; (c) enhancing the transparency of government transactions; (d) making government focus on its core functions; (e) standardizing the quality of public service delivery; (f ) devising a common measurement tool and methodology to solicit citizens’ feedback; and (g) improving the financial management system in government.

Corruption will be curbed to ensure that resources are effectively and efficiently used for priority public goods and services. To achieve this, the government will: (a) intensify efforts to detect and prevent corruption; (b) resolve pending corruption cases with dispatch; (c) adopt a comprehensive anticorruption program; (d) enhance the legal and policy framework for corruption prevention; (e) strengthen integrity mechanisms and control structures; (f ) enhance partnership structures and mechanisms and international linkages; and (g) conduct anticorruption advocacy campaigns.

The rule of law shall be reinforced to ensure the impartial protection of rights and enforcement of obligations. Policies will be instituted to curb or discourage influence-peddling. Disputes must be impartially resolved based on facts and existing laws, free from influence or pressure. The strict and impartial enforcement of laws, rules and public policies will safeguard the rights of the citizens and will ensure that public interest will be upheld at all times. A swift and efficient system of resolving cases involving issues of property rights and contractual

obligations shall be pursued to enhance the business and investment climate.

Citizens’ access to information and participation in governance will be enhanced by creating space for free, active, voluntary and genuine participation in policy making, decision making and development planning. Towards this end, efforts will be focused on: (a) pursuing the passage of the Freedom of Information Bill; (b) ensuring open and transparent search process in the selection of appointees in independent bodies; (c) promoting and implementing multisectoral NACPA programmes and projects; and (d) ensuring budget transparency.

There will be an accessible and transparent mechanism for redress and accountability, including fair, prompt and immediate investigation of violation of right to equal access to public service and equal access to justice.

Ensure High-Quality, Effective, Efficient, Transparent, Accountable, Economically and Physically Accessible and Nondiscriminatory Delivery of Public Service

1. Improve Public Services Access and Delivery through Connected GovernmentCitizens and their needs shall be the focus of government, particularly the delivery of public services and the public’s other transactions with government (e.g., applications for birth certificates, passports, police clearances, and tax-filing).

Agencies need to overcome bureaucratic turfing and fragmentation to deliver public services more efficiently, quickly, and flexibly. Efforts must go beyond the past desultory and sporadic efforts at “one-stop shops” for certain transactions and must give way to a systematic


horizontal integration of related services based on a studied assessments of the flow of citizens’ needs.

Government services should cluster around the business life-cycle (from start up to closing of business) and the life-cycle of citizens (from birth to death), and establish corresponding single-window service channels.

Government processes should be reviewed, coordinated, and simplified in order to reduce processing time and to make it easier for citizens to transact with government. To achieve this, government should use information and communications technology (ICT) to the fullest, to facilitate electronic access to public services. Virtual single-windows can be provided via the Internet by interconnecting online public services of government. Such virtual coordination must be underpinned, however, by real coordination, information-sharing, and cross-checking among various agencies of government as citizens complete their transactions.

This should lead to the elimination of redundant and repetitive information requirements in government forms, among others.

2. Professionalize the Bureaucracy to become Duty-Bearers Competence, professionalism, and integrity in the civil service can be raised if appointments are depoliticized, and a purposive, program-based and integrated professional development for career executives and personnel is implemented. This is in line with the vision of public service values, and thrust of the Philippine government, as captured in the phrase “Gawing lingkod-bayani ang bawat kawani.”

a) Formulate a Strategic and Integrated HRD Program for the Philippine bureaucracy from entry to exit from government service (based on Competency Needs Assessment).The

government should devise a more comprehensive, programmatic and integrated HRD program to raise the level of professionalism, competence, commitment to service, and integrity of government personnel. This medium-term strategy should include an Induction Program at entry level, Workplace Basics for the rank and file, Functional Competency Development for specialists, Supervisory Development for supervisors, Executive Development and Strategic Management for career executives, Governance and Public Leadership for senior officials. To ensure progression and full coverage, a ladderized HRD program should be established with certification and links to promotion. A percentage of the government budget should ideally be set aside for the purpose. This HRD program may be implemented through the Civil Service Academy. Human-rights education shall also be integrated in the HRD program at all levels.

b) Pursue the passage of the Career Executive System (CES) bill. The CES bill seeks to strengthen professionalism in the executive and managerial levels and in highly specialized and technical positions in the government. It identifies career and noncareer positions and provides transparent performance-based promotions and appointments, balancing the exercise of presidential appointing power with the preservation of meritocracy in the civil service. Its aim is a unified bureaucracy in which the first, second and third levels are under the Civil Service Commission as the central personnel agency.


c) Align individual performance with organizational performance. Organizational and individual performance goals must be aligned. Employees should appreciate the significance of their contribution to their organization’s performance before they find satisfaction in what they do. Thus, the linkage and government-wide implementation of the Organizational Performance Indicators Framework (OPIF) and the Performance Management System (PMS) need to be pursued. This seeks to align the programs, projects and activities of the departments or agencies with the desired objectives or goals of the government, and the individual performance goals with the organization’s strategic vision and goals. This will also ensure organizational effectiveness by cascading institutional accountabilities to the various levels of the organization’s hierarchy, and have a performance management linked to rewards and incentives, among others.

The PMS of the government institutions shall be reviewed and reformulated to establish clear performance objectives and standards and to promote a culture where the performance and contribution of the employees are recognized and rewarded accurately and fairly. The Balanced Scorecard is one PMS platform or approach that has been proven to create an effective alignment.

d) Pursue the effective implementation of the Magna Carta of Women, particularly the targeting of 50 percent of women in third level positions. All concerned agencies of government should ensure that there shall be an incremental increase in the recruitment and training of women in the police

force, forensics and medico-legal, legal services, and social work services.

3. Enhance the Transparency of Government-to-Business and Government-to-Citizen Transactionsa) Enforce full compliance with the

provisions of the Anti-Red Tape Act including the formulation, adoption and effective implementation of Citizen’s Charters in all government agencies and LGUs. In line with the Anti-Red Tape Act (ARTA) of 2007 (RA 9485), all government entities with frontline services shall have developed their Citizen’s Charter which serve as a service charter or pledge that describes the step-by-step procedure for availing of a particular service, and the guaranteed performance level that the public may expect for that service. Information such as procedures to avail of the service, responsible person/office, processing time, documentary requirements, applicable fees or charges, and procedures for filing complaints are reflected in the CC. Despite the September 2009 deadline set by ARTA, more than a thousand entities, particularly local governments, still have to comply with the law. ARTA mandates the review and reengineering of frontline services to cut red tape and enhance efficiency, transparency, and accountability in the delivery of public services. It requires the formulation and publication of CCs and the establishment of Public Assistance Desks to receive feedback and handle complaints from the transacting public. In order to remain responsive to the need of citizens, agencies must continually improve their systems and standards through the publication and implementation of Citizens’ Charters, Citizens Feedback Surveys, and Transactions Reengineering.

b) Create a single website/portal for government information. To facilitate access to government information and services, a common website/portal


should be established where citizens can obtain vital information and services from different government agencies. This portal should also serve as a channel for citizens to report incidents or provide feedback on the performance of government agencies, including complaints against erring officials and employees.

LGUs must develop and expand the e-governance services available on their websites, from providing general information to discharging routine transactions, and encourage transparency by making information on budgets and procurement available. A common basic template should be followed by all LGUs so that a minimum set of common information and services is provided on their portals.

The government will set up a communication plan. Through faster communications technology, bureaucracies must be able to adopt and evolve into listening and communicating organizations. Press officers and official spokespersons will be adequately equipped to counter negative or malicious information and to constructively engage media partners. A simple yet comprehensive communication plan is a cornerstone of getting the message of governance across.

c) Pursue the passage of a Freedom of Information Act. A law on freedom of information is a cornerstone of transparent and accountable governance. Its intent is to provide the citizenry, especially media, with access to information pertaining to all transactions and communications that are of legitimate public interest. Its existence should encourage probity and prudence in all national and local government negotiations relating to loans, treaties, service contracts, and similar transactions. It also seeks to protect the civil rights

of law-abiding citizens and organizations against potential abuses of government’s police and intelligence-gathering powers (already partly affirmed through the writ of amparo). A future law must stipulate how these aims are to be achieved maximally while recognizing the state’s legitimate right to reserve information affecting national security.

4. Focus Government Efforts on its Vital Functions and Eliminate Redundancies, and Overlaps in Functions and Operationsa) Complete the implementation of the

Rationalization Program (RP). The completion of the implementation of the RP, as mandated under EO 366, s. 2004, will be pursued to: focus efforts on government’s vital/core functions and priority programs and projects, and channel resources to these core public services; and improve service delivery by cutting red tape through systems and organizational improvements, and elimination of redundancies and overlaps in functions and operations. In transforming the Executive Branch, government offices need to complete a strategic review of their respective operations and organization and implement their RP upon approval of the DBM.

b) Institute zero-based budgeting (ZBB) in program evaluation. To attain the administration’s commitment to lift the nation from poverty, instituting ZBB approach to program evaluation is vital. The ZBB approach involves the review of ongoing major programs and projects by different offices in order to: (a) establish the continued relevance of program objectives given the current developments; (b) assess whether or not the program objectives


are being achieved; (c) ascertain alternative or more effective and efficient ways of achieving the objectives; and (d) guide decision-makers on whether or not the resources for the programs should continue at its present level, or be increased, reduced or discontinued.

Under this initiative, government shall terminate or cut back on programs that have been inefficient or ineffective in delivering outcomes, or withhold funding for others pending reforms in implementation and procurement. More importantly, it allows the expansion of the implementation of the well-performing programs that address critical gaps.

c) Review the extent of devolution of services to LGUs. The extent of power devolution as well as the transfer of assets and resources to local governments from national government agencies in consonance with the Local Government Code shall be reviewed. The review must yield appropriate policy recommendations to eliminate confusing or unnecessary overlaps in the service-delivery functions across levels of government.

5. Enhance and Standardize the Quality of Public Service Delivery to become Consistent with the International Organization for Standardization (ISO) Quality Management System (QMS)

a) Adopt the ISO 9001:2008 QMS in the delivery of priority government services. Government processes, systems, and operations shall be made consistent with the ISO QMS through the continual institutionalization of the Government Quality Management Program (GQMP) in all departments and agencies of government, spearheaded by the

GQMP. In the pursuit of this program, the ISO 9001:2008 QMS shall be adopted in the delivery of priority government services.

b) Refine the Government Quality Management Systems Standards (GQMSS) to become consistent with ISO 9001:2008 QMS for the use of the different departments and agencies of the Executive Branch. The GQMSS consistent with ISO 9001:2008 QMS shall likewise be refined for the use of different Executive Branch departments and agencies. QMS processes shall be installed in certain critical government-to-business, government-to-citizens, LGU-to-business, LGU-to-citizen, and government-to-government transactions.

c) Activate Quality Class category of the PQA for the Public Sector. The PQA for the Public Sector (mandated per RA 9013) provides a framework for public service excellence. Global benchmarks on public service excellence like Canada, Singapore, and even Malaysia, succeeded in building a culture of service excellence through the wide-scale adoption of business excellence models such as the PQA. The PQA Quality Class will encourage self-assessment vis-a-vis the PQA performance excellence framework and promote improvement of processes to achieve excellence in public service delivery. This will boost the country’s competitiveness.

6. Citizen-Centered GovernmentThe bottom line for government is the welfare and satisfaction of its citizens. Government shall devise a common measuring tool and methodology to solicit feedback from the citizens and determine their requirements. A National Citizen Satisfaction Index (NCIS) should be developed that will serve as common measuring tool of efficiency, effectiveness, accessibility, integrity, transparency and


accountability of government agencies in the delivery of public services.

7. Improve the Financial Management System in Governmenta) Develop a Government Integrated

Financial Management Information System (GIFMIS). A vital reform initiative is the strengthening of the public financial management (PFM) system. PFM is a system of rules, procedures and practices for government to manage its public finances. PFM includes not only sound budgeting but also management of public debt, assets, and revenues, fiscal relations between levels of government or between government and public enterprises, and a system of public reporting on the public sector’s financial operations.

A major undertaking will be the development and installation of a GIFMIS, an application that shall automate routine financial operations and reporting of the national government, particularly financial planning and budgeting, treasury, and accounting functions. The GIFMIS will link budget preparation and execution to accounting, cash management, reporting, and auditing. Once installed, it will enable the government to implement improved systems for public financial management.

b) Empower LGUs and promote public accountability. Policy reforms to advance local autonomy and decentralization shall be pursued. Service delivery functions have been vested in LGUs on the premise that they would respond better to diverse and changing local conditions, and thus more effectively meet the needs of their constituents. Emerging issues and needs of LGUs related to their devolved service delivery functions shall be continuously identified. Proposed legislation shall likewise be reviewed and appropriate

recommendations will be provided to ensure that LGU needs are met and there is no reversal of decentralization.

Efforts to enhance the capacities of LGUs shall be intensified to improve their ability to deliver public services. The capacity needs of LGUs shall be identified and appropriate interventions provided. Knowledge management activities, including the sharing of good practices in local governance, shall be undertaken to enhance information-sharing among localities and help improve LGU performance.

c) Enhance LGU accountability mechanisms. Improved accountability of local officials induces responsible leadership and ensures that efficient and responsive services are delivered. In promoting local government accountability, the following strategies shall be undertaken:

• Implementation of systems to determine performance of LGUs in terms of their state of local governance and compliance with policies;

• Public disclosure of LGU performance; and

• Institution of performance-based LGU incentives or awards.

Curb Corruption Decisively

A comprehensive and integrated Anticorruption Framework and Program will be an essential part of the administration’s commitment to fight corruption. This framework shall be the anchor of the strategic objectives identified in this section and provide focus and direction in achieving the vision that the administration has


committed for its people. It will contain key result packages with the corresponding set of anticorruption projects and implementation mechanisms to ensure success. As a starting point, a comprehensive and integrated anticorruption program will be established for the prosecution of corrupt officials, beginning with case build-up all the way up to conviction, including ancillary remedies (i.e., freezing of assets) and recovery of property. Corrupt officials shall be prosecuted and dismissed, with the highest priority accorded to high-profile cases.

1. Intensify Corruption Preventiona) Honestly reassess the progress,

priorities, and capacities of the main anticorruption agencies. All government agencies involved in anticorruption efforts, beginning with the Office of the Ombudsman, need to reexamine whether their track records match public expectations and the scale of the problem of corruption. Shortfalls and inadequacies in personnel and strategies must be urgently addressed if any further progress is to be made. The results of such reassessments should be made public in the interest of transparency;

b) Strictly enforce and observe anticorruption laws and policies. These include the Anti-Graft and Corrupt Practices Act; the Anti-Red Tape Act; National Guidelines on Internal Control System (NGICS); the Procurement law (RA 9184); mandatory provisions of UNCAC; the Code of Conduct and Ethical Standards for Public Officials and Employees (RA 6713); and the Anti-Money Laundering Act (AMLA).

The legal and policy framework for corruption prevention will be enhanced through compliance with the United Nations Convention against Corruption (UNCAC) and other international standards. Anticorruption advocacy campaigns will be conducted through the rollout of an integrated integrity and anticorruption promotion program. This will also include monitoring in the implementation of anticorruption programs, projects and activities;

c) Strengthen information-exchange among all government agencies to prevent corruption and private-public sector collusion. Data possessed by revenue agencies, line agencies involved in contracting (e.g., DPWH, DOTC), local governments (residences and business permits), and the AMLAC, can be potentially assembled and mined to build anticorruption cases based on lifestyle-checks and possibly fraudulent tax returns. The availability of such information serves as a powerful deterrent against corruption involving collusion between private persons and public officials;

d) Support private sector initiatives to police its own ranks and discourage corrupt relations with government agencies in revenue collection and procurement. The Compliance and Integrity Programs for Business (CIPB) are an initiative of the Joint Foreign Chambers of the Philippines to ensure the pledge of their members not to bribe public officials, to report corruption, and to embed standard corporate practice. The private sector has also committed to intensify its efforts to improve corporate governance through training of directors and requiring compliance with higher standards of corporate governance;


e) Implement fundamental reforms in public procurement and in budget releases to close off opportunities for corruption and to promote transparency, competition, and cost-effectiveness through the following measures:

• Roll out an enhanced Philippine Government Electronic Procurement System (PhilGEPS) in order to minimize discretion and intervention in procurement. The new PhilGEPS features shall include: (a) a virtual store; (b) an expanded supplier registry; (c) an electronic payment facility; (d) a facility for electronic bid submissions to the virtual store; and (e) annual procurement plans;

• Expand the use of the PhilGEPS E-Bidding system to improve the efficiency and transparency of government agencies’ procurement activities, government contracts, and other procurement related electronic transactions, thereby reducing spending on print media advertisements;

• Review the guidelines for blacklisting unscrupulous contractors and suppliers. The Government Procurement Policy Board (GPPB) shall streamline procedures and strengthen policies to facilitate the collection and presentation of evidence of bid-rigging, overpricing, and underprovision against corrupt contractors and suppliers for blacklisting;

• Create an independent body to review appeals filed by bidders. An independent body, composed of procurement and legal experts shall be formed by the GPPB to review and resolve protests and appeals filed by participating bidders;

• Prevent the diversion of unspent funds from vacated positions by releasing PS allotments only for filled positions, with special attention to

large service-organizations such as the military and the police;

• Prevent the conversion of MOOE and CO outlays by standardizing and disclosing MOOE and CO requirements including those of military camps and other facilities;

• Conduct technical visits to validate the budgetary status of programs, projects and activities;

f ) Invite the participation and scrutiny of CSOs and individual citizens with respect to government performance through institutional means and through the provision of information. This will cover the following measures:

• Expand the pool of CSOs that serve as observers in the bids and awards committees (BACs) of various agencies to ensure civil society representation;

• Invite the regular participation of citizen groups in the budget-preparation process for the evaluation of existing government programs and for them to provide inputs to ZBB; and

• Make available to the public the accountability reports of all agencies, including the DND and the AFP, on the DBM website.

g) Empower citizens to directly and confidentially report either exemplary performance or corrupt practices of employees through dedicated portals, such as the DOF’s Pera ng Bayan website (http://perangbayan.com), which also entertains information regarding tax evaders and smugglers.


2. Speedy Resolution of Corruption Cases, with Special Cases of Grand CorruptionLaws and rules provide reglementary periods to be observed in the filing and prosecution of corruption cases. The strict observance of these rules will highly contribute to the speedy resolution of corruption cases and serve as a deterrent and a proof of the government’s sincerity in its commitment to fight corruption.

a) Review policies and procedures on speedy disposition of cases. Courts are required to submit their decisions within 90-calendar days from the time the case was submitted for resolution. This period excludes litigation proper where delays are common. Thus, it is suggested that a review of existing laws and rules be done to address the problem;

b) Strictly implement the reglementary period provided for by laws and rules for the immediate resolution of administrative and corruption cases. After the policies and procedures on the speedy disposition of cases has been reviewed and improved, strict compliance with the periods set forth by laws and rules must be ensured;

c) Pursue corruption cases resolutely based on principle and to set a public example. Especially in well-known cases of grand corruption, the government shall use all instrumentalities to ensure that solid evidence is gathered, prepared, and preserved so that cases are not compromised but rather pursued in accordance with the full force of the law. As a result, this may serve as serious deterrents to future grafters;

d) Amend the COA Charter to provide for the recovery of illegally-disbursed public funds. The COA Charter21 amendments must solve the problem of issuance of writ of execution of decisions rendered final and executory by the Supreme Court in cases on notice of disallowances for illegal or irregular disbursements or notice of charge for under collection or underassessment of revenues applying to natural or juridical persons. Under the Constitution, COA decisions are directly appealable to the Supreme Court. However, the COA Charter, Rules of Procedures and other issuances do not contain any provision on how to execute these decisions and collect COA disallowances and charges from private persons or entities. Alternatively, Supreme Court rules of procedures in execution of judgments on COA appealed cases may be reviewed;

e) Nationwide implementation of the case tracking monitoring system. All justice sector agencies should be interconnected through the National Justice Information System;

f ) Pursue the enactment of a Whistleblower Protection Law. A credible means to protect key informants is urgent, particularly when the impartiality of judicial and law enforcement agents is in question; and

g) Pursue the enactment of a law on campaign finance reform regulating campaign contributions. There should be a law limiting campaign contributions. Unregulated campaign funds often results in the corrupting influence of campaign contributors to an elected candidate. Our election laws impose limits on the amount and type of campaign

21 P.D. No. 1445, “Government Auditing Code of the Philippines.”


expenditures, and candidates are required to report all contributions but there is nothing that regulates the excess contribution.

3. Adopt a Comprehensive Anticorruption ProgramThe tedious process of getting a final resolution is a major obstacle to people filing complaints against corruption. A single window for filing and monitoring corruption cases, lodged in a credible agency, will encourage people to file complaints against erring officials and employees, and eventually help curtail corruption. This will also promote the seamless coordination of investigation, prosecution and other bodies in the expeditious resolution of corruption cases.

a) Review rules of procedure on administrative/civil/criminal actions on corruption-related cases. Due to the relatively low conviction rate in corruption cases, existing procedures should be reviewed and evaluated to determine the need for further refinements in the procedures applicable to corruption-related cases and make them more effective; and

b) Review policies and procedures on case monitoring and records management. Existing policies and procedures for monitoring of cases and records management should be reviewed and, if necessary, revised to adapt to the present condition. Monitoring of cases from filing up to the execution of decisions/judgments is important to verify if justice has been fully served.

4. Enhance the Legal and Policy Framework for Corruption PreventionComply with the UNCAC on corruption prevention and other international standards.

5. Strengthen Integrity Mechanisms and Control Structuresa) Expand the Integrity Development

Review;

b) Institute a public reporting mechanism on adherence to anticorruption policies. This will be achieved by creating an independent joint NG and NGO Committee with appropriate human capital and financial support; and

c) Execute memoranda of agreement for partnerships in transparency and accountability in LGUs. Parties to these memoranda should include LGUs themselves, national government agencies and CSOs.

6. Enhance Partnership Structures and Mechanisms and International Linkagesa) Expand CSO and private sector

participation in the Multi-Sectoral Anticorruption Council (MSACC);

b) Strengthen interagency coordination; and

c) Comply with international and regional commitments (e.g., UNCAC, ADB-OECD Anticorruption Initiative for Asia and the Pacific, APEC Anticorruption Plan of Action).

7. Conduct anticorruption advocacy campaignsa) Roll-out an integrated promotion

program for integrity and against anticorruption;

b) Enhance values formation and moral recovery for all government officials and employees in close collaboration with CSOs; and

c) Wage a massive educational campaign on the law, rules, and regulations relating to good governance.


Strengthen the Rule of Law

The strict implementation of the rule of law indicates the government’s seriousness in carrying out its responsibilities and obligations in a democratic environment, while extracting from the citizens the needed cooperation through compliance with existing laws and public policies.

1. Strengthen the Oversight Bodiesa) Expand OMB powers. The powers

of the OMB shall be expanded to include examination of bank accounts, and the establishment of witness protection and benefits program under the office. The compensation and benefits for OMB employees themselves should likewise be enhanced, specifically, their exemption from the salary standardization law, ranking, retirement benefits (survivorship), and special allowances for lawyers; and

b) Pursue the passage of a charter for the Commission on Human Rights (CHR). Enable CHR to perform its comprehensive monitoring function independently, which will contribute to the strengthening of the rule of law, government accountability and transparency. Examining performance of the executive, legislative and judicial, and other government functions against international norms and standards will lead to reforms and changes in policies, programs, and actions consistent with international human rights instruments.

2. Effective and Speedy Resolution of Cases in Courts and Quasi-Judicial Bodiesa) Improve investigative abilities

of law enforcement agencies. The investigative capacity of law enforcement units, especially the NBI, needs to be raised

dramatically. A greater availability of science-based evidence from law enforcers can only enhance the quality of final judicial outcomes. This will be attained through the establishment of world-class forensic laboratories in major regional centers and cities;

b) Rules for preliminary investigation reviewed and codified. The rules on preliminary investigation shall be restudied and codified to consider the expeditious resolution of cases;

c) Establish policy and guidelines in the determination of probable cause. The policy and guidelines on the elements and parameters of probable cause should be issued based on laws and jurisprudence to avoid the frivolous filing of cases and to reduce the currently high rate of dismissed cases. In this way, courts can focus on resolving high-impact cases while avoiding delays;

d) Strictly implement the reglementary period provided for by the rules for the resolution of cases. Timelines in the disposition of cases should be defined, strictly monitored and complied with. Delayed resolution of cases does not only wastes limited government resources but also harms the interest of all parties involved in the dispute;

e) Establish a case-monitoring system covering the entire justice system. A justice system infrastructure should be established to be able to comprehensively monitor the progress of cases from one agency to another. The system will interconnect existing case-monitoring systems for efficient and effective case management – such as the Warrant of Arrest Information System (WAIS) of the PNP; the CDIS of the NBI; the electronic Prosecution Case Management of the DOJ; the Judiciary Case Management System


( JCMS) of the Supreme Court; and the Inmate Information System of the Bureau of Corrections, the Board of Pardons and Parole, and the Parole and Probation Administration. An effective monitoring system enforces accountability among service providers and thus encourage them to resolve their cases within the timelines provided by existing rules; and

f ) Complete APJR projects on docket decongestion and judicial systems and procedures. The Supreme Court must complete its APJR project on docket decongestion and judicial systems and procedures, e.g., the Expansion of Court-Annexed Mediation; Expansion of e-JOW ( Justice on Wheels Project); diminish caseload for each Court of Appeals’ (CA) Justice (Zero Backlog Project); nationwide implementation of the Enhanced Case Flow Management (eCFM) System which monitors the status of the cases to see whether they are proceeding as scheduled; full computerization of courts from Bangued, Abra to Tacurong, Sultan Kudarat; Pending integration of eCFM with Court Administration Management Information System (CAMIS); full coordination of all three CMIS stations of the CA; capacity building to enable electronic filing; Enhancement and expansion of the Case Management Information System (CMIS) project.

3. Reduce the Cost of Litigationa) Study the reduction of filing fees for cases;

and

b) Adopt a standard format of transcript of stenographic notes (TSNs) to reduce the cost of litigation. This reduces the discretion of stenographers in the length of the transcripts.

4. Avoid Law Suits Involving Government Contractsa) Government contracts should be consistent

with international instruments, existing

laws, and public interest. The issuance of legal opinions by the Legal Staff and the Office of the Government Corporate Counsel of the DOJ should be free from political interference and should be reviewed in accordance with domestic laws and public policies; and

b) Review and ensure that FTAs are consistent with national laws and public interest. These FTAs will be disseminated through a massive information campaign.

5. Enhance the Integrity and Competence of Justices, Judges, Court Personnel and all other Officers of the Judiciary and Quasi-Judicial Bodies

To reaffirm the people’s faith in the judiciary, there is a need to enhance the integrity and competence of justices, judges, court personnel and all other officers of the judiciary and quasi-judicial bodies by:

a) Weeding out the undesirables, both from the Bench and the Bar. To maintain public confidence in the competence and integrity of members of the judiciary, the government will intensify its efforts to weed out misfit and undesirable officials and personnel who fail to uphold the dignity and integrity of the legal profession;

b) Continuing the Court Cleansing Initiative. The continuance of the court cleansing initiative will further strengthen the integrity of the judiciary and hopefully achieve an ethical judiciary that is above suspicion as envisioned by the Supreme Court;

c) Strengthening the Integrity of the Judiciary and the Integrity Development Review. Besides adjudicating cases and promulgating rules, the Supreme


Court also has the power of administrative supervision over all courts and their personnel, including the power to take disciplinary action against them when warranted. (CONST., Art. VIII, sec. 6). In 2009, it disciplined 66 Regional Trial Court judges; 27 Metropolitan Trial Court, Municipal Trial Court in Cities, Municipal Trial Court, and Municipal Circuit Trial Court judges; and 181 first and second-level court personnel. Nor has the Supreme Court spared the rod in its own ranks. In 2009 it administratively disciplined 19 SC employees and dropped three others from the roll for being absent without leave.

In an unprecedented and unanimous per curiam decision, the Supreme Court also imposed a PhP500,000 fine on a retired SC justice for grave misconduct for leaking a confidential internal document of the Court (AM No. 09-2-19-SC, In Re: Undated Letter of Mr. Louis C. Biraogo, February 24, 2009).

The SC has also disciplined 129 members of the Bar for various administrative offenses. In response to the pervasive drug menace, it has approved mandatory drug testing for all Judiciary employees as recommended by its Committee on Security (AM No. 09-3013-SC, Mandatory Drug Testing of All Supreme Court Employees, March 24, 2009. Information lifted from the 2009 Supreme Court Annual Report); and

d) Strictly implement agency-specific Codes of Conduct for law enforcers, prosecutors and judges. The specific administrative rules of conduct and behavior for various government agencies will be strictly enforced to

maintain a competent workforce in government service.

6. Increase Resources for Justice Sector Agencies and Quasi-Judicial Bodiesa) Renew efforts to address the human

capital shortage. A proactive and enhanced recruitment program shall be developed to attract brilliant young lawyers to justice sector agencies;

b) Implement continued capacity-building and updating of skills of law enforcers, prosecutors, public defenders and judges, and corrections officers. The government will complement the continued influx of knowledge and information with a sturdy policy of skills-enhancement and capacity-building of the members of our law enforcement units and the justice sector; and

c) Modernize and upgrade facilities for law enforcers such as the PNP and the NBI crime laboratories, forensic investigation facilities and equipment. Improve capacities of prosecutors and law enforcers particularly NBI agents in the investigation and prosecution of special cases involving economic or white-collar crimes such as money laundering, tax evasion, smuggling, human trafficking, violations of intellectual property rights and antitrust laws, illegal drugs and even cases involving extralegal killings and other human rights violations as well as violation of environmental laws.

7. Improve Access to Justice of All Sectors of Society particularly the Vulnerable Groups Citizens should be made aware of their fundamental rights and be taught on how to access the services of government institutions involved in justice delivery when their rights are violated or when the enforcement of these rights are sought. This is the essence of democracy and good governance – when people are empowered to exercise their rights and attain the progressive fulfilment of their needs.


a) Make full use of the services of government lawyers by deputizing them. Lawyers employed in various government agencies and instrumentalities will be imbued with the necessary authority to defend public interests in congruence with the functions of the OSG;

b) Provide tax credits for lawyers representing IPs and other vulnerable groups. Tax incentives will be provided for lawyers representing society’s vulnerable groups to encourage them to render adequate legal assistance and at the same time, promote equal access in the justice system;

c) Strengthen the Katarungang Pambarangay Law to resolve cases at the local level. The strengthening of the Katarungang Pambarangay Law will result in the speedy resolution of cases at the local level without going through the rigors of court processes. This will substantially improve the delivery of justice and facilitate the declogging of court dockets; and

d) Conduct training among judges, court personnel, prosecutors, public defenders and other pillars of the justice system in handling gender-sensitive cases, especially those involving violence against women and children (VAWC).

8. Promote the Use of Alternative Dispute Resolution (ADR)The government shall encourage and actively promote the use of ADR. Resorting to ADR could help decongest both court and prosecution dockets of cases which may be subject of ADR and allow the courts and the prosecution to dedicate their resources in resolving equally important cases brought before them. It will also spare both the parties and the government from litigation costs and the tedious judicial and administrative processes thus helping the parties achieve speedy and impartial justice.

a) Disseminate information on ADR. ADR will also develop potential active citizen’s participation since most ADR institutions are private-led. They promote the culture of peaceful negotiation and resolution of disputes by discouraging the adversarial manner of resolving conflicts such as court litigation;

b) Strengthen and support institutions involving ADR. Efforts should be stepped up to communicate and disseminate information about ADR as well as strengthen and support institutions involved;

c) Strengthen DOJ-OADR. The Office of Alternative Dispute Resolution (OADR), an agency recently created under the DOJ, shall be strengthened to be able to monitor and assess existing ADR mechanisms in the country and ensure that ADR programs conform with international standards and best practices. With an effective and efficient ADR mechanism in place, the country can join countries like Singapore as an arbitration hub in the region; and

d) Establishment of prosecution-level mediation. Resolving cases subject to ADR can help declog prosecution and court dockets as cases will be resolved before information is filed in court.

9. Institutionalize Existing Justice Sector Coordinating MechanismsJustice sector coordinating mechanisms such as the Judiciary, Executive and Legislative Advisory & Consultative Council ( JELACC) and the Justice Sector Coordinating Council ( JSCC) shall be institutionalized.


The JELACC serves as a forum for the discussion of issues relating to resource needs, recognizing the fact that there is a need to dialogue on cross-cutting issues relating to justice sector performance.

On the other hand, the JSCC, which is composed of the Supreme Court, DOJ, DILG, PNP, BJMP and the DBM, is another forum for dialogue and preparation of joint justice sector reform programs and initiatives.

Enhance Citizens’ Access to Information and Participation in Governance

1. Pursue the Passage of the Freedom of Information Bill

The Freedom of Information Bill is intended to give the citizenry access to information by allowing full disclosure of all transactions which are of public interest. It aims to institute transparency in the national and local government’s undertakings relative to loans, treaties, contacts and other similar transactions.

2. Issue an Executive-Wide Policy on Public Access to Information Pending the Passing of the Right to Information Act

3. Ensure Open and Transparent Search Process in the Selection of Appointees in Constitutional Commissions, Regulatory Bodies and other Independent Bodies (e.g., CSC, CHR, JBC etc.)

A credible multisectoral committee should be engaged in the nomination and appointment of members of constitutional commissions, regulatory bodies, independent commissions and other oversight bodies. The criteria for the selection, the candidates and their qualifications and those endorsing them, should be made public. The feedback of the public should also be considered.

4. Promote and Implement the NACPA In order to push forward the national anticorruption agenda and contribute towards the attainment of sustainable and inclusive growth, the OMB and its partners from the MSACC, should continue to pursue its priority programmes and projects under the NACPA. These include the enhancement of the anticorruption legislative framework and local policies, adoption and customization of the APEC Code of Conduct for Business, integrity development review of LGUs, capacity-building on the UNCAC, anticorruption workshops for professional groups, including engineers and accounts, for assistance in case build-up and prosecution.

5. Intensify People’s Engagement in Local GovernanceIncreasing participation of CSOs in local development processes reinforces responsiveness and accountability among local officials. Local governments will therefore be encouraged to create opportunities for citizens to continuously engage with them in an inclusionary and participatory manner. Representation of CSOs in the Local Special Bodies in accordance with the Local Government Code will be strictly enforced. Likewise, the forging of LGU-CSO/Private Sector partnership will be promoted. By collaborating with CSOs and the private sector in the implementation of local government’s development projects, not only are financial resources shared, but also knowledge and experiences, which increases the chances for local development.

6. Ensure Budget Transparencya) Mandatory publication in agency

or department websites of major information on budgets, finance, and performance indicators. A strategic program to restore public trust and to enhance disbursement of funds and their utilization is the establishment of transparency and accountability requirements in the budget. Specific budget provisions shall require DBM and other agencies to publish in their websites detailed information on the


allocation, disbursement and status of programs and projects, including the following:

• approved budgets;• performance measures and targets;• major programs/projects

implemented/to be pursued;• annual procurement plan;• contracts awarded and the name of

contractors/suppliers/consultants;• targeted and actual beneficiaries;• status of implementation and

fund utilization; and• program/project evaluation and/

or assessment reports;

b) Posting of fund releases on the DBM website. Information technology will be leveraged to achieve transparency and accountability. This facilitates the process of fund release and strengthens security while promoting transparency and accountability. Fund releases (e.g., congressional allocations chargeable against priority development assistance fund, financial assistance to LGUs, school building program, and internal revenue allotment) and other pertinent budgetary releases shall be posted on the DBM website; and

c) Constructively engaging CSOs in the budget process. The involvement of CSOs in the budget process is being pursued to institutionalize greater transparency and accountability in government and enhance participatory governance. The government and concerned CSOs shall have a constructive engagement to advocate good governance in the government budgeting process. This partnership aims to promote transparency, accountability, and public participation in the preparation, authorization, execution and monitoring of the national budget. This effort allows the public full access to government budget information, thereby increasing their capacity to understand the budget process and analyze its policy implications.

A communication and advocacy plan will be developed to ensure that all stakeholders understand the budget process and pertinent budgetary information. Training will also be conducted to facilitate a fuller understanding of budget documents among legislators and legislative staff. Finally, a healthy relationship between government and media shall be maintained to ensure continuous public discussion regarding government’s programs and projects.

7. Full Disclosure of Local Budget and Finances, and Bids and Public OfferingsThe declared policy of promoting good local governance calls for the posting of budgets, expenditures, contracts and loans, and procurement plans of LGUs in conspicuous places within public buildings in the locality, on the web, and in print media with local or general circulation, specifically including the following:

• annual budgets;• quarterly statements of cash

flows;• statements of receipts and

expenditures;• trust fund (PDAF) utilization;• Special Education Fund

utilization;• utilization of the 20

percent Development Fund component of the IRA;

• Gender and Development Fund Utilization;

• statement of debt service;• annual procurement plan and

procurement list;• items to bid;• bid results on civil works and

goods and services; and• abstract of bids as calculated.

231Social Development08Social Development


Social development has improved the access of Filipinos to quality basic social service delivery in education, training and culture; health and nutrition; population and development; housing; social protection; and asset reform. The country is on track in pursuing the Millennium Development Goals (MDGs) on poverty, gender and equality, child health, disease control and sanitation. However, the country lags in achieving universal primary education, improving maternal health, and combating HIV/AIDS. Moreover, large discrepancies across regions need to be addressed by the social development sector in the next six years.

The social development sector shall focus on ensuring an enabling policy environment for inclusive growth, poverty reduction, convergence of service delivery, maximized synergies and active multistakeholder participation. Priority strategies include: (a) attaining the MDGs; (b) providing direct conditional cash transfers (CCT) to the poor; (c) achieving universal coverage in health and basic education; (d) adopting the community-driven development (CDD) approach; (e) converging social protection programs for priority beneficiaries and target areas; (f) accelerating asset reform; (g) mainstreaming climate change adaptation and disaster risk reduction in social development; (h) mainstreaming gender and development; (i) strengthening civil society-basic sector participation and public-private partnership; (j) adopting volunteerism; and (k) developing and enhancing competence of the bureaucracy and institutions.

The Plan translates the President’s Social Contract with the Filipinos in ensuring inclusive growth and equitable access to quality basic social services, especially by the poor and vulnerable.

Social Development


Assessment

The social development sector has generally shown improved access to quality service delivery in health, nutrition and population; education, training and culture; housing; social protection; and asset reform efforts and initiatives. The Philippines is on track in meeting the MDGs on food poverty, gender equality in education, child mortality, malaria, tuberculosis, and access to sanitary toilet facilities (Annex 8.1). However, the country lags in achieving universal primary education, improving maternal

health, and combating HIV/AIDS. Moreover, large discrepancies across regions need to be addressed in the next six years.

The poverty incidence of families slightly decreased from 21.1 percent in 2006 to 20.9 percent in 2009, or from 26.4 percent of the population in 2006 to 26.5 percent in 2009. However, this improvement is limited, considering the slow growth of incomes, increase in household formation, natural disasters and inflationary pressures mainly from rising fuel and food prices. In 2009, more than a quarter of the 23.1 million poor Filipinos lived in four regions (Annex 8.2). While only one-third of poor Filipinos came from Mindanao,

233Social Development

income are Regions 7, 8, 9, 10 and 13 (CARAGA), as these regions have Gini ratios higher than 0.45 (Annex 8.4).

Trends in the Human Development Index (HDI)2 showed slight improvements. The HDI for the Philippines rose from 0.744 in 2005 to 0.751 in 2007, placing the country in the medium-HDI category (i.e., HDI values between 0.50 and 0.80). The Philippines ranked 105th among 182 countries. However, the country’s Gender Development Index (GDI) decreased from 0.768 in 2005 to 0.748 in 2007. Likewise, the Gender Empowerment Measure (GEM) fell from 0.590 in 2005 to 0.560 in 2007 (United Nations Development Programme, 2007, 2009).

Income gap3, poverty gap4, and severity of poverty5 varied in a narrow range from 2006 to 2009. In 2009, Region 9 recorded the highest income gap at 30.8 percent,

more than half of the provinces in the bottom cluster are located in the island group (Annex 8.3). This situation can be attributed to the armed conflict and unsettled peace and order situation.

Using the US$1.25-a-day poverty threshold (at 2005 prices), the Philippines, with a headcount poverty index of 22.6 percent (adjusted for 2005 purchasing power parity), ranked better than Cambodia (40.2%), Lao PDR (35.7%) and Vietnam (22.8%), but trailed behind Indonesia (21.4%), Malaysia (0.5%) and Thailand (0.4%) (Figure 8.1).

Income inequality remains high. The Gini concentration ratios1 showed only slight and slow improvements, from 0.4605 in 2003 to 0.4580 in 2006 and 0.4484 in 2009. The regions with the most unequally distributed

1 The Gini concentration ratio measures the inequality in income distribution, where zero means perfect equality and a value of 1 implies perfect inequality.2 The HDI measures quality of life or wellbeing in terms of health, education and income.3 Income gap refers to the average income shortfall expressed as a proportion to the poverty line of families with income below the poverty threshold.4 Poverty gap is the total income shortfall of families with income below the poverty threshold, divided by the number of families.5 Severity of poverty measure is the total of the squared income shortfall of families with income below the poverty threshold, divided by the total number of families.

Figure 8.1. Poverty Incidence in Southeast Asia

Source: ADB, 2009

Pov

erty

Inci

denc

e (in

%)


with National Capital Region (NCR) the lowest at 16.9 percent. The NCR also had the lowest gap at 0.4 percent, with CARAGA the highest at 12.1 percent (Annex 8.5).

It has been estimated that the national government and the LGUs must boost their budget for basic education and health by PhP348.9 billion (or 0.45% of GDP) and PhP45.0 billion (or 0.04% of GDP), respectively, if the MDG targets are to be met by 2015 (Manasan, 2009). This implies a huge financial requirement that should be allocated by the government, if it is to invest in the two most important human capital forming subsectors.

The slow rate of progress in the social sector may be partly attributed to the compression of expenditure at the national level in previous years, in response to balancing the budget due to declining revenue efforts. The combined share of social services in total national government expenditures exhibited a well defined downtrend from 1998 to 2005 (Figure 8.2).

Health, Nutrition and Population

The country’s health status is best summarized in the progress towards the MDGs. While the Philippines is on target for most of its MDGs, it lags behind in terms of reducing the maternal mortality ratio (MMR). The decline in neonatal mortality has also been very slow, as neonatal deaths comprise the majority of infant deaths. The MMR and infant mortality rate (IMR) were still at 95 to 163 per 100,000 live births in 20106, and 25 per 1,000 live births in 2008 (National Statistics Office, 2008), as against the MDG targets of 52 and 19, respectively.

For communicable diseases, the target for the tuberculosis (TB) case detection rate has been met, while a total of 22 provinces were declared malaria-free in 2008. The prevalence of HIV and AIDS remains below one percent of total population, although the number of HIV cases has been increasing annually. As in previous years, most of the ten leading causes of morbidity in 2008 were communicable diseases; in contrast, the leading causes of mortality in the country have mainly been noncommunicable diseases. There is a wide variance in the outcomes and

While the Philippines is on target for most of its MDGs, it lags behind in terms of reducing the maternal mortality ratio.

6 NSCB Resolution No. 11, Series of 2010 - Adopting the Interim Estimation Methodology Used in Generating National-Level Estimates of Maternal Mortality Ratios for 1990 and 2000-2010.

Figure 8.2. Share of Social Services in Total National Government Expenditures

Source: DBMYear

Per

cent

age

Sha

re


program performance of priority public health programs, due to demand side problems related to health care access especially by the poor, such as geographical barriers, financial constraints, and limited information on family health risks.

While it is urgent to address the slow progress in meeting MDGs, the health sector also needs to focus on the prevention and treatment of chronic and degenerative diseases and traumatic injuries, which are now the fourth leading cause of mortality. Many such deaths are untimely and financially catastrophic, affecting mostly the working-age population and causing large intergenerational effects.

In health care financing, the 2007 Philippine National Health Accounts (PNHA) revealed that 54 percent of the total health expenditure comprised out-of-pocket expenses, and only 9 percent from social health insurance. Total health expenditure was only PhP234.3 billion, or 3.2 percent of the GDP, which is below the World Health Organization’s (WHO) benchmark of 5 percent of GDP for developing countries.

High out-of-pocket expenses and low prepayment schemes reflect an unevenness, if not an inequity, in health care financing. The results of the Benefit Delivery Review by the Department of Health (DOH) and Philippine Health Insurance Corporation (PHIC) highlighted the need for PHIC to increase its enrolment coverage, improve the availment of its benefits and increase the support value for its claims, for the National Health Insurance Program (NHIP) to provide Filipinos with financial risk protection. Moreover, benefit delivery for the sponsored

program is lowest among member groups. To date, the nationwide benefit delivery ratio (BDR)7 is only 8 percent (Annex 8.6).

Public hospitals and primary health facilities cannot provide adequate services and quality care. Recent data show that only 977 out of 1,073 of DOH-licensed private hospitals (91%) and 631 out of 711 of DOH-licensed government hospitals (88%) are accredited by PHIC. These ratios are expected to decline once PhilHealth raises accreditation standards to globally competitive levels. The deterioration and poor quality of many government health facilities, which is particularly disadvantageous to the poor, is due to: (a) backlogs in upgrading of existing facilities, including those required to make public hospitals safe from disasters; and (b) the inability of the total capacity of public health facilities to meet demands from an increasing population base.

While the Philippines produces a globally-competitive medical and allied health workforce, many parts of the country, especially far-flung and depressed areas, remain underserved. Human resources in the health sector are concentrated in urban areas, with fast staff turnover and oversupply of personnel.

On nutrition, underweight, stunting, wasting and thinness continue to be serious problems. The proportion of underweight children under-five decreased from 27.3 percent in 1990 to 20.6 percent in 2008, or an average annual percentage point reduction of 0.352. However, this is only 67.2 percent of the desired rate of decline to achieve the MDG of 13.7 percent. In addition, stunting8 among under-fives (32.2%) and wasting9 (7.5%) are at high levels. Thinness is also prevalent among school-age children (8.1%). About 26.3 percent of pregnant women are nutritionally at-risk, with low weight-for-height levels.

54 percent of the total health expenditure comprised out-of-pocket expenses, and only 9 percent from social health insurance.

7 BDR refers to the cumulative likelihood that any Filipino is (a) eligible to claim; (b) aware of entitlements and is able to access and avail of health services from accredited providers; and (c) is fully reimbursed by PHIC as far as total health care expenditures are concerned.8 Stunting is an indication of prolonged deprivation of food and frequent bouts of infections.9 Wasting is an indication of lack of food or infection in the immediate past.


Overweight and obesity is prevalent among adults, at 26.6 percent based on the National Nutrition Survey of 2008 (Annex 8.7). The prevalence of overweight and obesity among children less than five years old has increased three-fold between 1990 (1.1%) and 2008 (3.5%). Among children aged 6-10 years old, overweight and obesity increased from 0.1 percent to 1.1 percent in 2008 (based on International Reference Standards).

Micronutrient deficiencies continue to be a public health concern, especially among young children and pregnant women. About 15.2 percent of children 6 months to 5 years old were vitamin A-deficient (Food and Nutrition Research Institute, 2008). Iron deficiency anemia among various groups remains very high (based on WHO classification), specifically among infants 6-11 months old (55.7%); children 12-23 months old (41.0%); and pregnant women (42.5%). Iodine deficiency is another public health problem among pregnant and lactating women, with the average of 105 ug/L median urinary iodine excretion not reaching the WHO-recommended level of 150 ug/L.

Hunger is another serious concern. While the percentage of Filipino households with inadequate caloric intake decreased from 69.4 percent in 1990 to 66.9 percent in 2008, quarterly surveys on hunger by the Social Weather Stations (SWS) since 1998 showed that the hunger situation has been volatile within a year, characterized by spikes and dips. However, the subsistence incidence10 of families decreased from 8.7 percent in 2006 to 7.9 percent in 2009, or from 11.7 percent of the population in 2006 to 10.8 percent in 2009.

The current population growth rate (PGR) of 2.04 percent remains high and means 1.8 million Filipinos are added

every year. At this rate, the population will double in 34 years. This has also contributed to the high dependency ratio of 69 percent as of 2000, with a youth dependency ratio at 62.6 percent and an elderly dependency ratio of 6.5 percent. This means that every 100 persons in the working age group (15-64 years) have to support about 63 young dependents and about six elderly dependents. Dependency reduces growth in savings and funds for investment in productive capacity. In turn, underinvestment reduces overall economic growth and prospects for poverty reduction.11

The actual fertility rate of 3.3 children is one child higher than the desired fertility rate of 2.4. The biggest difference between actual and wanted fertility is most evident among women with lower education achievement and incomes. Based on the 2008 National Demographic and Health Survey (NDHS), the country’s contraceptive prevalence rate (CPR) was only 51 percent. It is a source of concern that the level of unmet need has increased from 17 percent in 2003 to 22 percent in 2008.

Although the DOH has continued to implement reforms, more effective mechanisms are needed to further enhance the health system. Areas needing improvements include health financing in local health facilities and medical centers, and preventive measures to reduce noncommunicable diseases, such as diabetes mellitus, hypertension and trauma. Moreover, the health information system, including research, should be strengthened, in order to ensure that policies and programs are based on evidence and limited resources are used effectively and efficiently.

The country’s current population growth rate of 2.04 percent remains high and means an additional 1.8 million Filipinos every year.

10 Subsistence incidence refers to the proportion of families (or population) with per capita income less than the per capita food threshold to the total number of families (population). (NSCB)11 See “The Population-Poverty Nexus” by Balisacan, Mapa & Tubianosa, 2004.


Education, Training and Culture

Based on the 2008 Functional Literacy, Education and Mass Media Survey (FLEMMS), about 58 million out of the estimated 67 million Filipinos aged 10 to 64 years old (86.4%). This is a slight increase from 84.1 percent in 2003. Basic literacy, on the other hand was estimated at 95.6 percent. Literacy is much higher among those in the highest income stratum and who have completed high school or higher education. Some Filipinos who have little or no formal schooling, however, may have also gained functional literacy through alternative learning sources, such as the media.

Despite past efforts to increase access to formal basic education, the country continues to confront the challenge of ensuring greater participation of all school-aged children, especially in the elementary level. In school year (SY) 2009-2010, the Net Enrolment Rates (NER) at the elementary and secondary levels were 85.0 percent and 62.4 percent, respectively, which is far below the MDG and Education For All (EFA) targets. The cohort survival rate reached 74.4 percent for elementary and 78.5 percent for secondary in 2009, with completion rates recorded at 72.2 percent for elementary and 73.7 percent for secondary education

The elementary completion rate level was still far from the EFA target of 81.0 percent in 2015, but the secondary completion rate almost reached the 2015 EFA target of 75.27 percent. The drop-out rate, on the other hand, was still a high of 6.3 percent for the elementary level and 8.0 percent for high school, despite free provision of education at those levels. This was due to poverty, poor health, peace and order problems in some areas, and the prevalence of child labor.

The National Achievement Test (NAT) results for the elementary level showed

a substantial improvement from a mean percentage score (MPS) of 58.7 in 2004 to 68.0 in 2009. In contrast, the NAT MPS in high school declined slightly from 46.8 to 45.6 during the same period.

A total of 76,710 new classrooms were constructed from 2004 to 2010, exceeding the yearly minimum target of 6,000. However, classroom gaps still persist due to the increasing student population and damages caused by natural disasters. Classroom shortage in 2011 is estimated at 113,000. Moreover, there were wide disparities in classroom-student ratios across regions, with a 1:78 ratio in elementary in NCR and 1:82 in high school in the Autonomous Region in Muslim Mindanao in SY 2009-2010. The national average of teacher-student ratios in SY 2009-2010 stood at 1:36 for elementary and 1:38 for secondary levels, but wide disparities again existed across schools.

The number of barangays without access to elementary school was reduced significantly from 1,617 in 2001 to only 227 in 2008. Access also improved dure to more high school students benefitting from the Education Service Contracting scheme and the Education Voucher System. Of the 250,000 target beneficiaries for the period of 2004 to 2009, a total of 153,694 grantees (62%) benefited from these programs.

In line with the institutionalization of the Early Childhood Care and Development (ECCD) Law, 99 percent of provinces and all cities already implemented ECCD in varying degrees. However, the actual gross enrolment rate in public and private preschools for 4-5 years old reached only 24.69 percent in 2008, up from 19.23 percent in 2004. The Department of Education (DepEd), for its part, provided preschool education to around 1.4 million children. Over the same period, the percentage of Grade 1 pupils with ECCD experience improved from 55.98 percent to 64.62 percent.

There was a steady increase in the number of learners served by both the DepEd and

Based on the 2008 Functional Literacy, Education and Mass Media Survey, about 58 million out of the estimated 67 million Filipinos aged 10 to 64 years old (86.4%). This is a slight increase from 84.1 percent in 2003. Basic literacy, on the other hand was estimated at 95.6 percent.


Indicators 2004 2005 2006 2007 2008 2009

ELEMENTARYNet Intake Rate in Grade 1 41.3 36.6 39.7 45.6 48.4 56.3 Male 37.5 33 36.2 43.4 46.4 54.6 Female 45.3 40.5 43.5 48.0 50.5 58.0Gross Enrolment Rate 104.2 101.1 99.9 102 102.1 100.8 Male 104.9 101.9 100.7 102.9 103.3 102.1 Female 103.5 100.3 99.0 101.1 100.8 99.5 Net Enrolment Ratio 87.1 84.4 83.2 84.8 85.1 85 Male 86.17 83.56 82.39 84.01 84.86 85.0 Female 88.08 85.35 84.08 85.72 85.71 85.0Cohort Survival Rate 71.3 70 73.4 75.3 75.4 74.4 Male 66.1 65.5 68.8 70.9 71.5 69.9 Female 77.2 75.0 78.6 80.1 79.7 79.4Completion Rate 69.1 68.1 71.7 73.1 73.3 72.2 Male 63.6 63.3 67.3 68.4 69.1 67.4 Female 75.2 73.5 76.7 78.3 77.9 77.5Dropout Rate (School Leaver) 7 7.3 6.4 6 6 6.3 Male 8.4 8.6 7.6 7.2 7.1 7.5 Female 5.4 6 5 4.7 4.9 4.9Achievement Rate (Grade 6 NAT MPS ) 58.73 54.66 59.94 64.81 66.33 68.00 Male 57.10 52.89 58.59 63.73 64.38 66.65 Female 60.29 56.58 61.81 65.87 66.72 69.36SECONDARYGross Enrolment Rate 83.9 80.5 79.5 81.4 82.9 82.2 Male 80.2 77.0 76.4 78.7 80.6 80.2 Female 87.8 84.1 82.6 84.2 85.3 84.1 Net Enrolment Ratio 60 58.5 58.6 61.9 60.7 62.4 Male 55.0 53.7 53.9 57.4 56.4 57.9 Female 65.0 63.5 63.4 66.6 65.2 67.0 Cohort Survival Rate 78.1 67.3 77.3 79.9 79.7 78.5 Male 73.3 61.5 72.7 75.21 75.5 74.2 Female 82.8 73.0 81.8 84.5 83.9 82.8 Completion Rate 72.4 61.7 72.1 78.7 75.2 73.7 Male 66.9 55.1 67.2 71.6 70.4 69.1 Female 77.8 68.1 77.0 86.0 79.9 78.3 Dropout Rate (School Leaver) 8 12.5 6.6 7.5 7.5 8.0 Male 9.9 15 7.5 9.3 9.1 9.7 Female 6.1 10.1 5.9 5.6 5.8 6.2Achievement Rate (Year II NAT MPS)* 46.80 46.97 46.64 49.26 47.4 45.55 Male 45.83 45.44 44.81 47.84 44.89 43.95 Female 47.61 48.31 48.29 50.45 48.32 46.98

Table 8.1. Formal Basic Education Performance Indicators, by Sex: 2004-2009

Source: DepEd; *Administered to 4th year students in 2004


various alternative learning system (ALS) providers. From 2005 to 2009, 631,914 and 418,108 enrollees were recorded under the DepEd-delivered and DepEd-procured ALS programs, respectively. However, only 74 percent of these enrollees completed the DepEd-delivered and 72 percent the DepEd-procured ALS programs. Despite its vast potential, the ALS has yet to maximize the full potential of nonschool-based learning schemes in universalizing functional literacy.

In culture and the arts, the National Heritage Act (RA 10066) was enacted in 2009 to protect, preserve, conserve and promote the nation’s cultural heritage, its property and histories, and the ethnicity of local communities; establish and strengthen cultural institutions; protect cultural workers and ensure their professional development and wellbeing. Moreover, more than 2,000 projects nationwide were approved to be funded by the National Endowment Fund for Culture and the Arts (NEFCA) from 2007 to 2010.

In sports, the Short-Term Philippine Sports Development Plan: 2008-2010 was formulated to carry out systemic institutional reforms that rationalized resource allocation. While the Plan was approved through Resolution No. 2, Series of 2008 by the NEDA-Social Development Committee, most of the envisioned institutional reforms have not been implemented due to changes in leadership.

Enrolment in middle-level human resource development via technical and vocational education and training (TVET) increased by 27.38 percent, from 1.68 million in 2004 to 2.14 million in 2007. However, it declined to 2 million in 2008 and 1.98 million in 2009, as a result of efforts to improve quality assurance. On the other hand,

enrolment in higher education rose moderately from 2.40 million in 2004 to 2.62 million in 2009. The number of graduates across all disciplines likewise increased from 409,628 to around 469,654 in the same period, or by 14.65 percent.

Based on the 2008 Impact Evaluation Study (IES) commissioned by TESDA, the absorption rate12 of TVET graduates (as a percentage of the labor force) was 55.1 percent, which is less than the 2005 figure of 64.6 percent. The decline can be attributed, among others, to the effects of the global financial crisis that slowed down economic activities and resulted in job losses, skills mismatch between the requirements of the available jobs and the skills possessed by workers, and geographical mismatch between locations of job opening and job seekers.

Increased access to higher education and middle-level skills development was made possible through the provision of various scholarships and student financial assistance programs by CHED and TESDA, such as the Private Education Student Financial Assistance Program (PESFA), ADB-assisted Technical Education and Skills Development Program (TESDP), President Gloria Scholarship (PGS) Program and Ladderized Education Program (LEP).

The PGS, a scholarship program intended to provide interventions to meet the need for critical skills and drive TVET provision to highly in-demand jobs, reached more than one million scholars from 2006 to 2009. The program was provided an increased budget of PhP5.6 billion in 2009, in view of the government’s commitment to job generation through skills enhancement and investment in human capital. However, the PGS had its own share of operational problems and drawbacks, ranging from increased dropout rate and low employment of graduates. There is a need to introduce reforms in the targeting and selection of beneficiaries, fund disbursement, accountability and program management.

12 Absorption rate refers to the ratio of employed and the total number of TVET graduates.


Another major accomplishment in the subsector is the institutionalization of the ladderized system between TVET and higher education through EO 358 in 2005. The LEP covered 1,330 ladderized education programs in eight priority disciplines (information technology, hotel and restaurant management and tourism, engineering, health, education, maritime, agriculture, and criminology). Complementing this is the DOST-SEI, which administered demand-oriented science and technology (S&T) scholarships through their Merit Scholarship and financial assistance programs. The latter supports the education of poor, talented and deserving students in the priority degree courses of basic and applied sciences, engineering and science teaching. In 2009, about 4,257 scholarship qualifiers nationwide were announced, thus increasing the number to a total of 11,428 scholars.

To ensure a competent workforce responsive to the quality standards of industries, the TVET subsector through TESDA implemented quality assurance measures through a mandatory assessment of TVET graduates in programs covered by the promulgated training regulations. The number of trainees who underwent competency assessment and certification peaked to 836,131 in 2009. Of these, a total of 690,836 workers were certified across all occupations, representing a certification rate of 82.62 percent.

According to the 2007 Annual Poverty Indicators Survey (APIS), the proportion of dropouts was worst at the tertiary level, or among the 16-24 age group, particularly in degree programs, at 65.8 percent. This was mainly due to the high cost of education that had to be fully shouldered by the households. Access to tertiary education for students from poor families was possible through publicly-funded scholarships and other student financial assistance programs.

The challenge for the tertiary education is not just broadening but rationalizing the access of the economically and socially-disadvantaged and potentially-restive population. The CHED recently rationalized and streamlined the guidelines of its student financial assistance programs (StuFAPs). However, these guidelines only subsumed CHED-administered StuFAPs, and do not substantially address major government-wide scholarship issues. Particularly, the efficacy, usefulness and viability of student loan programs have not improved remarkably through the years.

Significantly, the need to produce enough competent and skilled workforce that will match domestic needs has become much more compelling. Faced with the challenge of competitiveness and the diversifying industry needs, the government continuously instituted

Faced with the challenge of competitiveness and the diversifying industry needs, the government continuously instituted programs and provided the critical resources for skills upgrading and intensification in both high- and middle-level professions.

Year 2005 2006 2007 2008 2009

TESDA Male 673,353 694,745 856,965 805,567 893,091Female 1,010,029 1,042,120 1,315,449 1,208,353 1,091,555Total Enrolees 1,683,382 1,736,865 2,142,414 2,013,920 1,982,435Graduates 1,154,333 1,340,620 1,702,307 1,812,528 1,903,793

Academic Year 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009

CHED Male 1,100,199 1,130,360 1,194,701 1,211,108 1,199,247Female 1,302,116 1,352,914 1,409,748 1,443,186 1,426,138Total Enrolees 2,402,315 2,483,274 2,604,449 2,654,294 2,625,385Graduates 409,628 421,444 444,427 444,815 469,654

Table 8.2. Enrolment in Tertiary Level of Education, by Sex: Academic Years 2004-2009

Sources: TESDA, CHED


Program(in households assisted)

AgencyYear

2004 2005 2006 2007 2008 2009 2010 TotalDirect Housing Provision

1. NHA Housing Production NHA 20,180 39,786 37,601 41,528 47,112 29,413 23,276 238,896

Resettlement 11,760 16,960 15,390 28,655 36,830 22,044 18,740 150,379

Slum Upgrading 1,395 4,136 1,338 3,707 6,231 2,187 2,068 21,062

Sites and Services 2,036 1,192 2,061 4,036 1,361 1,463 1,142 13,291

Core Housing 2,871 1,033 927 721 41 456 572 6,621

Medium-Rise Housing 0 0 105 60 0 0 0 165

Other Housing Assistance 2,118 16,465 17,780 4,349 2,649 3,263 754 47,378

2. Community Mortgage Program (CMP) SHFC 14,129 14,199 13,783 11,819 9,169 10,022 7,109 80,230

3. Retail and Developmental Financing 44,614 39,138 33,427 48,020 62,846 75,328 118,785 422,158

End-User Financing HDMF 39,562 37,175 33,066 47,367 62,507 74,973 56,696 351,346

GFIs End-User Financing

LBP 78 37 65 103 186 281 243 993

SSS 187 91 47 37 62 74 50 548

DBP 66 0 0 220 16 0 11,300 11,602

GSIS 4,721 1,835 249 293 75 0 50,496 57,669

4. Provision of Secure Tenure

Proclamations HUDCC 44,248 11,784 15,082 51,668 6,504 5,286 100 134,672

Total Direct Housing Provision 123,171 104,907 99,893 153,035 125,631 120,049 149,270 875,956

Table 8.3. Direct Housing Accomplishments

Source: HUDCC

programs and provided the critical resources for skills upgrading and intensification in both high- and middle-level professions. Post-basic education funding has pointed to the need for students to be channeled to fields that have clear local demand, such as emerging and critical S&T fields.

The education and training sector remains confronted with the following issues and challenges: (a) limited participation of the industry sector in developing competency standards and curricula; (b) societal bias against TVET and insufficient social marketing, particularly among basic education students and their parents; (c) the need to upgrade the quality of higher education programs, including S&T courses, and make them internationally comparable; and (d) continuing job-

skills mismatches, owing to low quality and relevance of education and training programs, alongside lower absorptive capacity of the economy.

Housing and Urban Development

With an enormous total housing need of 3.7 million as of 2010, a total of 812,463 housing and shelter security units (i.e., house and/or lot) were provided from 2004 to 2010.

Indirect housing assistance (i.e., provision of retail and developmental guaranties, issuance of licenses to sell and assistance in comprehensive land use planning) delivered both modest and better-than-expected outputs. Against a target of 275,649 retail and developmental guaranties, the HGC guaranteed a total of 168,347 housing loans for an accomplishment rate of 61


RegionYear

Total2011 2012 2013 2014 2015 2016

Philippines 1,380,537 1,173,456 997,438 847,822 720,649 612,552 5,732,454NCR 418,328 355,579 302,242 256,906 218,370 185,614 1,737,039

CAR 10,035 8,530 7,250 6,163 5,238 4,453 41,669

I – Ilocos 48,323 41,075 34,913 29,676 25,225 21,441 200,653

II – Cagayan Valley 29,582 25,145 21,373 18,167 15,442 13,126 122,834

III – Central Luzon 112,675 95,774 81,408 69,197 58,817 49,994 467,865

IV-A – CALABARZON 158,723 134,915 114,677 97,476 82,854 70,426 659,071

IV-B – MIMAROPA 27,696 23,542 20,010 17,009 14,457 12,289 115,003

V – Bicol 66,307 56,361 47,907 40,721 34,613 29,421 275,329

VI – Western Visayas 90,111 76,594 65,105 55,339 47,039 39,983 374,171

VII – Central Visayas 78,934 67,094 57,030 48,475 41,204 35,023 327,761

VIII – Eastern Visayas 44,759 38,045 32,338 27,488 23,364 19,860 185,854

IX – Zamboanga Peninsula 30,199 25,669 21,819 18,546 15,764 13,399 125,396

X – Northern Mindanao 54,446 46,279 39,337 33,437 28,421 24,158 226,078

XI – Davao 67,911 57,724 49,066 41,706 35,450 30,132 281,989

XII – SOCCSKARGEN 47,291 40,197 34,168 29,043 24,686 20,983 196,368

XIII – CARAGA 38,025 32,321 27,473 23,352 19,849 16,872 157,893

ARMM 57,191 48,612 41,320 35,122 29,854 25,376 237,476

Table 8.5. Total Housing Need: 2011-2016

Source: HUDCC

percent. The HLURB issued a total of 1,294,985 licenses-to-sell exceeding its target of 1,028,853 licenses for an accomplishment rate of 126 percent which indicates a robust housing construction and completion of housing units. Moreover, the HLURB provided assistance to 419 LGUs in updating and formulating their Comprehensive Land Use Plans (CLUPs) against a target of 432. (Table 8.4).

The government provided housing tenure assistance through the following


AgencyYear

2004 2005 2006 2007 2008 2009 2010 TotalIndirect Housing Provision

1. Home Guaranty Corporation

Retail Guaranty HGC 5,493 12,536 16,282 15,680 12,089 15,709 77,609 155,218

Developmental Guaranty 157 32 5,217 925 311 17 6,470 13,129

Securization 24,678

2. Housing and Land Use Regulatory Board

License To Sell HLURB 172,883 167,229 187,001 172,967 220,756 200,124 174,025 1,294,985

CLUP Assistance (LGUs) 123 104 106 102 104 103 110 752

Source: HUDCC

Table 8.4. Indirect Housing Accomplishments

reform measures: (a) loan interest-rate reductions that brought down the lowest socialized housing package to 3 percent per annum; (b) extension of payment terms for all housing loans from 25 up to 30 years; (c) reduction of loan requirements from 15 to eight; and (d) reduction of loan processing time from three months to seven working days for developer accounts with buy-back guarantee, and 30 days for retail and developer accounts without buy-back guarantee.


2000 2006 Growth (in %)

All HouseholdsPhilippines 3.60 3.80 5.55Urban 3.48 5.65 62.35Metro Manila 5.30 9.60 81.13

Table 8.6. Proportion of Households in Informal Settlements

Sources: FIES, NSO

The housing sector, however, confronts the following key challenges:

Meeting the Enormous Housing Need and Demand

Total housing need, which includes housing backlog and housing for new households, is estimated to reach about 5.8 million units by 2016 (Table 8.5). The National Urban Development and Housing Framework (NUDHF) 2009-2016 indicates that Regions 3, 4B and NCR account for about half of the total housing need.

Rapid Growth of Informal Households and Settlements

Informal settlements have grown by leaps and bounds. In Metro Manila, households in informal settlements increased by more than 81 percent between 2000 and 2006. With rural-urban migration expected to continue, and six out of ten Filipinos living in urban areas, addressing the housing problem must be embedded within a larger urban development framework for environmental sustainability. While the MDGs on access to safe drinking water and sanitary toilets have already been achieved, land use and green technology for housing construction have can be tackled only within an action plan for climate change adaptation including disaster risk management.

Strained Basic Shelter, and Urban Services and Fiscal Constraints

The phenomenon of urban slums and informal settlements have been characterized by unsanitary conditions, congestion and limited access to basic urban services, like health centers, schools, waste disposal and safe water supply. While the housing sector is expected to contribute in attaining the MDG target on improving the lives of at least 100 million slum dwellers worldwide by 2020, the formulation of the National Slum Upgrading Strategy and the setting of national targets for urban renewal and slum upgrading efforts should allow a more systematic and detailed assessment of the Philippines’ contribution to the global goal in the coming years.

The annual public expenditure for housing in the Philippines, which is approximately less than 1 percent of the total government expenditures, accounts for less than 0.1 percent of GDP, which is one of the lowest in Asia (Habito, 2009). The limited budget, unclear compliance of the provision of the Urban Development and Housing Act (i.e., allocation of at least 20 percent of total project cost in every housing development for socialized housing finance), and reliance to the social insurance system to finance housing needs effectively limit the access of the poor to housing assistance. Government shelter strategies are focused on increasing housing production either by direct provision of housing units/loans or by giving incentives to developers who cater mainly to the formal sector and the middle/high-


income households. These approaches do not address the fundamental issues of land supply constraints and financing, weak institutional mechanisms in housing construction and the financial environment, and unclear focus on poverty reduction (Ballesteros, 2010).

The HGC must be strengthened through equity infusion from the government to establish a stronger guaranty system that will encourage the funding of socialized and low-cost housing projects by the private sector and housing developers. Funds for housing can be secured and sustained, only if there is a viable system of guarantees for both the government and private financial institutions that cater to the funding requirements of housing production and end-user financing. The HGC can guaranty loans granted by financial institutions and developers for housing up to 20 times its net worth.

Social Protection

The number of poor Filipinos increased from 22.2 million in 2006 to 23.1 million in 2009. Filipinos unable to meet their daily dietary requirements slightly decreased from 9.9 million in 2006 to 9.4 million in 2009. The poverty incidence and the number of the poor from all sectors increased between 2003 and 2006 (Annex 8.8).

Fisherfolk, farmers and children were the three poorest population subcategories in 2006, with poverty incidences of 49.9 percent, 44 percent and 40.8 percent, respectively. Children and women accounted for the largest number of the poor, at 14.4 and 12.8 million respectively in 2006 (Annex 8.8). The slow rate of poverty reduction drew greater attention to the need to protect the poor and vulnerable.

Wide disparities across regions were also evident. Among regions, ARMM had the highest poverty incidence in 2006 according to six basic sector categories, namely children, farmers, youth, urban population, and senior citizens. CARAGA had the highest poverty incidence under fisherfolk and migrant and formal sectors (Annex 8.9). Meanwhile, NCR posted the lowest poverty incidence in five sectors, namely children, women, youth, senior citizens and migrant and formal sector workers (NSCB, 2006).

In terms of number, the children, women and urban sectors headed the list of poor basic sectors (Annex 8.10). Disparities across regions were also evident. Region 5 had the most number of poor children and women; ARMM had the most number of poor farmers and fisherfolk; Region 6 had the most number of poor youth and migrant and formal workers; NCR had the most number of urban poor; and Region 7 had the most number of poor senior citizens. Meanwhile, CAR had the least number of poor children, women, youth and urban poor.

The increase in poverty incidence was accompanied by the rise in the percentage of vulnerable households13 (Albert & Ramos, 2010). The percentage of the population belonging to highly vulnerable households rose from 36.21 percent in 2003 to 50.70 percent in 2006. Conversely, the percentage who were not vulnerable declined sharply from 31.44 percent in 2003 to 18.99 percent in 2006. This trend implies that individuals and households, whether poor or nonpoor, face various social risks and vulnerabilities (e.g., loss of income, unemployment, natural disaster, among others), especially during economic downturns and

The slow rate of poverty reduction drew greater attention to the need to protect the poor and vulnerable.

13 Households are classified as vulnerable if the probability of their becoming poor is greater than the national poverty incidence. The vulnerable are further categorized into highly vulnerable if the probability of their being poor is greater 50 percent and relatively vulnerable otherwise.


crises that can push them down to poverty. Owing to the lack or absence of appropriate social protection intervention, households resorted to coping strategies that tend to erode human capital, such as reducing food consumption, withdrawing children from school, reducing health care investments, selling assets and using up savings, among others (Ahmed, et al., 2004)

The current social protection system is characterized by a series of fragmented and uncoordinated programs. The multiplicity of programs and government agencies involved often result in poor coordination, redundancy in providing services or overlapping of program beneficiaries. For example, 21 agencies were involved in the implementation of 65 social protection programs and projects (Development Academy of the Philippines, 2009). Social protection programs were found to be inadequately funded, and most are short-lived (Manasan, 2009).The country’s national government spending on social protection was much lower (0.8% of GDP in 2007) than the mean spending of 87 developing and transition countries on safety nets (1.9% of their GDP from 1996-2006) (Weigand & Grosh Survey, 2008).

The benefits of existing social protection programs are compromised by weak targeting systems resulting in high leakage to the nonpoor, undercoverage of the poor, low program impact and wastage of scarce resources. For example, the National Food Authority (NFA) rice price subsidy showed a high leakage rate of 71 percent, because it is an untargeted program that benefits all households (Manasan, 20).

Existing social protection programs are inadequate in terms of coverage. While partnership with nongovernment organizations (NGOs) and other stakeholders have succeeded in making social services accessible to the poor, NGOs tend to flock to selected advocacies like children’s causes, leaving behind other sectors, such as the disabled and elderly wanting (ADB, 2009).

Moreover, impact assessment of many programs is difficult, due to their lack of built-in monitoring and evaluation components. There is a dearth of up-to-date and disaggregated data on vulnerable groups, often making them invisible in statistics.

The industrial and occupational adjustments necessitated by industrial restructuring, the globalized system of production, various international agreements, and the damage wrought on incomes and livelihoods by natural calamities highlight the need to protect those in contractual employment, in seasonal work, and at risk from displacement or facing potential income losses. The limited coverage of the social security schemes (i.e., Government Service Insurance System, Social Security System or SSS) means that the larger part of the workforce found in the informal and vulnerable occupations are marginalized. Although there have been attempts by PhilHealth to cover the poor and unemployed, as well as workers in the informal sector (IS) and those working overseas, universal membership has yet to be achieved. Social welfare and safety nets also need to improve programs and services standards, and focus on the poorest among the basic sectors.

To improve the effectiveness and efficiency of the social protection interventions, the government launched the CCT program called the Pantawid Pamilyang Pilipino Program. Further work is needed, however, to consolidate social protection programs and complement these with the CCT. The bigger challenge

The bigger challenge is the expansion of the CCT to make it the core program in the convergence of social protection initiatives to ensure sustainability of beneficiaries’ gains.


is the expansion of the CCT to make it the core program in the convergence of social protection initiatives to ensure sustainability of beneficiaries’ gains.

Children

Children accounted for the largest number of poor persons among the basic sectors, at 13.4 million in 2003 and 14.4 million in 2006. The proportion of poor children living in rural areas was twice as much as those living in urban areas. The Child Development Index (CDI)14 fell from 0.779 in 2003 to 0.729 in 2006 (NSCB). Children in especially difficult circumstances include street children, victims of child abuse and commercial sexual exploitation, child victims of prostitution and pornography, children in conflict with the law, children in situations of armed conflict, children with disabilities, child victims of illegal recruitment and trafficking, and child laborers.

Working children are a significant portion of the Filipino workforce. There are about 2.1 million economically active children in the Philippines, aged 5-17 years old, majority of whom were males between 15-17 years old (DOLE-BLES). Across industries, 55.6 percent of the working children were engaged in agriculture, hunting and forestry. A significant portion numbering around 201,000 were employed in private household, a majority of them working as laborers and unskilled workers. Child work affects the performance of children in school resulting in low grades, absenteeism, tardiness, and lack of interest.

Women

While Filipino women may be considered as relatively advanced vis-a-vis women in other developing countries (e.g., in the areas of education, profession, politics

and legislation), they also suffer from domestic violence, economic disadvantages, discrimination at the workplace, exploitation as migrant workers and prostituted women, and displacement brought about by the intermittent wars in conflict-affected areas. In general, women are in disadvantaged position due to differences in gender roles that limit their access to productive resources and basic services.

The number of employed women (13.3 million) was lower than that of men (21.3 million) in the 2009 Labor Force Survey. There was an increasing trend of unpaid workers, 55.8 percent of whom were women. In 2008, 54.7 percent of the total number of female OFWs were laborers and unskilled workers, including domestic helpers, cleaners, and manufacturing laborers. Remittances from female OFWs worldwide were relatively lower than from their male counterparts.

Around 18 percent of elected posts in 2010 were won by women candidates. However, in the judiciary, only 20 percent of total incumbent judges were women. While women were predominant in the government bureaucracy, these occupied mostly the technical or second-level positions.

Regarding violence against women (VAW), the number of cases reported to the police rose 37.4 percent from 2008 to 2009 (Philippine Commission on Women, 2010). While there was a decreasing trend in reported cases from 2001 to 2006, the number rose from 2007 to 2009, with 10,440 VAW cases occurring in 2009. The increase in reported cases may be attributed to more women having been emboldened to report, due to the passage of laws that address sexual and gender-based

14 The CDI is a composite index measuring average achievement in the three basic dimensions captured in the human development index, adjusted to account inequalities between women and men (UNICEF, 2010).


to the mainstream labor market because they are disproportionately undereducated, untrained, and socially excluded.

Workers in the Informal Sector (IS) 15

The IS comprises a major portion of the country’s labor force and is recognized as major contributor to the economy. Over the years, however, the informal sector has constantly been confronted with issues. In 2001, the Department of Labor and Employment (DOLE) through, its program entitled “Support for Policy and Programme Development” (SPPD), identified strategic issues confronting the IS. These are the: (a) invisibility of the IS in government statistics and representation in policy-making bodies; (b) lack of access to health and other social protection interventions; (c) lack of access to productive resources; and (d) the need to be organized.

Overseas Filipino Workers (OFWs)

Social security and protection of OFWs are growing concerns, given the limited coverage of the SSS, PHIC and Overseas Workers Welfare Administration (OWWA). Out of 8.6 million overseas Filipinos (OFs) in 2009, 4 million are permanent migrants, 3.9 million are temporary OFWs and 658,370 are irregular migrants. Table 8.7 summarizes the actual OFW membership to institutions that provide social security benefits.

violence. Still, it should be noted that the data reflect only what is reported to the PNP, and there could still be other unreported cases.

The incidence of physical injuries and/or wife battering reported to the PNP has been decreasing since its peak in 2001, with 5,668 reported cases. The decrease may be partly attributed to the enactment of RA 9262, which penalizes abusive husbands and live-in partners. Data on the number of women in extremely difficult circumstances (WEDC) served by DSWD also show a downward direction, from 7,763 cases in 1999 to 5,549 cases in 2007.However, this may have been due to a decrease in the budget of DWSD for WEDC rather than an improvement in the plight of WEDC.

Elderly

In 2003 and 2006, the number of elderly people in the Philippines was estimated at about 5.2 million and 6.3 million, respectively. Some of the risks and vulnerabilities of the elderly included loss of income as a result of retirement, disability and impairment of functions affecting their quality of life, lack of or inadequate health care insurance and lack of adequate living conditions for those who live alone. There was also a rise in the number of elderly persons who were victims of violence and abandonment due to in and out migration of younger family members.

Persons with Disability

There were about one million persons with disability (PWDs) or 1.23 percent of the total 88 million population in 2007 (NSO, 2007). Of these, 50.24 percent were females. It was also estimated that 30 to 40 percent of PWDs were children. PWDs remain among the poorest of the poor. They have insufficient access

Institution Number of OFW

SSS 184,000 (2009)

OWWA 2.2 million (November 2010)

PHIC 2.1 million (2009)

Table 8.7. Summary of Actual OFW Membership

Sources: SSS, OWWA, PHIC

15 Informal sector refers to unincorporated household enterprises, consisting of both informal own-account and enterprises of informal employers (NSCB, 2002).

There is, therefore, a need to review the viability of current social security and welfare fund schemes


There is, therefore, a need to review the viability of current social security and welfare fund schemes, given the limited capacity and resources of the country’s social security and welfare fund institutions. Another challenge is the exclusion of domestic workers, the top occupational category with respect to deployment of landbased OFWs, in most of the social security laws particularly in top destination countries (see Figure 8.3).

Displaced Workers

In 2007 and 2008, around 52,000 workers were permanently displaced due to economic shocks (DOLE-BLES). About 213,417 workers were retrenched by 1,836 firms as a result of the global financial crisis, with 58.1 percent (124,006) being placed under flexible work arrangements, 18.1 percent (38,556) temporarily laid off, and 23.8 percent (50,855) permanently terminated.

While the global financial crisis had a minimal impact on the deployment of OFWs, OWWA and POEA data indicated that 6,957 workers in 327 companies lost their jobs mostly from factories in Taiwan and South Korea. Of this number, nearly two-thirds (4,495) returned to the Philippines (See also Chapter 2).

Workers with HIV and AIDS

From 1984 to January 2011, there were 6,167 reported HIV Ab sero-positive cases in the country based on the DOH National HIV and AIDS Registry. The 25-29 age group registered the most number of cases at 25 percent. Statistics also showed that 25 percent, or 1,539 of those listed in the registry are OFWs, of which 267 were full-blown AIDS cases. This is an indication that HIV and AIDS might be a biomedical problem that has both social and labor implications, particularly because they affect the most productive segment of the labor force.

Victims of Disasters

Natural and man-made disasters are major causes of poverty and vulnerability in the country. An average of 20 typhoons visit the country a year, owing to climate change the effects have become more devastating. The most vulnerable areas of the country are Eastern Visayas, and Southern, Central and Northern Luzon. Victims of disasters, mostly from typhoons and floods, doubled from an average of four million in 1994-1996 to eight million in 2004-2006, most of them in rural areas (ADB, 2007).

Natural and man-made disasters are major causes of poverty and vulnerability in the country.

Figure 8.3. Deployed Landbased OFWs, by Top Occupational Category: 2009

Source: Overseas Employment Statistics, Philippine Overseas Employment Administration

Deployed Landbased OFWs by Top Occupational Category, 2009Housekeeping and related 5127Welders and Flame-cutters 5910Plumbers and Pipe Fitter 7722Laborers/Helpers General 8099Caregivers and Caretakers 9228Wiremen Electrical 9752Charworkers, Cleaners 10056Waiters, Bartenders 11977Nurse Professional 13465Household Service Workers 71557Source: Overseas Employment Statistics, Philippine Overseas Employment Administration

Source: Overseas Employment Statistics, Philippine Overseas Employment Administration

51275910

77228099

9228975210056

1197713465

71

Housekeeping and relatedWelders and Flame-cutters

Plumbers and Pipe FitterLaborers/Helpers GeneralCaregivers and Caretakers

Wiremen ElectricalCharworkers, Cleaners

Waiters, BartendersNurse Professional

Household Service Workers

Deployed Landbased OFWs by Top Occupational Category, 2009


retention16 to be distributed in five years starting from July 2009. At least 40 percent of the said amount has been set aside for the delivery of support services to the beneficiaries. The CARPer Law also stipulates that support services, agrarian justice delivery, and operational requirements of CARP implementing agencies (CIAs) shall be continued even after completion of the LAD component of the CARP.

From 2004 to 2008, the Department of Agrarian Reform’s (DAR) average annual LAD accomplishment rate hit 102 percent against its funded target. In 2009, only 69 percent of the reduced annual LAD target of 85,764 hectares was accomplished.

Operational bottlenecks were encountered, including longer processing due to compliance with the new acquisition requirements imposed under CARPer. Such requirements include landowners’ attestation, Barangay Agrarian Reform Committee (BARC) certification, and oath-taking before the City/Municipal Court Judge. The need to intensify the synergy among CIAs in delivering land distribution commitments continues to be an issue.

Related to LAD is the delivery of agrarian justice, which involves the adjudication of agrarian cases and representation of Agrarian Reform Beneficiaries (ARBs) before quasi-judicial bodies and regular courts. The performance of DAR’s delivery of agrarian justice during the past years has been commendable in terms of solving cases on coverage, land use conversions, land exemptions or exclusions, installation of ARBs to awarded lands, and provision of legal assistance to ARBs despite some challenges, such as lack of personnel, resolution of backlog cases, and budgetary constraints.

Indigenous Peoples

In 2009, there were about 110 ethno-linguistic groups in the Philippines consisting of approximately 14 million indigenous people (IP). IPs are among the discriminated, vulnerable, and marginalized groups, a fact not only seen from various smaller studies but also suggested by the correlation between low human development indicators and high concentration of IPs (Stavenhagen, 2002). The National Commission on Indigenous Peoples (NCIP) reported that provinces with most IPs have high poverty incidence. The lack of power and access to decision making and management processes contribute to the impoverishment of IPs, who mostly live in mountains and have limited access to sustainable livelihood and basic services. They are often victims of armed conflict and human rights abuse.

Asset Reform

Land Acquisition and Distribution

Performance in land tenure improvement (LTI) took an uncertain turn due to the national government’s successive budget reenactments and the lapse of the appropriation cover provided under RA 8532 or the “Act Strengthening Further the Comprehensive Agrarian Reform Program (CARP) Law of 1988.” The declaration of over one million hectares of the land acquisition and distribution (LAD) balance provided policy shifts in the CARP implementation for the next five years. With the signing of the CARP Extension with Reforms (CARPer) Law in 2009, an additional PhP150 billion has been appropriated for the completion of CARPer’s LAD balance of 1,034,661 hectares net of

16 PARC Executive Committee Resolution No. SP-2010-04, establishing and firming up the CARPER gross land acquisition and distribute balance at 1,281,033 hectares of which 1,034,661 is estimated to be net of retention


Studies have confirmed that ARBs are more productive and better off than non-ARBs.17 Agrarian reform communities (ARCs), when properly established and supported, improved their economic conditions, social capital, civic entrepreneurship and democratic participation. Furthermore, the study of Habito, et. al. (2010)18 confirmed that consolidation of output does not require consolidation of ownership in order to realize economic gains from processing or marketing. Institutional arrangements through tie-ups with collective organizations of farmer-beneficiaries are viable alternatives.

Ancestral Domains and Lands

In 1997, the Indigenous Peoples Rights Act (IPRA) was passed, embodying the rights and aspirations of Indigenous Peoples (IPs) and providing the legal framework for the protection and development of Indigenous Cultural Communities (ICCs). Among the rights sought by IPs is the recognition of their ancestral domains (ADs) through the issuance of the certificates of ancestral domain titles (CADTs) and certificate of ancestral land titles (CALTs). CADTs are titles that formally recognize the rights of possession and ownership of ICCs/IPs over their ancestral domains as identified and delineated in accordance with this law, while CALTs refer to titles formally recognizing the rights of indigenous cultural communities (ICCs)/IPs over their ancestral lands.

As of July 2010, 156 out of 286 CADT applications have been approved by the NCIP, while 130 are still in various stages of the titling process. The NCIP also approved 258 CALTs with 8,609 right holders.

The Ancestral Domain Sustainable Development and Protection Plan

(ADSDPP) is a long term comprehensive spatial and development plan with identifiesd programs and projects that strengthen self-governance, build lasting peace and genuine development within ancestral domains of particular ICCs or IP groups. It serves as the community development framework that ensures a participatory process of mainstreaming IP issues and concerns. However, the ICCs/IPs still need technical and financial assistance in the formulation of the ADSDPPs and their integration in the CLUPs and local development plans. The NCIP had already assisted 87 ICCs/IPs in the formulation of their ADSDPPs.

The NCIP also formulated and implemented the guidelines on the Free, Prior and Informed Consent (FPIC). FPIC refers to the consensus of all concerned members of the ICCs/IPs that is determined in accordance with their respective customary laws and practices free from any external manipulation, interference and coercion and obtained after fully disclosing the intent and scope of the project. To date, the NCIP has issued a total of 296 Certificates of Compliance and 1,368 Certificates without Overlap (CEB/Certificates of Non-Overlap) related to FPIC. Concerns exist, however, over the duration of the FPIC process, as well as the internal conflicts within the ICCs utilization of royalties, and the non-implementation by companies operating within ADs of the terms indicated in the memorandum of agreement with the ICCs.

Further, NCIP is mandated to provide legal assistance to enforce the right of IPs to resolve conflicts in accordance with their customary laws pertaining to property rights, claims, ownership,

17 These include the CARP-Impact Assessment Study (Phase I) conducted in 2000, a re-validation of the said study under CARP-Impact Assessment Study (Phase II), the DAR-German Technical Cooperation (GTZ) Study on Post-LAD Scenarios in 2006, the Asset Reform CARD Study by Dr. Cielito Habito in 2008, and the CIRDAP study on Access to Land and Rural Development in the Philippines18 A Comprehensive Study on the Ap¬propriate Economically Viable Land Size by Type of Crop Category Under Varying Bio-Climatic Zones and Techno¬logical Conditions,” led by Dr. Cielito Habito.


hereditary succession and settlement of land disputes within ancestral domains/lands. NCIP handled 8,767 legal assistance to ICCs/IPs before judicial and quasi-judicial bodies since 2004. There are still 265 cases pending before the NCIP regional hearing officers.

Basic services for IPs within their ancestral domains were delivered in accordance with their rights and entitlements. These covered educational assistance; strengthening IP education starting with indigenization of curriculum and learning materials, as well as cultural sensitivity training for teachers; assistance to IP-serving community schools; traditional crafts; livelihood and entrepreneurship; support to cultural festivals/congresses; medical missions and referral system; assistance in emergency situations; and documentation of activities for traditional knowledge and traditional cultural expressions, customary laws and children in armed conflict (CIAC).The delivery of these socioeconomic services was anchored on indigenous knowledge systems and practices (IKSPs) and based on the principles of human rights, cultural sensitivity, gender equality, people empowerment, and sustainable development.

Most IPs/ICCs, however, still lack adequate access to social protection and basic services within their localities and among their particular tribal groups. They also need the negotiation skills and technical know-how on risk and impact assessments, to ensure equitable access-benefit sharing agreements, and the necessary funds for the management and preservation of their ancestral domains.

The representation of IPs in various legislative bodies and other special bodies, as provided under the IPRA, as well as the convening and sustainability of their multilevel consultative bodies, are priority concerns that still need to be fully addressed.

There is also a need for a more updated and disaggregated data on IPs that can serve as basis in the formulation of more appropriate, targeted and updated policies and programs for IPs.

Coastal and Marine Settlement

Based on the 2009 data of the National Mapping and Resource Information Authority (NAMRIA), more than 900 coastal municipalities completed their municipal water delineation. Unfortunately, only 30 of these municipalities passed ordinances on municipal water delineation. Thus, the delineation of municipal waters, as stipulated under the Fisheries Code, has still not been implemented in most coastal municipalities 12 years after its enactment. In areas where municipal waters have been delineated, marked improvements in fish catch and small fishers’ income and illegal fishing apprehension have been observed. Furthermore, the delineation process facilitated the resolution of boundary conflicts among contiguous municipalities, which in turn improved resource management.

The National Anti-Poverty Commission (NAPC) previously advocated the signing of an Executive Order (EO) establishing a task force on fisherfolk settlement, to address the sector’s need for decent human settlement. This was endorsed by the National Agriculture and Fishery Council-Committee on Fisheries and Aquaculture (NAFC-CFA), a private-sector led consultative arm of DA. However, the said EO was not issued.

It is widely acknowledged that climate change will accentuate the damage in low lying coastal communities, as strong typhoons become more frequent and dangerous. The Fourth Assessment Report of the Inter-governmental Panel for Climate Change (IPCC) predicts that low lying regions, particularly in tropical and coastal communities, are likely to be adversely affected by the sea-level rise and temperature increase attributed to climate change. The privatization and

Urban asset reform deals with the provision of security of land tenure to the poor and vulnerable including informal settler families in urban areas.


commercialization of foreshore areas and the indiscriminate designation of freeports and economic zones adds pressure on the coastal community’s productivity and social cohesion, which dislocates small fishing settlements. The government needs data to anticipate adverse consequences and minimize the damage brought about by natural disasters. The absence of mechanisms addressing both the productive and reproductive needs of women fisherfolk is also a concern.

The lack of financial resources and manpower also poses a constraint in the development of the fishery industry, despite the industry’s significant contribution to agriculture’s gross value added.

Urban Asset Reform

Urban asset reform deals with the provision of security of land tenure to the poor and vulnerable including informal settler families in urban areas. These interventions include presidential proclamations of sites for socialized housing, onsite development and services, and resettlement, among others. Presidential proclamations identify and proclaim idle government lands as socialized housing sites for disposition to qualified beneficiaries. Since 2001, the government, through the Housing and Urban Development Coordinating Council (HUDCC), has issued 113 proclamations covering 27,000 hectares, providing security of tenure to about 280,000 informal settler families.

In resettlement, the overriding policy is to improve the quality of life of informal settlers while ensuring maximum retention and minimum dislocation. The national government has implemented a number of resettlement programs, namely the North and South Rail Project, the North Luzon Expressway–C5–South Luzon Expressway, and the relocation of typhoon-related victims. As of November 2010, the government has relocated almost 88,000 families, or 93 percent of total families living along the rail rights-of-way in North Luzon and South Luzon (which are danger

zones), paving the way for development of new transport systems and to provide safer and better homes.

Challenges

Against this backdrop, the Philippines faces the following challenges in the social development sector:

• Unsustained Poverty Reduction. While the Philippines was able to reduce poverty from 1991 to 1997, progress from 1997 to 2009 was sluggish and erratic. From 2006 to 2009, poverty incidence among families decreased from 21.1 to 20.9 percent. In the same period, poverty incidence among population rose slightly from 26.4 to 26.5 percent. This outcome is attributed to the slow growth of incomes, increase in household formation, natural disasters and inflationary pressures mainly from rising fuel and food prices. Moreover, wide disparities across regions, provinces and municipalities continue to exist. There is a need to enhance the government’s overall antipoverty framework and strategy to ensure complementation and synergy of antipoverty programs and projects, and to put in place a unified targeting system that would result in greater impact.

• Slow Progress towards the Attainment of the MDGs. There are still huge gaps in terms of achieving the MDGs. The Philippines lags in achieving universal primary education, improving maternal health and combating HIV and AIDS. At the national level, the Philippines is on track to meet the targets on food poverty, gender equality in education, reducing child mortality, reversing the incidence of and death rate associated with malaria; detection, treatment success and cure rates of tuberculosis cases; and access to sanitary toilet facilities.


• Inadequate Financing for Social Services. The share of the social development in the government’s expenditure increased slightly from 28.9 percent in 2004 to 31.71 percent in 2009. Through the years, education has received the bulk of the share, although it has not satisfactorily met the requirements of access and quality. Meanwhile, the housing sector had less than one percent of the national budget. Competing claims within the social sector also require more rigorous prioritization and efficient resource utilization for equitable access to social services and assets that will contribute to poverty reduction, job creation and inclusive growth.

• High Population Growth Rate. Although the average annual population growth rate of the country from 2000-2007 decreased to 2.04 percent from 2.34 percent in 1990-2000, the population is still expected to double in 34 years. Such a high population growth is likely to worsen existing poverty by absorbing scarce resources that might otherwise be directed to investment and productive activities. The limited government may encounter increasing difficulties in raising the quality of basic services provision, when its resources are already strained to cover a rapidly growing population.

• Lack of Access to Productive Resources and Employment Opportunities. Poverty is largely caused by the lack of access to productive resources, employment and livelihood opportunities. From a double-digit unemployment rate of 11.9 percent in 2004, the unemployment rate declined to 7.1 percent in October 2010. The underemployment rate has also slightly improved from 19.0 percent in 2009 to 18.5 percent in July 2010. To effectively reduce poverty and inequality, however,

generation of an increasing number of highly productive and quality jobs and entrepreneurial opportunities needs to be sustained.

• Adverse Effects of Disasters and Shocks. The confluence of natural and man-made disasters and calamities reverse the pace of development and require the allocation of more resources for relief and rehabilitation efforts. Natural disasters (e.g., typhoons, earthquakes, volcanic eruptions) and the onslaught of extreme weather conditions (e.g., El Niño and La Niña) caused by global warming and climate change, coupled with man-made conflicts fueled by insurgency and unpeace, disrupt the socioeconomic progress in conflict-stricken areas of the country.

The theme “Gaganda ang buhay kung may bahay at hanapbuhay” emphasizes the need for security of tenure and livelihood opportunities in human settlements.


Strategic FrameworkGoals

The overriding goal of social development is to improve the quality of life of all Filipinos. In pursuit of the MDGs, the social sector shall seek to reduce poverty and inequality, universalize elementary education and health care, achieve gender equality, ensure environmental sustainability, and foster a global partnership for development.

Universal Health Care shall be directed towards ensuring the achievement of better health outcomes, fair health financing and responsive health system that provide all Filipinos, especially the disadvantaged groups, with equitable access to quality health care.

The goals of education, training and cultural development are to: (a) make every Filipino functionally literate both through the schools and non-school learning modalities; (b) achieve a higher level of productivity, international competitiveness, industry relevance and social responsiveness in the development of both middle-level skills and the high-level professions; and (c) develop, promote and inculcate a strong sense of nationalism by utilizing the media, arts and sports in strengthening ownership of cultural heritage and tradition.

Housing and urban development envisions to provide families not just with the infrastructure of a house, but the framework of a home; to build not just a neighborhood, but a real harmonious community. The theme “Gaganda ang buhay kung may bahay at hanapbuhay” emphasizes the need for security of tenure and livelihood opportunities in human settlements. The promotion of local shelter development and strengthening of public-private partnerships (PPPs) are expected to help achieve sustainable communities, urban competitiveness, housing affordability, effective governance and poverty reduction. Moreover, the housing sector aims to achieve the MDG of significantly improving

the lives of at least 100 million slum dwellers worldwide by 2020. With the formulation of the National Slum Upgrading Strategy, a systematic focusing of programs and coordination of efforts is expected to be realized.

The goal of social protection is to empower and protect the poor, vulnerable and disadvantaged individuals, families and communities from individual life cycle, economic, environmental and social risks.

Finally, the goal of asset reform is to recognize, protect and empower ICCs/IPs’ rights and welfare, as well as to improve and guarantee the security of land tenure of ARBs.

Targets


This Philippine Development Plan affirms the government’s commitment to attain the MDGs. One of the main thrusts of the Universal Health Care approach is geared towards this end, including program targets on lifestyle-related diseases. Other targets pertain to programs on health insurance, nutrition and reproductive health.


By 2016, the country shall achieve a universal and at least a 93 percent participation or net enrolment rate in the elementary and secondary levels, respectively. A gender parity index (GPI) of 1 shall be targeted in basic education indicators. Likewise, TVET and higher education subsector shall also increase enrolment and graduation rate by 2016.

Social protection sector shall ensure the empowerment and protection of the poor, vulnerable and disadvantaged individuals from all types of risks.


Indicators Baseline 2011 2012 2013 2014 2015 2016

MDG IndicatorsPrevalence of underweight children under five years of age (in %) 20.6 (2008) 17.6 16.6 15.6 14.6 13.7 12.7

Proportion of households with per capita intake below 100% dietary energy requirement (in %) 66.9 (2008) 54.1 49.9 45.6 41.4 37.1 32.8

Under 5 mortality rate(per 1,000 live births) 34 (2008) 31.6 30.4 29.2 28 26.7 25.5

Infant mortality rate(per 1,000 live births) 25 (2008) 23 22 21 20 19.0 17

Maternal mortality ratio(per 100,000 live births)

95-163 (2010, NSCB) 97 84 70 61 52 50

Contraceptive Prevalence Rate(all methods) 51 (2008) 56.2 57.9 59.7 61.4 63

Proportion of births attended by a health professional (in %) 62 (2008) 69 72 75 80 85 90

Proportion of births delivered in health facilities (in %) 44 (2008) 69 72 75 80 85 90

HIV Prevalence* Less than 1% (2009) <1% <1% <1% <1% <1% <1%

Malaria morbidity rate per 100,000 22 (2009) 16.9 14.3 11.8 9.2 6.6 4Malaria mortality rate 0.03 (2009) <.03 <.03 <.03 <.03 <.03 <.03TB prevalence rate per 100,000 486 (2008) 446 434 422 410 398 387TB mortality rate per 100,000 41 (2007) 36 35 35 34 33 33TB case detection rate 73 (2008) 79 81 83 84 85 85TB cure rate 79 (2008) 82 83 83 84 85 85Proportion of population with access to safe water (households) (in %)

82.3 (FHSIS 2008) 83 84 85 86 86.9 88

Proportion of population with access to sanitary toilet facilities (households) (in %)

76.8 (FHSIS 2008) 79 81 83 84 85.9 88

Population with access to affordable essential drugs (in %)

73 (2009) 75 78 82 84 85 95

Other Indicators

Population Growth Rate2.04 (2000-

2007) 1.48-1.82

Total Fertility Rate 3.3 (2008) 2.4-2.96Percentage of out of pocket payment from total health care expenditure

54.3 (2007) 41 35

Benefit Delivery Rate (NHIP) 7.7 (2008) 15 30National Health Insurance Program (NHIP) Coverage 53 (2008) 70 85 100 100 100 100NHIP Enrollment rate 74 (2010) 85 90 100 100 100 100Ratio of accredited health facilities to total number of licensed health facilities

90 (2010) 95 95 95 95 95 95

Mortality rate from lifestyle related and non communicable diseases (in %)

2% ann. reduction

2% ann. reduction

2% ann. reduction

2% ann. reduction

2% ann. reduction

2% ann. reduction

Prevalence (in %) of stunted under-five children 32.2 (2008) 28.0 26.6 25.2 23.8 22.3 20.9Prevalence (in %) of wasted under-five children 7.5 (2008) 6.5 6.2 5.9 5.6 5.2 <5Prevalence (in %) of thin children 6-10 years old 8.1 (2008) 6.9 6.5 6.1 5.7 5.3 <5Percent of pregnant women who are nutritionally-at-risk

26.3 (2008) 24.8 24.3 23.9 23.4 22.9 22.4

Table 8.8. Health, Nutrition and Population Targets: 2011-2016

Sources: DOH, NNC, POPCOM and NSCB*For the specific annual targets, please refer to the 5th AIDS Medium Term Plan (AMTP). The 5th AMTP goal states that by 2016, the country will maintain the prevalence of less than 66 HIV cases per 100,000 population.



LiteracySimple Literacy Rate (10 yrs. old and above)a/ 95.6 (2008) 98.1

Functional Literacy Rate (10-64 yrs. old)a/ 86.4 (2008) 90.1

Early Childhood EducationGross Enrolment Rate of 3-4 years old children in Day Care Service 19.45 20.00 30.00 40.00 50.00 60.00 70.00

Gross Enrolment Rate - Kindergartenb/ c/ 68.41 74.73 81.05 87.36 93.68 100.00 100.00

Net Enrolment Rate - Kindergarten (5 yrs. old) b/ c/ 48.23 58.58 68.94 79.29 89.65 100.00 100.00

Percentage of Grade 1 entrants with ECE experience 67.40 73.92 80.44 86.96 93.48 100.00 100.00

ElementaryNet Intake Rate in Grade 1b/ 58.61 65.89 73.17 80.44 87.72 95.00 100.00

Gross Enrolment Rateb/ 105.37 108.30 111.22 114.15 117.07 120.00 122.93

Net Enrolment Rateb/ 88.09 90.09 92.09 94.10 96.10 98.10 100.00

Cohort Survival Rate 74.38 76.45 78.51 80.57 82.64 84.67 86.76

Completion Rated/ 72.18 75.13 76.61 78.09 79.56 81.04 82.52

Achievement Rate (Grade 6 NAT MPS ) 68.0 70.9 71.7 72.5 73.3 74.2 75.0

Secondary

Gross Enrolment Rateb/ 81.03 86.83 92.62 98.41 104.21 110.00 115.79

Net Enrolment Rateb/ 59.52 65.16 70.79 76.43 82.06 87.70 93.34

Cohort Survival Rate 78.44 79.35 80.27 81.18 82.09 83.00 83.91

Completion Rated/ 73.74 74.25 74.51 74.76 75.02 75.27 75.53

Achievement Rate (Year II NAT MPS) 45.6 54.6 58.7 62.7 66.8 70.9 75.0

TVETEnrolment 1,568,617* 1,100,000 1,210,000 1,331,000 1,464,000 1,610,510 1,771,560

Male 893,091 531,300 586,850 649,528 720,288 805,255 885,780

Female 1,091,555 568,700 623,150 681,472 743,712 805,255 885,780

Graduates 1,344,371* 1,000,000 1,100,000 1,210,000 1,331,000 1,464,100 1,610,510

Male 856,708 494,000 545,600 602,580 664,169 732,050 805,255

Female 1,047,085 506,000 554,400 607,420 666,831 732,050 805,255

No. of Persons Assessed 772,670* 600,000 660,000 726,000 798,600 878,460 966,306

No. of Persons Certified636,689*

(2010)510,000 564,300 624,360 690,789 764,260 845,518

Certification Rate (%) 82.40* 85.00 85.50 86.00 86.50 87.00 87.50

Private Education Students Financial Assistance (PESFA) – Number of TVET beneficiaries

13,406 15,000 15,000 15,000 15,000 15,000 15,000

Higher EducationEnrolment 2,770,965 2,881,352 2,955,949 3,021,059 3,080,827 3,155,616 3,220,987

Male 1,255,839 1,305,170 1,335,880 1,361,395 1,388,337 1,418,062 1,445,247

Female 1,515,126 1,576,182 1,620,069 1,659,664 1,692,490 1,737,554 1,775,740

Graduates 481,026 509,707 524,054 538,397 552,735 567,083 581,425

Male 206,015 219,503 226,249 232,994 239,737 246,482 253,228

Female 275,011 290,204 297,805 305,403 312,998 320,601 328,197

Faculty Qualification% Master’s Degree 35.04 40 45 50 55 60 65

% Doctorate Degree 9.69 10 13 16 20 25 30

Table 8.9. Education Targets: 2011-2016



AccreditationPercent of higher education institutions with accredited programs

20 20 23 26 29 32 35

Expanded Tertiary Accreditation and Equivalency Program (ETEEAP) Graduates

200 800 800 800 800 800 800

Student Financial Assistance Programs (STUFAPs)– Number of HE beneficiaries

42,000 44,000 44,000 44,000 44,000 44,000 44,000

Percent of higher education institutions with Ladderized Education Program (LEP)

34 (2008) 30 32 34 36 38 40

National Passing Percentage in Licensure Exams 36.26 45.84 47.04 48.39 49.72 50.94 52.53

Table 8.9. Education Targets: 2011-2016 (cont’d.)

* 2010 dataSources: DepEd, TESDA, CHED, NSO and the ECCD Councila/ Data from the FLEMMS conducted by the NSO every five yearsb/ Based on the 2000 Census of Population using the growth rate of the 2007 Census which is 2.04%c/ Excludes preschool enrolment in summer classesd/ The definition and formula for completion rate is currently being reviewed


Baseline2010

YearTotal

2011 2012 2013 2014 2015 2016

I. D

irect

Hou

sing

Pro

visi

on

1. NHA Housing Production 20,003 70,000 70,000 70,000 72,000 73,000 75,000 430,000

Resettlement 18,740 42,000 46,000 58,000 58,000 58,000 70,000 332,000

Slum Upgrading 2,068 20,000 10,000 10,000 10,000 10,000 -- 60,000

Sites and Services 1,142 -- -- -- -- -- -- --

Local Housing -- 8,000 12,000 -- -- -- -- 20,000

Core Housing 572 -- 1,000 1,000 2,000 3,000 3,000 10,000

Medium-Rise Housing -- -- 1,000 1,000 2,000 2,000 2,000 8,000

2. SHFC Community Mortgage Program 7,109 20,000 25,000 30,000 40,000 40,000 40,000 195,000

3. Retail & Developmental Financing 120,465 100,000 150,000 150,000 150,000 150,000 150,000 850,000

HDMF End-User Financing 56,696 100,000 150,000 150,000 150,000 150,000 150,000 850,000

GFIs End-User Financing 63,769 LBP 243 SSS 50 DBP 11,300 GSIS 50,496

Total Direct Housing Provision 147,577 190,000 245,000 250,000 262,000 263,000 265,000 1,475,000

II. In

dire

ct H

ousi

ng P

rovi

sion

1. HGC 50,500 57,065 64,484 72,866 82,339 93,044 420,298

Retail Guaranty 15,709

Development Guaranty 17

Securitization 24,678

2. HLURB

License to Sell 174,025 166,500 167,000 167,500 168,000 168,500 169,000 1,005,300

CLUP Assistance (LGUs) 110 111 111 113 113 115 115 678

3. NHMFC

Purchase of Mortgages 930 820 2,433 2,267 3,267 2,838 12,555

4. HUDCC

Pre-Proclamations 5,000 5,000 5,000 5,000 5,000 5,000 30,000

Source: HUDCC

Table 8.10. Housing Targets by Program/Agency: 2011-2016



No. of Pantawid Pamilya household beneficiaries reached1 1.0 million (2010)

2.3 million2

3.0 million3

3.7 million4

4.0 million5

3.5 million6 2.9 million7

No. of KALAHI-CIDSS household beneficiaries reached

1,197,720 Households

(2009)571,7258 382,9508 323,3258 323,3258 274,2758

No. of families provided with capital seed fund (SEA-K)

Level I151,454 (2009)

16,2908 17,9108 19,6958 21,6608 23,8208 26,2058

Level II7,532

(2009)1,7608 1,8408 1,9208 2,0008 2,1208 2,2408

National Health Insurance Coverage See targets on health section

Table 8.11. Social Protection Targets: 2011-2016

Source: DSWD1 Total number of beneficiaries per year. The declining number is due to the expected graduation of beneficiaries after 5 years.2 Includes Sets 1, 2, 3 and 4.3 Additional 0.7 million target HHs in 2012 (Set 5)4 Additional 0.7 million target HHs in 2012 (Set 6); Additional 0.7 million target HHs in 2013 (Set 7); the combined total target of Sets 1, 2, 3, 4, 5, 6 and 7 will reach 4.3 million HHs (to include the 320,411 HH beneficiaries graduated in 2013)5 By 2014, Sets 1,2 and part of Set 3 with a total of 435,718 HH beneficiaries would have completed the 5-year program 6 By 2015, Set 3 remaining HHs and part of Set 4 with a total of 613,439 HH beneficiaries would have completed the 5-year program 7 By 2016, Set 4 remaining HHs and Set 5 HH beneficiaries with a total of 1,677,152 HHs would have completed the 5-year program8 Additional beneficiaries per year

YearDAR DENR Total

No. of HectaresNo. of

BeneficiariesNo. of Hectares

No. of Beneficiaries

No. of HectaresNo. of

Beneficiaries

2011 200,000 121,070 100,000 129,747 300,000 250,8172012 240,274 141,322 100,000 129,747 340,247 271,0692013 334,928 197,016 100,000 129,747 434,928 326,7632014 326,920 192,306 97,461 126,455 429,476 325,496Total 1,102,095 651,714 397,461 515,696 1,504,651 1,174,145

Source: Revised CARP Targets 2011-2014 under RA 9700 as presented to PARC Executive Committee on March 31, 2011

Table 8.12. Agrarian Reform Targets, by Land Distribution and CARP Beneficiaries: 2011-2016

Baseline 2011 2012 2013 2014 2015 2016 Total

No. of CADTs issued12 (250,000

hectares covered)

12 (250,000 hectares covered)



- -48 (1 million

hectares covered)

No. of CALTs issued12 (250,000

hectares covered)




- -48 (1 million

hectares covered)

No. of ADSDPPs formulated

1 1 1 1 1 1 6

Source: NCIP

Table 8.13. Ancestral Domain and Lands Targets: 2011-2016



The housing sector targets the provision of 1.47 million units of direct housing assistance from 2011 to 2016. This target for direct and indirect housing provision is identified in Table 8.10.

The global MDG on ensuring environmental sustainability aims to achieve significant improvement in the lives of at least 100 million slum dwellers worldwide by 2020. This will guide the plans and programs on urban renewal or slum upgrading, which is a key component of the socialized housing program.

The identification and development of new relocation/resettlement sites for the marginalized and vulnerable sectors will be adopted, and program targets will likewise be set. The National Slum Upgrading Strategy that will be formulated will identify the national targets for the programs addressing the needs of slum dwellers.

Social Protection

The social protection sector shall ensure the empowerment and protection of the poor, vulnerable and disadvantaged individuals from all types of risks. The convergence of Pantawid Pamilyang Pilipino Program, the Kapit-Bisig Laban sa Kahirapan–Comprehensive and Integrated Delivery of Social Services (KALAHI-CIDSS) and

Self-Employment Assistance–Kaunlaran (SEA-K) shall cover 53 provinces, while the National Household Targeting System for Poverty Reduction (NHTS-PR) shall update its database by 2014 in identifying at least 5.6 million poor households. Other targets are listed in Table 8.11.

Asset Reform

DAR and DENR shall effectively synchronize the targets of the land acquisition and distribution component of the CARP. It shall distribute an estimated 1.5 million hectares to about 1.1 million beneficiaries from 2011 to 2014.

CARP’s target has been revised based on the updated database as of December 2010. It shall be noted that the remaining balance of 1,102,095 hectares represent the gross landholdings that shall be covered by DAR. The gross area includes the retention areas of the landowners, since it is impossible to identify specific landholdings for retention, unless petitioned for retention while landholding is in the process of coverage. Targets for 2013 and 2014 are still very high, since RA 9700 mandates that Phase 3A lands (above 10 hectares) can only be covered starting July 2012 and Phase 3B lands (above 5 hectares) starting July 2013.

DAR’s commitment to provide legal assistance to agrarian reform beneficiaries shall continue to be prioritized. The aim is to resolve 70,941 cases under adjudication of agrarian cases, provide legal assistance services in 45,487 cases filed at the judicial


Baseline2010

YearTotal

2011 2012 2013 2014 2015 2016

Provision of Secure Tenure1. SHFC Community Mortgage Program (CMP) 7,109 20,000 25,000 30,000 40,000 40,000 40,000 195,000

2. HUDCC Pre-Proclamations 5,000 5,000 5,000 5,000 5,000 5,000 30,000

Table 8.14. Urban Asset Reform Targets: 2011-2016

Source: HUDCC


and quasi-judicial courts, and mediate and conciliate 131,099 agrarian-related conflicts.

From 2011 to 2016, DAR shall provide legal assistance to agrarian reform beneficiaries, with 780,000 targeted cases to be resolved, disposed or submitted for resolution. These cases include those for adjudication, on agrarian law implementation, filed at the judicial and quasi-judicial courts, and for mediation and conciliation.

Meanwhile, the NCIP shall issue 48 CADTs and 48 CALTs until 2014 covering one million hectares. It will also formulate one ADSDPP each year until 2016.

The housing sector, led by the Housing and Urban Development Coordinating Council (HUDCC) and key shelter agencies, targets the provision of security of tenure to informal settlers as listed in Table 8.14.

Policies and Strategies

Cross-Cutting Policies and Strategies

The social development sector shall focus its efforts on ensuring an enabling policy environment for inclusive growth, poverty reduction, convergence of service delivery, maximized synergies, and active and strategic participation of stakeholders. The following policies and strategies that cut across the social sector shall be given priority:

Attaining the MDGs

The government is committed to attain the MDGs by 2015 through accelerated programs and affirmative action in education, health, nutrition, gender and development, housing, and social protection interventions. It shall be the priority consideration in planning, policy formulation and programming of programs, activities, projects in the social sector, with particular emphasis on MDGs where the country is lagging.

Providing Direct CCTs to the Poor

Direct CCTs to the poor through the Pantawid Pamilyang Pilipino Program shall be the cornerstone of the government’s strategy to fight poverty and attain the MDGs. Regular school attendance of children, health visits and immunizations shall be the conditions for the continuing direct cash assistance. Such transfers are not doles, as they are based on poor families’ fulfillment of responsibility of investing in their children’s health and education. The direct nature of such transfers will minimize administrative costs and corruption, and fulfill the government’s thrust of transparency and efficiency. Similarly, the integrity and political independence of the NHTS used to identify CCT beneficiaries shall be safeguarded at all times and its technical and professional capabilities constantly upgraded.

Achieving Universal Coverage in Health and Basic Education

Universal Health Care shall be adopted as the approach to improve, streamline, and scale up the health sector reform strategies. This shall address inequities in health outcomes by ensuring that all Filipinos, especially the poor, have equitable access to quality health care. No Filipino will be denied health care, even those without the means to pay.

The National Health Insurance Program (NHIP) shall be strengthened as the prime mover in improving financial risk protection, generating resources to modernize and sustain health facilities, improving the provision of health services to achieve the MDGs, and reducing the risks of lifestyle-related illnesses. The NHIP’s limited resources shall be augmented through PPPs.


To attain universal participation in primary education, the government shall provide adequate basic educational inputs, expand alternative learning systems (ALS) and alternative delivery modes (ADM), and improve facilities. Alongside efforts that address disparities in access and equity, gaps in quality shall be closed by enhancing learning efficiency through strong partnership with various stakeholders. A convergence of efforts shall be ensured.

The CCT program shall be a crucial component of the strategy for universal health care and education for all. Providing incentives to families to keep their children in school and to seek regular health care creates the demand for the social services government provides.

Adopting the CDD approach

Wherever applicable, social development programs shall adopt the CDD approach, wherein local communities take control in the planning, implementing and resource investments. CDD ensures that programs integrate the principles of local empowerment, participatory governance, demand-responsiveness, administrative autonomy, greater downward accountability, and enhanced local capacity. Programs adopting this approach, such as the KALAHI-CIDSS, have been found to be more responsive to the needs of the poor and the vulnerable.

Converging Social Protection Programs for Priority Beneficiaries and Target Areas

Social protection programs shall converge in terms of strategies, target beneficiaries and geographic areas, to fully maximize resources and create more impact to beneficiaries. The Pantawid Pamilyang Pilipino Program shall form the backbone of

this convergence, with complementation from other social protection programs that ensure job generation, livelihood/microfinance, CDD and asset reform.

Accelerating Asset Reform in the Agrarian, Ancestral Domain, Coastal Marine and Settlement, and Urban Sectors

The government shall complete the CARP, as amended by CARPer, by 2014. Large tracts of private agricultural lands shall be prioritized, with the government improving its efficiency in resolving cases, hastening land distribution and ensuring equity. IPRA shall be fully implemented, ensuring IPs’ ownership and priori rights to their ancestral domains and access to basic services. The government shall ensure the effective implementation of policies and laws concerning fisherfolk, and their coastal and marine settlement. Stakeholder engagement and convergence of efforts shall be emphasized in asset reform.

Urban asset reform shall be strengthened through the utilization of idle and underutilized government lands and the expedited issuance of land titles to intended beneficiaries in all housing proclamation projects. New sustainable communities or townsites shall be created to de-crowd the urban population. Extensive slum upgrading will be pursued as a strategy, with a holistic perspective in relation to basic elements such as relocation, resettlement, livelihood, and financing for slum communities.

Mainstreaming Climate Change Adaptation and Disaster Risk Reduction in Social Development Interventions

The frequency of natural disasters in the Philippines makes such events a question of survival not only for the poor but for all Filipinos. The mainstreaming of climate change adaptation and disaster risk reduction in social development interventions will proceed from ongoing research on the


impact of climate change on diseases, like dengue. Responses to climate change shall be introduced in the school curricula, alongside the promotion of green technology in constructing houses and social infrastructure and social safety nets for vulnerable groups, like farmers dependent on agriculture.

Mainstreaming Gender in the Social Development Process

The government shall mainstream gender and development concerns in planning, policy formulation, program and project development and implementation, and monitoring and evaluation. It shall address the differentiated needs of women and men, so they can equally participate in and benefit from the development process.

Strengthening Civil Society-Basic Sector Participation and PPP

In education, partnerships with the private sector, particularly with industry chambers, employers’ associations, technical panels and other relevant bodies shall be strengthened. Such partnerships shall work on developing standards and curricula, monitoring indicators, and providing relevant hands-on education and training that are up to international standards. This will help close gaps in access and quality across regions, between urban and rural areas, between girls and boys, and among the vulnerable groups. The PPP and the national-local government collaboration shall be encouraged in addressing critical and basic educational inputs. These include the outsourced delivery of basic education services through instructional and other management services by qualified private providers, in order to improve access, efficiency and student achievement and to promote education fiscal reform.

In health, adequate incentives and regulations shall be put in place to attract private investments needed to

upgrade public health facilities, and to encourage existing private facilities and providers to address the needs of underserved populations. National health budgets and subsidies can promote PPP for health by: (a) increasing value for money of PhilHealth premium subsidies; (b) using national to local transfers to leverage PPP at the local health system level; and (c) providing direct incentives for private sector participation. In addition, the DOH shall expand partnerships with private tertiary medical centers through the Philippine Medical Tourism Program (PMTP). A percentage of income from medical tourism shall be channeled as benefits for the poor through a fund that subsidizes insurance premiums.

In the housing sector, an investment-friendly environment shall be created through PPPs, even as tax and fiscal incentives to private developers or investors are rationalized. The private sector shall be encouraged to develop ecofriendly, socially and economically viable land for new communities. Social protection schemes involving PPPs that reduce poverty and vulnerability of workers shall likewise be developed.

Adopting Volunteerism

The government shall reinforce the practice of volunteerism in the delivery of social services, provision of technical assistance, responding to disasters, and undertaking humanitarian efforts, especially in the remote and unserved areas. The sector shall mobilize the talents, expertise, time and energies of volunteers from the academe, corporate sector, NGOs, government and foreign volunteer organizations.

The implementation of the Universal Health Care (UHC) shall ensure better health conditions, fair financing and a responsive health system.


Developing and Enhancing the Competence of the Bureaucracy and Institutions, to Improve Quality and Equitable Access to Social Services

Capacity development shall be intensified at all levels of government, especially among LGU officials and staffs across the gamut of social sector activities, such as planning, programming, coordination, monitoring and evaluation. Targeting and delivery shall be improved to achieve the needed synergy and optimal results. At the same time, the sector and its institutions shall ensure optimized and judicious use of available resources the government and development partners through fiscal reforms and participatory local processes.

Sectoral Policies and Strategies


Health

Achieving universal health care shall be pursued under the Aquino Health Agenda (AHA). This aims to improve, streamline, and scale up reform interventions espoused in the Health Sector Reform Agenda (HSRA) and implemented under FOURmula One (F1) for health, with particular focus on the poor. This will ensure that as health reforms move forward, the poor are not left behind. The successful implementation of the AHA will restructure the following health system components: good leadership and governance practices; accurate and timely information and feedback on performance; financing that reduces the burden of health spending especially among the poorest, the marginalized IS and the middle class; a well-performing workforce; affordable and high quality medical products and technologies; and appropriately delivered essential services.

The implementation of the Universal Health Care (UHC) shall ensure better health conditions, fair financing and a responsive health system. The objective UHC is to promote equity in health through the provision of full financial protection and improvement of access to priority public health programs and quality hospital care, especially for the poor. Its strategic thrusts are as follows:

1. Protect the poor from the financial burden of health care use by improving the BDR of the National Health Insurance Program (NHIP):

a) Redirect PhilHealth operations towards the improvement of the national and regional BDRs;

b) Attain and sustain universal coverage of NHIP (expansion of coverage to include the poor and the informal sector);

c) Promote availment of quality outpatient and inpatient services at accredited facilities through reformed capitation, with no balance billing or zero co-payment arrangements for sponsored members; and

d) Increase the support value of health insurance for the poor through ICT upgrading to fast track Philhealth claims processing.

2. Improve access to quality hospitals and health care facilities by upgrading or expanding government-owned and -operated hospitals and health facilities as well as providing quality services to help attain the MDGs; attending to traumatic injuries and other types of emergencies; and managing noncommunicable diseases and their complications:

a) Enhance targeted health facility programs that shall leverage funds to improve facility preparedness for trauma and the most common causes of mortality and morbidity;


b) Provide grant mechanisms from PPPs to support immediate repair and rehabilitation of selected priority facilities;

c) Promote fiscal autonomy and income retention schemes for government hospitals and health facilities;

d) Unify and streamline DOH licensing and PhilHealth accreditation for hospitals and facilities; and

e) Cluster referral networks by region to address the fragmentation of services.

3. Attain the MDGs for health by focusing public health programs on maternal and child mortality; morbidity and mortality from TB, dengue and malaria, and the prevalence of HIV-AIDS, in addition to emerging diseases; and prevention and control of noncommunicable diseases, particularly cardiovascular diseases, cancer, diabetes mellitus, and end-stage renal disease.

a) Deploy Community Health Teams to actively assist families in assessing and acting on their health needs;

b) Utilize the life-cycle approach when providing needed services, such as family planning, antenatal care, delivery in health facilities, essential newborn care, immediate postpartum care, and Garantisadong Pambata package for children 0-14 years of age;

c) Aggressively promote healthy lifestyle changes to minimize noncommunicable diseases;

d) Ensure adequate surveillance and preparedness for emerging diseases; and

e) Harness the strengths of interagency and intersectoral approaches to health.

To achieve the above strategic thrusts, the following instruments shall be utilized:

1. Health Financing. This increases resources for health that will be effectively allocated and utilized to improve the financial risk protection of the poor and the vulnerable sectors. Strategies and activities include achieving universal health insurance coverage, increasing public investments for health, allocating health resources to appropriate financing agent, and securing fiscal autonomy of government health facilities and shifting to new provider payment mechanism.

2. Service Delivery. This seeks to transform the health service delivery structure to address variations in health service utilization and health outcomes across socioeconomic variables and across geographic boundaries. Strategies and activities will aim to ensure that appropriate health services are available at all levels of health care by:

a) Transforming the health service delivery system from providing several individual health providers or facilities to service delivery network;

b) Enhancing the service packages delivered by the service delivery network to achieve the country’s MDG commitments, eliminate endemic diseases as public health threats, intensify disease prevention and control for both communicable and noncommunicable diseases, and manage health emergencies and disasters; and

c) Investing in a health facility enhancement program that defines a unified and rationalized health


facility blueprint; strengthening the gate-keeping function of lower level facilities; increasing the capacities of centers of excellence for specialty hospitals; enhancing the quality assurance system for public outpatient facilities like rural health units (RHU)s and barangay health stations (BHS); ensuring that hospitals are safe from disasters; and providing incentives to promote PPP ranging from investments for tertiary care to involving private practice midwives in the delivery of primary services;

3. Human Resources for Health. This will ensure that all Filipinos have access to professional health care providers to meet their health needs at the appropriate level of care. Strategies include ensuring that each family has assigned competent primary health care providers and producing health professionals responsive to the current needs of the health sector. To address distribution concerns of health human resources, the following strategies will be pursued: providing incentives for deployment in underserved areas; using ICT to direct health workers to local job offerings; and using of global market forces like medical tourism to keep highly-trained health workers and reduce turnover rates.

4) Policy, Standards and Regulation. These instruments aim to ensure equitable access to essential medicines, health services and technologies of good quality, availability and safety. Strategies include:

a) Increasing the availability of cheaper quality medicines through efficient and reliable procurement and distribution systems; improving the affordability of essential medicines through assured delivery of entitlements to specific treatment packages;

linking the PhP100 Program with PhilHealth benefit package in all levels of care; and promoting generics;

b) Monitoring and boosting the rational use of drugs and technology through implementation of clinical practice guidelines; regulating over-the-counter nonessential drugs, nutraceuticals and alternative health services; and regulating product and health service advertisements, to reduce the risk of misleading and biased promotional information reaching the consumers and professionals;

c) Ensuring the quality of essential medicines, food, technology and services by strengthening regulatory agencies of DOH, such as the Food and Drug Administration (FDA) and the Bureau of Health Facilities and Services (BHFS), and the post-marketing surveillance system;

d) Strengthening the regulatory functions of DOH agencies standards and processes for licensing, certification and accreditation of public and private health facilities, such as lying-in clinics, Basic Emergency Obstetric and Neonatal Care (BEmONC), Comprehensive Emergency Obstetric and Neonatal Care (CEmONC) and hospitals; and

e) Reviewing and updating the laws and guidelines governing practice by health professionals to allow flexibility in the delivery of health services, especially in resource-poor areas (e.g., performance of lifesaving functions by midwives).

5. Governance for Health. This establishes the mechanisms for efficiency, transparency and accountability, thus preventing fraud. Under this instrument, initiatives shall be undertaken towards enhancing the health system to better respond to inequities in health. The institutionalization of the Sector-wide


Development Approach for Health (SDAH) systems shall also be undertaken aside from strengthening the governance structures for managing the health sector at the national and local levels. Better performance, accountability and internal management control mechanisms and stronger client-centered services shall also be undertaken.

6. Health Information. The instrument to establish a modern information system that will provide evidence for policy and program development to improve performance levels, distribution and equity, and support for immediate and efficient provision of health care and management of province-wide health systems. ICT shall be used to implement UHC, together with reliable and timely data. Investments on the automation of health information in all health facilities shall be encouraged.

To support the Health Information System, core agencies and partners of the Philippine National Health Research System (PNHRS) shall share their resources and mutually complement their health research. The following specific strategies shall be adopted by the PNHRS:

a) The science community shall address the gaps in the access to essential medical products, vaccines and technology, and the health information system. Health technology development shall focus on diagnostics, vaccines, drugs, use of ICT in health care (telehealth), and traditional and alternative health care. For health information systems, the science community shall focus on building information content and providing access to relevant, current, and accurate health information;

b) CHED shall focus on education-related research to produce competent health workforce, while the DOH will focus on health systems and operations research, to address

health services, health financing, leadership and governance; and

c) To create and sustain a critical mass of researchers and mentors, capacity-building programs that involve local and international scholarships, fellowships, training and twinning arrangements shall be continued and enhanced. These shall focus on expertise in the research continuum, from conceptualization and stakeholder engagement, to writing, implementation, dissemination of research results, and technology commercialization, where applicable, in order to increase research relevance and visibility, and translate results into policies and actions.

Nutrition

1. Reduce disparities in nutrition by focusing on population groups and areas highly affected by or at risk of malnutrition, specifically pregnant women, infants, children 1-2 years old, underweight children 0-5 years old, and LGUs with high levels of child undernutrition or at risk of undernutrition.

2. Devote more resources to interventions with a greater impact on undernutrition among children under–five, including the following:

a) Optimum infant feeding and young-child feeding practices anchored on breastfeeding during the first six months of life;

b) Calorie-, nutrient-dense and safe solid and semi-solid foods (complementary foods) from the sixth month of life onward, with continued breastfeeding up to two years of age;


c) Sanitary practices, including personal hygiene and handwashing;

d) Supplementation with Vitamin A, zinc for diarrhea management, iron for pregnant women and infants, and iodine in areas where iodine deficiency disorders are endemic;

e) Deworming;

f ) Appropriate medical and dietary management of acute malnutrition; and

g) Iron fortification of rice and flour, iodization of salt, and Vitamin A fortification of other staples.

3. Revive, identify, adopt, and propagate good practices and models for nutrition improvement;

4. Increase food supply at the community level through food production programs and development and the maintenance of facilities to allow efficient distribution of food (refer also to Chapter 4);

5. Improve access to food by generating employment and building capacities for higher employability;

6. Protect the vulnerable from food insecurity through food-based safety nets, e.g. direct distribution of rice, emergency employment; and

7. Strengthen and nurture interagency structures for integrated and coordinated implementation of nutrition and related services at national and local levels.

Population

The Directional Plan for Population 2011-2016 addresses the challenge of poverty alleviation, as this is affected by fertility and parenting choices. Its long

term goal is to contribute to improving the quality of life of all Filipinos through responsible parenting, and outcomes in health, education, and population that are in harmony with available resources and sustainable environment conditions, thus reducing poverty and inequalities in human development opportunities.

The following objectives support this long-term goal:

• Help couples and parents exercise responsible parenting to achieve the desired number, timing and spacing of children and improve maternal, neonatal and child health, and nutrition status;

• Help adolescents and youth avoid premarital sex, teenage pregnancies, early marriages, sexually transmitted infections and other psychosocial concerns; and

• Contribute to policies, plans and programs to attain population growth and distribution consistent with economic activities and sustainable development.

The following major strategies shall be undertaken:

1. Work for universal access (accessibility, availability, and affordability) of all medically, ethically, and legally approved family planning methods and services to help parents plan their families consistent with their plans and decisions;

2. Promote male responsibility in Responsible Parenting and Family Planning (RP/FP) programs, in the context of gender equality and equity;

3. Continue to utilize community organizing and participatory strategies (e.g., Responsible Parenting Movement, community-based volunteerism) to sustain and broaden the acceptance of responsible parenting as a social norm;

Reaffirm the highest priority for basic education as a right that should be enjoyed by all Filipinos


4. Provide age- and culture-appropriate and gender-responsive human sexuality education for the youth through the formal and nonformal educational systems; and educate parents in appropriate skills and information regarding adolescent health and human concerns;

5. Intensify communication, education, and advocacy campaigns for population and development and RP/FP programs by broadening alliances and strengthening networks with program stakeholders, LGUs, NGOs, business community, the academe, the media and faith-based organizations, among others; and

6. Advocate increased investment in the population program by the national government, and coordinate with LGUs to mobilize support for the population program through ordinances, executive issuances, and budgetary allocations that strengthen local population and RP/FP programs.


With the slow decline in population growth, the country must contend with continually rising demands for educational and employment opportunities, other basic human rights-based entitlements, and a more extensive participation in the era of internationally-shared human resources. The national education and other learning systems must respond to the above challenges, even as it attends to the socioeconomic requirements of a peaceful and progressive nation and a globally competitive economy.

The following policies and strategies shall be pursued:

1. Reaffirm the highest priority for basic education as a right that should be enjoyed by all Filipinos;

2. Harness private-sector resources in the delivery and monitoring of, social marketing and advocacy for education, especially higher education;

3. Make education and training truly inclusive and expand opportunities for lifelong learning through: (a) better and broader provision of basic educational inputs, especially in traditionally lagging areas by using ADMs in formal education and ALS for out-of-school youths and adults; (b) maximal learning opportunities for mentally challenged individuals (e.g. autistic, attention deficit hyperactivity disorder, etc.) by providing special instructional services and facilities; (c) improved and safe school buildings and facilities, to ensure accessibility of PWDs and consider disaster risks; and (d) strengthened Madrasah, education of IPs, and other vulnerable groups;

4. Accelerate the implementation of the Basic Education Sector Reform Agenda’s five key reform areas towards the attainment of the goals of EFA and the MDGs: (a) school-based management (SBM); (b) national learning strategies; (c) quality assurance and accountability; (d) complementary interventions; and (e) institutional culture change. The SBM system shall be fully operationalized to ensure direct access to resources of public schools as a means of achieving educational devolution and decentralization;

5. Enhance learning efficiency in the early grades through the use of the mother tongue as the language of learning, and improve student retention, completion and achievement rates, with strong support from parents, the community, and civil society;

6. Pursue a focused program for the health, nutritional and physical well-being of learners as the foundation of improved attendance and performance, in coordination with the expanded CCT Program;

7. Align the pedagogy of science and mathematics education with the requirements of the global environment; strike a strong balance


between technology and livelihood education on both elementary and secondary levels; and expand the use of ICT in technology-based student learning packages to enhance the teaching-learning approach in basic education (e.g., indexing of curriculum concepts and competencies for systematic development of e-learning materials);

8. Ensure that the structure and program of formal basic education, within the framework of Kindergarten to 12 Years (K+12) Basic Education Program, are adequate and sufficiently responsive to: meet legal and other formal requirements of employment; pass the test of global comparability and prepare students for employability and for higher levels of learning; and reinforce career consciousness among students, and provide guidance and counselling throughout the K+12 Basic Education Program;

9. Strengthen, streamline, and improve the learner assessment system based on the expanded definition of Functional Literacy, utilizing it as a mechanism for: (a) a more comprehensive measurement of system performance; (b) curriculum development and instructional delivery; (c) further learning and training enhancement; (d) career and skills aptitude and job readiness; and (e) actual entry into employment;

10. Institutionalize preservice education, in-service training, hiring, licensure, promotion and performance assessment of teachers, fully anchoring on the National Competency-Based Teacher Standards (NCBTS) and the expanded definition of functional literacy as firm foundations of all quality enhancement and professionalism; and establish an effective system for the two-track career paths of teachers (teaching and management) that guarantees

attractive remuneration and professional growth, alongside awards, incentives and recognition that may be provided through PPPs;

11. Support and institutionalize cultural and values-oriented projects on TV, radio, print and Internet through partnership with media and other private-sector and civil society entities; produce TV documentaries and infomercials, to highlight positive Filipino values and promote sustainable development, peace and human security, good governance, disaster-risk reduction and climate-change preparedness. The development communication policy framework of the Philippine Information Agency (PIA) shall be adopted, with the convergence of traditional and multimedia platforms, as well as online and social media, in engaging wider clientele and audiences at all levels;

12. Embed the development communication approach espoused by the PIA in all government information programs and projects, from policy formulation to implementation, monitoring and evaluation. The private media, academe, civil society organizations and business sector shall be encouraged to join in the various development communication efforts of government, to inspire the citizenry and instill in them an active commitment as stakeholders in building better citizenry and stronger and self reliant communities;

13. Sustain heritage conservation approaches to nurture country’s history and preserve the patrimony of bio-cultural diversity;

14. Develop a sporting culture that views grassroots and mass-based sports as an important mechanism in promoting human development and peace, and as a source for development of athletes by: (a) strengthening the national centerpiece program for grassroots and sports for all; (b) harnessing high-level training towards developing Filipino athletes

Work for a highly accountable higher education subsystem and institutions with strong external governance, management, and financing (including locally-funded and maintained institutions) and demonstrating desired socioeconomic impact, responding to the imperatives of globalization but reaching out to politically–challenged areas and communities.


who will be at par with the world’s best; and (c) enforcing the mandates, responsibilities and accountabilities of major sports stakeholders, to encourage partnerships and good governance;

15. Pursue an integrated system of all publicly-funded forms of student financial assistance in post-basic education to achieve the following: (a) increased student purchasing power and freedom of choice; (b) improved targeting and selection system; and (c) rationalized financing. The bulk of public resources for post-basic education shall be channeled directly to students through efficient and effective governance and clientele targeting of financing schemes (e.g. voucher system, expanded scholarships, student loans), and other forms of student assistance, in order to promote the matching of and demand for critical skills and professions;

16. Rationalize the governance of middle-level skills development by strengthening TESDA and focusing on development planning, resource allocation, standard-setting and quality assurance; and encouraging LGUs and industries to directly participate in the delivery of TVET skills development programs;

17. Work for highly accountable higher education subsystem and institutions with strong external governance, management, and financing (including locally-funded and maintained institutions), thus demonstrating desired socioeconomic impact, responding to the imperatives of globalization, and at the same time reaching out to politically–challenged areas and communities. HEIs shall be encouraged to incorporate the promotion of peace, sustainable development, gender equality, and women empowerment in appropriate parts of the curriculum and in agendas for research and extension;

18. Rationalize the number, size, and roles of HEIs through systematic interventions, including amalgamation,

phase-out or closure of nonperforming HEIs and redundant programs, and harmonization and complementation of offerings;

19. Enhance the cross-level mobility of students between higher education and middle-level skills development based on the Philippine National Qualification Framework (PNQF) through ladderization, the expanded tertiary education, equivalency and accreditation program (ETEEAP) and other modalities;

20. Devise a transnational education (TNE) strategy in programs and services for both inbound and outbound students and workers, including mutual recognition/accreditation of skills and professional development of Filipino workers vis-a-vis neighboring countries. Reasonable and mutually beneficial supervision and regulation of TNE should lead to quality assurance and management of foreign providers, as well as the integrity and competitiveness of Filipino providers;

21. Improve the efficiency and effectiveness of the demand-supply match for critical skills and high-level professions by: (a) addressing the problem of job-skills mismatch through tighter industry-academe links and better dissemination of labor market information (including career guidance and counselling); (b) emphasizing education and training in generic competencies, such as trainability, work ethics, ICT literacy, critical thinking and problem solving, and communication skills; and (c) improving levels of competencies among trainers and assessors in human resource development, including heightened gender sensitivity;

22. Integrate human rights concepts and principles in the educational system, to empower

To rapidly address the housing problem, particularly the proliferation of slums and informal settlements, the government shall formulate a National Slum Upgrading Strategy that will set the targets for slum upgrading programs.


students, faculty and education staff to uphold their rights and prevent any discrimination;

23. Strengthen social cohesion and solidarity (i.e. unity in diversity) among the different ethnolinguistic groups and faith communities in the country and within the ASEAN community by enhancing awareness and understanding of common cultural, economic, and political interests; promote intercultural and interfaith dialogues alongside informal and nonformal modalities, to train communities and leaders in the art and practice of conflict resolution;

24. Balance the demands of globalization through a locally-adapted/indigenized curricula that promote and preserve indigenous knowledge by: (a) expanding and upgrading the capacity to teach foreign languages in response to the requirements of internationally-shared human resources and emerging needs in the ASEAN region; (b) integrating balanced messages of migration and development in the Philippine education, both in the formal and alternative learning system; (c) making the education system responsive to the needs of the global community, while minimizing brain drain, encouraging brain gain and protecting the Filipino family from the social costs of migration; and (d) encouraging Filipinos overseas to remain rooted in their culture through an appreciation of Filipino languages, culture and heritage.


To rapidly address the housing problem, particularly the proliferation of slums and informal settlements, the government shall formulate a National Slum Upgrading Strategy that will set the targets for slum upgrading programs. Expanded slum upgrading, onsite upgrading or incity resettlement shall be pursued as strategies by government and stakeholders.

Government shall pursue the following reforms to scale up and sustain slum upgrading: (a) supporting other forms or modalities of security of tenure such as usufruct and lease rights; (b) developing PPPs for onsite upgrading and resettlement; (c) stimulating housing microfinance for end-user financing; and (d) strengthening community partnerships and stakeholdership through capacity development. Through the PPPs, urban renewal shall also be promoted for sustainable urban development, to ensure balanced provision of revitalized infrastructure that would support social sectors, including socialized housing.

LGUs shall lead the efforts in shelter planning, since housing and human settlements will be localized in terms of identifying solutions and programming. Thus, LGUs shall develop a land inventory system to identify areas for urban growth and planned areas for human settlements through their Comprehensive Land Use Plans (CLUPs).

Building capacity for effective urban planning systems, data management, and disaster risk management especially among the LGUs shall be established.

The following policies and strategies shall be pursued:

Housing

1. Create alternative funds and mobilize resources, to spur housing production through the revival of the SSS, GSIS and GFIs’ contribution in the housing sector pool; reinstate the entitlements of the housing sector under the Comprehensive and Integrated Shelter Finance Act (RA 7835); involve rural banks, cooperatives and microfinance institutions in implementing a housing micro-finance program, catering to the marginalized sector and rural homebuyers; and develop an effective and viable secondary mortgage market and rationalization of the guarantee system;

Social protection policies and strategies shall be guided by an operational framework of reducing poverty and vulnerability through interventions in four major areas: labor market, social welfare, safety nets, and social insurance.


2. Build strong partnerships with LGUs to accelerate housing production through land use and local shelter planning, land inventory and creation of Local Housing Boards (LHB); re-channel development funds to LGUs for housing projects for their constituents; and set aside lands for socialized housing in accordance with the Urban Development and Housing Act (RA 7279);

3. Engage NGOs (e.g., Gawad Kalinga, Habitat for Humanity, ABS-CBN Foundation) and the private sector in building and scaling up socialized housing projects;

4. Promote the use of “green” technology and materials in housing construction and in building “disaster-resilient homes”; and

5. Develop a strong, cohesive and responsive shelter team (e.g., key shelter agencies and stakeholders) to bring significant changes and institutional reforms, including simplifying loan application procesing for development and homebuyer’s loans, and reducing red tape in the issuance of land titles and housing and development permits, at the national and local levels; and ensure transparency and good governance in the housing sector.

Urban Development

1. Formulate an action plan implementing the National Urban Development and Housing Framework (NUDHF) 2009-2016, to achieve urban competitiveness and sustainability, housing affordability, poverty alleviation, and effective and performance-oriented governance through a participatory process; and

2. Prioritize slum improvement under a policy of maximum retention and minimum dislocation; and vigorously implement the National Slum Upgrading Strategy through a National Slum Improvement Action Plan for 2011-2016 that comprise specific targets, programs

and activities to provide secured tenure to urban informal settlers, especially those in danger areas.

Social Protection

Social protection policies and strategies shall be guided by an operational framework of reducing poverty and vulnerability through interventions in four major areas: labor market, social welfare, safety nets, and social insurance. A convergence of social protection programs, through partnership-building, and participatory governance, shall be implemented.

Cross-Cutting Issues

1. Improve the targeting of social protection programs:

a) Ensure the integrity and the use of the NHTS-PR to target social protection programs for the poor, such as the CCT program and the PhilHealth Indigent Program, to maximize coverage and minimize leakages;

b) Consolidate, maintain, and update the NHTS-PR system and database;

c) Make the NHTS-PR available to all agencies and entities at the national and local levels; and

d) Complement NHTS-PR with the Community-Based Monitoring System (CBMS) available at the LGU level.

2. Provide adequate funding for social protection:

a) Redirect public spending from less effective to more effective and efficient social protection programs;

Strengthen the CBEP to create jobs and sustain labor market programs by adhering to decent work standards


b) Increase and sustain the budget for social protection programs; and

c) Intensify advocacy among LGUs to reinforce political will and improve their commitment to the implementation of social protection programs and projects.

3. Improve policy coordination and program implementation of social protection measures:

a) Ensure that the necessary institutional arrangements to implement the programs are in place;

b) Ensure the coherence and coordination among national government agencies, LGUs, key private sector organizations, NGOs and international development agencies for greater financing, coverage and convergence; and

c) Raise the capacity of government agencies involved in social protection, particularly in implementation and monitoring.

4. Establish a monitoring and evaluation scheme:

a) Establish a reliable and responsive monitoring and evaluation system to regularly assess impact, identify successes, improve program features and performance, win political commitment for program sustainability, and inform program administrators of changes in the status of beneficiaries; and

b) Revisit program designs regularly to check their consistency with objectives, desired outcomes and the adequacy of coverage.

5. Improve the database on vulnerable population groups to help form the basis for sound policies and effective programs; and

6. Guarantee the inclusion of the vulnerable groups in local development plans through their representation in local development councils and their participation in the formulation, development, and implementation of policies and programs.

Labor Market Interventions

1. Establish emergency employment/guaranteed employment programs for workers affected by crisis, the seasonally jobless and the long-term unemployed, particularly the youth and women;

2. Strengthen the Community-Based Employment Program (CBEP) to create jobs and sustain labor market programs by adhering to decent work standards, to prevent the effects of sudden loss of income and to enable vulnerable workers, especially women, to attain economic security:

a) Intensify advocacy for self employment and livelihood programs;

b) Promote workers’ cooperatives in the community for mutual assistance (e.g., damayan, paluwagan);

c) Make workers’ relief and rehabilitation contingent to relocation to safer habitats and more sustainable livelihood;

d) Guarantee the availability of suitable housing, jobs and livelihood in relocation areas;

e) Promote paradigm shift during crisis from response to mitigation to preparedness interventions; and

f ) Establish a multipurpose Emergency Fund for crisis-affected workers.

Achieve and sustain universal coverage of the poorest and vulnerable sectors, including the IS and OFWs who can afford to pay


3. Implement active labor market policies and programs to enhance the employability of vulnerable workers, such as those affected by crisis, workers in the informal economy, displaced and distressed OFWs, internally displaced people, the youth and women:

a) Improve access, availability and affordability of training in new skills and occupations;

b) Expand training opportunities for vulnerable workers; and

c) Facilitate the reintegration of returning OFWs through appropriate training, investment and savings programs.

4. Initiate policy interventions, programs, projects and other measures to ensure the transformation of the brain-drain into a brain-gain phenomenon, and enhance the earning capabilities and entrepreneurship opportunities of returnees.

5. Intensify workforce-focused occupational safety and health (OSH) programs:

a) Improve OSH compliance, particularly in high-risk industries, such as construction;

b) Strengthen industrial tripartite councils for business process outsourcing;

c) Sustain dialogues to strengthen interaction and cooperation between labor and management, to promote OSH programs at the enterprise level, particularly in industries identified as key employment generators or industry winners;

d) Integrate OSH in local development plans and in school curricula;

e) Intensify the campaign for family welfare programs; and

f) Implement gender-responsive OSH programs (e.g. breastfeeding in the workplace).

6. Strengthen measures against child labor and exploitation through strategic partnerships, and intensify advocacy and action at all levels while improving access to quality and integrated services;

7. Use labor-intensive techniques, whenever appropriate, in implementing government infrastructure projects by giving priority to the socially and economically disadvantaged residents of the project areas;

8. Make Public Employment Services Office (PESO) more responsive to the needs of job seekers; and

9. Promote the integration of PWDs in mainstream vocational training, employment, and livelihood schemes, with particular attention to the participation of women with disabilities.

Social Insurance

1. Achieve and sustain universal coverage of the poorest and vulnerable sectors, including the IS and OFWs who can afford to pay:

a) Enrol the poorest families in PhilHealth by utilizing the NHTS-PR;

b) Expand coverage of IS workers, and pursue legislation that mandates the enrolment among of IS workers who can afford to pay;

c) Provide effective membership services; and

d) Secure access to critical outpatient services at accredited rural health units and health centers, and to critical inpatient services at the national and local hospitals.

Complement the CCT program with other social protection programs, to ensure it is linked with programs on job generation, livelihood, or asset reform.


2. Develop enhanced social insurance measures for vulnerable groups against economic and natural shocks particularly for laid-off workers:

a) Implement employment insurance for workers in the private sector and IS;

b) Implement indigenous microinsurance schemes and integrate microinsurance into microfinance lending;

c) Re-examine whether the SSS contributions required of IS workers remain affordable and realistic; and

d) Implement mandatory SSS coverage for landbased OFWs, and include SSS enrolment as prerequisite in the issuance of the Overseas Employment Certificate.

3. Reform the provider payment mechanism and benefit packages in the NHIP, to improve private health insurance schemes and financial risk protection of members;

4. Promote hazard insurance coverage for vulnerable groups.

Social Welfare

1. Expand and strengthen the CCT program to cover all poor households in the country:

a) Maintain and enhance the CCT support systems, such as compliance verification, beneficiaries update, payment system, targeting, regular spot checking and monitoring; and

b) Implement supply-side reforms and adjustments (basic health and education services), and

coordinate with provider agencies to improve compliance among CCT beneficiaries.

2. Complement the CCT program with other social protection programs, to ensure it is linked with programs on job generation, livelihood, or asset reform;

3. Develop and implement appropriate, adequate and cost-effective social welfare interventions, to address the needs of the poorest and the most vulnerable;

4. Sustain and expand the gains achieved in CDD projects, such as KALAHI-CIDSS, and facilitate environmental protection and conservation through CDD and participatory development projects, such as rainforest rehabilitation, reforestation, biodiversity conservation, watershed management, river basin management, coastal and lakes protection;

5. Provide sustainable microfinance services:

a) Expand and enhance microfinance programs and services, especially in areas with low saturation rate, complementing the CCT Program;

b) Provide capacity development for microfinance institutions to effectively and viably implement microfinance programs;

c) Develop and enhance the entrepreneurial skills of target end-clients; and

d) Operate and manage microenterprises sustainably.

6. Strengthen regulation and enforcement of social welfare and development (SWD) standards for both public and private organizations engaged in SWD;

7. Strengthen measures against human trafficking and provide support for its victims;

To achieve inclusive growth and sustainable socioeconomic development, the completion of agrarian reform must be prioritized as the government’s antipoverty and social justice program.


8. Fully implement the laws protecting and promoting the rights of vulnerable groups, (e.g., IPRA, Expanded Senior Citizens Act, Amended Magna Carta for PWDs, Magna Carta of Women, Magna Carta of Migrant Workers, Anti-Trafficking in Persons Act, Juvenile Justice Welfare Act, Anti-Violence against Women and their Children Act);

9. Monitor and ensure the country’s compliance with various international treaties, conventions and protocols that protect and promote the rights of the vulnerable groups;

10. Campaign for other countries to ratify international conventions, treaties, standards and protocols that are relevant to the protection and promotion of the rights and wellbeing of OFs;

11. Promote service-delivery models, such as partnership with faith-based organizations and NGOs, in providing SWD services and cost-sharing between NGAs and LGUs or NGOs.

Safety Nets

1. Develop safety net programs that are readily available and can be scaled up during financial and economic crisis, calamities, emergencies and disasters (e.g., public workfare program);

2. Allocate quick-disbursing funds at the national and local levels, to assist victims of calamities and disasters;

3. Implement an emergency response income-support program through employment creation in distressed areas, to respond to contingencies such as recessions, natural and man-made disasters or sudden income shocks; and put in place a regular monitoring mechanism to ensure the readiness of relevant agencies during natural and man-made disasters;

4. Reform the NFA Rice Subsidy program, to effectively target the poor and to support the CCT and other anti-poverty and social protection programs; and

5. Strengthen safety nets for OFWs:

a) Intensify the effort for OWWA membership enrolment and renewal; and

b) Institute dialogues and forge agreements to further strengthen cooperation with labor-receiving countries towards mutual protection and benefits for the OFWs.

Asset Reform

Land Acquisition and Distribution (LAD)

To achieve inclusive growth and sustainable socioeconomic development, the completion of agrarian reform must be prioritized as the government’s antipoverty and social justice program. Completing the CARP by 2014 will be a historic milestone of this Plan. The country will finally put to rest the greatest property issue once property relations in agriculture are clarified.

The DAR, as the lead CARP implementing agency, shall adopt the following strategic directions in improving land tenure security of the landless farmers:

1. Complete LAD of private agricultural lands (PAL) in the CARPer balance:

a) Focus on large private agricultural lands;

b) Streamline processes and procedures by utilizing technology-enabled information tracking systems; and


c) Enhance the database of landholdings for ease in targeting and monitoring land acquisition and distribution.

2. Continue the distribution of public alienable and disposable lands;

3. Synergize the efforts of CIAs in all LAD processes; and

4. Establish and operationalize strategic partnership with CSOs, particularly on the coverage of large private agricultural lands.

Agrarian Justice Delivery

1. Prioritize cases with higher number of affected ARBs;

2. Enhance the case-tracking system for the inventory of cases and flowcharting of existing systems;

3. Speed up decisions of cases through the development of templates, proper docketing and establishment of central servers for monitoring;

4. Ensure transparency by streamlining administrative orders and utilizing the web links to case resolution; and

5. Develop new training programs for Program Beneficiaries Development (PBD) to support enterprise management of ARBs.

Ancestral Domains and Lands

1. Intensify the information, education, and communication drive on IPRA and the NCIP’s delineation and titling program in all levels of government;

2. Fasttrack the identification, delineation, titling and registration of ancestral domain claims;

3. Continue the coordination and dialogue among government agencies, such as the DENR, DA, LRA, DAR and NCIP, on land and tenurial conflicts and overlapping claims involving ancestral lands;

4. Review and simplify existing NCIP policies, circulars, issuances, and guidelines, including the guidelines on the issuance of the FPIC, without sacrificing the welfare and concerns of IPs. The inclusive and full participation of IPs in the process shall be ensured while maintaining a meaningful collaboration/partnership with CSOs, the private sector, national government agencies, and LGUs;

5. Improve and facilitate IP access to justice and traditional decision-making processes on the settlement of conflicts by the elders. Traditional practices and processes shall be documented and serve as reference for transfer of knowledge on conflict resolution, to strengthen IP decision making processes. Coordination among the DOJ, the Public Attorney’s Office (PAO) and the Supreme Court, as well as the civil society, shall also be pursued towards advocating indigenous rights and increasing access by IPs to free and immediate legal services;

6. Assist ICCs/IPs in documenting cases resolved under indigenous justice systems, conflict resolution mechanisms and peace building processes, for NCIP to adequately defend the indigenous litigants. Documentation of cases is essential as written evidence is required by regular courts in cases filed against IPs;

7. Consider the IPRA provisions in discussions regarding Reducing Emissions from Deforestation and Forest Degradation (REDD) and other carbon forest engagements in the national and international arena;


8. Encourage ecotourism as a source of alternative or supplementary income, subject to community protocols on protection of indigenous knowledge systems and practices. Watershed management and the planning of ancestral waters to enhance biodiversity shall be considered in ancestral domain planning;

9. Ensure that IP data and statistics are up-to-date by including IP indicators, particularly the ethnicity variable, in the national censuses and related surveys and by ensuring the involvement of the NCIP from the preparatory activities up to the validation of the collected IP-related statistics. The NCIP shall also take the lead in orienting LGUs with IP population on gathering IP ethnicity variable statistics, and utilizing these in formulating socioeconomic profiles. The NCIP shall ensure that institutional coordination and agreement on this concern is established; and

10. Strengthen partnership among ICCs, LGUs, NGAs and CSOs to ensure synergy in activities for IPs. Partnerships shall be tapped in: ensuring compliance with the FPIC process; formulating and implementating ADSDPPs and their integration in CLUPs and local development plans; and providing capacity building and training in entrepreneurial skills enhancement, business management, bookkeeping, communication, product development, training and marketing.

Coastal and Marine Settlement

1. The delineation of municipal waters shall be fasttracked and completed during this Plan period through the following strategies:

a) In partnership with NGOs and fishersmen’s federations at the local and national levels, deploy at least one trained community organizer in each of the remaining 873 coastal municipalities, to: facilitate

the organization, education, and mobilization of the small fishers in the municipality; speed up the delineation of municipal waters; and facilitate the implementation of coastal resource management planning and the Fisheries Code;

b) Issue a Memo Circular (from DA-BFAR and DILG) to local chief executives advocating the swift implementation of the Fisheries Code, especially the delineation of municipal waters, as a means to help 1.5 million small fishermen and increase the LGU tax base;

c) Explore the granting of incentives to small fishers participating in the process, in the form of their immediate registration and licensing as municipal fishers, and provision of settlement sites and land tenure security; and

d) Provide technical assistance through DILG and relevant agencies in delineating and validating municipal waters, especially among municipalities with territorial conflicts.

2. Explore a moratorium on all approvals of Foreshore Lease Agreements, except on ensuring the settlement of small fisherfolks, and set up a task force on fisherfolk settlement, to begin providing land tenure security to small fisherfolk households;

3. Ensure that 40 percent of women are represented in all management structures, both nationally and locally, as provided in RA 9710 or the Magna Carta for Women;

4. Set aside sufficient funds for the implementation of the Comprehensive National Fishery


Industry Development Plan (CNFIDP), which is the 25-year development plan initiated by the DA-BFAR by virtue of the Philippine Fisheries Code of 1998; and

5. Conduct vulnerability risk assessments of coastal communities through DA-BFAR and DENR, in coordination with LGUs, and provide the necessary funds for the activity.

Urban Asset Reform

1. Increase funding for proven housing programs and institutions, scale up the Community Mortgage Program’s success and strength, and fasttrack the issuance of Presidential proclamations for socialized housing;

2. Provide incentives to unlock land for affordable housing through resource generation for socialized or low-cost housing and private sector-guided redevelopment of public land (e.g., redevelopment of NHA land to raise funds for relocation and construction of socialized housing facilities); and

3. Provide and encourage access to land for affordable housing through the alternative land access modes, such as long-term lease and usufruct rights, including putting in place basic infrastructure ahead of settlements and making the accessed land in the periphery available for mass housing.

Legislative AgendaHealth, Nutrition and Population

Health Financing

Amendment of RA 7875, or the National Health Insurance Act of 1995

A roadmap towards universal health care through a refocused PhilHealth, this seeks to modify national-local government premium sharing for the Sponsored Program and full subsidy scheme for the lowest income bracket of the population (5 million families); sustain membership to PhilHealth for all Filipinos; include membership to PhilHealth as requirement for government transactions, such as application of business permit, driver’s license, marriage certificate; strengthen the visitorial powers of PhilHealth; and define offenses and abuses against the NHIP.

Restructuring the Excise Tax on Alcohol and Tobacco Products and Earmarking Portions of Incremental Revenue for Health Programs

This seeks to increase the resources for health promotion and disease control programs of DOH and Philhealth’s coverage of indigent households, by amending Sections 141, 142, 143, 144, 145 and 288 of the National Internal Revenue Code of 1997, as amended.

Income Retention of National Government Hospitals

This seeks to authorize all national government hospitals to utilize all its income for hospital operations, particularly the capital outlay, maintenance and other operating expenses, and allow them to invest their funds in high yield investment instruments. The coverage shall include all government hospitals at national and local levels.


Service Delivery

A National Policy on Reproductive Health, Responsible Parenthood and Population Development

This seeks to strengthen government’s efforts towards the protection of women’s rights and the realization of the people’s vital role in family health, among others; and compel the State to guarantee universal access to medically-safe, legal, affordable and quality reproductive health services, methods, devices, supplies and relevant information for responsible parenthood.

Strengthening of the Philippine comprehensive policy on the prevention and control of AIDS

This seeks to enhance existing HIV and AIDS information and educational program to increase the level of awareness of the citizens; provide mandatory disclosure of HIV and AIDS status to spouse; and strengthen the Philippine National AIDS Council Secretariat.

Regulation on the Donation and Transplantation of Human Organs and Tissues from Living and Deceased Donors

This seeks to promote access to organs and tissues for transplantation for patients with end-stage diseases, and regulates the donation of human organs and tissues from living and deceased donors; develop and maintain a national registry and reporting system of donors and recipients of human organs and tissues, and continuous evaluation of the system.

Establishment of a Philippine Center for Specialized Health Care (PCHSC)

This seeks to establishe the Philippine Center for Specialized Health Care, composed of Philippine Heart Center for Asia, Lung Center of the Philippines, Natonal Kidney & Transplant Institute,

Philippine Children’s Medical Center, and East Avenue Medical Center, to provide specialized medical services, professional and advanced medical training.

Human Resources

Improved Management Systems in Human Resources for Health (HRH)

This seeks to institutionalize the Human Resources for Health Network as a structure to support human resources for health development in the Philippines.

Amendment of the Medical Act of 1959

This seeks to amend or include the following provisions: classification and/or reclassification of all existing allowances, including magna carta for health workers; creation of the Council on Medical Education; admission requirements; creation of the Professional Regulatory Board for Medicine; examination, registration and licensure; regulation of the practice of medical profession (suspension or revocation); and foreign reciprocity.

Amendment of the Midwifery Act

This seeks to allow midwives to administer vaccination during immunization campaigns, as well as routine immunization at the barangay health stations, and administer life-saving drugs in emergency cases.

Regulation

Bureau of Health Facilities and Services (BHFS) strengthening

This seeks to strengthen the licensing of health facilities and services under BHFS.


Health Information System

Notifiable Disease Act

This seeks to improve reporting of important communicable and noncommunicable diseases, including injuries and trauma, and strengthen the use of ICT for data collection.


Basic Education

Amendments to the Education Provisions of the Local Government Code

This seeks to amend the education provisions of the Local Government Code of 1991, including: mandating the broader and better use of the Special Education Fund; reorienting the roles of the LGUs in the local management and quality assurance of basic education; and changing the composition of the Local School Board, which shall be renamed Local Basic Education Board, to promote greater roles, synchrony and check-and-balance among local stakeholders, thus following the constitutional priority accorded to basic education.

Amendments to Magna Carta for Teachers

This seeks to balance the enjoyment of rights and privileges with the exercise of responsibility and accountability, in order to expediently implement the developmental objectives of the DepEd in promoting equity and quality in the provision of basic education.

An Act Establishing a Multilingual Education and Literacy Policy

This seeks to mandate a permanent policy that institutionalizes within

the DepEd the use of the Filipino in teaching, learning and assessment, to enhance the efficiency, effectiveness and relevance of the learning process, both formal and ALS.

Amendments to the Roxas Law

This seeks to restructure the allocation of DepEd’s budget for capital outlay, amending RA 7880 (Fair and Equitable Access to Education Act), and emphasizing the role of up-to-date school mapping in the rational allocation of educational infrastructures in all planning cycles.

An Act Strengthening and Expanding the Education Service Contracting Scheme for Basic Education

This seeks to support current basic education reforms by comprehensively amending the existing GASTPE Law and promoting fiscal savings-oriented PPP. Alongside other purchaseable services, the legislation will provide for the expanded outsourcing of instructional services for early childhood education, elementary education and ALS, on top of the existing secondary education.

An Act Providing for an Integrated System of Licensure, Assessment, Qualification and Professional Development of Teachers, and Revising RA 7836 (as amended by RA 9293)

This seeks to provide a three-stage licensure and qualification system, and authentic, performance- and NCBTS-based examination; reform the criteria for appointment or membership in the Licensure Examination for Teachers (LET); and limit the number of times LET can be taken.

Amendments to ECCD Law (RA 8980)

This seeks to recognize the early years from 0-6 as the first cycle of educational development, and strengthening the ECCD Council.


Middle-level Skills Development

Enterprise-Based Education and Training Bill

This seeks to subsume the apprenticeship chapter of the Labor Code of the Philippines; and integrate all enterprise-based training programs, including on-the-job training, apprenticeship, dual training system, and similar training modalities, under one set of coherent policies, and structure to implement and expand opportunities and venues for work-relevant education and training.

Institutionalizing the LEP

This seeks to develop and implement a unified national qualifications framework that establishes equivalency pathways and access ramps for a ladderized system that allows easier transitions and progression between TVET and higher education.

Higher Education

Amendment to CHED Charter ( RA 7722) towards Comprehensive Higher Education Reform Law

This seeks to pursue the recommended measures of the Philippine Education Sector Study (PESS), to eliminate the conflict of interest between the system of internal and external governance due to CHED’s chairmanship of the governing boards. Other needed provisions include: for LGU-created/funded HEIs to be part and parcel of the overall governance of higher education, for them to conform to national standards and best practices; clear-cut definition of the functions of regional offices; strengthen the management of the Higher Education Development Fund; strengthen, safeguard and institutionalize normative financing; and update private higher education provisions of the Education Act of 1978.

Public Higher Education Institutions Restructuring Bill

This seeks to address the urgent need to innovate and rationalize the system of governance, financing and quality assurance of publicly funded institutions of higher learning, to make state higher education more accountable and responsive to both the needs of the students and the economy.

Regional University System in Region 11 Bill

This seeks to create the Southeastern Philippines Regional State University System in Region 11 that integrates the existing state university and three state colleges in Davao City, Davao del Norte, and Davao Oriental. This shall serve as the pioneering model for the envisioned national restructuring of state higher education subsystem that will promote better resource management and utilization while pursuing enhanced quality management, effectiveness and regional relevance.

Comprehensive Scholarship and Student Financial Assistance Reform Act

This seeks to rationalizes provisions and rules governing all publicly funded scholarship based on merit and talent, student loans, grants and vouchers. This will modify the existing law on Government Assistance to Students and Teachers in Private Education, and integrate under one set of policies the optimal resource use, systematizing of clientele targeting and selection and awarding of grantees. The legislation is patterned after Thailand’s Income-Contingent Allowance and Loans Program and the Australian Higher Education Contributions Scheme.



Creation of the Department of Housing and Urban Development (DHUD)

This seeks to ensure an adequate and coherent institutional framework for a holistic management of the housing and urban development sector.

Balanced Housing Requirement for Condominium Projects

This seeks to require developers of proposed condominium projects to develop socialized housing projects (costing at least 20 percent of the projects) as compliance with the 20 percent balanced housing requirement for subdivisions, per Section 18 of the Urban Development and Housing Act or RA 7279.

Establishment of Local Housing Boards

This seeks to create Local Housing Boards in every city and municipality that shall serve as the focal unit in the delivery of housing services, local shelter planning and disposition of underutilized assets of shelter agencies and national government.

National Land Use Act (NALUA)

This seeks to establishe a national land use framework that will define the indicative priorities for land utilization and allocation. NALUA shall integrate efforts, monitor developments related to land use, and evolve policies, regulations and directions of land use planning processes. The NALUA mandates the formulation of national planning and zoning guidelines and standards, to guide LGUs in the formulation of their CLUPs and enactment of zoning ordinances.

Comprehensive and Integrated Shelter Finance Act (CISFA) II

This seeks to enact the continuation of CISFA or RA 7835, to increase budget appropriation for the socialized housing program of the government, and significantly increase the provision of housing and tenure security to poor informal settlers, and in order to attain the MDGs.

Social Protection

An Act Establishing a Comprehensive System for Registration and Licensing of SWD Agencies and Accreditation of SWD Programs and Service

This seeks to encourage the participation of all persons, organizations or corporations, natural or judicial, that engage mainly or in part, or represents themselves to engage in charitable or SWD activities in uplifting the quality of life of the poor, vulnerable and the disadvantaged sectors through a DSWD registration, licensing and accreditation; provide benefits and incentives to registered, licensed and accredited SWD agencies; and reinforce the regulatory functions of the DSWD over public and private individuals, agencies and/or organizations engaged in SWD activities.

Philippine Adoption Act

This seeks to integrate all the existing laws on adoption and establish a central adoption office under the DSWD.

Magna Carta for Workers in the Informal Economy

This seeks to address the development, rights and protection of poor, marginalized, unprotected and underrepresented workers in the IS; recognize the real economic value of their labor; and provide standard registration and accreditation.


An Act to Strengthen and Propagate Foster Care for Abandoned and Neglected Children and For Other Children with Special Needs, Providing Funds Therefore and for Other Purposes

This seeks to develop a comprehensive legal framework that will consolidate the interest of children in need of foster care and for those who can provide such care.

Anti-Prostitution Bill

This seeks to address the system of prostitution through the apprehension and prosecution of agents, recruiters, traffickers, pimps, procurers, establishment owners, customers and others who derive sexual gratification, financial gain or any other benefit from the prostitution of another person. It shall also complement the current laws on antitrafficking and violence against women, in protecting and promoting the rights of the vulnerable groups, especially women and children.

Magna Carta for Domestic Workers

It seek to protect and promote the welfare of domestic workers by providing realistic minimum wage and other benefits, such as SSS and PhilHealth, implementing the use of a formal contract to govern employee-employer relationship, and preventing physical, sexual, mental and economic abuse of workers among others.

Magna Carta for Youth

This seeks to ensure the rights, freedoms and protection of the youth in all aspects of their lives, and put into reality the tenet of youth empowerment.

Asset Reform

Land Administration Reform Act (LARA)

This seeks to establish the Land Administration Authority integrating the Land Management Bureau, the Land Registration Authority, the National Mapping and Resource Information Authority, and Registry of Deeds.


MDG Goals, Targets and Indicators Pace of ProgressProbability of Attaining

the Target

Goal 1: Eradicate extreme poverty and hungerTarget 1.A: Halve, between 1990 and 2015, the proportion of people whose income is less than the poverty threshold

• Proportion of population below the poverty threshold• Proportion of population below the food threshold

Target 1.C: Halve, between 1990 and 2015, the proportion of people who suffer from hunger• Prevalence of underweight children 0-5 years old• Proportion of households with per capita intake below 100 percent dietary

energy requirement

0.881.28

0.670.79

MEDIUMHIGH

MEDIUMMEDIUM

Goal 2. Achieve universal primary educationTarget 2.A: Ensure that, by 2015, children everywhere, boys and girls alike, will be able to complete a full course of primary schooling

• Elementary education net enrolment rate• Elementary education cohort survival rate• Elementary education completion rate

0.000.360.35

LOWLOWLOW

Goal 3. Promote gender equality and empower womenTarget 3.A: Eliminate gender disparity in primary and secondary education, preferably by 2005, and in all levels of education no later than 2015

• Ratios of girls to boys in elementary education participation rate• Ratios of girls to boys in secondary education participation rate• Ratios of girls to boys in elementary education cohort survival rate• Ratios of girls to boys in secondary education cohort survival rate• Ratios of girls to boys in elementary education completion rate• Ratios of girls to boys in secondary education completion rate

HIGHHIGHHIGHHIGHHIGHHIGH

Goal 4. Reduce child mortalityTarget 4.A: Reduce by two-thirds, between 1990 and 2015, the under-five mortality rate

• Infant mortality rate• Under-five mortality rate

1.171.20

HIGHHIGH

Goal 5. Improve maternal healthTarget 5.A: Reduce by three quarters, between 1990 and 2015, the maternal mortality ratio

• Maternal mortality ratioTarget 5.B: Achieve, by 2015, universal access to reproductive health

• Contraceptive prevalence rate

0.47

0.27

LOW

LOW

Goal 6. Combat HIV/AIDS, malaria and other diseasesTarget 6.A: Have halted by 2015 and begun to reverse the spread of HIV/AIDS

• HIV prevalence among 15 years old and over• Proportion of population aged 15-24 years with comprehensive correct

knowledge of HIV/AIDS Target 6.B: Achieve, by 2010, universal access to treatment for HIV/AIDS for all those who need it

• Proportion of population with advanced HIV infection with access to antiretroviral drugs

Target 6.C: Have halted by 2015 and begun to reverse the incidence of malaria and other major diseases

• Malaria morbidity rate• Malaria mortality rate• Tuberculosis case detection rate• Tuberculosis cure rate

0.020.03

0.72

2.012.373.822.53

LOWLOW

MEDIUM

HIGHHIGHHIGHHIGH

Goal 7. Ensure environmental sustainabilityTarget 7.C: Halve, by 2015, the proportion of people without sustainable access to safe drinking water and basic sanitation

• Proportion of population with access to safe water• Proportion of population with access to sanitary toilet facilities

0.821.68

MEDIUMHIGH

Annex 8.1. Pace of Progress of the Philippines in terms of Attaining the MDG Targets


RegionPoverty Incidence

Among the Population (%)

Magnitude of Poor Population

Subsistence Incidence Among

Population (%)

Magnitude of Subsistence Poor

Population

Philippines 26.5 23,142,481 10.8 9,440,397NCR 4.0 447,891 0.6 69,747Region I 23.3 1,085,078 7.9 367,955Region II 18.8 545,053 5.8 167,479Region III 15.3 1,457,004 5.0 480,695Region IV-A 13.9 1,566,359 3.7 414,399Region IV-B 35.0 980,542 14.8 413,876Region V 45.1 2,422,267 17.8 956,531Region VI 31.2 2,113,255 11.2 761,200Region VII 35.5 2,368,361 17.1 1,143,065Region VIII 41.4 1,731,617 19.0 794,766Region IX 43.1 1,361,287 23.5 744,286Region X 39.6 1,586,668 20.7 829,041Region XI 31.3 1,278,985 14.8 604,612Region XII 35.7 1,332,061 15.6 582,716CAR 22.9 346,193 10.8 162,371ARMM 45.9 1,388,856 11.5 349,459CARAGA 47.8 1,131,004 25.3 598,201

Annex 8.2. Regional Poverty and Subsistence Incidence and Magnitude: 2009

Source: NSCB

Province Poverty Incidence

Zamboanga del Norte 46Agusan del Sur 43.5Surgao Del Norte 43.1Eastern Samar 37.6Maguindanao 37.7Zamboanga Sibugay 35.4Romblon 36.3Masbate 36.6Davao Oriental 36.4Northern Samar 32.4Bohol 33.6Saranggani 34Sulu 33Lanao del Norte 31.9Camarines Sur 33.8

Annex 8. 3. Provinces with Highest Poverty Incidence: 2009

Source: NSCB

Annex 8.4. Gini Concentration Ratios, by Region: 2006 and 2009

Region 2006 2009

Philippines 0.4580 0.4484NCR 0.3988 0.3953CAR 0.4481 0.4212I (Ilocos Region) 0.3953 0.4086II (Cagayan Valley) 0.4216 0.4425III (Central Luzon) 0.3994 0.3727IV-A (CALABARZON) 0.4082 0.4063IV-B (MIMAROPA) 0.4106 0.4004V (Bicol) 0.4428 0.4164VI (Western Visayas) 0.4326 0.4197VII (Central Visayas) 0.4639 0.4601VIII (Eastern Visayas) 0.4828 0.4841IX (Zamboanga Peninsula) 0.5054 0.4738X (Northern Mindanao) 0.4806 0.4737XI (Davao) 0.4225 0.4275XII (SOCCSKSARGEN) 0.4006 0.4425XIII (CARAGA) 0.4452 0.4595ARMM 0.3113 0.2948

Sources: FIES, NSO


RegionIncome Gap Poverty Gap Severity of Poverty

2006 2009 2006 2009 2006 2009PHILIPPINES 27.2 25.7 5.7 2.7 2.2 2.0NCR 19.2 16.9 0.7 0.4 0.2 0.1CAR 27.5 28.0 5.1 4.8 1.9 1.8I (Ilocos Region) 23.5 22.4 4.8 4.0 1.7 1.4II (Cagayan Valley) 21.2 21.0 3.3 3.0 1.0 1.0III (Central Luzon) 22.3 22.9 2.7 2.8 0.9 0.9IV-A (CALABARZON) 22.2 20.2 2.1 2.1 0.7 0.6IV-B (MIMAROPA) 28.8 25.6 9.9 7.1 3.9 2.6V (Bicol) 28.7 25.1 10.3 9.0 4.0 3.3VI (Western Visayas) 24.2 23.8 5.4 5.7 1.8 2.0VII (Central Visayas) 31.7 28.8 10.6 8.7 4.6 3.6VIII (Eastern Visayas) 27.6 27.4 8.6 9.1 3.3 3.5IX (Zamboanga Peninsula) 32.9 30.8 11.3 11.3 5.1 4.8X (Northern Mindanao) 31.1 29.9 10.1 9.8 4.3 4.1XI (Davao) 28.4 27.5 7.4 7.0 2.9 2.8XII (SOCCSKSARGEN) 26.4 27.0 7.2 7.6 2.6 2.9XIII (CARAGA) 30.1 30.5 11.1 12.1 4.6 5.0ARMM 23.3 20.2 8.5 7.7 2.8 2.3

Annex 8.5. Income Poverty Measures, by Region: 2006 and 2009

Source: NSCB

Region Coverage (%) Adjusted Availment Rate (%) Support Value (%) BDR (%)

Philippines 53 42 34 7.7I - Ilocos Region 65 19 29 3.6II - Cagayan Valley 48 10 38 1.9III - Central Luzon 54 24 29 3.7IVA - CALABARZON 62 35 26 5.7IVB - MIMAROPA 36 23 32 2.7V - Bicol Region 46 38 40 7.0VI - Western Visayas 44 40 38 6.6VII - Central Visayas 54 61 27 8.7VIII - Eastern Visayas 38 62 32 7.3IX - Zamboanga Peninsula 36 76 40 11.0X - Northern Mindanao 74 49 42 15.1XI - Davao Peninsula 43 64 41 11.5XII - SOCCSKSARGEN 35 92 37 11.9NCR 77 33 21 5.4CAR 57 37 36 7.4ARMM 14 87 37 4.4CARAGA 51 28 42 6.1

Annex 8.6. National and Regional BDR Estimates for the Regular Benefit Package: 2008

Source: Joint DOH-PhilHealth Benefit Delivery Review, August 2010


Region

Children 0-5 years old, in percent Anemia, in percent Median urinary iodine

excretion, in mcg/LOverweight and obesity

among adults, in percentStunting Wasting 6mos – 5years Pregnant Pregnant Lactating

Philippines 32.3 6.9 23.7 42.5 105 81 26.6I 27.5 6.5 29.4 33.3 82 112 23.0II 31.1 8.0 39.3 60.0 157 161 22.3III 22.3 7.1 21.4 40.7 143 94 29.8IV-A 24.8 6.5 22.9 37.8 111 97 29.3IV-B 37.2 7.0 25.4 49.6 75 67 20.6V 38.2 8.0 24.9 51.1 125 97 20.5VI 39.1 8.5 29.1 61.5 111 74 19.4VII 35.1 4.6 20.4 40.4 82 63 28.0VIII 41.1 6.7 16.1 39.5 83 58 27.1IX 40.3 8.0 20.5 34.1 68 48 23.9X 37.7 6.6 16.0 35.7 38 55 29.1XI 37.0 5.7 15.4 22.6 62 50 28.9XII 39.6 6.9 34.8 49.8 105 72 25.4CARAGA 37.2 7.8 29.0 34.3 94 49 29.6NCR 24.7 6.2 23.7 48.0 135 128 32.2CAR 36.3 5.8 12.4 22.6 107 99 29.9ARMM 39.7 10.3 22.7 47.3 85 88 17.1

Annex 8.7. Various Forms of Malnutrition, by Region: 2008

Source: 2008 National Nutrition Survey by the Food and Nutrition Research Institute of DOST

Basic SectorPoverty Incidence (%) Magnitude in Millions

2000 2003 2006 2000 2003 2006

Women 32.3 29 30.1 12.22 11.60 12.80

Youth 24.5 23.5 25.4 5.47 5.29 5.92

Children 42.5 38.8 40.8 14.09 13.47 14.40

Senior Citizens 28 18.4 20.3 1.27 .96 1.29

Urban Poor 17.3 15.9 16.1 6.78 6.36 6.85

Migrant and Formal Sector Workers 18.7 18.4 19.5 2.62 2.88 3.22

Farmers 46.6 42.4 44 2.43 2.02 2.09

Fishermen 50.8 43.6 49.9 .45 .44 .48

Annex 8.8. Poverty Estimates of the Basic Sectors: 2000, 2003 and 2006

Source: NSCB Press Release ( July 2009)


Basic SectorLeast Poor Poorest

Region Poverty Incidence (%) Region Poverty Incidence (%)

Women NCR 9.7 ARMM 58.9Youth NCR 7.3 ARMM 53.2Children NCR 15.2 ARMM 66.3Senior Citizens NCR 4.4 ARMM 46.5Urban Poor CAR 7.4 ARMM 52.4Migrant and Formal Sector Workers NCR 4.8 CARAGA 36.8

Farmers Region II 16.9 ARMM 62.3Fishermen Region III 23.9 CARAGA 66.7

Annex 8.9. Regions with Minimum and Maximum Poverty Incidences for Each Basic Sector: 2006


Basic SectorMagnitude Region

Highest Lowest Poorest Least Poor

Children 1,420,163 262,711 1. Region V 1. CAR2. Region VI 2. Region II3. Region IV-A 3. Caraga

Women 1,183,088 245,306 1. Region V 1. CAR2. Region VI 2. Region II3. Region IV-A 3. Caraga

Urban Poor 1,138,424 37,563 1. NCR 1. CAR2. Region III 2. Region II3. Region IV-A 3. Region IX

Youth 547,595 135,222 1. Region VI 1. CAR2. Region V 2. Region II3. Region IV-A 3. Caraga

Migrant and Formal Sector Workers

400,251 41,863 1. Region VI 1. CAR2. Region III 2. ARMM3. Region IV-A 3. Caraga

Farmers 212,188 47,118 1. ARMM 1. Region II2. Region VII 2. Region III3. Region V 3. CAR

Senior Citizens 144,473 26,936 1. Region VII 1. Region II2. Region VI 2. CAR3. Region VIII 3. NCR

Fishermen 116,725 2,512 1. ARMM 1. Region II2. Region V 2. NCR3. Region VII 3. Region III

Annex 8.10. Regions with the Most Number of Poor for Each Basic Sector: 2006


291Peace & Security09Peace & Security


Peace & Security


A stable national security environment is crucial to achieving development, human security and general welfare. Stability can be threatened, however, by internal security concerns such as recurring armed conflict and criminality, together with new global security threats such as terrorism, human trafficking, illegal arms trade, and drug trafficking.

The challenge, therefore, is for the country to achieve national stability through an appropriate and adequate response to internal conflicts and external threats, so that it may become a responsible partner in promoting peace and good relations among nations. All these must occur within the irreducible framework of national sovereignty and territorial integrity.

Internal Security Challenges

Of all security concerns, the most pressing is the internal conflict involving armed groups with a capability to gravely affect lives and properties in areas in Southern Philippines, especially those

with large Muslim population. While government instituted efforts to come to a political settlement with the armed groups and has worked to address the causes of conflict, these conflicts have persisted, thereby affecting the delivery of basic services and creating a large development gap between conflict-affected areas and the rest of the country. Among the causes of armed conflict are abject poverty, poor governance, abuse of power, corruption, failures of the justice system, human rights violations, disputes over land ownership and use of natural resources, marginalization of lumad and indigenous cultural communities, and the lack of respect and recognition of ancestral domain and indigenous peoples’ rights.

Government will continue to pursue negotiated political settlements with the Moro Islamic Liberation Front (MILF) and the Communist Party of the Philippines-New People’s Army-National Democratic Front (CPP-NPA-NDF). There is also a need to complete the implementation of Final Peace Agreements with the Cordillera People’s Liberation Army (CPLA) (1986), Moro National Liberation Front (MNLF)

Peace and security shall be achieved in support to national development. The government shall exert all efforts to win peace and ensure national security. The peace process shall center on the pursuit of negotiated political settlement of all armed conflicts and the implementation of complementary development tracks to address its causes. This shall be anchored on conflict prevention and peace-building in conflict-affected areas. On the other hand, national security shall involve the whole-of-nation approach, focusing on internal stability, upholding the sovereignty and territorial integrity of the state, capability and preparedness against natural calamities and disasters, and reform and modernization of the security sector.

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(1996), and the Rebolusyonaryong Partido ng Manggagawa-Pilipinas / Revolutionary Proletariat Army / Alex Boncayao Brigade (RPMP/RPA/ABB) (2000). While this requires disposition of forces through appropriate reintegration, it will also involve provision of socioeconomic assistance to former rebels and delivery of basic services to conflict-affected communities. Meanwhile, the Tripartite Implementation Review of the 1996 Final Peace Agreement with MNLF is nearing completion, during which common grounds and common proposals were formulated for adoption and implementation.

While formal negotiations with both the MILF and the CPP-NPA-NDF have stalled in recent years, prospects have since improved for the resumption of formal negotiations. These include: (a) reconstitution by government of the negotiating panels for the MILF and the CPP-NPA-NDF peace talks; (b) continued implementation of the agreements with the MILF on ceasefire mechanisms, and rehabilitation and development of conflict-affected areas; and (c) agreement with the CPP-NPA-NDF on respect for human rights and international humanitarian law. Not the least of the reasons, however, has been the renewal of the government’s legitimacy through the democratic election of an administration that enjoys the people’s support and that is willing to invest its political capital on peace.

While peace negotiations are pursued, the causes of conflict must also be addressed in order to reap dividends from peace efforts. For conflict-affected areas, the peace talks must be complemented by the delivery of basic services, institution of good governance, people empowerment, assistance for the return or resettlement of IDPs, policy reforms, and local economic development.

Other Security Challenges

Other threats to peace and development in local communities arise from criminal elements and other armed threats to peace and order, including politically partisan armed groups (PAGS) that surface during the conduct of national and local elections. Putting an end to these criminal activities shall be given prime importance.

External Security Challenges

As global trade in goods and services and international investment become important drivers of the country’s economic growth, government shall continue to be vigilant in responding to crimes that thrive under an environment of increasingly open borders, such as terrorism, human trafficking, arms and drug-trafficking, and smuggling.

The archipelagic nature of the country makes it both urgent and challenging for the government to uphold its territorial integrity. Greater efforts shall be exerted to safeguard the country’s interests within maritime areas, notably its Exclusive Economic Zone (EEZ), through heightened maritime security capabilities.

The administration will have to pick up the pieces and resume the quest for peace with vigor and clarity of purpose. Our quest must not only focus on ensuring stability of the State and the security of our nation. Our ultimate goal must be the safety and wellbeing of our people.

“We must revive the peace process on the basis of a comprehensive understanding of the root causes of the conflict, under clear policies that pave and clear the way ahead, and driven by a genuine desire to attain a just and lasting peace. We shall endeavor to restore confidence in the peace process that is transparent and participatory, and renew our faith in our shared vision of a peaceful, secure and prosperous future under one sovereign flag.”

-President Benigno S. Aquino, April 22, 2010

Mandarin Hotel, Makati


In addition to territorial threats, the overseas diaspora of Filipinos entails a wider redefinition and understanding of threats to Filipino interests. In particular, the predicament of overseas Filipinos who come into conflict with the laws of other countries poses complex new challenges to the country’s conduct of foreign relations, with potential repercussions on issues of sovereignty and territorial integrity.

A comprehensive response to these concerns involves initiatives to improve relations and forge cooperation with other nations to preserve and protect national security and interest, including the welfare of Filipinos living and working abroad.

Nontraditional Security Challenges

Nonmilitary and transnational threats, otherwise called nontraditional security concerns, also challenge the country’s peace and security. Armed personnel of government shall continue to assist other government agencies during emergency situations, such as during disasters caused by natural hazards and health pandemics, as well as in securing vital development projects under threat of destabilization.

Strategic FrameworkAs the challenges to national security become more complex, effective strategies that would ensure the attainment of peace, public order and safety through the cessation of armed conflict and prevention of crimes shall be continuously identified and pursued while communities are empowered and transformed into areas of growth and productivity.

Because peace and security are indivisible, efforts toward their attainment must be anchored through a whole-of-nation approach, which seeks to bring about a concerted effort towards national peace and security. This approach is not about burden-sharing but rather about creating a consensus and understanding

of security, that is shared not just among core security forces and oversight government institutions, but also by civil society and all the nation’s communities. This shared responsibility can only emanate from a shared concept of security. People-centered security within the framework of human security puts people’s welfare at the center of its operations. It gives primacy to human rights while recognizing and promoting local security and safety based on the needs and realities of communities.

This framework shall be pursued under the following guiding principles: (a) full respect, promotion and protection of human rights and human security; (b) primacy of the peace process at all times; and (c) acceptance of social diversity and promotion of a culture of peace. These principles shall be adopted in all key aspects of the implementation of strategies.

Overall, specific strategies shall support government’s National Security Policy and National Security Strategy. These two documents lay down the blueprint for the country’s national security vision and serve as the basis for the preparation of the plans and programs of government agencies involving national security.

Section 1. Winning the Peace

Promotion of the peace process shall be the centerpiece of the internal security program, as a testament to government’s commitment to a policy of peace, reconciliation and reunification. Peace is not just the absence of war or conflict, rather it is the sum total of conditions that ensure human and social wellbeing in all its dimensions. This entails winning the hearts and minds of the aggrieved and afflicted while retaining the allegiance of the rest.

Because peace and security are indivisible, efforts toward their attainment must be anchored through a whole-of-nation approach, which seeks to bring about a concerted effort towards national peace and security.

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A. Goal

While the government’s ultimate aim is to win the peace, the goal for the medium term shall be to bring all armed conflict to a permanent and peaceful closure.

B. Objectives

Toward this end, the following objectives shall be met by the end of the Plan period:

1. A negotiated political settlement of armed conflicts; and

2. The causes of armed conflict and other issues that affect the peace process being effectively addressed.

C. Specific Strategies

In pursuit of the abovementioned goal and objectives, two tracks shall be followed, each with its corresponding strategies and programs, as follows:

1. A Negotiated Political Settlement of all Armed Conflicts

This track shall involve the following:

a. Resumption and completion of negotiations with the MILF and CPP-NPA-NDF, respectively;

b. Completion and implementation of signed final closure agreements with the CPLA (1986) and the Rebolusyonaryong Partidong Manggagawa-Pilipinas / Revolutionary Proletariat Army / Alex Boncayao Brigade (RPM-P/RPA/ABB) (2000), respectively;

c. Adoption and implementation of actions agreed upon in the Tripartite Implementation Review of the 1996 Final Peace Agreement with the MNLF;

d. Final disposition of arms of the abovementioned armed groups and mainstreaming of former rebels as productive members of society, in accordance with peace agreements;

e. Establishment of mechanisms for a participatory and accountable peace process.

Negotiations with armed groups shall be guided by the principles laid down in EO 3 (series of 2001), with reference to a comprehensive peace process which: (a) is community-based, reflecting the sentiments, values and principles important to all Filipinos; (b) aims to forge a new social compact for a just, equitable, humane and pluralistic society; and (c) seeks a principled and peaceful resolution to the internal armed conflicts, with neither blame nor surrender, but with dignity for all concerned. The following parameters for peace talks are further specified:

a. the Constitution, inclusive of the flexibilities provided within its provisions;

b. the experience and lessons learned from past negotiations and with the creation and operation of the ARMM;

c. Government’s ability to deliver - politically, economically and socially - commitments made and agreed on; and

d. Inclusiveness and transparency, sensitivity to general public sentiment as far as practicable, with the aim of restoring full confidence and trust in the peace process.

In order to put in place a gender-responsive mechanism for transparent and accountable peace process, civil society organizations shall be involved, with government support if necessary, in the establishment of a Consultative Body defining its own structures and mechanisms to fully participate in various peace processes. Alongside this body

To put in place a transparent and accountable peace process, civil society organizations shall be involved in various peace processes.


Government will implement a converged peace-building program focused on the development of conflict-affected areas to address the causes of armed conflict.

led by civil society organizations, the government shall establish an Advisory Body with representatives from Congress, members of the 1987 Constitutional Commission, retired Justices of the Supreme Court, local government executives, and former government chief negotiators. This shall serve as venue for dialogues to address issues of discontent, inhibition, and agitation, facilitate conflict resolution and, prevent armed confrontations in conflict-affected areas.

2. Complementary Track

A complementary track will be followed to address the causes of conflict and issues affecting the peace process. This includes:

a. Focused development in conflict-affected areas through the PAMANA “Payapa at Masaganang Pamayanan” Program;

PAMANA (Peaceful and Resilient Communities) is the national government’s peace and development framework to respond and strengthen peace building, reconstruction and development in conflict-affected areas (CAAs). Under the guiding principles of PAMANA, government will implement a converged peace building program focused on the development of conflict-affected areas to address the causes of armed conflict. The main strategy is to bring back government in these communities by ensuring that they benefit from improved basic services delivery and are served by responsive and accountable government. This will ensure that these communities feel the presence of government in their lives. The design of specific interventions shall recognize cultural practices and traditions.

PAMANA aims to: (a) reduce poverty and vulnerability in conflict-affected areas; (b) improve governance; and (c) empower communities and strengthen their capacity to address issues of conflict and peace through activities that promote

social cohesion. Over a period of four years, PAMANA shall cover 218 municipalities in 43 provinces. Some 3,500 conflict-affected barangays and an estimated 400,000 households will benefit from this intervention. This will be implemented through collaboration between national government agencies, LGUs and development partners. PAMANA rests on three main pillars:

• Pillar 1 refers to interventions at the macrolevel that help establish the foundations of peace and the building of communities capable of addressing peace issues. Among the policy issues the framework seeks to address are:

» Dialogues and policy formulation to improve governance and address threats to identity and marginalization;

» Ancestral domain, agrarian reform and natural resource conflict resolution; and

» Security guarantees and transitional support especially to internally displaced persons (IDPs).

• Pillar 2 refers to microlevel interventions focused on households and communities. These include delivery of basic services at the community level through conditional cash transfer approaches, community driven reconstruction and development and community livelihood.

• Pillar 3 refers to mesolevel interventions that address local development challenges, including constraints to local economic development, economic integration of poor areas with more prosperous areas and physical and economic connectivity improvements. These include

297Peace & Security

high-impact local development projects, such as ancestral domain management plans, support services for farmers and farm-workers, including roads and post-harvest facilities, or culturally sensitive industries, such as development of community-based tourism and the halal industry.

b. Support efforts to end impunity and extra-judicial killings through decisive action of the government in dealing with grave human rights violations as well as political or election-related violence;

c. Support the indigenous peoples’ agenda which includes: professionalizing the service bureaucracy; the review of Certificate of Ancestral Domain Titles (CADTs) issuances; delivery of basic services and review/ redress IPs in conflict areas and realization of the Indigenous Peoples Masterplan (IPMAP) 2011-2016 with particular stress on Human Rights Protection of IPs; implementation and compliance with the International Convention on the Elimination of All Forms of Racial Discrimination (ICERD) and the Convention of the Rights of the Child; and advocacy of the ratification of ILO Convention No. 169, or the Convention on Indigenous and Tribal Peoples;

d. Support an affirmative action agenda for Muslims including the development of a halal industry, institutionalization of the Hajj management system, establishment of economic and financial mechanisms, such as Islamic banking and microfinance, speedy resolution of cases involving children and women languishing in jails, putting an end to discriminatory practices in work places, and the establishment of Shari’ah Courts;

e. Support the enhancement of ARMM governance, including greater accountability to citizens living in remote and poorest areas. This shall be accompanied by efforts to end patronage politics, dismantle all private armies, ensure free, responsible and clean elections, strengthen democratic processes and the rule of law in the electoral system, and fully integrating ARMM in all Mindanao-wide and national development plans;

f. Support the implementation of UN Security Council Resolution 1325, which entails close collaboration with the CSOs to fully comply with the government’s commitment to increase participation of women in peace processes and address sexual violence against women in armed conflict situations. More specifically, efforts shall be exerted to: (i) ensure the protection of women’s rights and prevent the violation of these rights in armed conflict and postconflict situations; (ii) empower women and ensure their active and meaningful participation in areas of peace building, peace keeping, conflict prevention, conflict resolution and postconflict reconstruction; (iii) promote and mainstream the gender perspective in all aspects of conflict prevention, conflict resolution and peace building; and (iv) institute a system to monitor, evaluate and report the implementation of the national action plan to enhance accountability for successful implementation and the achievement of its goals;

g. Address the needs of children in situations of armed conflict by setting up an effective mechanism to monitor, report and immediately respond to the identified seven grave child rights violations in conflict situations, namely: recruitment and use of minors by armed groups, killing and maiming, abduction, denial of humanitarian assistance, rape and sexual abuse, and attacks on schools and hospitals.


Protecting children in situations of armed conflict will likewise entail monitoring of implementation and compliance to the International Convention of the Rights of the Child;

h. Support the reform of the security sector, which entails mainstreaming a people-centered approach to human security and developing policies to institutionalize Democratic Control of the Armed Forces (DCAF);

i. Support the settlement of land disputes aimed at rationalizing national land policies and strengthening conflict resolution mechanisms on the ground, recognizing the fact that internal armed conflicts are largely rooted in long-standing disputes over land and resources.

Legislative Agenda

During the Plan period, the administration shall work toward the passage of legislation to achieve the following outcomes, among others:

1. An Organic Act for the ARMM as amended to ensure full implementation of the GRP-MNLF Final Peace Agreement;

2. Protection of women and children in situations of armed conflict; and

3. Human rights and human security of persons in conflict-affected areas fulfilled and protected.

Section 2. Ensuring National Security

Apart from the peace process, the government shall create and sustain an enabling environment conducive to development. This will be done by involving the whole government, other institutions, and the entire citizenry in addressing national integrity, public order and safety, and governance reforms. These mutually-reinforcing strategies

are envisioned to secure internal and external peace that will contribute to the development efforts of the government and ensure that Filipinos will be able to take part in the process of economic growth and development.

A. Goal

Throughout the Plan period, the government shall create and sustain a safer and more secured environment conducive to national development.

B. Objectives

In particular, the following objectives shall be pursued:

1. Promotion of sustained internal stability;

2. Full capability to uphold the sovereignty and territorial integrity of the state assured;

3. Highest standard of capability and preparedness against natural calamities and disasters achieved; and

4. Security sector reformed and modernized.

C. Specific Strategies

1. To promote and sustain internal stability, the following strategies shall be pursued:

a. Capabilities of armed groups must be reduced at a level where they can no longer threaten the stability of the state. These shall be done through the following:

• End activities of Abu Sayyaf Group (ASG), Jemiah Islamiyah( JI) and their allied armed groups and other criminal elements; and

Secure internal and external peace that will contribute to development efforts and ensure that Filipinos will be able to take part in the process of economic growth and development.

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• Contribute to the establishment of conditions for civil authorities to take responsibility for the safety and wellbeing of their constituents.

b. Continuous and intensified police and other law enforcement agencies’ operations must be implemented to address criminality including organized crime groups. To ensure the safety of the citizenry from becoming victims of unlawful acts, the following shall be carried out:

• Enforce the law effectively and credibly and anticrime strategies in partnership and collaboration with stakeholders and other pillars of the Criminal Justice System;

• Improve performance in solving crimes; and

• Dismantle private armed groups.

2. To assure full capability to uphold the sovereignty and territorial integrity of the state, the following strategies shall be undertaken:

a. International relations and external security must be sustained and cultivated through the following:

• Strengthen cooperative security arrangements with neighbors and other countries by adopting mechanisms in the regional and global setting in building confidence and promoting consultations and interactions.

• Pursue friendly and peaceful bilateral and multilateral relations with other nations and international agencies to

promote cooperative projects in the political, economic and military fields, as well as assuring the security and welfare of Filipinos working and living abroad; and

• Expand and improve participation in UN Peace Operations.

b. Capability on border management, surveillance and detection against lawless elements must be improved through the following:

• Enhancement of border security through the strict enforcement of the Philippine immigration laws and upgrading of surveillance and detection capacity to thwart the entry of foreign terrorists and other lawless elements as well as human trafficking and smuggling of anti-social goods and weapons of mass destruction; and

• Ensuring that maritime assets, maritime practices, territorial integrity and coastal areas are protected in accordance with the Baselines Law (RA 9522) and by upgrading air and maritime capability.

3. To achieve the highest standard of capability and preparedness against natural and man-made calamities and disasters, the following will be undertaken:

• Strengthen the role of the security sector in emergency relief and rescue operations to maintain public order and safety during calamities. Mechanisms to improve alert warning and monitoring before and during disasters will be enhanced to pre-empt loss to lives and properties. The sector will be transformed to become more dynamic, proactive, and responsive to prevent and prepare for disasters through improvement on technical


and institutional capacity, and by promoting synergy among stakeholders and building resiliency of communities to disasters; and

• Support national development programs by securing and protecting critical infrastructures and facilities, and other high value projects of the public and private sector.

4. To carry out Security Sector Reform and Modernization initiatives that shall adhere to the principle of transparency and accountability, the following strategies shall be implemented:

a. Pursue reforms in the security sector by adopting policies, programs and activities that contribute to:

• Strengthening the civilian control and oversight of the security sector;

• Orienting the security forces, to include, among others, programs designed to train soldiers, police and other security sector personnel on their respective responsibilities, respect on human rights and international law, and ethnic sensitivity;

• Strengthening the internal security system. Pursue and support the reform efforts in both the AFP and PNP through programs such as the Philippine Defense Transformation Program of the AFP and the Integrated Transformation Program-Performance Governance System of the PNP. The security sector must rebuild themselves as institutions by reorganizing, retooling, and reorienting the approaches to keep up with the constantly changing policy and security strategy environment; and

• Strengthening of the rule of law throughout the country by ensuring a strong, independent judicial system and a better functioning of correctional systems so that justice is applied to all. The Philippine government recognizes the need to strengthen the rule of law to assure the people of the basic protective services with an effective and reliable response mechanism from the law enforcement agencies as well as a functioning and dependable justice system.

b. Pursue the upgrading and modernization of the defense and security establishments to perform the full spectrum of roles and mandates in accordance to the more comprehensive and updated definition of National Security. This entails the following:

• Capability to perform all types and levels of internal and external operations as well as non-traditional and development roles;

• Capability to perform air, land and sea operations, as mandated;

• Capacity building of the security sector particularly on non-traditional skills on conflict resolution and peace-building, democratic accountability, gender and development issues, ethnic sensitivity, and indigenous people’s rights; and

• Education, training, and preparation of all officers (including non-commissioned officers) and civilian employees, in accordance with the highest standards of personal integrity and professional competence required in all the leadership, officer, technical and rank and file positions in the armed and other uniformed services.

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Legislative Agenda

During the Plan period, the administration shall work toward the passage of legislation or amendments to existing laws such as:

1. Amendment of the AFP Modernization/Development Program (RA 7898) to extend its implementation;

2. Enactment of the National Defense and Security Act to make it relevant to the contemporary global and regional environment;

3. Enactment of a law declaring the country’s maritime zones (Territorial Sea, Contiguous Zone and Exclusive Economic Zone) to ensure Philippine Maritime interests;

4. Enactment of PNP Reorganization Law; and

5. Enactment of Comprehensive Law on Firearms, light Weapons and Ammunition.

303Conservation, Protection & Rehabilitation of the Environment & Natural Resources10Conservation, Protection & Rehabilitation of the Environment & Natural Resources


The country is widely acknowledged as having an outstanding endowment of natural resources, which could provide essential ecosystem services to the population. Demands arising from development and utilization activities, population expansion, poor environmental protection, and external factors such as climate change, however, have placed the country’s environment and natural resources under grave threat. For the medium-term, an environment that is healthy, ecologically balanced, sustainably productive, climate change resilient, and one that provides for present and future generations of Filipinos is envisioned. This vision will be pursued through an integrated and community-based ecosystems approach to environment and natural resources management, precautionary approach to environment and natural resources, sound environmental impact assessment (EIA) and cost-benefit analysis (CBA). These, then, are all anchored on the principles of shared responsibility, good governance, participation, social and environmental justice, intergenerational space and gender equity, with people at the core of conservation, protection and rehabilitation, and developmental initiatives.

Conservation, Protection & Rehabilitation of the Environment

& Natural Resources

Assessment State of the Environment and Natural Resources

The degraded state of the country’s environment and natural resources is felt most intensely by the poor, especially the rural communities given that they depend on these resources for their primary source of living. On the other hand, poverty frequently aggravates environmental stress as the marginalized population presses upon limited resources, such as unregulated activities and upland cultivation.

Major urban centers are polluted…

With regard to water pollution, the Biochemical Oxygen Demand (BOD) levels of 10 rivers (Bocaue, Anayan, Malaguit, Paniqui, Calapan, Iloilo,

Luyang, Sapangdaku, Cagayan de Oro and Balili) are already within standard and BOD levels of rivers have improved. However, waterways in major urban centers, especially esteros, are unfit for human activity, despite recent clean-up efforts. The cost of medical treatment and loss of income from water-borne diseases total PhP6.7 billion per year, according to a WB report (2007). At least six rivers in the NCR, Region 3 and Region 4-A fail in terms of both dissolved oxygen (DO) and Biological Oxygen Demand, namely: the Parañaque, San Juan, Marikina, Pasig, Meycauayan, and Ylang-Ylang rivers. The Supreme Court in December 2008 issued a continuing mandamus for the government to clean up the waterways, especially those emptying into Manila Bay, in order to improve

305Conservation, Protection & Rehabilitation of the Environment & Natural Resources

the water quality in the bay to “SB level”. 1

In Metro Manila, up to 58 percent of groundwater has been found to be contaminated with coliform.2

The problems posed by hazardous wastes are also beginning to be a priority concern due to the increasing number of large companies that generate wastes considered hazardous to health and the environment. Like most developing countries, the Philippines still has inadequate equipment and technical expertise to deal with these wastes despite steps to define the regulatory and enforcement responsibilities of various government agencies. Currently, the Philippines has no large-scale treatment and disposal facilities for hazardous wastes.

…solid waste remains a major source of pollutants

Uncontrolled dumping of raw sewage in coastal areas, particularly those that are thickly populated or used heavily by tourists, contributes to dangerous water contamination levels. The lack of point-source and nonpoint-source pollution controls are the main factors that contribute to the degradation of water quality in the Philippines.

The problem of solid waste disposal is most serious in urban centers, particularly Metro Manila, because of high population density, high consumption rates, and the concentration of packaged goods, and packaging materials, some of which are toxic and nonbiodegradable.3 The Philippines generates 30,000 tons of garbage per day. Metro Manila alone produces 8,000 tons per day, of which

only 70 percent is collected. For the whole country, only half of the garbage generated is collected. Uncollected garbage ends up mostly in rivers, esteros, and other water bodies, clogging the drainage system and leading to floods and the pollution of major water bodies.

Water is becoming scarcer…

The country is endowed with abundant water resources. It experiences an average annual rainfall of 2,400 mm. and has 421 river basins, of which 20 are major river basins ranging from 990 to 25,000 sq. km. The country’s watersheds and aquifers, if fully functional, could supply 146 billion cubic meters (BCM) of water annually for domestic, industrial and agricultural uses. Total water availability is estimated at 126 BCM per year from surface water such as rivers or streams, and an estimated 20 BCM per year groundwater potential (NWRB 1998).

Although water is still abundant in certain areas, the country faces the threat of emerging water scarcity. Lack of urban planning, indiscriminate urban development, lack of investment in water, problems of water resource management, and the impact of climate change threaten water security and sustainability. Deforestation and lack of effective management of forest and freshwater ecosystems have led to the further deterioration of watersheds, limiting aquifer recharge and increases water runoff and soil erosion. Around 267 watersheds with a total area of 10.6 million hectares have been identified as needing immediate rehabilitation. These priority watersheds support national irrigation systems and are the major source of domestic water supply. Storage and distribution of water to deficient areas and proper water-resources management are also areas of concern.

The Philippines generates 30,000 tons of garbage per day. Metro Manila alone produces 8,000 tons per day, of which only 70 percent is collected.

1 SB-areas regularly used by the public for bathing, swimming, skin diving, etc.2 European Commission (EC), Country Environmental Profile, 2005.3 DENR, National State of Brown Environment, 2009.


Increasing water demand has resulted in a number of regions and at least nine key urban centers experiencing water stress (NWRB 1998). These include Metro Manila, Metro Cebu, Davao, Baguio, Cagayan de Oro, Bacolod, Angeles, Iloilo, and Zamboanga. These highly urbanized cities rely mostly on groundwater for water supply, resulting in uncontrolled withdrawal from groundwater aquifers in recent years. Rapid and uncontrolled urban development has reduced aquifer recharge and has eventually resulted in the decline of groundwater levels as well as saltwater intrusion.

The 2010 Philippines’ MDG Progress Report shows the proportion of the Philippine population with access to safe water has risen at a moderate rate, increasing from 73.8 percent in 1991 to 81.4 percent in 2008. If the trend continues, the 2015 target (86.9%) may be attainable. These favorable results, however, hide the fact that almost one in five (or 15.73 million) persons is still unable to access safe water despite abundant water resources.

…quality of farm land is deteriorating and forested lands are shrinking

The quality of land resources has deteriorated steadily because of erosion, pollution and land conversion. Twenty-one percent of the country’s agricultural lands and 36 percent of nonagricultural lands are moderately or severely eroded.4 Soil erosion has affected the productivity of land, limited the rehabilitation or restoration of degraded lands, lowered the quality of surface water, and modified hydrologic conditions by changing land resources and land management. Moreover, the changing weather patterns have brought about prolonged droughts and excessive rains. Farmers have to endure lower yields and lower income from farming.

Of the country’s total land area of 30 million hectares, 47 percent (14 million hectares) has been classified as alienable and disposable (A&D)

Figure 10.1. Philippine Forest Cover, 1934-2003

Source: World Bank (2009) and Forest Management Bureau (2010)The quality of land resources has deteriorated steadily because of erosion, pollution and land conversion. Twenty-one percent of the country’s agricultural lands and 36 percent of nonagricultural lands are moderately or severely eroded.

4 ADB, Country Environmental Analysis: Philippines, 2009


lands while 15.9 million hectares (52%) are classified as forestlands. Some 2.7 million hectares of total classified forestlands have been either established or considered as protected areas, making up a total of 238 protected areas. Of the 15.9 million hectares of forestland, only 6.43 million hectares or 41 percent were still forested in 2003, a significant decline from the 17 million hectares recorded in the 1930s.5 Figure 10.1 shows the decline in forest cover from 1934 to 2003.

An analysis of satellite-based maps elaborated by the EU’s Joint Research Centre ( JRC) in 2007 revealed that possibly, only 19 percent of the country’s land area remains forested.

The main threats to Philippine forests come from the collection of fuel wood, settlements in forestlands, conversion to agricultural uses, kaingin and forest fires, and illegal logging. There are approximately 20 million people living in upland watershed areas, half of whom are dependent on shifting cultivation for their livelihood6. Inequitable land distribution, insecure tenure and rural poverty are often cited as causes of deforestation and forest degradation in the Philippines, linked to increases in rural populations both as a result of high fertility and in-migration7. Deforestation has made many poor communities more vulnerable to natural calamities such as of typhoons, flash floods and landslides8.

The country’s unique biodiversity is under severe pressure…

The Philippines is rich in biological and genetic resources or biodiversity and is one of the 18 megadiverse countries in the world. The majority of plant and animal species in the country are unique and cannot be found anywhere else. The country’s species are among the world’s top 10 in terms of endemism. Given the land density and the density of both flora and fauna, the Philippines may even be considered to be the world’s most megadiverse country.

The country’s forests and coastal and marine ecosystems, inland water bodies, wetlands and caves are also home to a wide variety of flora and fauna. The wetlands are home to one of the largest assemblies of microorganisms, reptiles, amphibians, fish, birds, and mammals that live within or near waters. Over 1,500 caves have been recorded in the country since 1994 with a significant number yet to be discovered and mapped. These caves are considered unique, natural and nonrenewable resources with important scientific, economic, educational, cultural, historical and aesthetic values.

Biodiversity in the Philippines, however, is also among the most endangered in the world. As of 2008, 221 species of fauna and 526 species of flora have been included in the list of threatened species. The continually increasing demands for food, energy, and other goods, coupled with the pressures exerted by rapid development and economic growth, have put much stress on the country’s natural environment resulting in the destabilization of ecosystems, destruction of natural habitats and an alarming rate of biodiversity loss. The introduction of invasive alien species (IAS) has threatened biodiversity and destabilized ecosystems.

Located within the Coral Triangle, at the center of high marine diversity, the country’s vast, rich and diverse coastal and marine resources are composed of coral reefs, sea grass beds, mangrove and beach forests, fisheries, invertebrates, seaweeds, marine mammals and many others.

5 DENR-FMB estimate based on 2003 satellite images6 Cruz and Zosa-Feranil, 1998.7 Kummer, 1992; Liche, 1997.8 EC CEP, 2009


…coastal and marine resources are under threat

The Philippines has one of the world’s longest coastlines, a total of 36,289 kilometers. The country’s marine jurisdiction extends up to 200 nautical miles from the baseline (Exclusive Economic Zone) and up to the limits of the continental margin where it extends beyond 200 miles (Extended Continental Shelf ). Located within the Coral Triangle, at the center of high marine diversity, the country’s vast, rich and diverse coastal and marine resources are composed of coral reefs, sea grass beds, mangrove and beach forests, fisheries, invertebrates, seaweeds, marine mammals and many others. About 60 percent of the total Philippine population live in the coastal zones and depend on these coastal resources for livelihoods.

Some unsustainable human activities, however, cause great stress to coastal and marine resources. Coastal development and climate change impacts such as sea-level rise and increasing sea-surface temperature add to the stress on these resources. Sedimentation in coastal areas due to unsustainable land use in upland areas continues to threaten coastal ecosystems. The productivity of the country’s coral reefs, mangrove forests, sea grass, and algal beds and fisheries is declining at an alarming rate. Of the 27,000 sq km. of coral reef, over 70 percent are of poor or fair quality and only five percent are in excellent condition.9 The Philippine reefs may already be in a steady state of decline from 5 percent to 3 percent to less than 1 percent (Nanola et. al., 2004). The country’s coral reefs are considered to be one of the highly threatened reef areas in the world.10

Major distributions of seagrass beds in the Philippines are found in Bolinao

Bay in Luzon, Palawan, Cuyo Islands, the Cebu-Bohol-Siquijor area, Zamboanga, and Davao. About half of the country’s seagrass beds have been lost due to coastline development and blast fishing. The mapping of seagrass bed distribution remains limited, and the management of seagrass resources has not received priority.

Mangroves protect the coast from waves, tidal currents, and typhoons and provide habitats, shelter, breeding sites, and food sources to various groups of fish and other coastal wildlife. The ecological functions of mangroves as land builder and coastline stabilizer are also widely known. Mangrove cover, however, has declined from 450,000 hectares in 1918 to only about 140,000 hectares in 2008.11 The development of mangrove swamps into aquaculture ponds, salt beds, reclamation areas and other agricultural activities has extensively degraded this resource. A total of 62,834 hectares of mangrove forest area were issued Fishpond Lease Agreements (FLAs) between 1973 and 2002. Logging concessionaires generally have not left behind mother trees to replenish the area, and several cases of illegal logging cutting occur even in protected reserves.

… mineral resource development is delivering mixed results

The mining industry in the Philippines has rebounded due to the promotion and revitalization of responsible mining and recognition of the industry’s possible contribution in inducing economic growth, attracting investments and reducing poverty in the countryside. Challenges remain on the emerging framework of

9 Gomez et. al., 1994.10 Burke et al., 200211 WB, 2009


responsible mining specifically on corporate accountability, voluntary compliance among companies and giving of due recognition to local autonomy and indigenous peoples’ rights.

Of the country’s 30 million hectares of land area, 9 million hectares (30%) is considered as having high mineral potential. Only 2.7 percent of this high-potential area is covered by mining permits or contracts and only 0.32 percent is in the development or operating stage. The mining industry’s potential as a driver of economic growth has led to the revitalization of the sector in the last six years.12 As a result, investments in priority mineral exploration, development and processing projects from 2006-2009 have reached US$2.2 billion, and the

production of gold, copper, and nickel has also increased. Nickel production increased by 651 percent, buoyed by favorable prices, while copper production rose by 141 percent in the same period. The value of mineral production increased by 46.34 percent from PhP72.5 billion in 2006 to PhP106.1 billion in 2009. Mining contributed 1.3 percent to GDP, or a gross value added of PhP97.1 billion in 2009 (at current prices). With the expected operation of five metallic mines and one cement plant, output value is projected to increase by 30 percent to PhP138.5 billion in 2010. For the period 2006 to 2009, employment in mining and quarrying increased from 141,000 to 166,000 (0.50 %), while taxes, fees and royalties from the minerals industry rose by 93.7 percent, from PhP6.39 billion in 2006 to PhP12.38 billion in 2009.

Figure 10.2. Distribution of Active Faults and Trenches

Source: PHIVOLCS Source: PAGASA

Figure 10.3. Frequency of Tropical Cyclones in the Philippines, 1948-2006

12 DENR-MGB, Mining Industry Statistics, 2011


Data show that the share of mining in GDP and employment is increasing and there are considerable potentials. However, target investments and excise tax from mining in 2004-2010 have not been fully achieved due to the financial crisis, among others. In addition, an assessment report of a mining project has indicated that the fair share of the government from mining has not been achieved due to the existing incentive mechanism.13 Issues have been also raised on sharing of the mining industry with

regard to foreign companies as well as the undesirable environmental conditions which the Filipino communities will have to deal with.

In separate researches, it was found that mining permits or contracts were within half the number of titled and claimed ancestral domains.

A number of mining projects, however, have been alleged to have caused environmental degradations, physical

Provinces Rank Area Susceptible to Flooding (%)

Pampanga 1 79.5

Nueva Ecija 2 51.2

Pangasinan 3 48.1

Tarlac 4 47.1

Maguindanao 5 42.5

Bulacan 6 39.9

Metro Manila 7 33.2

Cotabato (North Cotabato) 8 30.1

Oriental Mindoro 9 28.7

Ilocos Norte 10 27.9

Iloilo 11 26.7

La Union 12 26.3

Cagayan 13 25.5

Sultan Kudarat 14 24.4

Ilocos Sur 15 23.4

Bataan 16 23.1

Leyte 17 20.8

Davao Del Norte/Compostela Valley 18 20.2

Compostela Valley/Davao Del Norte 19 20.2

Camarines Sur 20 19.2

Table 10.1. Top 20 Provinces Susceptible to Floods

Source: DENR-Mines and Geosciences Bureau (MGB), 2010.

Provinces Rank Area Susceptible to Landslides(%)

Misamis Occidental 1 90.3

Quirino 2 87.1

Bulacan 3 86.7

Basilan 4 84.7

Bukidnon 5 84.7

Surigao Del Norte 6 82.6

Quezon 7 82.1

Camarines Sur 8 78.6

Lanao Del Norte 9 77.6

Camarines Norte 10 77.4

Zamboanga Del Norte 11 77.3

Northern Samar 12 74.5

Pampanga 13 74.4

Metro Manila 14 72.9

Pangasinan 15 71.5

Davao Oriental 16 70.9

Southern Leyte 17 70.1

Aurora 18 68.9

Cotabato (North Cotabato) 19 67.9

Sulu 20 67.4

Table 10.2. Top 20 Provinces Susceptible to Landslides

Source: DENR-MGB, 2010.

13 DENR, Assessment of the Rapu-Rapu Polymetallic Project, 2006.


Table 10.3.Hazard Susceptibility of Selected Provinces by Poverty Incidence

Sources: NSO, NSCB, MGB, PAGASA, UNDP

Province/Region 2006 Pov. Inc Susceptibility to hazards (% of area)

Typhoon frequency

% Rank Flood RIL

Tawi-Tawi 78.9 1 0.8 5.7 1 in 50 yrs

Zamboanga Del Norte 63.0 2 3.2 50.1 1 in 50 yrs

Maguindanao 62.0 3 42.5 23 1 in 50 yrs

Apayao 57.5 4 7.2 84.7 4 in 3 yrs

Surigao Del Norte 53.2 5 9.8 35 1 in 1 yr

Lanao Del Sur 52.5 6 7.6 41.4 1 in 30 yrs

Northern Samar 52.2 7 14.9 49.6 4 in 3 yrs

Masbate 51.0 8 5.7 28.8 1 in 1 yr

Abra 50.1 9 7.6 82.1 4 in 3 yrs

Misamis Occidental 48.8 10 3.5 50 1 in 30 yrs

Agusan Del Sur 48.7 11 15.3 51.4 1 in 10 yrs

Oriental Mindoro 47.1 12 28.7 54.6 1 in 1 yr

Sulu 46.5 13 no data 10.4 1 in 50 yrs

Occidental Mindoro 46.5 13 18.3 63.5 1 in 1 yr

Kalinga 45.8 15 7.2 84.7 2 in 1 yr

Surigao Del Sur 45.4 16 11.1 48.3 1 in 3 yrs

Mountain Province 45.0 17 0.8 87.1 2 in 1 yr

Sarangani 44.8 18 5.3 67 1 in 50 yrs

Lanao Del Norte 44.1 19 11.7 54.9 1 in 30 yrs

Negros Oriental 43.7 20 5.6 51 1 in 3 yrs

Sorsogon 43.5 21 13.7 47 4 in 3 yrs

Antique 43.0 22 13.6 74.5 1 in 2 yrs

Eastern Samar 42.7 23 8.5 62.1 4 in 3 yrs

Aklan 42.6 24 18.3 66.5 1 in 2 yrs

Romblon 41.9 25 10.7 58 1 in 1 yr

Camarines Sur 41.2 26 19.2 38 1 in 1 yr

Davao Oriental 40.8 27 7.9 70.1 1 in 30 yrs

Palawan 40.8 27 10.3 43.7 1 in 3 yrs

Marinduque 40.8 27 10.6 78.6 1 in 1 yr

Sultan Kudarat 40.7 30 24.4 52.1 1 in 50 yrs

Leyte 40.5 31 20.8 49.5 1 in 1 yr

Samar 40.2 32 6.2 68.9 1 in 1 yr


displacement of indigenous peoples, and cultural dislocations. In 2005, a European Union (EU)-commissioned study reported that legal and illegal mining operations posed serious threat to the forest and to local rivers because of forest clearing and the release of toxins.14 Metallic mine waste generated from 1990 to 1999 amounted to 131 million metric tons (MT), while mine tailings were about 136 million MT.15 Many of these concerns stem from the failure of many small and large-scale mining companies to adhere to stringent, globally-defined standards for responsible mining.

Ensuring the equitable and just distribution of benefits from extracted mineral resources remains to be a challenge.

Currently, there is no standard resource and environment valuation. There is a need to have a cost-benefit analysis and standard parameters that will consider all relevant values (including nonmarket values).

Extreme vulnerability to environmental hazards and climate-related risks…

Owing to its location and natural attributes, the country is prone or vulnerable to natural hazards such as tropical cyclones, floods, earthquakes and volcanic eruptions. Active faults and trenches line the country (Figure 10.2). The longest of these, the Philippine Fault, is one of the major active faults in the world. On the average, the Philippine Institute of Volcanology and Seismology (PHIVOLCS) records 20 earthquake occurrences every day, but damage is normally caused by shallow-focus earthquakes with Magnitude 6 or more and when the associated ground

shaking is at Intensity 6 or higher. The country has 300 volcanoes, of which 22 are active.

The country also lies along the typhoon belt of the Western North Pacific where 66 percent of tropical cyclones originate. About 20 tropical cyclones enter the Philippine Area of Responsibility (PAR) every year, of which seven to nine make a landfall. Tropical cyclone season is from May to December; peak months are July to September with an average of three or more occurrences. Their movements follow a northwesterly direction, frequently hitting northern Luzon and provinces in the eastern seaboard (Figure 10.3). Mindanao is usually spared from being directly hit by majority of the typhoons that cross the country.

Data from the DENR-Mines and Geosciences Bureau (MGB) show that in eight provinces, at least 30 percent of provincial land area are susceptible to floods (Table 10.1). The same report shows 68 provinces are more susceptible to rain-induced landslides, affecting at least one third of the total land area of each province (Table 10.1).

Aside from the direct impact of natural disasters on human lives, their properties, and communities, disasters have also derailed social and economic development. A WB 2005 study reported that the country’s vulnerability to natural hazards cost the government an average of PhP15 billion annually in direct damages, or more than 0.5 percent of GDP.16 The indirect and secondary impact of disasters has further increased this cost. This was surpassed in 2009 when

The country’s vulnerability to natural hazards cost the government an average of PhP15 billion annually in direct damages, or more than 0.5 percent of GDP. The indirect and secondary impact of disasters further increases this cost.

14 EU, Commission Country Environment Profile, 200515 EU, Commission Country Environment Profile, 200516 WB, Natural Disaster Risk Management in the Philippines: Enhancing Poverty Alleviation through Disaster Reduction, 2005.


typhoons Ondoy and Pepeng inflicted damage equivalent to 2.7 percent of GDP.17

The degradation of the environment aggravates the impacts of disasters and climate change. Deforestation increases the chances of landslides. The risk of drought and poor availability of water are aggravated by the loss of forest cover.18 Depleted mangrove reserves deprive coastal communities of natural protection from storm surges. Uncontrolled urban growth coupled with poor land use planning results in encroachment on protected forests or danger zones like riverbanks. Together with shortfalls in basic services such as proper waste disposal and decent housing, these result in clogged waterways and increased flood risk.

Of the 32 provinces with poverty incidence of at least 40 percent, 16 are hit by typhoons at least once a year (Table 10.3). Provinces in extreme Northern Luzon (Apayao, Abra, Kalinga, and Mt. Province) and on the eastern seaboard (Surigao del Norte, Northern Samar, Masbate, Agusan del Sur, and Surigao del Sur), where typhoons are more frequent, are among the 20 poorest provinces.

Climate change has exacerbated these hazards. In the last six decades, the annual mean temperature has increased by about 0.57oC. Extreme events and severe climatic anomalies have been recorded, such as heat waves, intense rains and floods, droughts, and an increasing frequency of typhoons and tropical storms. The Department of Science and Technology-Philippine Atmospheric, Geophysical and Astronomical

Services Administration (DOST-PAGASA) scenarios for 2020 to 2050 project widespread warming in most parts of the country, with longer hot days and shorter cold days. The number of days with maximum temperature in excess of 35oC is expected to increase in all parts of the country within the said period.19 Projected seasonal mean temperatures in the Philippines are expected to rise by about 0.5oC to 0.9oC for 2020 and 1.2oC to 2.0oC by 2050. Extreme rainfall is also projected to increase in Luzon and Visayas, while a decreasing trend is projected in Mindanao.

ChallengesPolicy responses

In line with RA 9003 or the Ecological Solid Waste Management Act of 2000, technical assistance was provided to 1,325 LGUs for the closure and rehabilitation of open or controlled dumps, while technical assistance for the establishment of sanitary landfills was extended to 236 LGUs. Despite closure orders and technical assistance, there were still 838 open dumpsites and 396 controlled disposable facilities that need to be closed or rehabilitated. Only 338 of 1,610 cities and municipalities (20.9%) have completed their solid waste management plans. In Metro Manila, only eight out of 17 cities and municipalities have complete plans.

Hazardous wastes have been an increasing concern because of the increasing number of transnational companies that generate hazardous wastes. A core inventory of 38,000 legally allowable substances under the Philippine Inventory of Chemicals and Chemical Substances (PICCS) has been prepared. The Toxic Substances and

The degradation of the environment aggravates the impacts of disasters and climate change. Deforestation increases the chances of landslides. The risk of drought and poor availability of water are aggravated by the loss of forest cover. Depleted mangrove reserves deprives coastal communities of natural protection from storm surges. Uncontrolled urban growth coupled with poor land use planning results in the encroachment on protected forests or danger zones like riverbanks. Together with shortfalls in basic services such as proper waste disposal and decent housing, these result in clogged waterways and increased flood risk.

17 WB, Typhoons Ondoy and Pepeng Post-Disaster Needs Assessment, 2009.18 OCD-NDCC, Strengthening Disaster Risk Reduction of the Philippines: Strategic National Action Plan (2009-2019)19 MDGF-1656, PAGASA GCM Scenarios, 2010


Hazardous and Nuclear Waste Control Act of 1990 (RA 6969) already bans the consumption, storage or transport of toxic or nuclear waste into or within the country. However, the country lacks adequate equipment and technical expertise to deal with these wastes, although steps are being taken to define the regulatory and enforcement responsibilities of various government agencies.

With respect to mining, several environmental safeguards and social development programs have been installed in mining projects, including the 97 Environmental Protection and Enhancement Program (EPEP), 23 Final Mine Rehabilitation and/or

Decommissioning Program (FMR/DP), 387 Social Development Management Program (SDMP) and IEC Campaigns. Mining companies have committed to inculcate the following in their environmental and social programs:

a. the implementation of some 400 approved five-year SDMPs for the host and neighboring communities amounting to PhP1.89 billion benefitting over 700 barangays nationwide;

b. the implementation of environmental management and protection activities through the EPEP amounting to PhP25 billion and for mine closure through the FMR/DP worth PhP600 million;

c. a mining forest program with 79 participating companies reforesting or afforesting 10,319 hectares of mine affected and nonmining disturbed areas with 9.3 million seedlings; and

d. payment of royalties to indigenous peoples of at least PhP330 million between 2007-2009.

The assessment and rehabilitation of abandoned or inactive mines have also been started. The rehabilitation of Bagacay Mines in Western Samar included the implementation of interim structural measures, phytoremediation and revegetation of disturbed areas. Rapid risk assessment of other abandoned and inactive mines has also been conducted by the following companies: Basay Mining Corp (Negros Oriental); Thanksgiving Mine-Benguet Exploration, Inc. (Benguet); Black Mountain (Benguet); Consolidated Mines, Inc. (Marinduque); Palawan Quicksilver Mines (Palawan); Western Mine Corp (Benguet); and Dizon Mines (Zambales).

Table 10.4. Forest Tenurial Instruments Implemented

(Footnotes)/a Accumulated from the start of the implementation of each tenurial instrument.Source: DENR- Forest Management Bureau (2010)

No. LTI Type Number/a Area (has)

1 Timber License Agreement 4 252,510

2 Integrated Forest Management Agreement 145 1,017,654

3 Socialized Industrial Forest Management Agreement 1,822 36,941

4 Agroforestry Farm Lease Agreements 17 4,776

5 Tree Farm Lease Agreement 88 9,742

6 Forestland Grazing Management Agreement 364 97,019

7 Special Land Use Permit 198 2,063

8 Special Land Use Lease Agreement 18 98

9 Forest Land Use Agreements for Tourism Purposes 31 967

10 Special Forest Land Use Agreement 11 2,580

11

Community-Based Forest Management Program CBFM Agreement Other CBFM Tenure

1,7903,314

1,633,8923,200,024

12 Approved CADT and CALT 414 4,276,639

13 PACBRMA 58 22,240

14

Areas under Management Arrangements Philippine National Oil Corporation National Power Corporation National Irrigation Administration Co-Management Agreement with LGUs

153

266,326 337,721

22,243 485,536

TOTAL 8,427 11,668,974


While some case studies20 present examples of economic valuation of the environment and natural resources, other sectors contest the validity of the parameters used. Issues of transparency have also cropped up, with some sectors and support groups pointing to difficulties in accessing information on mining contracts.

As for forest lands, approximately 78,000 hectares were reforested during the period 2004-2010 although this only 60 percent of the total target of 130,000 hectares. More than 14 million hectares of untenured forestlands have been protected. As of end of 2009, 41 of the 78 target provinces for forest boundary delineation21 have completed boundary surveys. Seventeen of these are ready for legislation. A total of 336 municipalities were also covered by public land survey (partial cadastre only) while 770,835 hectares were covered by patents issued from 2004 to 2010. As of 2010, both government and nongovernment sectors reforested a total of 1,958,928 hectares22. The government, through projects of the DENR, contributed a total of 1,368,645 hectares or 70 percent, while the nongovernment sector accomplished 590,283 hectares or 30 percent. As of 2010, approximately 11.6 million hectares of forestlands were covered by some form of community forest management under various government programs (Table 10.4). Despite the rise in the distributed number of these tenurial instruments, few protected areas have been declared, while deforestation continues.23

Biodiversity conservation and protection measures have been taken in the form of cave and wetland management, proclamation of protected areas and critical habitats, and establishment of protected areas and zones. An Updated National Wetlands Action Plan for the Philippines (NWAPP) to be implemented from 2011-2016 has been prepared. RA 9072, otherwise known as the National Caves and Cave Resources Management and Protection Act of 2001, provides the backbone for managing and protecting caves in the country. The DENR Memorandum Circular 2007-04 or the Procedure in Cave Classification has been issued to assess the status and values associated with a particular cave and assign its most beneficial use. A Cave Strategic Action Plan has been developed with cave stakeholders for implementation within the period 2011-2016 to guide the priority actions on cave management and conservation.

Biodiversity protection has been expanded and intensified. A total of 111 protected areas (terrestrial and marine) have been proclaimed since the passage of the National Integrated Protected Areas System (NIPAS) Act in 1992, covering 3.53 million hectares. Terrestrial areas cover 2.16 million hectares or 7.2 percent of the land area, and marine areas cover 1.371 million hectares or 0.69 percent of the total sea area of the country. Of these, 13 protected areas covering 894,262.16 hectares have been established through specific laws, namely: (a)Batanes Protected Seascape, (b) Northern Sierra Madre in Isabela, (c) Bangan Hill National Park in Isabela, (d) Mts. Banahaw-San Cristobal in Quezon and

A cost-benefit analysis is required that considers all relevant (including nonmarket) values pertinent to the project. While some case studies present examples of economic valuation of the environment and natural resources, other sectors contest the validity of the parameters used.

20 Galang, Angelina P., The Philippine Environment in the Ecozoic Age, 2009.21 The delineation of forestland boundary is the first and an important step in the management of the country’s forest areas. Section 4, Article 12 of the Constitution provides that the congress, shall, as soon as possible, determine by law the specific limits of forest lands and national parks marking clearly their boundaries on the ground.22 DENR-Forest and Management Bureau23 Caucus of Development NGO Networks (CODE-NGO), The Freedom from Debt Coalition (FDC) and United Nations Development Program (UNDP). Citizen’s Roadmap for Poverty REduction and Achieving the MDGs, Recommendations for the 2010-2016 MTPDP, and Kalikasan People’s Network for the Environment. Philippine Environmental Situation 2001-2009.


Laguna, (e) Tubbataha Reefs in Palawan, (f ) Mt. Kanlaon and Sagay in Central Visayas, (h) Mt. Malindang, Misamis; (i) Mt. Mimbilisan, Misamis, (j) Mt. Apo, Davao, (k) Mt. Hamiguitan Range, Davao, (l) Mt. Kitanglad, Bukidnon. There are also protected areas outside the NIPAS such as those proclaimed by LGUs and People’s Organizations (PO). Unfortunately, most of these protected areas do not have sufficient budgets, staff or capacity for effective self-management.

The operating policies and strategies for these laws are provided in various issuances. EO 578 established the national policy for protecting, conserving and sustainably utilizing biological diversity. It also revitalized the management of rich fishing grounds like the Sulu-Celebes Seas and Verde Island Passage, which are considered the center of marine shore fish diversity in the world. The Philippines has signed an agreement with Indonesia, Malaysia, Papua New Guinea, Solomon Islands and Timor Leste on the protection and sustainable management of the Coral Triangle. Through EO 533, the government adopted integrated coastal management as a national strategy to

ensure the sustainable development of the country’s coastal and marine resources. The protection of the whale shark has been intensified with the issuance of AO 282 (March 16, 2010), providing for the following added protection for whale sharks: mapping of their migratory pathways, mandatory rescue, intensified investigation and prosecution, and provision of rewards. EO 797, on the other hand, adopts the Coral Triangle National Plan of Action, which contributes to the attainment of the goals and targets agreed by the six Coral Triangle countries under the Regional Plan of Action. During the Ministerial Meeting held in the Solomon Islands in December 2009, the six countries officially recognized the Sulu-Sulawesi Marine Ecoregion as the First Priority Seascape under the Coral Triangle Initiative-Regional Plan of Action.

These initiatives have contributed to the protection and conservation of threatened species and their habitats. Among others, the tamaraw population in the wild has increased from 187 in 2001 to 314 heads

Box 10.1. Women and the Environment and Natural Resources

Women, especially the poor, are most vulnerable to changing environmental conditions and economic shifts. The roles of women in the management of the environment and natural resources management have not been duly recognized. Women’s initiatives that include establishment of women-managed areas illustrate women’s enhanced role in effective implementation of coastal resources management. Yet, women are still less recognized particularly in existing policies. One of the critical challenges is the implementation of the Magna Carta of Women (RA 9710), of which an increase in the number of women participating in Fisheries and Aquatic Resources Management Councils and other bodies are mandated. In terms of access to productive resources, women enjoy less benefits than their male counterparts. There is differential access among men and women to forest resources. DENR data in 2002/2003 show that women beneficiaries make up only 30 percent of the total holder of community-based forest management agreements (CBFMAs).

Source: Philippine Council for Women and Women Network of Aksyon Klima, 2010The Philippines passed the Climate Change Act of 2009 (RA 9729) to incorporate climate change in government policy formulation and establish the framework strategy for climate change. The National Framework Strategy on Climate Change was formulated in 2010 to ensure and strengthen the adaptation of the country’s natural ecosystems and human communities to climate change, charting a cleaner development path for the country in the process. This is reinforced by the enactment of RA 10121, the Philippine Disaster Risk Reduction and Management Act of 2010.


in 2010. In 1999, only about 20 cockatoos were observed in the wild; at present about 239 cockatoos have been recorded in Raza Island, Palawan alone. To date, 48 new species of plants and animals have been discovered in the Philippines, including new species of bats, birds rodents, frogs, and rafflesia (world’s largest flower). The new species were discovered in the mountains of Cagayan, Camiguin, Cordilleras, Quezon, Palawan, Mindoro, among other places.

Various actions have been taken to address threats to coastal resources. Several initiatives led to the establishment of marine protected areas (MPAs) covering around 22,540 square kilometers. Of more than 1300 existing and proposed MPAs, however, only 10-15 percent are effective. Many MPAs are either unmanaged or nonfunctioning. Sixty percent are located in the Visayas Seas region, in the most heavily-fished waters in the country. It is estimated that 4.9 percent of coastal municipal waters are protected as MPAs, but only 0.5 percent are within no-take areas. One study shows that marine corridors are also not well represented by the current MPAs.24 Four of the nine identified corridors (namely, Babuyan Corridor, Mindoro-Calavite Tablas Triangle, Balabac Strait Corridor, Sibutu Passage-Sulu Archipelago Corridor, Ticao Pass-San Bernardino Strait-Samar Sea Corridor, Panay Gulf Guimaras Strait Corridor, Philippine Sea Corridor and Tapiantana Corridor) have designated no MPAs. This implies that the development of MPAs has largely been dominated by local initiatives rather than through

a national strategy. Small MPAs are unlikely to provide protection for larger, more mobile species25 and contribute little to regional conservation objectives. Smaller MPAs must therefore be scaled up to become MPA networks and made resilient to climate change by developing or redesigning them into “climate-smart” MPAs.

Effective and sustained enforcement of fishery and relevant environmental laws have also been a major challenge. There are notable achievements in community-based law enforcement by local Bantay-Dagat groups and networks in Verde Island Passage and in the Visayas, working as composite teams in cooperation with enforcement agencies and LGUs. Still there is an urgent need to strengthen, expand, replicate, and sustain these successful interventions.

As long as coastal resources continue to be threatened by both human-induced and natural disasters, the poor, particularly women, who are dependent on these ecosystems for their subsistence will likewise be further disadvantaged (Box 10.1).

To deal with disasters and extreme events, the country has adopted legislation and policy dealing with DRRM and CCA. Since the signing of the United Nations Framework Convention on Climate Change (UNFCCC) in 1992, the country has passed several laws and localized various international environmental commitments. Its policy responses have evolved from approaches focusing on greenhouse gas emissions to one that integrates mitigation and adaptation in practically all sectors. Its policy and institutional reforms are implemented through broad-based platforms on sustainable development

24 Weeks, R; Russ, GT; Alcala, AC; White, AT. Effectiveness of Marine Protected Areas in the Philippines for Biodiversity Conservation. Conservation Biology, Volume 24 Issue 2 p. 531-540. April 201025 Sale, PF, et al, 2005. Critical science gaps impede use of no-take fishery reserves. Trends in Ecology & Evolution 20:74-80.


such as multisector national plans and strategies, and special environmental management agenda. The Philippines passed the Climate Change Act of 2009 (RA 9729) to incorporate climate change in government policy formulation and establish the framework strategy for climate change. The National Framework Strategy on Climate Change was formulated in 2010 to ensure and strengthen the adaptation of the country’s natural ecosystems and human communities to climate change,

charting a cleaner development path for the country in the process. This is reinforced by the enactment of RA 10121, the Philippine Disaster Risk Reduction and Management Act of 2010.

The National Disaster Risk Reduction and Management Council (formerly NDCC) has been given the mandate to protect the wellbeing of people and safeguard the national economy and environment through more concrete financial investment in DRR. This paradigm shift is also in consonance with the country’s international commitment to the Hyogo Framework for Action (HFA) of 2005, which seeks to build the resilience of nations and communities in the face of disasters. The National DRRM Framework and Plan utilizes the multihazard approach in managing the impact of natural and human-induced disasters. It calls for building the disaster resilience of communities and institutionalizing arrangements and measures for reducing disaster risks, and enhancing disaster-preparedness and response capabilities at all levels. Since DRR is closely linked to poverty alleviation and development, it is necessary to link it firmly to development planning at all levels.

Before the passage of RA 10121, the government already initiated the development of a long-term master plan for disaster mitigation known as the Strategic National Action Plan on DRR or SNAP. This document proactively serves as a road map for the next 10 years and was formulated through as inclusive participatory process of all stakeholders. SNAP was approved on June 17, 2010 through EO 888 (Adopting the SNAP on DRR). EO 888 explicitly adopts the 18 priority programs/projects

Box 10.2. Environmental Education

In 2008, the Philippines enacted RA 9512 or the “National Environmental Awareness and Education Act of 2008”. This legislation concretized the country’s support to the United Nations Decade of Education for Sustainable Development (2005-2014) and the ASEAN Environmental Education Action Plan for Sustainable Development (2008-2012). This law has reiterated the policy of the State to protect and advance the right of the people to a balanced and healthful ecology in accord with the rhythm and harmony of nature. The law has further recognized the vital role of the youth in nation building, and the role of education to foster patriotism and nationalism, accelerate social progress and provide total human liberation and development.

In the DENR, the Environmental Education and Information Division (EEID) and the 16 Regional Environmental Education and Information Sections of the EMB has been the agency’s lead arm in creating environmental awareness. It has spearheaded year-round environmental events from World Water Day (March 22) and Philippine Water Week (third week of March), International Earth Day (April 22), Philippine Earth Month (April), World Environment Day (June 5), Philippine Environment Month (June), National Clean Up Month, and National Ozone Protection (September), International Ozone Day (September 16), International Coastal Clean Up Weekend (third weekend of September), National Clean Air Month, and National Environmental Awareness Month (November), Global Warming and Climate Change Consciousness Week (November 19-24).

EEID’s activities which include distribution of IEC materials, recyclables collection, tree planting and environmental exhibits have contributed to the increasing awareness of Filipinos in caring for the environment and natural resources of the country.

Source: DENR-EMB, 2009


on DRR and identified agencies with primary responsibility. The consistency of SNAP with RA 10121 however still has to be reviewed and reevaluated.

The GAA allocates specific amounts annually (PhP5 billion in 2011) for the calamity fund, for use in aid, relief and rehabilitation services to communities or areas affected by man-made and natural calamities, repair and reconstruction of permanent structures, including other capital expenditures for disaster operation, and rehabilitation activities, although it has a special provision allowing its use for predisaster activities. On the other hand, Section 22 of the Philippine DRRM Act of 2010 (RA 10121) also enumerates permissible uses of the annual calamity fund, generally allowing support for a wider range of activities. There is a need to reconcile differences and arrive at a common interpretation of what DRR measures can be charged against the calamity fund. Moreover, a big financing gap exists between the annual budget reserve of government for calamities (average of PhP2 billion a year) and the damage typically incurred in times of disasters.

Risk transfer mechanisms such as microinsurance/finance, although available, need to be made more accessible. Health insurance is also being made more widely accessible, but the uptake by poor rural communities, which are the most affected in terms of disaster, remains low.26

The government has initiated various programs and projects to provide more up-to-date scientific and technical information and data scales to be used in decision making. The DENR- Ecosystems Research and Development Bureau (ERDB) has

completed vulnerability assessments of 43 priority watersheds nationwide with the aim of highlighting areas vulnerable to soil erosion, landslide, biodiversity loss, and forest fire. Such information is critical for LGUs in the development of their disaster risk management programs, their local climate change action plans and in the formulation of their land use plans. Vulnerability assessments, adaptation tools and downscaling climate change scenarios and projections are being developed to equip decision makers and planners on how to adapt to climate change and disasters. IEC campaign materials and knowledge management

Box 10.3. Devolution of ENR Functions

The Local Government Code of 1991 placed LGUs at the forefront of environment and natural resources management. According to the League of Municipalities of the Philippines (LMP), the following ENR functions were devolved to LGUs in 2005:

a. Regulation of environmental impacts of SMEs under Kalakalan 20 Law;

b. Regulation of fishing in municipal waters;

c. Regulation of minor mineral extraction like small-scale mining and certain scales of quarrying and sand and gravel gathering;

d. Regulation of nuisance and pollution under the Clean Air Act;

e. Solid waste management under the Ecological Solid Waste Management Act; and

f. Antismoke belching program.

Likewise, the Code assigns municipalities the task of establishing a solid waste disposal system or environmental management system and services or facilities related to general hygiene and sanitation. Meanwhile, provinces are tasked to enforce forestry laws limited to community-based forestry projects, pollution control law, small-scale mining law, and other laws on the protection of the environment; and minihydro electric projects for local purposes.

Source: WB Country Environmental Analysis, 2009

26 SNC


products are also being created to increase public awareness of climate change, its impacts and attendant risks, and DRR.

Institutional issues

Despite government efforts at sustainably managing the country’s environment and natural resources, environmental degradation continues. The plethora of laws and policies, as well as the established agencies to manage, protect, and preserve the country’s environment and natural resources have not sufficed or worked effectively enough to address the threats to ecological integrity. Institutional issues need to be addressed to ensure the sustainability of the country’s fragile environment and natural resources. Policies, programs and existing institutional arrangements must be revisited in order to move forward and deliver the promise of sustainable development.

Implementation is confused by overlapping and conflicting policies

There is a need to review and harmonize a number of conflicting and overlapping policies. A case of policy conflict is that between forest protection laws, on the one hand, and the Agriculture and Fisheries Modernization Act (AFMA), on the other. AFMA encourages agriculture expansion into the uplands including forestlands through the creation of Strategic Agriculture and Fisheries Development Zone (SAFDZs) that promote the production of high value crops such as coconut, pineapple and sugarcane. While there is a need to improve the income of upland farmers, the identification of suitable upland areas for commercial high-value crop production should be given priority and closely undertaken together with DENR to avoid onsite and offsite negative externalities. The NIPAS Act is also in conflict with the Fishery Code

on the municipal water income of municipalities within protected areas, as well as the LGC on the matter of the jurisdiction of LGUs within protected areas. Conflicts also exist in the implementation of various laws such as the Mining Act, NIPAS Act, IPRA and the LGC, among others. These conflicts, overlaps, or divergent interpretations have led to the delay or suspension of some projects.

Government capacity for resource management is wanting

Overlapping jurisdictions. Due to the large number of players in the environment and natural resources sector, governance issues are inevitable. In some instances, conflicts arise between national and local governments in terms of the protection and utilization of natural resources. This is apparent when LGUs initiate the reversion of abandoned fishponds, while it is the DENR who should lead the process, following the Philippine Fisheries Code of 1998 and several joint administrative orders. Another concern is the national-local conflicts in mining projects, specifically when LGUs pass local legislation rejecting or opposing the entry or expansion of large-scale mining projects. This contravenes the DOJ opinion that local ordinances cannot undo a law and should not run counter to national policy; DENR memoranda also order its regional offices to continue implementing their mandate.27

To ensure compliance in incorporating CCA and DRRM management in the development process, the roles of agencies and their respective mandates as provided by law must converge and synchronize. The Climate Change Act and the Philippine DRRM Act of 2010 are significant

For CCA, putting in place adaptation measures also requires financial resources. The Philippines continues to uphold the UNFCCC principle of common and differentiated responsibilities to hold on to the agreement that Annex I countries will extend financial assistance over and above the level of development assistance. Developed countries are required under the Convention to provide new and additional resources, either through bilateral, multilateral or regional funding mechanisms, to meet the agreed costs of developing countries in complying with their obligations as well. The country, however, cannot be dependent on these funds.

27 DOJ Opinion No. 8, Series of 2005


strides to include climate change and DRR management in the planning process. Sectoral plans, including the Environment and Natural Resources Framework Plan, must be updated to include these concerns.

Technical expertise. Environment and natural resources management requires a skilled and competent workforce to implement professional standards of operation in environment, but technical experts and trained personnel at the national and local levels are in short supply. Some implementing agencies have the capacity to implement provisions of environment and natural resources laws requiring the application of new and sophisticated technologies (e.g., highly technical LAMTM technologies – geographic information system (GIS), global positioning system (GPS), valuation, databases and online connectivity of information systems). Still others, however, particularly LGUs, still have to develop the competence to implement their mandated tasks and to properly assume environment and natural resources functions.

Information systems. Integrated, updated and quality information for ENR and climate change is necessary for planning, management and decision making. The lack of a participatory and science-based baseline data creates discrepancies that can cause uncertainty and lead to serious errors in carrying out the policy and planning functions of ENR stakeholders.

A better system for gathering, processing, storing, and sharing information needs to be put in place. The DENR is currently implementing the Information Systems Strategic Plan (ISSP) which aims to provide a

coherent, integrated and decentralized set of data to every office, making information to stakeholders available anytime. ISSP also aims to develop information systems that will address the integration, collaboration and consolidation of data/information to deliver quality and timely statistics in spatial and digital form. (Box 10.2 summarizes current government efforts on environmental education.)

Enforcement of environmental laws and policies is inadequate

Full and effective implementation of environmental laws, policies and programs continues to be a challenge. Governance issues, including corruption, are among the reasons for low compliance in these laws. The incomplete devolution of mandates to LGUs has also hampered their full implementation (see Box 10.3 for devolved functions). A DILG-commissioned study in 200528 called the state of environment and natural resource devolution “partial and at worst, minuscule and insignificant”. Devolved functions were mainly peripheral, unattractive to private investors, and were costly to perform. Among these functions were watershed regulation, greenbelt and treepark development, farmer-level integrated social forestry, and small-scale mining, all of which do not attract significant investments from the private sector or are limited to certain LGUs. The control of smoke-belching vehicles, the management of solid wastes, and coastal zone regulation and protection are devolved functions requiring substantial investments from LGUs. In 2007, ADB also commissioned a study on the devolution of DENR functions, to help identify responsibilities in the Integrated Coastal Resources Management Project (ICRMP). The study pointed out the institutional weaknesses in most of the 206 Protected Area Management Boards (PAMBs) revealed by a 2003 UNDP study. Of these PAMBs, only five were

28 DILG/ADB, 2005. Local Government Financing and Budget Reform.


fully constituted boards backed by specific laws; the rest became interim boards.29

Contributing to poor enforcement and compliance is the lack of knowledge of environmental laws, policies, and programs among LGUs, specifically in communities or barangays. There are still rural communities which depend on resource extraction for their livelihood. Relevant environmental laws, specifically those regulating the utilization of natural resources, e.g., NIPAS, Wildlife Act, etc. are poorly implemented. There is a need to intensify information and advocacy campaigns on existing environmental laws and policies among communities.

Absence of a financing strategy for environment and natural resources programs and CCA

Government programs are hobbled by financial constraints. Funding support for watershed management has been insufficient to cover all important watersheds. It will take 280 years to reforest given the average budget allocation of about PhP300 million for reforestation in the past 10 years.30 Thus, more funds should be allocated, to prioritize watersheds that support irrigated lands. The implementation of National Sewerage and Septage Management Program by the DPWH has also been slow due to lack of funds to meet the large investment needed for infrastructure development.

As for CCA, putting in place adaptation measures also requires financial resources. The Philippines continues to uphold the UNFCCC principle of common and differentiated responsibilities to hold on to the agreement that Annex I countries will extend financial assistance over and above the level of development assistance. Developed countries are required under the Convention to provide new and additional resources, either through

bilateral, multilateral or regional funding mechanisms, to meet the agreed costs of developing countries in complying with their obligations as well. The country, however, cannot be dependent on these funds.

The National Environmental Economic and Development Study (NEEDS) 2010 on the inventory of financial flows showed that grants to the environment, agriculture, biodiversity, energy, CCA, health, and water supply and sanitation address only a given problem or requirement, like solid waste management, resource conservation, production constraints, biodiversity loss, Greenhouse Gas (GHG) emissions, institutional capacity, outbreak of infectious diseases, and water shortages. The grants received have moreover been limited in scope and geographic coverage. The restricted project scale, for instance, could be seen in an integrated area project covering at most only one or few cities or municipalities, a watershed or ecosystem, or of a nationwide scale but focused only on a few provinces or interregional areas. Limited geographical coverage result in project benefits being confined to particular area niches, a project piloting mode of introducing change, an inability to scale up, and turfing among country donors and multilateral agencies (EMB-DENR, 2010).

The NEEDS study concluded the budgetary resources set aside by the Philippine Government for CCA have been inadequate. The larger budgetary share of disaster management from 2003 to 2008 did not represent proactive efforts to mitigate the expected damages and risks from natural disasters but merely reflected the postdisaster relief and rehabilitation expenditures.

In order to improve the conservation, protection, and rehabilitation of the country’s natural resources, the sector shall pursue their sustainable use and integrated management. Natural resources management activities shall be directed at enhancing the state of the different ecosystems and the natural resources within them to provide resource-dependent communities with sustainable livelihoods.

29 ADB, Country Environmental Analysis, 2008.30 DENR-FMB


The budget for DRR, particularly those appropriated as Calamity Fund in the GAA, still reflects the response-oriented perspective of traditional disaster management. The DRRM Act (RA 10121) already explicitly provides for the change in the nature of the calamity fund making it more appropriate for DRR use as the NDRRMF. Government budget allocations for DRR should be clearly delineated so that aid from international financial institutions can be directed to where it is really needed. It is also critical to determine the extent and manner of obtaining funding from other stakeholders and partners in order to finance DRR activities, especially costly structural measures.

While good results from DRR projects and activities have provided opportunities for sound practices to take root, existing organizational and societal structures do not necessarily allow positive values to thrive. Sustaining mechanisms such as making DRR a regular budget item, strengthening PPP, creating incentives for disaster risk-reducing behaviour, recognizing and replicating best practice, instilling risk awareness at all levels of government, in households, firms and workplaces should be part of a general strategic plan.

The inadequacy of financing for the enforcement of laws and policies is an important continuing concern. Several studies and initiatives have been undertaken to measure the costs of user’s activities on natural resources, assessing the feasibility of generating funds for their management. ENR agencies however continue to rely largely on administrative services for regulation rather than on market-based instruments.

Strategic FrameworkConsistent with Philippine Agenda 21 and its enhanced version and the country’s commitments to multilateral environmental agreements, the Environment and Natural Resource Sector shall pursue the following goals and strategies:

Goal 1. Improved Conservation, Protection and Rehabilitation of Natural Resources

In order to improve the conservation, protection, and rehabilitation of the country’s natural resources, the sector shall pursue their sustainable use and integrated management. Natural resources management activities shall be directed at enhancing the state of the different ecosystems and the natural resources within them to provide resource-dependent communities with sustainable livelihoods. Priority shall be given to the implementation of national action plans on forest, biodiversity, coastal and marine resources and wetlands. Mechanisms and policies will be pursued to rationalize the use of the country’s land and mineral resources. In line with the National Framework Strategy on Climate Change, integrated ecosystem-based management will continue to be adopted as a major strategy for sustainable natural resource management as well as a means to adapt to climate change scenarios. As a safeguard for all undertakings with a potential impact on the environment and natural resources, a mechanism for third party cost-benefit analysis31 and monitoring shall be enforced that takes environmental and social costs and benefits into account.

The PNRPS aims to empower forestland managers and support groups that sustainably and equitably managing forestlands and ancestral domains with enhanced carbon stock and reduced greenhouse gasses emission. Besides reducing forest degradation and deforestation, the strategy alleviates poverty, conserves biodiversity, and improves governance.

31 WB, 2009


Sustainably manage forests and watersheds

Targeting to have 15 million hectares of forested land, 50 percent of which may be production forest, the following will be implemented to increase forest cover by 600,000 hectares by 2016;

a. Continue and enhance the protection of forest and reforested areas (especially in critical watersheds) and sustain the productivity of agroforestry areas:

• Manage, protect, and develop natural forest, established plantation, and economically important nontimber forest products and species;

• Encourage communities to enhance protection and sustain productivity of reforestation areas and upland areas for livelihood and poverty alleviation;

• Transform open, denuded and degraded areas into protection forests and/or economically-productive assets; and

• Encourage communities to develop multipurpose forests in open, denuded and degraded areas;

b. Complete the delineation of forestland boundaries and develop plans for forest land use and watershed management:

• Delineate and assess forestland boundaries and push for the enactment of relevant bills, placing all untenured /open access areas under management regimes;

• Carry out collaborative watershed management planning cum vulnerability assessment

and implementation among DENR, LGUs and other watershed stakeholders towards responsible forest management; and

• Develop a portfolio approach for forest investment in collaboration with the LGUs and the National Commission on Indigenous Peoples (NCIP), which shall jointly prepare a forest land use plan identifying areas for protection and areas for investment and provide the necessary permits and clearances prior to development;

c. Improve baseline information, and conduct valuation and accounting of forest resources:

• Conduct monitoring and evaluation using common criteria and indicators, third- party monitoring, and forest certification, among others; and

• Strengthen the decision-support system through an inventory of forest resources, baseline data generation and GIS mapping, and forest valuation and natural resource accounting;

d. Implement the Philippine National REDD32 + Strategy (PNRPS). The PNRPS aims to empower forestland managers and support groups that sustainably and equitably manage forestlands and ancestral domains with enhanced carbon stock and reduced greenhouse gasses emission. Besides reducing forest degradation and deforestation, the strategy alleviates poverty, conserves biodiversity, and improves governance.

PES is a mechanism in environment and natural resources management that corrects the flaw in current economic system whereby the users of ecosystem/environment services are made to pay the managers.

32 REDD is an acronym for Reducing Emissions from Degradation and Deforestation.


Improve protection and conservation of biodiversity

a. Conserve, preserve, and manage protected areas, wildlife, and their habitats:

• Assess the effectiveness of management and implement adaptive management in all protected areas proclaimed under the NIPAS;

• Establish and manage critical habitats to reduce habitat loss and enhance ecosystem services that play important roles in addressing climate change impacts;

• Establish and effectively manage additional protected areas focused on identified KBAs through Presidential Proclamation to sustain ecological goods and services of the area;

• Strengthen management of protected areas in partnership with local communities through issuance of security of tenure and provision of alternative livelihood;

• Manage significant caves for their socioeconomic and ecological values;

• Rehabilitation of important habitats such as wetlands; and

• Facilitation of significant increases in the population threatened and endangered species;

b. Prepare protected area management plan incorporating vulnerability and adaptability of the sector to disaster risk and climate change

• Complete the boundary delineation and demarcation of protected areas;

• Preparation/updating of management plan for protected areas and ecologically important habitats to include CCA; and

• Manage priority wetlands for food production, water conservation and disaster mitigation;

c. In protected areas, institute and operationalize the concept of Payment for Environmental Services (PES). PES is a mechanism in environment and natural resources management that corrects the flaw in current economic system whereby the users of ecosystem/environment services are made to pay the ENR managers;33

d. Continue implementing international commitments on biodiversity conservation, protection and rehabilitation:

• Implement EO 514 (Establishing the National Biosafety Framework, Prescribing Guidelines for its Implementation, Strengthening the National Committee of the Biosafety of the Philippines, and for Other Purposes) particularly the provisions on environmental and health risk assessment in the field-testing and regulated propagation of genetically-modified organisms (GMO) following the precautionary principle;

• Implement the Nagoya Protocol on Access to Genetic Resources and Fair and Equitable Sharing of Benefits Arising from their Utilization (e.g., capacity building and formulation of relevant policies); and

• Implement the Updated National Wetland Action Plan for the Philippines (NWAPP) as part of the country’s commitment to the Convention on Wetlands or Ramsar Convention.

33 Memorandum of Understanding on PES, 2010


Enhance coastal and marine resources management

a. Develop and implement the national integrated coastal management (ICM) program to include principles, strategies and action plans in accord with EO 533 (Adopting Integrated Coastal Management as a National Strategy to Ensure the Sustainable Development of the Country’s Coastal and Marine Environment and Resources and Establishing Supporting Mechanisms for Its Implementation);

b. Prioritize the protection and management of mangroves, sea grasses, coral reefs and beaches as a management unit to derive maximum benefits resulting in synergistic interactions of these four ecosystems that enhance marine productivity;

c. Apply the ecosystem approach to the management of fisheries and other marine resources, addressing transboundary policy and regulatory concerns;

d. Evaluate management effectiveness of all MPAs proclaimed under NIPAS;

e. Implement the Coral Triangle Initiative National Plan of Action and the Sulu-Sulawesi Marine Ecoregion (SSME) Conservation Plan which includes designating priority seascapes across the Coral Triangle as geographic focus of sustainable management;

f. Update nautical charts for safety at sea and protection of the marine environment;

g. Pursue claims for an extended continental shelf and delineate various maritime jurisdictions such as internal waters, archipelagic waters, territorial sea and exclusive economic zone;

h. Conduct inventory and status of foreshore lands to identify and clarify impacts of privatization and commercialization to the environment and the fishing communities;

i. Revert abandoned, underutilized and unproductive fishponds to mangroves;

j. Revise policies on the management of mangrove areas in order to increase mangrove cover;

k. Integrate coastal and marine water use plans into the comprehensive land use plans of LGUs;

l. Complete the delineation of municipal waters; and

m. Improve the status of coastal and marine biodiversity by safeguarding coastal ecosystems, species, and genetic diversity.

Improve land administration and management

a. Fast track the cadastral survey to delineate boundaries of all municipalities/cities, provide economic data for land-based development studies and projects and facilitate land disposition and titling;

b. Accelerate the titling of agricultural and residential lands and ancestral lands in partnership with DAR, NCIP, LRA and LGUs to improve the socio-economic condition of beneficiaries and provide security of land tenure;

c. Rationalize land policies and laws towards a harmonized and effective Land Administration laws;

The development of environment-friendly enterprise and livelihood opportunities for local communities is envisioned to address the prevailing poverty of resource-dependent communities. This will also motivate communities to protect natural habitat and wildlife.


d. Incorporate environmental safeguards in the issuance of foreshore leases taking into account the likely effect of climate change;

e. Intensify a more vigorous nationwide campaign against the proliferation of fake or fraudulently-issued certificates of land title;

f. Strengthen the management of land resources information and cadastral information through computerization and in partnership with other land-related agencies, local governments, and the private sector for improved land administration services and revenue collection;

g. Enhance the capacity and competence of professionals, practitioners and workers in the land sector, supporting them with modern technology and land-resources information made available at national and local levels and in the private sector; and

h. Develop a national country program to combat land degradation and poverty in marginal areas and rural communities and mainstream issues of sustainable land management (SLM) and desertification, land degradation and drought in agriculture and environment planning and policy formulation.

Manage a more equitable utilization of mineral resources

a. Review and harmonize mining policies and other related policies (e.g., IPRA, NIPAS, LGC, etc.);

b. Ensure the mining industry’s compliance with laws and policies on conservation, protection and rehabilitation:

• Institute comprehensive resource valuation of mining operations (including environmental and social costs);

• Safeguard the ecological and environmental integrity of areas affected by mining operations;

• Strictly enforce compliance of mining companies within environmental and social development commitment;

• Implement noncapital intensive and short-term remediation measures; and

• Develop mine viability and environmental assessment guidelines for the remediation/rehabilitation or redevelopment of viable projects.

c. Rationalize the extraction and use of minerals for national development:

• Determine the actual minerals and metal needs of the country that will contribute to the realization of industrialization;

• Promote the development of downstream industries to maximize the benefits or value-added from mining;

• Rationalize resource assessment for both metallic and mineral commodities; complete an accurate and realistic inventory of actual mineral reserves, indicating specific locations, types and values of the minerals to be potentially extracted;

• Strictly implement the “use-it-or-lose-it” policy to cleanse inactive mining applications and nonperforming mining contracts;

In order to provide communities with a healthier environment, the quality of the air, land and water must improve.


• Determine untapped offshore mineral resources by actively pursuing characterization and assessment surveys; and

• Pursue new mining technology and research and development of mining techniques in mining planning, scheduling, and design to raise the level of mine productivity and make the local mining industry globally competitive. This should be supported by capability-building programs and the establishment of laboratory facilities with state-of-the art equipment.

d. Guarantee the equitable distribution of benefits from minerals through good governance in the mining sector:

• Protect public investments through government oversight over mining companies to ensure transparency and accountability, stimulating more investment as a result;

• Review, monitor and evaluate existing large-scale mining contracts with respect to their compliance with existing rules and regulations;

• Reaffirm ordinances and resolutions issued by LGUs to protect their environment to the extent these are consistent with national laws and policies;

• Sign on to the Extractive Industry Transparency Initiative (EITI) in order to practice and implement transparency and accountability among mining companies operating in the country;

• Ensure the timely and accurate release of the legitimate share of local governments in the extraction of national wealth;

• Improve the government share in taxes; and

• Rationalize the incentives granted by the government to mining companies.

Develop and implement environment-friendly enterprise and livelihood opportunities.

The development of environment-friendly enterprise and livelihood opportunities for local communities is envisioned to address the prevailing poverty of resource-dependent communities.

This will also motivate communities to protect natural habitat and wildlife. This includes among others:

a. Well-regulated ecotourism areas;

b. Livelihood activities (income and food-based) designed for women; and

c. Development and intensification of markets for products out of waste such as organic composts and reusable items.

The DA-DAR-DENR National Convergence Initiative (NCI) intends to help provide more jobs and livelihood in identified convergence sites for productive management and sustainable utilization of forestlands. The programs of the three agencies will be integrated to promote increased investment in rural areas, increased and sustainable food production, good governance and efficiency in proper implementation.


Goal 2. Improved environmental quality for a cleaner and healthier environment

In order to provide communities with a healthier environment, the quality of the air, land and water must improve. Vital to the improvement of environmental quality is the full implementation of laws and other regulatory measures. Measures to reduce pollution and waste generation will also be pursued. The promotion of green jobs and the greening of industry are win-win solutions that should be pursued.

Reduce air pollution in Metro Manila and other major urban centers

Achieve a 30-percent reduction of 2009 levels of pollution by 2011 and a 5-percent annual reduction thereafter by 2016 in Metro Manila and other major urban centers through the following:

a. Intensify enforcement on stationary and mobile sources of pollution, instilling discipline and improving compliance with emission-testing and mandatory vehicle inspection and maintenance, and promoting conversion to fuel-efficient engine;

b. Monitor industry compliance with environmental standards;

c. Establish the full number of monitoring stations as provided under the Clean Air Act (CAA) in Metro Manila and other major urban centers;

d. Promote the use of clean fuel and use indigenous resources to the fullest as sources of clean energy;

e. Establish a financial mechanism to jump-start a massive electric vehicle (EV)-based public transportation system by supporting either new EV production or the conversion of existing fossil-fuel vehicles; and

f. Revise emission standards and update emission limits for motor vehicles.

Reduce water pollution to improve water quality in priority rivers and other economically and ecologically important water bodies

a. Establish, and operationalize the Water Quality Management Fund and water quality management areas and their governing boards;

b. Establish in Metro Manila the required number of monitoring stations provided under the Clean Water Act;

c. Undertake a massive clean-up and rehabilitation of esteros in partnership with DILG, LGUs, and other government agencies through partnership agreements such as the Adopt-an-estero program;

d. Undertake the massive cleaning and rehabilitation of Manila Bay using funds collected from identified polluters to bring water quality to SB classification through an effective Operational Plan for the Manila Bay Coastal Strategy Goal 2020;

e. Implement river rehabilitation and protection using bio-eco-engineering technology; and

f. Include other priority rivers for clean-up, including Laguna de Bay, Boracay, and Pasig Rivers, with funds collected from identified polluters.


Reduce wastes generated and improve waste disposal

a. Ensure compliance with RA 9003 or Ecological Solid Waste Management Act of 2000, the overall principle of which is that all waste should be brought to where they can be converted into resources;

b. Reduce land-based pollution by cutting back on waste generation;

c. Implement environmentally sound management and disposal of toxic and hazardous waste, including electronic waste (“e-waste”);

d. Immediately close or rehabilitate dumpsites and waste disposal facilities in environmentally critical areas;

e. Publish the list of nonenvironmentally acceptable packaging and products;

f. Regulate or ban consumer products containing chemicals of concerns;

g. Promote clean production and extended producer responsibility as part of corporate social responsibility;

h. Institute healthcare waste management systems in health facilities by investing in training and communications; encourage schools to include healthcare waste management processes in their technical curricula;

i. Engage LGUs in PPP options and financial schemes for the establishment of large-scale waste treatment technologies; BOT projects for cooperative waste treatment facilities and sanitary landfills are viable options;

j. Promote private sector research, development and manufacture of nonmercury-based devices and technologies used in health facilities and for health care; and

k. Encourage the development and manufacture of local waste-treatment technology and ensure their availability in the market.

Specific strategies, programs and projects as well as activities on the hard components of waste management are discussed in detail in Chapter 4, Accelerating Infrastructure Development.

Establish a healthier and livable urban environment

a. Establish urban parks with dense greenery to minimize heat island effects in town and cities

b. Adopt green architecture with rooftop gardens in central business districts; promote climate change-resilient building designs in new urban centers for a cool and refreshing environment;

c. Intensify ecological solid waste and wastewater management;

d. Promote waste recycling technologies to reduce green house gas emissions (CO2 and methane) and groundwater pollution in sanitary landfills;

e. Encourage industries to use cleaner technologies and practice extended producer responsibilities through provision of tax incentives;

f. Establish a pollution release and transfer registry and the “pay-as-you-pollute” scheme; and

g. Promote Green Industry and greening the supply chain.


Goal 3. Enhanced Resilience of Natural Systems and Improved Adaptive Capacities of Human Communities to Cope with Environmental Hazards Including Climate-Related Risks

Strengthen institutional capacities of national and local governments for CCA and DRRM

a. Mainstream and integrate DRR and CCA in national, sectoral, regional and local development plans, including integration of hazard and climate change vulnerability maps in the updating of CLUPs by LGUs and enforcement of zoning regulations; and encourage more provinces to mainstream DRR in their plans, and build capacities of national and local agencies assigned to lead the effort;

b. Support the initiatives for mainstreaming DRR and CCA in by granting it priority in budget allocation;

c. Adopt a responsive national and local legal and policy framework through multistakeholder dialogues that will create an enabling environment for all Filipino citizens and the government to guide them towards an integrated DRR and CCA approach;

d. Enhance the self-reliance of local DRRM councils and their ability to implement the program through responsible DRMM offices;

e. Devise cost-effective means to offset socioeconomic losses from disasters; prepare for disaster recovery by establishing an enabling environment for both

public and private sectors to increase their contribution to risk reduction activities; develop a common understanding of resource needs and include DRR and CCA in the regular business, policies, and actions of organizations;

f. Enhance national and local capacities for monitoring, forecasting, hazard identification, early warning, and risk evaluation and management;

g. Complete the geological mapping of hazards using a larger scale (1:10,000);

h. Improve the postdisaster rehabilitation and development process;

i. Make the newly established national DRRM fund more accessible to resource-poor LGUs; explore new mechanisms to expedite fund releases during emergencies; provide information on possible funding sources; and

j. Harmonize the implementation of the DRRM Act and the Climate Change Act.

Enhance the resilience of natural systems

a. Conduct vulnerability assessment and mapping on the different ecosystems;

b. Issue guidelines for the review and approval of design proposals and projects that are climate change-resilient under the EIA and risk assessment system of the EMB; and

c. Establish a network of protected areas in coordination with other LGUs based on ecological, social and economic considerations (ecosystem resiliency and biological connectivity) to address the impacts of human-induced factors and climate change.


Improve adaptive capacities of communities

a. Conduct geohazard mapping, vulnerability and risk assessments especially for highly susceptible communities and areas for the formulation and implementation of disaster risk reduction and management plans;

b. Integrate CCA and DRRM in all education levels and in specialized technical training and research programs;

c. Raise public awareness of DRR and mitigating the impacts of natural disasters through the formulation and implementation of a communication plan for DRR and CCA;

d. Conduct gendered vulnerability assessment, recognizing the differing vulnerabilities and capacities of poor women and men across economic sectors and geographic locations;

e. Use science-based tools and technologies to support decisions in identifying, preventing and mitigating potential disaster impacts; collect and disseminate data according to risk knowledge needs and develop information systems to support decision makers and apprise stakeholders;

f. Enhance disaster-preparedness through multistakeholder coordination; and

g. Conduct an extensive IEC campaign for an increased public awareness of DRR.

Cross-Cutting Strategies

In order to achieve the three goals and to realize an environment that is healthy, ecologically-balanced, sustainably productive, climate-change resilient, the following crosscutting strategies will be pursued:

Effective environmental governance

a. Encourage multistakeholder partnership through enabling mechanisms that encourage greater stakeholders’ participation and commitments, including:

• Community-based natural resources management efforts in forestry, biodiversity conservation, protected area management, coastal resource management and integrating resilience especially among vulnerable groups (women, children, elderly, etc);

• Partnership with the business sector in cleaning the environment, natural resource management, DRR and CCA;

• Devolution of relevant ENR mandate to LGUs accompanied by capacity development;

• Mandatory creation of Environment and Natural Resources Offices for LGUs;

• Provision of effective mechanisms that will empower marginalized groups as important partners for the sustainable development and management of natural resources;


• Tenurial security both in upland and coastal areas and recognition of indigenous peoples’ rights to their ancestral domain;

• Stewardship agreements and/or contracts between government and community; and

• Improved multistakeholder’s effectiveness in enforcing environmental law.

b. Reduce graft and corruption:

• Curbing graft and corruption in the natural resources sector is crucial to improving environmental governance. Transparency in decision-making and in the disposition of revenues raised from extraction, processing, and sale of natural products must be ensured. Philippine participation in the EITI is also important. The “greening” of the judiciary should also be pursued. The desired end is a vigorous and consistent enforcement of environmental laws and policies.

c. Harmonize and streamline efforts in protection and conservation:

• Environmental governance should be emphasized in the local level. There should be clear delineation of duties and responsibilities of stakeholders. ENR management strategies should also be harmonized horizontally and vertically. Furthermore, harmonization and strengthening of DENR’s policies, plans and programs related to the different ecosystems and natural resources will be pursued. Relatedly, requirements for

environmental permits (e.g., ECC) will be streamlined and simplified.

d. Implement Convergence Initiative:

• Facilitate complementation of different agencies to ensure that resources are maximized by achieving synergy and institutional efficiency;

• Build partnerships between and among the local communities, LGUs, and government agencies to ensure that all development interventions are based on the actual needs and aspirations of the community; and

• Achieve spatial integration within the different ecosystems to ensure environmental integrity and sustainability.

Continued institutional strengthening and capability building

a. Strengthen institutions for environment and natural resources management at various levels (i.e., insufficient manpower for ENR);

b. Improve and institutionalize various multistakeholder coordination mechanisms as mandated by the different ENR laws for greater transparency and accountability is important in environmental governance;

c. Provide assistance to LGUs to develop and implement local environment and natural resources management plans and programs (i.e., ICM plans, forest and watershed management plans, etc.) in accordance with the national programs, thereby facilitating the achievement of economic and environmental sustainability priorities and targets through relevant on-the-ground strategies and action plans; and

In order to sustainably finance environment and natural resources activities, government will pursue the use of appropriate valuation methods in the computation of applicable fees and taxes for the use the country’s natural resources and enhance its collection.


d. Support women’s enhanced roles in ENR through policy development, capacity-building and strengthening of gender mainstreaming mechanisms.

Research, Development, Extension and Knowledge Management

a. Pursue research, development and extension to:

• Demonstrate, develop and replicate low-cost technologies to optimize the recycling, reuse, and recovery of solid waste, including the conversion of residual organic materials into clean renewable energy;

• Establish valuation of resources and develop a system of natural resources accounting;

• Determine the values and potential benefits of the natural resources.

• Conduct gender-aware resource-use studies to recognize roles, impacts and opportunities among women in ENR ecological profiling;

• Develop DRR and CCA technologies;

• Develop clean and energy efficient technologies;

• Rehabilitate mines to ensure that abandoned/inactive, current and future mines are effectively rehabilitated;

• Obtain the most benefits and value-added from mineral resources;

• Geologically assess and explore of undiscovered mineral resources;

• Determine forest-based industrial requirements;

• Develop resource-based management technologies;

• Provide clear guidelines to minimize environmental impacts of existing technologies (e.g., incinerators) and new technologies (GMOs, e-waste, nano technology, etc.);

• Develop and propagate low-cost noncombustion technologies for infectious and hazardous wastes;

• Develop risk and vulnerability assessments using gendered tools and generating gender-disaggregated data; and

• Assess metallic and nonmetallic minerals, both onshore and offshore;

b. Make available timely, accurate and updated science-based information on the environment though an effective knowledge management system:

• Establish the National Spatial Data Infrastructure (NSDI);

• Establishment of baseline information on the environment and natural resources through ecosystem profiling;

• Establish strategic organization structure for information systems sharing;

• Update the national topographic and nautical chart databases, including electronic charts;

• Develop a National Coastal and Marine Resource Information Management System to support research, policy formulation and implementation and public


education and communication on coastal resources and the environment;

• Rationalize mapping activities; and

• Establish a monitoring and evaluation mechanism to measure and push performance to a high-level.

c. Establish National Wildlife Research Center pursuant to the Wildlife Act (RA 9147).

Environment and Natural Resource Financing

In order to sustainably finance environment and natural resources activities, government will pursue the use of appropriate valuation methods in the computation of applicable fees and taxes for the use the country’s natural resources and enhance its collection. Likewise, PES shall be institutionalized at the national and local levels and shared with communities to encourage natural resource protection and management as well as increase household income.

a. Ensure rightful share of ENR activities and priorities in national and local government budgets;

b. Enhance collection of taxes/revenues including pollution and exploitation fees from industries (i.e., mining companies including small-scale mining);

c. Retain the LGU share of taxes and revenues, specially those pertaining to environment activities;

d. Utilize disposable public and government land assets and resources, balancing economic, environmental, and social development objectives;

e. Strengthen LGU revenues through local real property tax to achieve better local tax efficiency, a wider tax base, and greater equity;

f. Promote and roll out the adoption of the Philippine Valuation Standards and compatible valuation methodologies in the public and private sector;

g. Develop local capacities to generate revenues to finance activities in the control of polluting vehicles;

h. Increase the value of natural resources by adopting resource valuation techniques in determining rates of users’ fees for use of forest land such as telecom, power, water utilities and others;

i. Increase Government share from the use of the country’s mineral wealth through thru the establishment of mineral reservations and greater value adding;

j. Formulation of policies on accessing carbon credits;

k. Exploring further innovative sources of finance, both for environment and natural resources activities and climate change adaptation; and

l. Increase value-added from natural resources (e.g., users fee and payment for environmental services) to generate revenues for protection and conservation

5. Implement a national communications strategy particularly for pollution concerns (air, water and solid waste). This is due to the fact that people themselves contribute to the pollution and they need to be made responsive on how pollution affects their well-being.


Legislative AgendaIn order to push forward sustainable management of the country’s environment and natural resources, the passage of the following pieces of priority legislation should be pursued:

1. National Land Use Bill – to provide a rationalized land use planning in the country and put in order the national laws on land uses (such as agrarian reform, protected areas, ancestral domain, fisheries, forestry, agriculture agricultural modernization, mining and housing) that are sector specific and do not address the cross cutting land use issues;

2. A Sustainable Forestry Bill to provide the clear policy for the sustainable management of the country’s forest resources;

3. Land Administration Reform Bill – to address the pervading multi titling problems through the rationalization of the various agencies responsible in land titling and related activities and address this concern through the adoption of the one stop concept;

4. Land Administration Code - update and harmonize land administration laws enacted at different dispensations to support the future roles of key agencies towards addressing cadastral information requirements and land administration services for sustainable development;

5. Marine Pollution Bill – to respond to the pressing need of reducing risks and preventing disasters caused by trade and other economic activities in the marine environment and its resources;

6. Permanent Forest line Bills – to provide the specific boundaries limits of forestlands per province delineating areas in which no other land use may prevail;

7. Bills on Enactment of Priority Protected Areas – to cover areas that are among the Key Biodiversity Areas in the country which are globally significant and considered as actually manageable for biodiversity conservation;

8. Integrated Coastal Management Bill – to institutionalize the Integrated Coastal Management in the Philippines as a national strategy to ensure the sustainable development of the country’s coastal and marine environment and resources and establishing supporting mechanisms for its implementation;

9. Improvement and enhancement of Small-Scale Mining Law to make it more responsive to present and emerging needs on environmental, safe-time health and social concerns;

10. Enact legislation recognizing access to clean water and sanitation as a human right;

11. People’s Survival Fund (PSF) Bill to amend the Climate Change Act of 2009 and put up a fund that will finance adaptation programs and projects that are directly supportive of the objectives enumerated in the local climate change action plans (LCCAP) of LGUs and communities;


12. Archipelagic Principle Bill to amend Section 4 of RA 8550 or the Philippine Fisheries Code of 1998 that provides guidelines on the delineation of municipal waters using the archipelagic principle;

13. Extended Producers Responsibility Bill to compel industries, manufacturers, importers and sellers to take-back the waste and end-of-life of their products or goods;

14. Formulation of the Electronic Waste (e-waste) policy framework to provide a mechanism on how to dispose, reuse and/or recycle waste coming from electronic equipment;

15. Environmental Code for LGUs to provide LGU budget appropriations for localized environmental activities;

16. Marine Protected Area Bill to mandate local government units to establish marine protected areas in their respective municipal waters;

17. PAG-ASA Modernization Law to allocate funds for the needed reforms of the agency; and

18. Bill on Hazardous and Radio Active Waste Management to provide penalties for violation thereof and for other purposes.

The following pieces of proposed legislation need further discussion and deliberation:

19. Minerals Management Bill. This bill pushes for the conservation of nonrenewable mineral resources for the benefit of both present and future generations of Filipinos by adopting a sustainable, rational, needs-based minerals management, geared towards effective utilization of mineral resources for national industrialization and modernization of agriculture; and

20. Ratification of the Basel Ban Amendments. The Basel Convention is an international treaty seeking to reduce movements of hazardous wastes between nations, and specifically preventing the transfer of hazardous waste from developed to less developed countries (LDC). The country has yet to ratify its position on the said Convention.


List of Acronyms3Rs Reduce, Reuse, and Recycle

3G Third Generation

4Ps Program Pantawid Pamilyang Pilipino Program

A&D Alienable and DisposableAAGR Annual Average Growth RateAARNR Agriculture, Agrarian Reform and

Natural Resources ACE ASEAN Center for Energy ACPC Agricultural Credit and Policy Council

AD Ancestral Domains

ADB Asian Development BankADBI Asian Development Bank Institute ADM Alternative Delivery Modes ADR Alternative Dispute Resolution ADSDPP Ancestral Domain Sustainable

Development and Protection PlanAFF Agriculture, Fisheries and ForestryAFFLA Agroforestry Farm Lease AgreementAFMA Agriculture and Fisheries

Modernization Act AFP Armed Forces of the PhilippinesAHA Aquino Health AgendaALS Alternative Learning SystemAMTP AIDS Medium Term PlanAPIS Annual Poverty Indicators SurveyAMCFP Agro-Industry Modernization Credit

Financing Program AMLA Anti-Money Laundering ActAO Administrative OrderAPEC Asia-Pacific Economic CooperationAPJR Action Program for Judicial Reform APP Annual Procurement Plan ARB Agrarian Reform BeneficiariesARC Agrarian Reform CommunitiesARTA Anti-Red Tape ActASA Air Service AgreementASEAN Association of Southeast Asian NationsATM Automated Teller MachineATO Air Transportation OfficeAWS Automatic Weather Stations

BemONC Basic and Comprehensive Emergency Obstetric and Neonatal Care

BARC Barangay Agrarian Reform CommitteeBAS Bureau of Agricultural StatisticsBasel II New Risk-based Capital Adequacy

FrameworkBCF Billion Cubic FeetBCM Billion Cubic MeterBDR Benefit Delivery RatioBESRA Basic Education Sector Reform

AgendaBFAR Bureau of Fisheries and Aquatic

ResourcesBHS Barangay Health StationsBHFS Bureau of Health Facilities and

ServicesBI Bureau of ImmigrationBIR Bureau of Internal RevenueBIS Bank for International SettlementsBMT Billion Metric TonBOC Bureau of CustomsBOD Biological Oxygen DemandBOI Board of InvestmentsBOP Balance of Payment BOT Build-Operate-TransferBPLS Business Permits and Licensing

SystemBPO Business Process OutsourcingBSP Bangko Sentral ng PilipinasBSWM Bureau of Soils and Water

Management BTr Bureau of the TreasuryBTU/lb British Thermal Unit / PoundCA Court of Appeals CAA Clean Air ActCAA Conflict-affected AreaCAAP Civil Aviation Authority of the

PhilippinesCAB Civil Aeronautics BoardCADT Certificate of Ancestral Domain TitlesCALABARZON Region IV-A (Batangas, Cavite,

Laguna, Quezon and Rizal)

339List of Acronyms

CALT Certificate of Ancestral Land TitleCAMIS Court Administration Management

Information SystemCAR Capital Adequacy RatioCARP Comprehensive Agrarian Reform

Program CARPER Comprehensive Agrarian Reform

Program Extension with Reforms CATV Cable TelevisionCBA Cost - Benefit AnalysisCBEP Community-Based Employment

ProgramCBFMA Community-Based Forest Management

AgreementCBFMP Community-Based Forest Management

ProgramCBMS Community-Based Monitoring SystemCBOs Community-based OrganizationsCCA Center for Culture and the ArtsCCA Climate Change AdaptationCCC Climate Change CommissionCCIC Central Credit Information CorporationCCT Conditional Cash TransferCDA Cooperative Development AuthorityCDD Community Driven DevelopmentCDI Child Development IndexCDIS Citizens Database Information SystemCEA Country Environmental AnalysisCeC Community e-CenterCES Career Executive SystemCFL Compact Fluorescent Lamp CFO Commission on Filipinos OverseasCFP Community Forestry ProgramCFSA Community Forest Stewardship

AgreementCHED Commission on Higher EducationCISFA Comprehensive and Integrated Shelter

Finance ActCHRP Commission on Human Rights of the

Philippines CIA CARP Implementing AgenciesCIAC Children in Armed ConflictCICT Commission on Information and

Communications TechnologyCIDF Communal Irrigation Development

FundCIMS Collateral Information and

Management SystemCIPB Compliance and Integrity Programs for

BusinessCIS Communal Irrigation System

CISFA Comprehensive and Integrated Shelter Finance Act

CISL Collective Investment Schemes LawCISs Communal Irrigation SystemsCITP Convention on Indigenous and Tribal

Peoples or ILO Convention No. 169Ckt Circuit KilometerCL Contingent LiabilitiesCLM Contingent Liability Management CLOA Certificate of Land Ownership Award CLUP Comprehensive Land Use PlanCME Coco-Methyl Ester CMIS Case Management Information System CMP Community Mortgage PlanCMTS Cellular Mobile Telephone ServiceCNFIDP Comprehensive National Fishery

Industry Development PlanCNG Compressed Natural GasCNS-ATM Communications Navigation

Surveillance-Air Traffic ManagementCO2 Carbon DioxideCOA Commission on AuditCOMELEC Commission on ElectionsCPI Consumer Price IndexCPI Corruption Perception IndexCPP Communist Party of the PhilippinesCPR Contraceptive Prevalence RateCQI Continuous Quality Improvement CRC Convention of the Rights of the ChildCSC Certificate of Stewardship ContractCSF Credit Surety FundCSO Civic Society OrganizationCTI-R/N POA Coral Triangle Initiative – Regional/

National Plan of Action DA Department of Agriculture DAR Department of Agrarian Reform DBCC Development Budget Coordination

Committee DBM Department of Budget and

ManagementDBP Development Bank of the PhilippinesDCAF Democratic Control of Armed ForcesDENR Department of Environment and

Natural ResourcesDepEd Department of Education DFA Department of Foreign AffairsDHUD Department of Housing and Urban

DevelopmentDICT Department of Information and

Communications Technology


DILG Department of the Interior and Local Government

DMIA Diosdado Macapagal International Airport

DO Dissolved OxygenDOE Department of EnergyDOF Department of FinanceDOH Department of HealthDOJ Department of JusticeDOLE Department of Labor and EmploymentDOPPI Deep Ocean Power Philippines, Inc. DOST Department of Science and TechnologyDOT Department of TourismDOTC Department of Transportation and

CommunicationsDPWH Department of Public Works and

HighwaysDRR Disaster Risk ReductionDRRM Disaster Risk Reduction and

ManagementDSWD Department of Social Welfare and

DevelopmentDTI Department of Trade and IndustryDTT Digital Terrestrial TelevisionDTU Direct-to-User Satellite ProviderDU Distribution UtilityEC Electric CooperativeECC Environmental Compliance CertificateECCD Early Childhood Care and

DevelopmentECE Early Childhood EducationeCFM Enhanced Case Flow ManagementEE & C Energy Efficiency and ConservationEEID Environmental Education and

Information DivisionEEZ Exclusive Economic ZoneEFA Education For All EIA Environmental Impact AssessmentEITI Extractive Industry Transparency

InitiativeEIU Economist Intelligence Unite-JOW Enhanced Justice on WheelsEMB Environmental Management BureauENR Environment and Natural ResourcesEO Executive OrderEPEP Environmental Protection and

Enhancement ProgramEPIRA Electric Power Industry Reform ActERA Energy Reform Agenda ERC Energy Regulatory Commission

ERDB Ecosystems Research and Development Bureau

ERDT Engineering Research and Development for Technology

ERP Economic Resiliency PlanESCO Energy Service CompanyESWMA Ecological Solid Waste Management

Act of 2000ETEEAP Expanded Tertiary Education,

Equivalency and Accreditation Program

EU European UnionE-waste Electronic wasteEV Electric VehicleFAA Federal Aviation AuthorityFDCP Film Development Council of the

PhilippinesFDI Foreign Direct InvestmentETEEAP Expanded Tertiary Education,

Equivalency and Accreditation Program

F1 FOURmula OneFDA Food and Drug AdministrationFL Functionally LiterateFLEMMS Functional Literacy, Education and

Mass Media SurveyFE Forward Estimates FIA Freedom of Information ActFICAP Federation of International Cable TV

Association of the PhilippinesFIES Family Income and Expenditures

SurveyFiT Feed-in TariffFLA Fishpond Lease AgreementFLAg (Special) Forest Land Use AgreementFLAgT Forest Land Use Agreement for

Tourism PurposesFLGMA Forestland Grazing Management

AgreementFLMA Forest Land Management AgreementFMB Forest Management BureauFMR Farm-to-Market Road FMR/DP Final Mine Rehabilitation and/or

Decommissioning ProgramFOB Freight on BoardFOI Freedom of Information FPIC Free, Prior and Informed ConsentFRB Fiscal Responsibility Bill FRIA Financial Rehabilitation and

Insolvency ActFSAP Financial Sector Assessment Program

341List of Acronyms

FSF Financial Sector ForumFSSR Food Staples Self-Sufficiency

Roadmap FTA Free Trade AgreementFY Fiscal YearGAA General Appropriations ActGAD Gender and DevelopmentGCM Global Climate ModelGCR Global Competitiveness ReportGDI Gender Development IndexGDP Gross Domestic ProductGEF Global Environment Facility GEM Gender Empowerment MeasureGFI Government Financial InstitutionGHG Greenhouse GasGIFMIS Government Integrated Financial

Management Information System GIR Gross International ReserveGIS Geographic Information SystemGMO Genetically-Modified OrganismGNP Gross National ProductGOCC Government Owned and Controlled

CorporationsGPI Gender Parity IndexGPS Global Positioning SystemGQMP Government Quality Management

Program GQMSS Government Quality Management

Systems Standards GRP Government of the Republic of the

PhilippinesGS Government SecuritiesGSIS Government Service Insurance SystemGSM Global System for Mobile

CommunicationsGVA Gross Value Added GWh Gigawatt-HourHCW Health Care WasteHDI Human Development IndexHEI Higher Education InstitutionHFA Hyogo Framework for ActionHGC Home Guaranty CorporationHIV-AIDS Human immunodeficiency virus–

acquired immune deficiency syndromeHLURB Housing and Land Use Regulatory

BoardHRD Human Resource DevelopmentHRH Human Resources for Health HSRA Health Sector Reform AgendaHUCs Highly Urbanized Cities

HUDCC Housing and Urban Development Coordinating Council

HWG Hazardous Waste GeneratorIAM Internal Audit ManualIAS International Accounting StandardsIAs Irrigators’ AssociationsIAS Invasive Alien SpeciesIATCTP Inter-Agency Technical Committee

on Transport PlanningIC Insurance CommissionICAO International Civil Aviation

OrganizationICC Investment Coordination CommitteeICC Indigenous Cultural CommunitiesICC-DBCC Investment Coordination Committee-

Development Budget Coordination Committee

ICERD International Convention on the Elimination of All Forms of Racial Discrimination

ICM Integrated Coastal Management ICS Internal Control System ICT Information and Communications

TechnologyICRMP Integrated Coastal Resources

Management ProjectIDP Integrated Development PlanIEC Information, Education and

CommunicationIES Impact Evaluation StudyIFC International Finance CorporationIFMA Integrated Forest Management

AgreementIFRS International Financial Reporting

StandardsIGF International Gateway FacilityIKSP Indigenous Knowledge Systems and

PracticesILO International Labour OrganizationIMD International Institute for

Management DevelopmentIMF International Monetary FundIMR Infant Mortality RateIMT Irrigation Management TransferINFRACOM NEDA Board Committee on

InfrastructureIP Indigenous PeopleIPCC Inter-governmental Panel for Climate

ChangeIPMAP Indigenous Peoples MasterplanIPP Independent Power Producer


IPPA Independent Power Producer Administrator

IPR Intellectual Property Rights IPRA Indigenous People’s Rights Act IRA Internal Revenue Allotment IRR Implementing Rules and RegulationsISDB-T Integrated Services Digital Broadcast-

TerrestrialISFs Irrigation Service FeesISM International Safety ManagementISO International Organization for

StandardizationISPS International Ship and Port FacilityISSP Information Systems Strategic PlanIWRM Integrated Water Resources

ManagementJCMS Judiciary Case Management SystemJICA Japan International Cooperation

AgencyJMC Joint Memorandum Circular JMP Joint Monitoring ProgramJRC Joint Research CentreJV Joint VentureKALAHI-CIDSS Kapit-bisig Laban sa Kahirapan-

Comprehensive and Integrated Delivery of Social Services

KPO Knowledge Process OutsourcingkV KilovoltLAA Land Administration AuthorityLAD Land Acquisition and Distribution LARA Land Administration Reform ActLBP Land Bank of the PhilippinesLCCAP Local Climate Change Action PlanLDC Least Developed CountriesLEP Ladderized Education ProgramLET Licensure Examination for TeachersLHB Local Housing BoardsLFS Labor Force Survey LGC Local Government CodeLGU Local Government Unit LMB Land Management BureauLMP League of Municipalities of the

PhilippinesLNB Liga ng mga BarangayLPG Liquefied Petroleum GasLRA Land Registration AuthorityLRTA Light Rail Transit Authority LTI Land Tenure ImprovementLUB Luzon Urban Beltway

LWUA Local Water Utilities AdministrationM1 Currency in circulation, peso demand

depositsM2 M1 and peso savings, time depositsMARINA Maritime Industry Authority MbpsMC Memorandum CircularMCC Millennium Challenge CorporationMCP Mandated Credit ProgramMDFO Municipal Development Fund OfficeMDG Millennium Development GoalsMDGF Millennium Development Goal Fund MEDP Missionary Electrification

Development PlanMERALCO Manila Electric CompanyMfDR Managing for Development Results MFI Microfinance InstitutionMGB Mines and Geosciences BureauMIGA Multilateral Investment Guarantee

AgencyMILF Moro Islamic Liberation FrontMIMAROPA Mindoro, Marinduque, Romblon and

PalawanMB Million BarrelsMBFOE Million Barrels of Fuel Oil EquivalentMMDA Metro Manila Development

AuthorityMME Monitoring, Management, and

EvaluationMMLOE Million Liters of Oil Equivalent MMMT Million Metric TonsMMR Maternal Mortality RatioMMS Multimedia Messaging ServiceMMSCF Million Standard Cubic Feet MNCHN Maternal, Neonatal and Child Health,

and NutritionMNLF Moro National Liberation FrontMOA Memorandum of Agreement MOOE Maintenance and Other Operating

ExpensesMPA Marine Protected AreaMPDI Mandatory Pre-departure InspectionsMRF Materials Recovery FacilityMRF Microinsurance Regulatory

FrameworkMRR Mandatory Rate ReductionMRS Materials Recovery SystemMSACC Multi-Sectoral Anti-Corruption

CouncilMSME Micro, Small and Medium Enterprises

343List of Acronyms

MT Metric TonsMTDPFS Medium-Term Development Plan for

the Financial SectorMTEF Medium-Term Expenditure

FrameworkMTOE Million Tons of Oil EquivalentMTPDP Medium Term Philippine

Development PlanMVA Megavolt-AmpereMVUC Motor Vehicle User's ChargeMW MegawattMWSS Metropolitan Waterworks and

Sewerage SystemMWSS-RO Metropolitan Waterworks and

Sewerage System–Regulatory OfficeNACPA National Anti-Corruption Plan of

ActionNAFC-CFA National Agriculture and Fishery

Council-Committee on Fisheries and Aquaculture

NAIA Ninoy Aquino International AirportNALUA National Land Use ActNAMRIA National Mapping and Resource

Information AuthorityNAPC National Anti-Poverty CommissionNATCCO National Confederation of

CooperativesNAT MPS National Achievement Test Mean

Percentage ScoreNBB National Biofuels Board NCBTS National Competency-Based Teacher

StandardsNCCA National Commission for Culture and

the ArtsNCCAP National Climate Change Action PlanNCI National Convergence Initiative NCIP National Commission on Indigenous

PeoplesNCR National Capital RegionNDCC National Disaster Coordinating

CouncilNDF National Democratic FrontNDHS National Demographic and Health

SurveyNDRRMC National Disaster Risk Reduction and

Management CouncilNDRRMF National Disaster Risk Reduction and

Management FrameworkNDSA National Defense and Security ActNEA National Electrification

AdministrationNEC National Ecology Center

NEDA National Economic and Development Authority

NEECP National Energy Efficiency and Conservation Programs

NEEDS National Environmental Economic and Development Study

NEFCA National Endowment Fund for Culture and the Arts

NER Net Enrolment RateNFA National Food AuthorityNG National GovernmentNGA National Government AgencyNGCP National Grid Corporation of the

PhilippinesNGICS National Guidelines on Internal

Control System NGO Non-Governmental OrganizationNGVPPT Natural Gas Vehicle Program for

Public Transport NHA National Housing AuthorityNHIP National Health Insurance ProgramNHTS-PR National Household Targeting System

for Poverty ReductionNIA National Irrigation Administration NIMF National Irrigation Management

FundNIPAS National Integrated Protected Areas

SystemNIS National Irrigation Systems NJIS National Justice Information System NLEX North Luzon ExpresswayNPA New People’s ArmyNPA Non-performing AssetsNPC National Power Corporation NPL Non-performing LoansNPP New Power ProviderNREB National Renewable Energy BoardNREP National Renewable Energy ProgramNSCB National Statistical Coordination

Board NSDI National Spatial Data InfrastructureNSM National Safety ManagementNSO National Statistics OfficeNSWMC National Solid Waste Management

CommissionNTC National Telecommunications

CommissionNTP National Transport Policy NUDHF National Urban Development and

Housing Framework


NWAPP National Wetlands Action Plan for the Philippines

NWAR National Warrant of Arrest RegistryNWRA Net Worth-to-Risk AssetsNWRB National Water Resources BoardNWRP National Water Resources PolicyNWAPP National Wetlands Action Plan for

the PhilippinesO&M Operations and MaintenanceODA Official Development AssistanceOECD Organisation for Economic

Cooperation and Development OEOs Other Executive Offices OFW Overseas Filipino WorkerOMB Office of the OmbudsmanOPIF Organizational Performance Indicator

Framework OSH Occupational Safety and HealthOTEC Ocean Thermal Energy ConversionOWWA Overseas Workers Welfare

AdministrationPACBRMA Protected Area Community Based

Resource Management AgreementPAGASA Philippine Atmospheric, Geophysical

and Astronomical Services Administration

PAGCOR Philippine Amusement and Gaming Corporation

PAL Private Agricultural LandPAMANA Payapa at Masaganang Pamayanan

ProgramPAMB Protected Area Management BoardPAO Public Attorney’s OfficePAR Philippine Area of ResponsibilityPAS Philippine Accounting StandardsPAYGO Pay-As-You-GoPBD Program Beneficiaries DevelopmentPBS Paper on Budget Strategy PC Personal ComputerPCFC People’s Credit and Finance

CorporationPCG Philippine Coast GuardPCL Priority Chemical ListPCSHC Philippine Center for Specialized

Health CarePCSO Philippine Charity Sweepstakes Office PCTA Philippine Cable Television

Association, Inc.PCW Philippine Commission on WomenPDEx Philippine Dealing Exchange

PDIC Philippine Depository Insurance Corporation

PDR Philippine Defense ReformPDU Private Distribution UtilityPECR Philippine Energy Contracting RoundPEEP Philippine Energy Efficiency ProgramPEGR Partnership for Economic Governance

ReformsPELMATP Philippine Energy Efficiency Lighting

Market Transformation Project PER Public Expenditure Review PERA Personal Equity and Retirement ActPES Payment for Environmental ServicesPESFA Private Education Student Financial

Assistance ProgramPESO Public Employment Service OfficePESS Philippine Education Sector StudyPEZA Philippine Economic Zone AuthorityPFM Public Financial Management PFRS Philippine Financial Reporting

StandardsPGIAM Philippine Government Internal

Audit Manual PGS President Gloria Scholarship ProgramPHF Post-Harvest Facilities PhilGEPS Philippine Government Electronic

Procurement System Philhealth Philippine Health Insurance

CorporationPHILPOST Philippine Postal CorporationPHIVOLCS Philippine Institute of Volcanology

and Seismology PIA Philippine Information AgencyPICCS Philippine Inventory of Chemicals

and Chemical SubstancesPIDS Philippine Institute for Development

StudiesPIOU Private Investor-owned UtilityPISs Private Irrigation SystemsPMS Performance Management System PMS-OPES Performance Management System-

Office Performance Evaluation System

PMTP Philippine Medical Tourism ProgramPNHA Philippine National Health AccountsPNHRS Philippine National Health Research

SystemPNOC Philippine National Oil CorporationPNOC-AFC Philippine National Oil Company -

Alternative Fuels Corporation

345List of Acronyms

PNQF Philippine National Qualification Framework

PNP Philippine National PolicePNP-MG Philippine National Police- Maritime

GroupPNRPS Philippine National REDD+ StrategyPO People’s OrganizationPOs Private Operators (Water Service

Provider)PPP Public-Private PartnershipPPP Purchasing power parityPQA Philippine Quality AwardPROC People’s Republic of ChinaPS Personal ServicesPSA Payment System ActPSALM Power Sector Assets and Liabilities

Management Corporation PSEi Philippine Stock Exchange IndexPSF Peoples’ Survival Fund PSSR Philippine Sustainable Sanitation

RoadmapPTF Patubigayan Trust FundPWD Persons with DisabilityPWSSR Philippine Water Supply Sector

Roadmap QMS Quality Management SystemQTP Qualified Third PartyR&D Research and DevelopmentRA Republic ActRATE Run After Tax EvadersRATS Run After the SmugglersRBCA Risk-based Capital Adequacy

FrameworkRCA Revealed Comparative Advantage RD&E Research, Development and Extension RDC Regional Development CouncilsRE Renewable EnergyREC Regional Ecology CenterREDD Reducing Emissions from

Deforestation and Forest DegradationREDD+ Reducing Emissions from

Deforestation and Forest Degradation (with enhanced carbon stock)

REER Real Effective Exchange Rate REIT Real Estate Investment TrustRHU Rural Health Units RIPS Revenue Integrity Protection ServiceRLX Regional Check CentersROD Registry of DeedsRORO Roll-On/Roll-Off

ROW Right-of-WayRP Rationalization PlanRP-FP Responsible Parenting and Family

PlanningRPMP/ RPA-ABB Rebolusyonaryong Partido ng

Manggagawa-Pilipinas /Revolutionary Proletariat Army-Alex Boncayao Brigade

RPS Renewable Portfolio StandardRRTS Road-RORO Terminal SystemRSEC-WR Rules for Setting EC Wheeling RatesS & T Science and TechnologyS/S SubstationSAFDZ Strategic Agriculture and Fisheries

Development ZoneSBC Small Business CorporationSBIA Subic Bay International AirportSC Service ContractSC Supreme CourtSCMB Subic-Clark-Manila-BatangasSCTEx Subic-Clark-Tarlac ExpresswaySCWR Sub-Committee on Water ResourcesSD Sustainable DevelopmentSDAH Sector-wide Development Approach

for HealthSDMP Social Development and Management

ProgramSEA-K Self-Employment Assistance -

KaunlaranSEC Securities and Exchange Commission SIFMA Socialized Industrial Forest

Management AgreementSIJ Strengthening the Integrity of the

JudiciarySLB Securities Borrowing and LendingSLM Sustainable Land ManagementSLP Special Land Use PermitSME Small and Medium EnterprisesSNAP Strategic National Action PlanSNC Second National CommunicationSOLAS Safety of Life at SeaSPED Special EducationSPLULA Special Land Use Lease AgreementSPPD Support for Policy and Programme

DevelopmentSPUG Small Power Utilities GroupSRNH Strong Republic Nautical HighwaySSIPs Small-scale Independent ProvidersSSL Salary Standardization Law


SSME Sulu-Sulawesi Marine Eco-regionSSS Social Security SystemSTAR Southern Tagalog Arterial RoadSTuFAPs Student Financial Assistance ProgramsSUF Spectrum User FeeSWM Solid Waste ManagementSWS Social Weather StationsTB TuberculosisT/L Transmission LineTDP Transmission Development Plan TelOf Telecommunications OfficeTESDA Technical Education and Skills

Development AuthorityTESDP Technical Education and Skills

Development ProgramTEU Twenty-foot Equivalent UnitTEZ Tourism enterprise zonesTFEC Total Final Energy ConsumptionTFLA Tree Farm Lease AgreementTFP Total Factor ProductivityTIEZA Tourism Infrastructure and Enterprise

Zone AuthorityTLA Timber Licence AgreementTNE Transnational EducationTPES Total Primary Energy SupplyTPLEx Tarlac-Pangasinan-La Union

ExpresswayTransCo National Transmission CorporationTRM Trade Related MattersTSD Transport, Storage, DisposalTSNs Transcript of Stenographic Notes TSP Total Suspended ParticlesTV TelevisionTVET Technical And Vocational Education

And TrainingUASF Universal Access and Service FundUCME Universal Charge for Missionary

Electrification UDHA Urban Development and Housing ActUHC Universal Health CareULAP Union of Local Authorities of the

PhilippinesUNCAC United Nations Convention Against

CorruptionUNDP United Nations Development

ProgrammeUNESCAP United Nations Economic and Social

Commission for Asia and the PacificUNFCCC United Nations Framework Convention

on Climate ChangeUNICEF The United Nations Children's Fund

VAS Value-Added ServiceVAT Value Added TaxVAW Violence Against WomenVE/VA Value Engineering/Value AnalysisVTMS Vessel Traffic Management SystemWB World BankWDR World Development Report WDs Water DistrictsWEDC Women in Extremely Difficult

CircumstancesWEF World Economic ForumWEO World Economic OutlookWESM Wholesale Electricity Spot Market WGI Worldwide Governance Indicators WHO World Health OrganizationWHS Wooden Hull ShipsWiFi Wireless FidelityWSP Water Service ProviderWTO World Trade OrganizationWWF World Wildlife FundYTD Year-to-DateZBB Zero-Based Budgeting

347Glossary

Absorption rate The percentage of the number of graduates who get a job after completion of education and/or training to the number of graduates who were not employed prior to completion of education and/or training.

Access to Finance Sustained availability of reasonably priced, socially responsible and environment friendly financial products, services and support programs that are designed for MSMEs, and that MSMEs can conveniently and readily access. Accordingly, a fully inclusive financial system is characterized by (a) the provision of a wide range of financial services (credit, savings, payments, insurance, innovative products) to serve the demands of different market segments, (b) the development of financial products that are appropriately designed and priced, tailor-fitted to market needs and capacities, (c) the participation of a wide variety of strong, sound and duly authorized financial institutions utilizing innovative delivery channels to provide financial services to more Filipinos, and (d) the effective interface of bank and non-bank products/delivery channels, technology and innovation to reach the financially excluded.

Action Program for Judicial Reform (APJR)

A comprehensive set of programs and projects aimed at enhancing conditions and performance for an improved delivery of judicial services. The APJR embodies the vision and mission of then Chief Justice Hilario G. Davide, Jr. for a judiciary that is independent, effective, efficient and worthy of public trust and confidence.

Adaptation Adjustment in natural or human systems in response to actual or expected climatic stimuli or their effects, which moderates harm or exploits beneficial opportunities.

AFP Coast Watch South System A program designed to secure the country’s coasts especially in Mindanao regions.AFP Modernization/Development Program or RA 7898

A comprehensive modernization of the AFP primarily for defense capability with support mechanisms for national development.

Agrarian Reform Community A community composed and managed by agrarian reform beneficiaries (ARBs) who are willing to be organized and to undertake the integrated development of an area and/or their organizations or cooperatives (RA 9700).

Agrarian Reform The redistribution of lands, regardless of crops or fruits produced, to farmers and regular farm workers who are landless, irrespective of tenurial arrangement, to include the totality of factors and support services designed to lift the economic status of the beneficiaries and all other arrangements alternative to the physical redistribution of lands, such as production or profit-sharing, labor administration, and the distribution of shares of stock, which will allow beneficiaries to receive a just share of the fruits of the lands they work (RA 6657).

Agribusiness The sum of all operations involved in the manufacture and distribution of farm supplies; production activities on the farm; and the storage, processing and distribution of farm commodities and items made from them (DAR AO No. 5, Series 2009).

Agricultural Lands Lands devoted to or suitable for the cultivation of the soil, planting of crops, growing of trees, raising of livestock, poultry, fish or aquaculture production, including the harvesting of such farm products, and other farm activities and practices performed in conjunction with such farming operations by persons whether natural or juridical and not classified by the law as mineral land, forest land, residential land, commercial land, or industrial land (RA 8435).

Agriculture and Fisheries Modernization Act (AFMA) of 1997 or RA 8435

An act modernizing the agriculture and fishing industries of the Philippines. It mandated the prescription of urgent related measures to modernize the agriculture and fisheries sectors to enhance their profitability, and prepare said sectors for the challenges of globalization through an adequate, focused and rational delivery of necessary support services.

Glossary


Agroforestry The sustainable management of land, which increases their productivity by properly combining agricultural crops with forest crops simultaneously or sequentially over time through the application of management practices which are compatible with the local climate, topography and slope.

Alienable or Disposable Land Land of the public domain, which has been classified and declared as such and available for disposition.

Allocation to Local Government Units

The share of LGUs from the internal revenue collections of the national government based on a sharing scheme computed for each LGU provided for under the Local Government Code and other special laws.

Alternative Dispute Resolution (ADR)

A procedure used to resolve a dispute or controversy, other than by adjudication of a presiding judge of a court or an officer of a government agency in which a neutral third party participates to assist in the resolution of issues, which includes arbitration, mediation, conciliation, early neutral evaluation, mini-trial, or any combination thereof (as defined under RA 9285).

Alternative fuels Non-conventional or advanced fuel; Any material or substance that can be used as fuel, other than conventional fuels such as fossil fuels and nuclear materials. Some well known alternative fuels include biodiesel, bioalcohol (methanol, ethanol, butanol), chemically stored electricity (batteries and fuel cells), hydrogen, non-fossil methane, non-fossil natural gas, vegetable oil, and other biomass sources.

Alternative Learning System A parallel learning system aimed to provide a viable alternative to the existing formal education instruction. It encompasses both the informal and the non-formal sources of knowledge and skills.

Ancestral Domains All areas generally belonging to ICCs/IPs comprising lands, inland waters, coastal areas, and natural resources therein, held under a claim of ownership, occupied or possessed by ICCs/IPs, themselves or through their ancestors, communally or individually, continuously to the present except when interrupted by war, force majeure or displacement by force, deceit, stealth or as a consequence of government projects or any other voluntary dealings entered into by government and private individuals, corporations, and which are necessary to ensure their economic, social and cultural welfare.

Ancestral Lands Land occupied, possessed and utilized by individuals, families and clans who are members of the ICCs/IPs since time immemorial, by themselves or through their predecessors-in-interest, under claims of individual or traditional group ownership, continuously, to the present except when interrupted by war, force majeure or displacement by force, deceit, stealth, or as a consequence of government projects and other voluntary dealings entered into by government and private individuals/corporations, including, but not limited to, residential lots, rice terraces or paddies, private forests, swidden farms and tree lots.

Armed Forces of the Philippines Established by virtue of Commonwealth Act No.1 otherwise known as the National Defense Act of December 21, 1935, as the official military organization of the state. It is composed of three branches of service: Philippine Navy (PN), Philippine Air Force (PAF) and the Philippine Army (PA).

Autoclave/Autoclaving A more efficient wet thermal disinfection. This method is typically used in hospitals for the sterilization of reusable medical equipment. Allows for the treatment of only limited quantities of waste and is therefore commonly used only for highly infectious waste, such as microbial cultures or sharps.

Backbone Network A major transmission path/facility that can carry high volume of traffic, and is designed to interconnect, often lower-speed distribution networks, channels, or clusters of dispersed terminals or devices.

Bank Density Ratio The ratio of the total number of domestic banking offices to the total number of cities/municipalities in the Philippines.

Barangay The smallest administrative division in the Philippines and is the native Filipino term for a village, district or ward. Municipalities and cities are composed of barangays.

349Glossary

Basel II & III It refers to the global minimum capital standards set by the Basel Committee on Banking Supervision. The Basel II (International Convergence of Capital Measurement and Capital Standards: A Revised Framework) framework is composed of three pillars: minimum capital requirements, supervisory review process and market discipline. It was released in June 2006 to provide global standards on risk-sensitive capital requirements for banks. As a revision to the 1988 Basel Accord, Basel II is designed to establish minimum levels of capital for internationally active banks. Basel III embodies the changes to existing capital rules under Basel II in response to the global financial crisis of 2008.

Basic education The education intended to meet basic learning needs which lays the foundation for subsequent learning. It encompasses early childhood, elementary and high school education as well as alternative learning system for out-of-school youth and adult learners and includes education for those with special needs (RA 9155).

Basic Education Sector Reform Agenda (BESRA)

A package of policy reforms pursued by the Department of Education (DepEd) to improve the quality of education in the Philippines and attain the Education For All (EFA) goals in 2015.

Basic or Simple Literacy The ability to read and write with understanding a simple message in any language or dialect.

Benefit Delivery Ratio (BDR) The cumulative likelihood that any Filipino is (a) eligible to claim; (b) aware of entitlements and is able to access and avail of health services from accredited providers; and (c) is fully reimbursed by PHIC as far as total health care expenditures are concerned.

Bio-chemical Oxygen Demand (BOD)

The measurement of the approximate quantity of dissolved oxygen that will be required by bacteria to stabilize organic water in wastewater or surface water.

Biodiesel Ethanol produced from feedstock and other biomass.Biodiversity Variability among organisms from all sources, including terrestrial, marine and other

aquatic ecosystems and the ecological complexes of which they are a part; this includes diversity within species, between species and of ecosystems. (Source: RA 9125)

Bioethanol Fatty Acid Methyl Ester (FAME) or mono-alkyl esters derived from vegetable oils or animal fats and other biomass-derived oils that shall be technically proven and approved by the Department of Energy for use in diesel engines, with quality specifications in accordance with the Philippine National Standards.

Biofuel Bioethanol and biodiesel and other fuels made from biomass and primarily used for motive, thermal and power generation, with quality specifications in accordance with the Philippine National Standards.

Biomass energy systems Energy systems which use biomass resources to produce heat, steam, mechanical power or electricity through either thermochemical, biochemical or physico-chemical processes, or through such other technologies which shall comply with prescribed environmental standards pursuant to Republic Act No. 9136.

Biomass resources Non-fossilized, biodegradable organic material originating from naturally occurring or cultured plants, animals and micro-organisms, including agricultural products, by-products and residues such as, but not limited to, biofuels except corn, soya beans and rice but including sugarcane and coconut, rice hulls, rice straws, coconut husks and shells, corn cobs, corn stovers, bagasse, biodegradable organic fractions of industrial and municipal wastes that can be used in bioconversion process and other processes, as well as gases and liquids recovered from the decomposition and/or extraction of nonfossilized and biodegradable organic materials.

Broadband A high data rate connection to the Internet and a transmission capacity with sufficient bandwidth to permit combined provision of voice, data and video. Each country may have varying definitions of "basic broadband" for data transmission speeds, ranging up from 256 kbps up to 4.0 Mbps.

Broadcast-Terrestrial (ISDB-T) The digital terrestrial television broadcasting standard originally developed by Japan, and is also one of international digital broadcasting standards recommended by ITU. DTT broadcasting services using ISDB-T started in Japan in December 2003. Currently, the ISDB-T standard is mostly adopted/deployed in South American countries (e.g., Brazil, Peru, Argentina, etc.) and is also the standard adopted in the Philippines.


Business Development Services (BDS)

The wide array of non-financial services critical to the entry, survival, productivity, competitiveness and growth of enterprises. BDS are provided to assist individuals and entrepreneurs to enhance their business skills and market access to improve their income generation and asset-building capacity. These services include training, consultancy and advisory services, marketing assistance, market information, technology development and transfer, and business linkage promotion.

Business Process Outsourcing (BPO) A form of outsourcing that involves the contracting of the operations and responsibilities of a specific business function (or process) to a third-party service provider. It is typically categorized into back office outsourcing which includes internal business functions such as human resources or finance and accounting, and front office outsourcing which includes customer-related services such as contact center services.

Cable Television (CATV) A transmission system which distributes broadcast television signals and other services by means of coaxial cable. CATV is also one of the popular pay-TV platforms in the Philippines.

Cabotage principle A state wherein a country grants rights to another country to trade and navigate within its own coastal territories, and to operate and regulate the traffic inside its territorial waters.

Capital Accounts Refers to the sum of paid-in capital, assigned capital and allowable qualified components, other equity instruments, retained earnings and undivided profits, other comprehensive income and appraisal increment reserves.

Capital Inflows Private and official inward flows of money to the country in the form of investments, grants and loans

Capital Market An alternative market from bank-originated loan market wherein individuals and institutions raise funds mostly via trading or other over-the-counter (OTC) financial instruments. It is also considered as a long-term (maturities of longer than one year) funding source. The most common sub-components of capital market are stock and bond markets.

Capital Outlay Appropriations for the purchase of goods and services, the benefits of which extend beyond the fiscal year and which add to the assets of the Government, including investments in the capital stock of GOCCs and their subsidiaries.

Carbon Dioxide (CO2) A chemical compound composed of two oxygen atoms covalently bonded to a single carbon atom. It is a colorless, odorless, non-poisonous gas that is a normal part of earth's atmosphere. It is considered as a greenhouse gas because it traps heat radiated by the earth into the atmosphere and thereby contributes to global warming.

Case Management Information System (CMIS)

An automated modernization program to improve overall efficiency of the Judiciary in the administration of justice in the Supreme Court and the Appellate courts (e.g. Court of Appeals, Court of Tax Appeals and Sandiganbayan.)

Center of Excellence A higher education institution, whether public or private, that demonstrates the highest degree or level of standards in a given field of instruction, research and extension as identified by CHED.

Certificate of Ancestral Domain Title A title formally recognizing the rights of possession and ownership of ICCs/IPs over their ancestral domains identified and delineated in accordance with this law; Land titles given to tribal communities in asserting their right on the protection and sustainable utilization of their ancestral domain areas.

Certification rate The percentage of examinees who passed the national competency assessment for or within a given period.

Chattel Movable items of property which are neither land nor permanently attached to land or building. A chattel mortgage is a conditional sale of personal property as security for the payment of debt or the performance of some other obligation, the condition being that the sale shall be void upon the seller's payment to the purchaser of a specific sum of money or his accomplishment of some named act. If the condition is performed according to its terms, the mortgage and the sale immediately become void and the mortgagee is hereby divested of his title.

Chemical Disinfection A method to treat wastes by adding chemicals, mostly aldehydes, chlorine compounds, ammonium salts, and phenolic compounds, to kill or inactivate the pathogens the waste contains.

351Glossary

Chemical mixture Any combination of two or more chemical substances if the combination does not occur in nature and is not, in whole or in part, the result of a chemical reaction, if none of the chemical substances comprising the combination is a new chemical substance and if the combination could have been manufactured for commercial purposes without a chemical reaction at the time the chemical substances comprising the combination were combined. This shall include nonbiodegradable mixtures.

Citizens Database and Information System (CDIS)

An information system maintained by the National Bureau of Investigation (NBI) whose main sources include the Clearance Processing and Issuance, e-Clearance and the Crime Information and Monitoring System. It is an information system that will provide effective and efficient frontline service to NBI clients, partners and counterparts. This system is useful for clearance, authentication, investigation, and for effective decision-making.

Civil Society Organization Civil Society Organizations (CSOs) refer to a wide array of organizations: community groups, non governmental organizations (NGOs), labor unions, indigenous groups, charitable organizations, faith-based organizations, professional associations, and foundations.

Classroom shortage The condition wherein the classroom-pupil ratio is higher than 1:45.Climate Change Act of 2009 or RA 9729

An act mainstreaming climate change into government policy formulations, establishing the framework strategy and program for climate change. It adopts a principle of protecting the climate system for the benefit of humankind, on the basis of climate justice or common but differentiated responsibilities and the Precautionary Principle to guide decision-making in climate risk management.

Climate Change Refers to a change in climate that can be identified by changes in the mean and/or variability of its properties and persists for an extended period typically decades or longer, whether due to natural variability or as a result of human activity. (RA 9729)

Co-Generation Facility A facility which produces electrical and/or mechanical energy and forms of useful thermal energy such as heat or steam which are used for industrial commercial heating or cooling purposes through the sequential use of energy.

Cohort survival rate The percentage of enrolees at the beginning grade or year in a given school year who reached the final grade or year of the elementary/secondary level.

Communal Irrigation System An irrigation system managed by a bona fide Irrigators Association (RA 8435).Communist Party of the Philippines Founded by Jose Maria Sison in December 26, 1968, the CPP is the major communist

party in the Philippines.Community e-Center (CeC) A Community e-Center is a self sustaining shared facility owned and operated by the

government as a one-stop shop for ICT needs of the citizens, providing affordable access to ICT-enabled services and relevant content. It serves as a conduit for efficient delivery of government and other services and a potent tool for empowerment and participation of unserved and underserved communities in development.

Competency Assessment The process of gathering and judging evidence to decide whether a person has achieved a standard of competency or competence objective.

Competitive Advantage Competitive edge in terms of product quality and/or price. It likewise refers to the ability to produce a product with the greatest relative efficiency in the use of resources (RA 8435).

Comprehensive Land Use Plan A document accompanied by maps and similar illustrations, which represent the community-deserved pattern of population distribution and proposal for the future allocation of land for the various land use activities, in accordance with the social and economic objectives of the people. It identifies the location, character and extent of the area's land resources to be used for different purposes and includes the process and the criteria employed in the determination of the land’s use (DAR AO No. 1, Series of 2002.)

Concession Contract The award by the government to a qualified private entity of the responsibility for financing, operating, expanding, maintaining and managing specific Government-owned assets.

Conflict-affected Area Areas where the local and peripheral population is heavily impacted by the infighting of armed groups.


Consolidated Public Sector Deficit or Surplus

The combined deficit of the National Government, the Central Bank restructuring accounts, the major non financial government corporations, the government financial institutions, the local government units, the social security institutions, and the Bangko Sentral.

Consumer Price Index A measure of change in the average retail prices of goods and services commonly purchased by a particular group of people in a particular area.

Continuous Quality Improvement (CQI)

A strategic approach to providing the best health care possible. It is a preventive strategy that uses consultant innovation to improve work processes and systems by reducing time-consuming, low-value activities.

Contraceptive prevalence rate (CPR) The percentage of currently married women 15 to 49 years of age reporting current use of any method of contraception.

Controlled dumpsites A disposal site at which solid waste is deposited in accordance with the minimum prescribed standards of dumpsite operation.

Convention on the Rights of the Child

The first instrument to incorporate the complete range of international human rights— including civil, cultural, economic, political and social rights as well as aspects of humanitarian law.

Convention on Indigenous and Tribal Peoples or ILO Convention No. 169

Convention No.169 is a legally binding international instrument open to ratification, which deals specifically with the rights of indigenous and tribal peoples. Today, it has been ratified by 20 countries. Once it ratifies the Convention, a country has one year to align legislation, policies and programmes to the Convention before it becomes legally binding. Countries that have ratified the Convention are subject to supervision with regards to its implementation.

Convergence This refers to two different trends: (a) convergence between the broadcasting and telecommunications sectors. Advances in technology make it possible to use different media (cable networks, terrestrial and satellite radio relay systems, computer terminals and television sets) to carry and process all kinds of information and services, including sound, images and data; and (b) fixed/mobile convergence. Increasingly similar technologies are used and services provided by fixed telephone and mobile telephone systems. This type of convergence opens up prospects for operators to propose the same services to all users, regardless of the technology or networks they use.

Core Housing Any formally built house that is incomplete at the time of initial occupation. It is normally designed so that it can be completed by the inhabitant.

Corporate Malfeasance Deceptive and fraudulent activities carried out by corporate officers, investment banks or brokerage firms that may cost investors millions. This takes place when trusted financial professionals abandon ethical principles to pursue excessive material gain.

Court Administration Management Information System (CAMIS)

A software designed for logging, monitoring and monitoring caseload and caseflow statistical data. The software was developed with the assistance of the Canadian International Development Agency (CIDA).

Coverage The geographical reach, or the area on earth capable of effectively receiving transmission of a certain network (e.g., coverage for cellular or satellite network).

Creditworthiness A creditor’s measure of an individual's or company’s ability to meet debt obligations. Current Operating Expenses Amount budgeted for the purchase of goods and services for the conduct of normal

government operations within a budget year. Includes goods and services that will be used or consumed during the budget year.

Democratic Control of Armed Forces The norms and standards governing the relationship between the armed forces and society. The armed forces are subordinated to democratically-elected authorities and subject to the oversight of the judiciary as well as the media and civil society organisations.

Dependable capacity The load-carrying ability of a power plant during a specific time interval and period. The dependable capacity of a generating facility or transmission system is a fluctuating value that depends upon the available energy, the demand for that energy, the capability of the system to deliver that energy at a given moment, and the facilities available to handle increased capacity should the need arise.

353Glossary

Digital Divide The gap between individuals, households, businesses and geographic areas at different socioeconomic levels with regard to both their opportunities to access information and communication technologies (ICTs) and to their use of the Internet for a wide variety of activities. The digital divide reflects various differences among and within countries.

Digital Terrestrial Television (DTT) Broadcasting

The sending and receiving of moving images and sound by means of discrete (digital) signals providing a greater number of channels and different interactive services and/or better quality of picture and sound in the same amount of frequency spectrum (bandwidth) as that used by analogue transmissions through a conventional (aerial) antenna instead of a satellite dish or cable connection.

Disaster Risk Reduction (DRR) Concept and practice of reducing disaster risks through systematic efforts to analyze and manage the causal factors of disasters, including through reduced exposure to hazards, lessened vulnerability of people and property, wise management of land and the environment, and improved preparedness for adverse events.

Disbursements Settlement of government obligations and/or accounts payable by cash; movement of cash from the BTr or from an authorized disbursing officer to the final recipient.

Disposal site A site where solid waste is finally discharged and deposited.Disposal The discharge, deposit, dumping, spilling, leaking or placing of any solid waste into or in

any land.Dissolved Oxygen (DO) Amount of gaseous oxygen (O2) actually present in water expressed in terms either of its

presence in the volume of water (milligrams of O2 per liter) or of its share in saturated water (percentage).

Distribution Utility Any electric cooperative, private corporation, government-owned utility or existing local government unit which has an exclusive franchise to operate a distribution system in accordance with Republic Act No. 9136.

Diversion Rate The rate or percentage of a potentially recyclable material that has been diverted out of the waste disposal stream and therefore not put into disposal sites.

Double-shift class A schooling system wherein a school caters to two entirely separate groups of pupils/students during the school day using the same classroom.

Eco-efficiency Means having “more value with less impact on the environment;” it emphasizes monitoring of material and energy flows of stocks and life cycle assessment.

Ecological Solid Waste Management Act of 2000 or RA 9003

An act providing for an ecological solid waste management program, creating the necessary institutional mechanisms and incentives, declaring certain acts prohibited and providing penalties. It reinforces the country's drive towards a healthier environment by providing a comprehensive solution to the country's solid waste problem.

Ecological Solid Waste Management The systematic administration of activities which provide for segregation at source, segregated transportation, storage, transfer, processing, treatment, and disposal of solid waste and all other waste management activities which do not harm the environment.

e-Commerce Commercial transactions occurring over open networks, such as the Internet. Both business-to-business and business-to-consumer transactions are included.

Economic zones Selected areas with highly developed or which have the potential to be developed into agro-industrial, industrial tourist/recreational, commercial, banking, investment and financial centers.

Eco-tourism A form of tourism that can sustainably use natural and cultural resources while providing employment opportunities for local communities.

e-Governance A wider concept that defines and assesses the impacts that technologies are having on the practice and administration of governments, and the relationships between public servants and the wider society, such as dealings with the elected bodies or outside groups such as non-government organizations, or private sector corporate entities. It is understood to extend the scope by including citizen engagement and participation in governance, and can be defined as the use of ICTs to achieve better governance.

e-Government The development of online services for the public, providing services such as: e-tax; business registration; birth, wedding, and death certificates; voting or public opinion polling; passport or identification renewal; social benefits; licences and approvals, planning or business applications; or e-health. Also included are networked ICT systems supporting various levels of government in the administration and delivery of mandated services.


El Niño/La Niña El Niño is a warming of the surface water of the Pacific Ocean that causes extreme dry weather or drought while the La Niña causes heavy rains in the country that may also bring strong winds and storms. La Niña brings mostly the opposite effect of El Niño.

Electric Cooperatives Cooperatives supplying or empowered to supply electric service.Electricity The fundamental form of energy created by the movement of electrons or an electric

current supplied as a public utility for lighting, heating, etc.Employment generation Derived from the Labor Force Survey conducted by the NSO, and pertains to the number

of “individuals” that were granted with work.Employment rate The ratio of the total number of employed persons to the total number of persons in the

labor force.End-user financing Financing for stakeholders in a particular sector usually incorporated in a modality or

program. Enhanced Case Flow Management System (ECFMS)

An offshoot project of the Case Flow Management (CFM) System that aims to establish a judiciary-wide ICT systems development for increasing efficiency in the management of dockets of all first and second level courts. It involves the design, development, testing, pilot testing, and process and system documentation of the eCFM system that is integrated with the existing CAMIS of the OCA, e-Payment and other application systems that may be developed later.

Enhanced Justice on Wheels (E-JOW)

A program created by the High Court to reach out to poor Filipinos and expedite litigation of cases they are involved in. The project aims to literally bring the courts to the people via an air-conditioned bus that houses a small courtroom representing first and second level court. The bus is staffed by a judge, court personnel and a mediator. It is divided into two main sections: the front section serves as the courtroom, while the rear section serves as a mediation room.

Enterprise-based training A program of learning which takes place in the enterprises or in the workplace. Entrepreneurship The act of being an entrepreneur, which can be defined as “one who takes over the world

innovations, finance and business acumen in an effort to transform innovations into economic goods.”

Environmental Compliance Certificate (ECC)

A document issued by the DENR Secretary or the Regional Executive Director certifying that based on the representations of the proponent and the preparers, as reviewed and validated by the EIARC, the proposed project or undertaking will not cause a significant negative environmental impact; that the proponent has complied with all the requirements of the EIS System and that the proponent is committed to implement its approved Environmental Management Plan in the Environmental Impact Statement or mitigation measures in the Initial Environmental Examination.

Environmental Impact Assessment (EIA)

The process of predicting the likely environmental consequences of implementing projects or undertakings and designing appropriate preventive, mitigating and enhancement measures.

EO 570, series of 2006 Also known as “Institutionalizing Peace Education in Basic Education and Teacher Education”.

Ethanol A volatile, flammable, colorless liquid that is most often used as a motor fuel, mainly as a biofuel additive for gasoline. It is made by fermenting and then distilling starch or sugar crops such as sugarcane, maize, sorghum, wheat and other grains, or even cornstalks, fruit and vegetable waste. Also called ethyl alcohol, pure alcohol, grain alcohol, or drinking alcohol.

Excise Tax Tax, either specific and/or ad valorem, imposed on selected articles manufactured or produced in the country for domestic sale or consumption or for any other disposition, and or selected imports.

355Glossary

Exclusive Economic Zone A zone beyond and adjacent to the territorial sea in which a coastal state has: sovereign rights for the purpose of exploring and exploiting, conserving and managing the natural resources, whether living or non-living, of the waters superjacent to the seabed and of the seabed and its subsoil, and with regard to other activities for the economic exploitation and exploration of the zone. This includes the production of energy from the water, currents, and winds; jurisdiction with regard to the establishment and use of artificial islands, installations, and structures; marine scientific research; the protection and preservation of the marine environment. The outer limit of the exclusive economic zone shall not exceed 200 nautical miles from the baselines from which the breadth of the territorial sea is measured.

Executive Order 514 An order establishing the National Biosafety Framework which aims to strengthen the existing science-based determination of biosafety to ensure the safe and responsible use of modern biotechnology, enhance the decision-making, and guide implementation of international obligations on biosafety. The NBF puts together into the framework the existing biosafety regulations, delineates the responsibilities of each biosafety agencies, strengthens the National Committee on Biosafety of the Philippines and provides a venue for discussion of overlapping policy issues.

Executive Order 533 An order adopting an Integrated Coastal Management as a National Strategy to ensure the sustainable development of the country's coastal and marine environment and resources and establishing supporting mechanisms for its implementation. It seeks to address environmental as well as socioeconomic issues in a comprehensive and integrated manner in order to promote optimum resource utilization and sustainable coastal and marine development.

Executive Order No. 3 (series of 2001)

Also known as the EO “Defining the Policy and Administrative Structure: For Government Comprehensive Peace Efforts”

Executive Order No. 797 An order that seeks to reorganize the ministry of labor and employment, creating the Philippine overseas employment administration, and for other purposes. It is basically geared towards the development of employment opportunities, the protection of workers, and the promotion of industrial peace.

Executive Order No. 888 An order adopting the Strategic National Action Plan (SNAP) on Disaster Risk Reduction, 2009-2019 and institutionalizing DRR. It seeks to reduce economic losses from the adverse impacts of climate variability including extreme events as the country undergoes economic growth, population increase and rapid urbanization.

Expanded Tertiary Education Equivalency and Accreditation Program (ETEEAP)

A certification mechanism for non-school based learning that is integrated into the country’s educational system through the Executive Order 330. This program is a comprehensive educational assessment scheme at the tertiary level which recognizes, accredits and gives equivalency to the knowledge, skills, attitudes and values gained by individuals from relevant work experiences, high-level non-formal training and informal experiences parallel to those obtained from the formal system leading to an award of a degree. In essence, it is an alternative learning system in tertiary education.

Extension Services The provision of training, information, and support services by the government and non government organizations to the agriculture and fisheries sectors to improve the technical, business, and social capabilities of farmers and fisherfolk (RA 8435).

Farm-to-Market Roads Roads linking the agriculture and fisheries production sites, coastal landing points and post-harvest facilities to the market and arterial roads and highways (RA 8435).

Feed-in Tariff A policy mechanism that involves the obligation on the part of electric power industry participants to source electricity from renewable energy generation at a guaranteed fixed rate per kilowatt‐hour for renewable energy generation for a given period of time.

Feedstock Organic sources such as molasses, sugarcane, cassava, coconut, jatropha, sweet sorghum or other biomass used in the production of biofuels.

Financial Sector Forum (FSF) It principally provides for an institutionalized framework for coordinating the supervision and regulation of the financial system, for strengthening the exchange of information among the different regulators and for the promotion of better consumer protection.

Fiscal Deficit Shortfall/deficiency of revenues over expenditures of the government.Fiscal Policy The part of government policy which is concerned with the raising of resources through

taxation and borrowing and deciding on the level and pattern of expenditures.


Fiscal Responsibility Bill (FRB) A proposed bill which aims to strengthen fiscal discipline in the public sector by prescribing principles of responsible fiscal management, establishing control mechanisms on spending, and adopting preventive measures against the erosion of the tax base of the government.

Fixed Telephone Line Voice telephony via land line telephone service. It is a physical line connecting the subscriber to the telephone exchange. Typically, fixed-line network is used to refer to the traditional phone system or the Public Switched Telephone Network (PSTN), to distinguish it from mobile networks.

Food security It exists when all people, at all times, have physical and economic access to sufficient, safe and nutritious food that meets their dietary needs and food preferences for an active and healthy life (FAO, 2002).

Foreign direct investment The category of international investment made by a resident entity in one economy (direct investor) with the objective of establishing/obtaining a lasting interest in an enterprise resident in an economy other than that of the investor (direct investment enterprise).

Foreign Direct Investments Investments made to acquire a lasting interest by a resident entity in one economy in an enterprise resident in another economy. The purpose of the investor is to have a significant influence and effective voice in the management of the enterprise.

Forward and backward linkages Channels through which information, material and money flow from suppliers to the firms (backward) and from suppliers to customers (forward).

Forward Estimates (FEs) Projections or estimation of future costs of existing policies. It also serves as the validation instruments for the reasonableness of agency proposals on existing programs, projects, and activities.

Fossil fuels Fuels formed by natural resources such as anaerobic decomposition of buried dead organisms. The age of the organisms and their resulting fossil fuels is typically millions of years, and sometimes exceeds 650 million years. The fossil fuels, which contain high percentages of carbon, include coal, petroleum, and natural gas.

Franchise area A geographical area exclusively assigned or granted to a distribution utility for distribution of electricity.

Functional Literacy (new definition) A range of skills and competencies – cognitive, affective and behavioral – which enables individuals to: (a) live and work as human beings; (b) develop their potentials; (c) make critical and informed decisions; (d) function effectively in society within the context of their environment and that of the wider community (local, regional, national, global) in order to improve the quality of their life and that of society.

Functional Literacy (old definition) A significantly higher level of literacy which includes not only reading and writing skills but also numerical skills. The skills must be sufficiently advanced to enable the individual to participate fully and efficiently in activities commonly occurring in her/his life situation that require a reasonable capability of communicating by written language.

General Fertility Rate The number of live births per 1,000 women aged 15-49 in a given year.Geothermal Energy Systems Machines or other equipment that converts geothermal energy into useful power.Geothermal Resources Mineral resources, classified as renewable energy resource, in the form of: (a) all products

of geothermal processes, embracing indigenous steam, hot water, and hot brines; (b) steam and other gases, hot water, and hot brines resulting from water, gas, or other fluids artificially introduced into geothermal formations; (c) heat or associated energy found in geothermal formations; and (d) any by-product derived from them.

Gini concentration ratios Measures the inequality in income distribution where zero means perfect equality and a value of 1 implies perfect inequality.

Gini ratio (Gini coefficient) A concentration ratio which is used to measure income inequality. It takes values from zero (0), representing complete equality of income, to one (1), representing complete inequality. Thus, the higher the value of the coefficient, the more unequal is the distribution of income among families within a given area under study.

Global Warming Increase in the average temperature of the earth’s near-surface air and oceans that is associated with the increased concentration of greenhouse gases in the atmosphere.

Government of the Republic of the Philippines

The official title of the government.

357Glossary

Greenhouse gases (GHG) Constituents of the atmosphere that contribute to the greenhouse effect including, but not limited to, carbon dioxide, methane, nitrous oxide, hydrofluorocarbons, perfluorocarbons and sulfur hexafluoride.

Green ICT Green ICT is a new approach to ensuring environmental sustainability of ICTs in businesses and organizations. This involves reducing carbon emissions and improving energy efficiency of ICT systems, as well as promoting use of less harmful materials and encouraging recycling and appropriate disposal of ICT equipment and peripherals.

Grid The high voltage backbone system of interconnected transmission lines, substations and related facilities.

Gross Domestic Product (GDP) Refers to the value of all goods and services produced domestically. It is the sum of gross value added of all resident institutional units engaged in production (plus any taxes, and minus any subsidies, on products not included in the values of their outputs); The total output produced within the geographical boundaries of the country regardless of the nationality of the entities producing the output.

Gross Enrolment Rate (GER) The total enrolment in a given level of education, regardless of age, as a percentage of population which, according to national regulations, should be enrolled at this level.

Gross International Reserve (GIR) Foreign assets that are readily available to and controlled by the BSP for direct financing of payment imbalances and for managing the magnitude of such imbalances, GIR consists of holdings of gold, special drawing rights, foreign investments, and foreign exchange, including Reserve Position in the Fund.

Gross National Product (GNP) A measure of the country’s output of final goods and services. It is equivalent to the Gross Domestic Product adjusted with the net factor income from the rest of the world. It refers to the aggregate earnings of the factors of production (nationals) plus indirect taxes (net) and capital consumption allowance.

Gross Value Added Total payment to factors of production namely: wages, interest, profit and rent. It also includes capital consumption allowance and indirect taxes. It is estimated by deducting from the gross value of output of non-factor such as raw materials, fuel, advertising and other non-industrial overhead cost.

Hazardous Substances Substances which present either: (a) short-term acute hazards, such as acute toxicity by ingestion, inhalation or skin absorption, corrosivity or other skin or eye contact hazard or the risk of fire or explosion; or (b) long-term environmental hazards, including chronic toxicity upon repeated exposure, carcinogenicity (which may in some cases result from acute exposure but with a long latent period), resistance to detoxification process such as biodegradation, the potential to pollute underground or surface waters, or aesthetically objectionable properties such as offensive odors.

Hazardous Wastes Substances that are without any safe commercial, industrial, agricultural or economic uses and are shipped, transported or brought from the country of origin for dumping or disposal into or in transit through any part of the territory of the Philippines.

Health Care Waste Infectious waste from hospitals such as equipment, instruments, utensils, and fomites of a disposable nature from patients who are suspected to have or have been diagnosed as having communicable diseases and must therefore be isolated as required by public health agencies, laboratory wastes such as pathological specimens (i.e., all tissues, specimens of blood elements, excreta, and secretions obtained from patients or laboratory animals), and disposable fomites that may harbor or transmit pathogenic organisms, and surgical operating room pathologic specimens and disposable fomites attendant thereto, and similar disposable materials from outpatient areas and emergency rooms.

High Speed Packet Access (HSPA) A family of high-speed 3G digital data services provided by cellular carriers worldwide that use the GSM technology.

Higher Education (HE) The stage of formal education requiring secondary education covering the programs on all courses of study leading to bachelor’s degree and all degree courses of study beyond bachelor’s degree level.

Household A person or a group of persons who occupy a housing unit such as a house, an apartment, a mobile home, a group of rooms, or a single room that is occupied (or if vacant, is intended for occupancy) as separate living quarters.

Housing loan ceiling The limit one can acquire as loan for the construction of a housing structure.Housing Unit A building or structure that is a dwelling or place for habitation by human beings.


Human Development Index (HDI) Measures quality of life or well-being in terms of health, education and income.Hydropower Resources Water resources found technically feasible for development of hydropower projects.Hydropower Systems Water-based energy systems which produce electricity by utilizing the kinetic energy of

falling or running water to turn a turbine generator.Inclusive Finance Greater access to in financial services and further deepening of the financial system

towards sustainable growth and stability.Inclusive Growth Growth that is rapid enough to matter, given the country’s large population, geographical

differences, and social complexity. It is sustained growth that creates jobs, draws the vast majority into the economic and social mainstream, and continuously reduces mass poverty. It is an essential ingredient of any successful growth strategy where the idea of equality of opportunity is emphasized in terms of access to markets, resources, and unbiased regulatory environment for businesses and individuals.

Income gap The average income shortfall expressed as a proportion to the poverty line of families with income below the poverty threshold.

Independent Power Producer An existing power generating entity which is not owned by NPC.Indigenous People People, communities, and nations who are native to a particular area; Refer to a group of

people or homogenous societies identified by self-ascription and ascription by other, who have continuously lived as organized community on communally bounded and defined territory, and who have, under claims of ownership since time immemorial, occupied, possessed customs, tradition, and other distinctive cultural traits, or who have, through resistance to political, social and cultural inroads of colonization, non-indigenous religions and culture, become historically differentiated from the majority of Filipinos. IPs shall likewise include peoples who are regarded as indigenous on account of their descent from the populations which inhabited the country, at the time of conquest or colonization, or at the time of inroads of non-indigenous religions and cultures, or the establishment of present state boundaries, who retain some or all of their own social, economic, cultural and political institutions, but who may have been displaced from their traditional domains or who may have resettled outside their ancestral domains.

Indigenous Peoples Masterplan Under the Indigenous Peoples Rights Act (IPRA) of 1997, the National Commission on Indigenous Peoples (NCIP) is mandated to formulate regularly the Five Year Master Plan

Indigenous Peoples Rights Act of 1997 or RA 8371

An act which recognizes, protects and promotes the rights of indigenous cultural communities/indigenous people, creating a national commission of indigenous people, establishing implementing mechanism, appropriating funds therefore, and for other purposes.The law restores the rights of indigenous peoples over their ancestral lands and ancestral domains.

Inelastic supply Market characteristic or situation where any increase or decrease in the price of a good or service does not result in a corresponding increase or decrease in its supply.

Infant mortality ratio (IMR) The number of deaths among children below one year old per 1,000 livebirths at a specified period of time. IMR is used as a general indicator of the nutritional and health status of the population.

Inflation rate The annual rate of change or year-on-year change in Consumer Price Index.Inflation Rates The annual rate or percentage change or the year-on-year change in the Consumer Price

Index (CPI). It indicates how fast or slow the CPI increases or decreases.Informal settlers Occupants of public or private lands without any legal entitlement or authority to said

lands.Informal waste sector Individuals or groups involved in extraction of recyclable and reusable materials from

mixed waste, i.e., scavengers and waste pickers. INFRACOM Sub-Committee on Water Resources (SCWR)

An inter-agency committee for the Water Resources Sector established through NEDA Board Committee on Infrastructure (INFRACOM) Resolution No. 2, Series of 2008 composed of representatives from key national government agencies, leagues of cities and municipalities, academe and civil society. Its functions include, among others: (a) ensuring that sector plans are carried out; (b) coordinating the conduct of sector monitoring and periodic assessments; (c) coordinating the undertaking of studies, researches and analyses in order to propose subsequent policy recommendations for the sector; (d) formulating areas of cooperation within the sector; (e) clearing sector data/information; and (f ) serving as a platform for discussion and resolution of issues in the sector.

359Glossary

Installed/rated capacity The maximum capacity of an equipment/facility such as a power plant for which it is designed by the manufacturer and is usually expressed in megawatts (MW).

Integrated Water Resources Management (IWRM)

A framework which promotes the coordinated development and management of water, land and related resources in order to maximize the resultant economic and social welfare in an equitable manner without compromising the sustainability of vital ecosystems.

Interconnection The physical connection of telephone networks owned by two different operators. Network operators typically charge a per minute fee for use of their network by other network operators.

International Convention on the Elimination of All Forms of Racial Discrimination

United Nations convention adopted and opened for signature and ratification by the United Nations General Assembly on December 21, 1965, and which entered into force on January 4, 1969. It defines and condemns racial discrimination and commits States to change national laws and policies which create or perpetuate racial discrimination.

Investment climate Overall environment for investments. It refers to the factors such as economic, monetary, and other conditions that affect the performance of investments.

Irrigation Service Fees (ISF) A means to generate revenues to cover operations and maintenance (O&M) costs of irrigation facilities.

Job generation The number of “tasks, duties, or activities” that were created.Judiciary Case Management System ( JCMS)

A management system of the Supreme Court and one of the Judiciary's reform projects aimed at declogging congested dockets and helping solve delays in case management and resolution through the use of information technology.

Justice Sector Coordinating Council ( JSCC)

An inter-agency body composed of senior representatives from the Judiciary, the Department of Justice, the Department of the Interior and Local Government, and their relevant attached agencies, which serves as a joint forum for dialogue on issues of common interest and mechanism for effective coordination and sharing of information for planning and implementation of joint initiatives.

K+12 system Kindergarten and the twelve years of elementary and secondary education. Kindergarten refers to the 5-year old cohort that takes a standardized kinder curriculum. Elementary education refers to primary schooling that involves six or seven years of education; meanwhile secondary education refers to high school. Under the K+12, the intention is not just to add two years of schooling but more importantly to enhance the basic education curriculum.

Kapit-bisig Laban sa Kahirapan-Comprehensive and Integrated Delivery of Social Services (KALAHI-CIDSS)

A program for implementing small-scale projects by barangays following their own plans, priorities, and processes, with funding support and in-kind support from the national and local governments.

Kilowatt-hour (kWh) A unit of energy equivalent to one kilowatt (kW) of power expended for one hour of time.Labor Force The population 15 years old and over, whether employed or unemployed, who contribute

to the production of goods and services in the country. Persons considered not in the labor force are those who are not working and are not available for work during the reference week, and persons who are not available and are not looking for work because of reasons other than those previously mentioned, (e.g., housewives, students, disabled or retired persons and seasonal workers.)

Labor Market Programs Measures aimed at enhancing employment opportunities and protection of the rights and welfare of workers. Employment enhancing measures include trade policies and skills development and training. Labor protection includes compliance with labor standards such as minimum wages or health and safety in the workplace.

Ladderized Education A new system of education in the Philippines that allows learners to progress between TVET and college, and vice-versa.

Lateral Attrition The transfer in post and/or separation from government service, in accordance with civil service rules and regulations of internal revenue or customs officials/officers and collection officers of other revenue-generating units, who do not meet their respective revenue or collection goals for the year with all due considerations being taken.

Level I Water Supply System (point source)

A protected well or developed spring system without a distribution system, generally adaptable for rural areas where the houses are thinly scattered. A Level I facility normally serves an average of 15 households. (NEDA Board Resolution No. 12 Series of 1995).


Level II Water Supply System (communal faucet system or standpost)

A system composed of a source, reservoir, distribution system and communal faucets. Usually, one faucet serves 4 to 6 households. Generally suitable for rural and urban fringe areas where houses are clustered densely to justify a simple piped-system. (NEDA Board Resolution No. 12 Series of 1995).

Level III Water Supply System (waterworks system or individual household connections)

A system composed of a source, reservoir, piped distribution system and household taps. It is generally suited for densely populated urban areas. (NEDA Board Resolution No. 12 Series of 1995).

Lifeline rate The subsidized rate given to low-income captive market end-users who cannot afford to pay at full cost.

Liquefied petroleum gas (LPG) A flammable mixture of hydrocarbon gases used as a fuel in heating appliances and vehicles. It is increasingly used as an aerosol propellant and a refrigerant, replacing chlorofluorocarbons in an effort to reduce damage to the ozone layer.

Local Exchange Carrier The regulatory term in telecommunications for the local telephone company.Local Government Code of 1991 or RA 7160

An act providing for a local government code which seeks to promote genuine and meaningful local autonomy for territorial and political subdivisions of the State to enable them to attain their fullest development as self-reliant communities and make them more effective partners in the attainment of national goals. It provides a responsive and accountable local government structure instituted through a system of decentralization whereby local government units shall be given more powers, authority, responsibilities, and resources.

Low cost housing Under Philippine laws, these are housing units that are priced from P 400,000 to P 3,000,000.

Magna Carta for Countryside and Barangay Business Enterprises (Kalakalan 20)

An act establishing the Magna Carta for countryside and barangay business enterprises, granting exemptions from any and all government rules and regulations and other incentives and benefits thereof, and for other purposes. It aims to achieve growth in the countryside business enterprises through absence of bureaucratic restrictions and granting of incentives and other benefits.

Magna Carta of Women or RA 9710 A comprehensive women's human rights law that seeks to eliminate discrimination against women by recognizing, protecting, fulfilling and promoting the rights of Filipino women, especially those in the marginalized sectors. It promotes empowerment of women and pursues equal opportunities for women and men and ensures equal access to resources and to development results and outcome.

Magnitude of Poor Families The number of families whose income cannot provide for the basic food and non-food requirements called the poverty threshold.

Magnitude of Poor Population The number of individuals whose income cannot provide for the basic food and non-food requirements called the poverty threshold.

Maintenance and Other Operating Expenses (MOOE)

Expenditures to support the operations of government agencies such as expenses for supplies and materials; transportation and travel; utilities (water, power, etc) and the repairs, etc.

Managing for Development Results A management strategy that focuses on development performance and on sustainable improvements in country outcomes. It provides a framework for development effectiveness in which performance information is used to improve decision making. It also includes practical tools for strategic planning, risk management, progress monitoring, and outcome evaluation. (OECD Policy Brief, March 2009).

Market Turnover A number of shares of stocks sold on the market during a given period of time. Generally, it is the trading volume numerated against the outstanding volume of stocks in the bourse.

Materials Recovery Facility Includes solid waste transfer station or sorting station, drop-off center, a composting facility, and a recycling facility.

Maternal mortality ratio (MMR) The number of women who die from any cause related to or aggravated by pregnancy or its management (excluding accidental or incidental causes) during pregnancy and childbirth or within 42 days of termination of pregnancy, irrespective of the duration and site of the pregnancy, per 100,000 livebirths.

361Glossary

Medical tourism The concept of traveling to a particular destination for health care services. These services are offered by countries with qualified and experienced health care professionals working in some of the highly technologically advanced facilities in the world. International medical travel helps medically underserved residents located in the US, Europe, Australia, Canada, and Asia. The costs are usually a fraction of what the same procedure would be in their countries. Moreover, these medical travels may include holiday amenities like hotel or resort accommodation, chauffered city travel, and a bilingual personal assistant to guide and make a client feel secure and to arrange any other requirements he or she may need aside from medical needs.

Medium-Term Expenditure Framework (MTEF)

A planning budgeting framework of the government which provides a medium term three-year perspective to decision making process during budget preparation.

Metrology The field of science concerned with weights and measures which includes all aspects of measurement in whatever level of accuracy and in any field of science and technology

Micro, Small and Medium Enterprises (MSMEs)

Any business activity/enterprise engaged in industry, agri-business/services, whether single proprietorship, cooperative, partnership, or corporation whose total assets, inclusive of those arising from loans but exclusive of the land on which the particular business entity's office, plant and equipment are situated, must have value falling under the following categories:

Asset Size(in million PhP)

Employment

Large > 100 > 200Medium 15.1 – 100 100 – 199Small 3.1 – 1.5 10 – 99Micro < 3 1 – 9

Missionary Electrification The provision of basic electricity service in unviable areas with the aim of bringing the operations in these areas to viability levels.

Mitigation Human intervention to address anthropogenic emissions by sources and removals by sinks of all GHG, including ozone-depleting substances and their substitutes.

Managing for Development Results A management strategy that focuses on development performance and on sustainable improvements in country outcomes. It provides a framework for development effectiveness in which performance information is used to improve decision making. It also includes practical tools for strategic planning, risk management, progress monitoring, and outcome evaluation. (OECD Policy Brief, March 2009)

Monetary Policy The part of economic policy which regulates the level of money or liquidity in the economy to achieved desired policy objectives, such as inflation control, improvement of the BOP or growth of the economy.

Moro Islamic Liberation Front The MILF is an Islamic secessionist movement in the Bangsamoro homeland in Mindanao and the neighbouring islands. The MILF was formed in 1977 when Hashim Salamat split from the Moro National Liberation Front, in 1977.

Moro National Liberation Front The Moro National Liberation Front (MNLF) is a political organization whose former aim was to secede away from the Philippines. The MNLF, led by its Chairman, Nur Misuari, signed a Final Peace Agreement with the Government in 1996 which resulted to the enactment of Republic Act 9054 otherwise known as the Autonomous Region in Muslim Mindanao.

Multimedia Messaging Service (MMS)

A service that allows the sending of multiple media in a single message, and the ability to send a message to multiple recipients.

Mutual Funds Funds (open or closed) of individual and institutional investors that are pooled to form a massive asset base. The assets are then entrusted to a full time professional fund manager who develops and maintains a diversified portfolio of security investments. Investors of a mutual fund are the owners or shareholders. Their investments provide the money for a mutual fund to buy securities such as stocks and bonds. Mutual funds profit from security investments either through dividends and interests to the fund or increase in fund value.


National Convergence Initiative A multi-sectoral and integrated planning approach adopted by the DA, DAR, and the DENR towards more efficient use of resources.

National Defense and Security Act The law that governs the mechanisms of the national defense of the PhilippinesNational Democratic Front The political component of the Communist Party of the Philippines. The NDF sits

across the GPH on the peace negotiating table. National Environmental Awareness and Education Act of 2008 or Republic Act No. 9512

An act to promote national awareness on the role of natural resources in economic growth and the importance of environmental conservation and ecological balance towards sustained national development. This legislation concretized the country’s support to the United Nations Decade of Education for Sustainable Development (2005-2014), and the ASEAN Environmental Education Action Plan for Sustainable Development (2008-2012).

National Framework Strategy on Climate Change

A framework strategy of the Philippines serving as basis for a program for climate change planning, research and development, extension, and monitoring of activities to protect vulnerable communities from the adverse effects of climate change. It seeks to build the adaptive capacity of communities in the country, increase the resilience of our natural ecosystems to climate change, and optimize the country's mitigation opportunities towards sustainable development. It highlights the critical aspect of Climate Change adaptation, which will be applied to all levels of governance—from city to municipal down to the barangay level. "

National Integrated Protected Areas system Act of 1992 or RA 7586

An act providing for the establishment and management of national integrated protected areas system, defining its scope and coverage, and for other purposes. It encompasses outstanding remarkable areas and biologically important public lands that are habitats of rare and endangered species of plants and animals, biogeographic zones and related ecosystems, whether terrestrial, wetland or marine, all of which shall be designated as protected areas.

National Integrated Protected Areas Systems (NIPAS)

Classification and administration of all designated protected areas to maintain essential ecological processes and life-support systems, to preserve genetic diversity, to ensure sustainable use of resources found therein, and to maintain their natural conditions to the greatest extent possible.

National Irrigation System (NIS) A major irrigation system managed by the National Irrigation Administration (RA 8435).

National Justice Information System (NJIS)

A program that is intended to address and remedy the current information gaps in the Philippine criminal justice system by enabling effective sharing of data between the participating agencies, including the police, judiciary, probation services, custodial authorities, and criminal information registries, at key decision points in our criminal justice system process.

National Transport Policy (NTP) A long-term comprehensive policy which shall guide all elements of the transportation system and all sub-sectors of transportation, including passengers, shippers, service providers, agencies and instrumentalities of government and those involved in the movement of people and goods and in the provision of transportation infrastructure, facilities and services. The NTP shall cover the areas of: (a) Resource Generation and Allocation; (b) Criteria for the Preparation of Agency Plans, Programs and Projects; (c) Cost Recovery and Subsidies; (d) Regulation of Passenger Transport Services; (e) Urban Transport; (f ) Transport Logistics; and (g) Governance, in all their decision-making, undertakings, and transactions.

Natural gas A gas consisting primarily of methane, typically with 0 to 20 percent higher hydrocarbons (primarily ethane). It is found associated with other hydrocarbon fuel, in coal beds, as methane clathrates, and is an important fuel source and a major feedstock for fertilizers.

Net Enrolment Rate (NER) or Participation Rate

The ratio of the enrolment for the age group corresponding to the official school age in the elementary/secondary level to the population of the same age group in a given year.

Net Foreign Transaction The net change in the ownership of foreign assets. Net Intake Rate (NIR) The percentage of the population at the official elementary school-entrance age (defined

as 6 years old per DepEd Order No. 65, s. 1994) who are new entrants in the first grade of elementary education, and who are of the same age (IACES).

363Glossary

Net Lending Advances by the NG for the servicing of government-guaranteed corporate debt during the year; net of repayments on such advances. Includes loan outlays or proceeds from program loans relent to government corporations.

Network Combination of telecommunications resources, for example, exchanges, wire links (copper cable, optical fiber) and terrestrial or satellite radio transmission links.

New People’s Army Military arm of the Communist Party of the Philippines. Non-Tax Revenues Revenue collected from sources other than compulsory tax levies. Include those collected

in exchange for direct services rendered by government agencies to the public, or those arising from the government’s regulatory and investment activities.

Nuclear wastes Hazardous wastes made radioactive by exposure to the radiation incidental to the production or utilization of nuclear fuels but does not include nuclear fuel, or radioisotopes which have reached the final stage of fabrication so as to be usable for any scientific, medical, agricultural, commercial, or industrial purpose.

Ocean Energy Systems Energy systems which convert ocean or tidal current, ocean thermal gradient or wave energy into electrical or mechanical energy.

Off-Grid Areas Areas not connected to the wires and related facilities of the On‐Grid System of the Philippines.

On-Grid System Electrical systems composed of interconnected transmission lines, distribution lines, substations, and related facilities for the purpose of conveyance of bulk power to the grid.

Open access The system of allowing any qualified person the use of transmission, and/or distribution system, and associated facilities subject to the payment of transmission and/or distribution retail wheeling rates duly approved by the Energy Regulatory Commission (ERC).

Organic Agriculture Includes all agricultural systems that promote the ecologically sound, socially acceptable, economically viable and technically feasible production of food and fibers. Organic agriculture dramatically reduces external inputs by refraining from the use of chemical fertilizers, pesticides and pharmaceuticals. It also covers areas such as, but not limited to, soil fertility management, varietal breeding and selection under chemical and pesticide-free conditions, the use of biotechnology and other cultural practices that are consistent with the principles and policies of RA 10068, and enhance productivity without destroying the soil and harming farmers, consumers and the environment as defined by the International Federation of Organic Agriculture Movement (IFOAM): Provided, that the biotechnology herein referred to shall not include genetically modified organisms or GMOs (RA10068).

Organizational Performance Indicator Framework (OPIF)

An approach to expenditure management that directs resources towards results or major final outputs and measures agency performance by key quality and quantity indicators.

Over-urbanization A term used in relation to cities in the developing world which have been deemed to be too large in relation to their country’s industrial base.

Pantawid Pamilyang Pilipino Program (4Ps program)

The country’s conditional cash transfer (CCT) program, which provides direct cash transfers to the poor on condition that (a) their children continue to attend school and (b) the family makes use of preventive health care and nutrition services.

Paper on Budget Strategy This will link budget allocation with the national agenda of the government to identify the priority areas for spending and to incorporate the sectoral and regional implications in the dimension and distribution of the budget.

Payapa at Masaganang Pamayanan Program

The national government’s peace and development framework to respond and strengthen peace building, reconstruction and development in conflict-affected areas.

PAYGO A part of the budget process which requires that any additional budgetary allocation and/or mandatory spending increase must be compensated by a corresponding increase in tax and/or revenue or a cut in spending in other items in the budget over a specified time period.


Payment for Environmental Services (PES)

A compensation involving cash that is linked directly to the provision of environmental services. This is a mechanism to improve the provision of indirect environmental services, which the provider gets paid for doing so (provider-gets) and the beneficiaries pay for getting the services (user-pays). Payment for environmental goods and services may include: watershed protection from upland forest, biodiversity of forest and coastal resources, carbon sequestration of forest and landscape/scenic beauty of the country’s natural resources. Other forms of PES include: purchase of land critical to habitat preservation, biodiversity conservation, important ecological function; and tax relief to owners who will maintain the desired land uses.

Penetration A measurement of access to telecommunications. It is usually calculated by dividing the number of subscribers by the population, and multiplying by 100. Also referred to as density.

Per capita income Obtained by dividing the total family income by the total number of family members.Petroleum A naturally occurring, flammable liquid consisting of a complex mixture of hydrocarbons

of various molecular weights and other liquid organic compounds, that are found in geologic formations beneath the earth's surface. Petroleum is recovered mostly through oil drilling. It is refined and separated, most easily by boiling point, into a large number of consumer products, from gasoline and kerosene to asphalt and chemical reagents used to make plastics and pharmaceuticals.

Philippine Clean Air Act of 1999 or RA 8749

An act providing for a comprehensive air pollution control policy and for other purposes. It aims to protect and advance the right of the people to a balanced and healthful ecology in accord with the rhythm and harmony of nature. It seeks to promote and protect the global environment to attain sustainable development while recognizing the primary responsibility of local government units to deal with environmental problems.

Philippine Clean Water Act of 2004 or RA 9275

An act providing for a comprehensive water quality management, and for other purposes. It aims to protect, preserve and revive the quality of the country’s fresh, brackish and marine waters.

Philippine Defense Reform The PDR provides the framework for introducing a comprehensive, institutional, structural and systemic reform package at the strategic level for the defense and military establishment.

Philippine Disaster Risk Reduction and Management Act of 2010 or RA 10121

An act that seeks to strengthen the Philippine disaster risk reduction and management system through the adoption of the National Disaster Risk Reduction and Management Framework (NDRRMF), and the National Disaster Risk Reduction and Management Plan (NDRRMP). It further aims to recognize and strengthen the capacity of the national government and the local government units (LGUs), together with partner stakeholders, to build the disaster resilience of communities, and to institutionalize arrangements and measures for reducing disaster risks, including projected climate risks, and enhancing disaster preparedness and response capabilities at all levels.

Philippine National Police The Republic’s national and local police force that provides all law enforcement services throughout the Philippines.

Post -Harvest Facilities Includes, but is not limited to, threshers, moisture meters, dryers, weighing scales, milling equipment, fish ports, fish landings, ice plants and cold storage facilities, processing plants, warehouses, buying stations, market infrastructure and transportation (RA 8435).

Poverty gap The total income shortfall of families with income below the poverty threshold, divided by the number of families.

Poverty Incidence The proportion of families/individuals with per capita income/expenditure less than the per capita poverty threshold to the total number of families/individuals

Poverty Incidence of Families The proportion of families whose income cannot provide for the basic food and non-food requirements called the poverty threshold to the total number of families.

Poverty Incidence of Population The proportion of individuals whose income cannot provide for the basic food and non-food requirements called the poverty threshold to the total number of individuals.

365Glossary

Poverty Threshold Is equal to the food threshold plus the non-food requirements. In the new methodology as approved by the NSCB Executive Board on December 8, 1992, the non-food requirements provide only the expenditures on basic non-food items. This includes clothing and footwear and other wears, fuel, light, and water, housing maintenance and other minor repairs, rental of occupied dwelling units, medical care, education, transportation and communication, non-durable and furnishings, household operations and personal care and effects but excludes alcoholic beverages, tobacco, recreation, durable furniture and equipment, miscellaneous expenditures and other expenditures. The raising factor is estimated from the consumption pattern of all FIES (Family Income and Expenditure Survey) families of size six by taking the average ratio of total expenditures to total food expenditures.

Power The rate at which work is performed or energy is converted. It can be expressed in kilojoules per second (kJ/sec) or kilowatts (kW).

Privatization The sale, disposition, change and transfer of ownership and control of assets and Independent Power Producer (IPP) contracts from the government or a government corporation to a private person or entity

Productivity and Efficiency Refers to the production and delivery of competitive, standards-compliant, socially-responsible and environment-friendly products and services that generate optimum economic returns.

Protected area Identified portions of land and water set aside by reason of their unique physical and biological significance, managed to enhance biological diversity and protected against destructive human exploitation.

Public-Private Partnership (PPP) A contractual arrangement between the government and the private sector to deliver public infrastructure and/or public services.

Purchasing power of the peso A measure of the real value of the peso in a given period relative to a chosen reference period. It is computed by getting the reciprocal of the CPI and multiplying the result by 100.

Rationalization Program A move to transform the Executive Branch into a more effective and efficient government. It aims to: (a) focus government efforts on its vital functions and channel government resources to these core public services; and (b) improve the efficiency of government services, within affordable levels, and in the most accountable manner.

Real Effective Exchange Rate (REER)

The weighted average of a country's currency relative to an index or basket of other major currencies adjusted for the effects of inflation. The weights are determined by comparing the relative trade balances, in terms of one country's currency, with another country within the index. Essentially it refers to the NEER adjusted for inflation differentials.

Real Per Capita GDP An approximation of the value of goods produced per person in the country, equal to the country's constant GDP divided by the total number of people in the country.

Reasonable Water Supply Access Availability of at least 20 liters per day from a source within 1 kilometer of the dwelling.Rebolusyonaryong Partido ng Manggagawa-Pilipinas /Revolutionary Proletariat Army-Alex Boncayao Brigade

The party was formed in 1995 following a split from the Communist Party of the Philippines due to its ideological differences like rejection of Maoism and preferring the act of insurrection over the Maoist Protracted People's War.

Recyclable material Any waste material retrieved from the waste stream and free from contamination that can still be converted into suitable beneficial use or for other purposes, including, but not limited to, newspaper, ferrous scrap metal, non-ferrous scrap metal, used oil, corrugated cardboard, aluminum, glass, office paper, tin cans, plastics and other materials as may be determined by the NSWMC.

Reducing Emissions from Deforestation and Forest Degradation Plus (REDD-plus)

A proposed incentive system for reducing GHG emissions. Industrialized countries would provide financial incentive for forested, developing countries to manage and protect forests to reduce their GHG emissions and enhance carbon stocks. It is performance-based, such that payments would only be delivered if emissions were reliably reduced.

Regulatory capture An economic situation in which state regulators serve the interest of the industry or firms rather than the interest of the public or society.


Renewable Energy Resources Energy resources that do not have an upper limit on the total quantity to be used. Such resources are renewable on a regular basis and the renewable rate is rapid enough to consider availability over an indefinite time. These include, among others, biomass, solar, wind, hydro and ocean energy.

Renewable Portfolio Standards (RPS)

A policy mechanism which places an obligation to electric power industry participants to source or produce a specified fraction of their electricity from eligible renewable energy resources.

Rent-seeking Profit-seeking; when a company, organization or individual uses their resources to obtain an economic gain from others without reciprocating any benefits back to society through wealth creation.

Republic Act 8532 An act strengthening further the Comprehensive Agrarian Reform Program (CARP), by providing augmentation fund therefor, amending for the purpose Section 63 of Republic Act No. 6657, otherwise known as “ The CARP Law of 1988”.

Republic Act 9700 An act strengthening the Comprehensive Agrarian Reform Program (CARP), extending the acquisition and distribution of all agricultural lands, instituting necessary reforms, amending for the purpose certain provisions of Republic Act No 6657, otherwise known as the Comprehensive Agrarian Reform Law of 1988, as amended, and appropriating funds therefor.

Repurchase Agreement One of the two open market operations (OMO) instruments of the BSP. Under a repurchase (repo) agreement, the BSP buys government securities from a bank with a commitment to sell it back at a specified future date at a predetermined rate. A repo transaction expands the level of money supply as it increases the bank's level of reserves. At present, the BSP enters into a repo agreement for a minimum of one day (overnight) and for a maximum of 91 days.

Resettlement The act or instance of settling or being settled in another place; also, movement of informal settlers from land where they have no legal right, to land provided by the government and with just title.

Residual Waste Waste left from household sources containing materials that have not been separated out or sent for reprocessing.

Retail Rate The total price paid by end-users consisting of the charges for generation, transmission and related ancillary services, distribution, supply and other related charges for electric service.

Retail trade Any act or occupation of selling direct to the general public merchandise, commodities or good for consumption.

Revealed Comparative Advantage Refers to the share of product to total Philippine exports as a ratio of share of the product to total world exports.

Revenue Effort Computed as the ratio of total government revenues (both tax and non-tax) to gross domestic product (GDP) at current prices, aims to measure the capability of the government sector to generate revenues to support the development needs of the economy. Revenue data are sourced from the Department of Finance (DoF) while GDP data are sourced from the National Statistical Coordination Board (NSCB).

Revenue Integrity Protection Service (RIPS)

The anti-corruption arm of the DOF created by Executive Order 259 (December 17, 2003). RIPS investigates allegations of corruption in the Department of Finance and its attached agencies such as the Bureau of Internal Revenue and the Bureau of Customs, the Bureau of Local Government Finance, Bureau of Treasury, Central Board of Assessment Appeals, the Insurance Commission, the National Tax Research Center, the Fiscal Incentives Review Board, and the Privatization and Management Office.

Risk-Based Capital Adequacy Framework

The internationally accepted risk-sensitive capital adequacy standards for financial institutions. It prescribes that financial institutions must, at all times, have capital commensurate with their risk taking activities.

Run Against Tax Evaders (RATE) A program initiated by the DOF and BIR to investigate and prosecute individuals and/or entities engaged in tax evasion and other criminal violations of the National Internal Revenue Code (NIRC) of 1997. RMO No. 24-2008 issued on June 11, 2008 provides the policies and guidelines for the development, investigation and prosecution of cases under the RATE Program of the BIR.

367Glossary

Salary Standardization Law An act prescribing a revised compensation and position classification system in the government and for other purposes.

Sanitary Landfill A waste disposal site designed, constructed, operated and maintained in a manner that exerts engineering control over significant potential environmental impacts arising from the development and operation of the facility.

Sanitation A wide range of services and arrangements pertaining to the hygienic and proper management of human excreta (feces and urine) and community liquid wastes to safeguard the health of individuals and communities.

Secondary Mortgage Market A market for the purchase and sale of existing mortgages, designed to provide greater liquidity, for selling mortgages.

Securities Borrowing and Lending The temporary loan of securities between borrower and lender. This allows the borrower, who expects the price of the security (either a government security or a stock) to fall, to hold a short position for a long duration. Meanwhile, the lender receives a fee that could potentially enhance portfolio yield with relatively low risk. A repo is also one form of securities borrowing and lending instrument wherein securities may be borrowed in a repo market to cover short positions.

Septage The sludge produced in individual/communal onsite wastewater-disposal systems, principally septic tanks.

Severity of poverty The total of the squared income shortfall of families with income below the poverty threshold, divided by the total number of families and is sensitive to the income distribution among the poor.

Sewage Wastewater which is a combinaion of the liquid or water-carried wastes removed from households, insitutions, and commercial and industrial establishments, together with such groundwater, surface water, and stormwater as may be present.

Sewerage Facilities that collect human waste and sullage from residences and establishments usually piped and conveyed in structures (sewers, pump stations) for eventual central treatment and safe disposal. Piped sewerage includes a collection system (street lateral), a conveyance system (trunk sewers and pump stations), and a treatment plant/disposal.

Shari’ah Courts Shari’ah District Courts (SDCs) and Sharia’h Circuit Courts (SCCs) that were created in 1977 through Presidential Decree 1083, which is also known as the Code of Muslim Personal Laws. These courts have been established to resolve cases involving Muslims.

Short Messaging Service (SMS) A service available on digital networks, typically enabling messages with up to 160 characters to be sent or received via the message center of a network operator to a subscriber's mobile phone.

Sitio A territorial enclave inside a barangay, especially in rural areas.Slum A run-down area of a city characterized by substandard housing and squalor and lacking

in tenure security.Small Power Utilities Group (SPUG) The functional unit of the National Power Corporation created to pursue missionary

electrification function.Social Insurance Programs that seek to mitigate income risks by pooling resources and spreading

risks across time and classes. These are designed in such a way that beneficiaries pay a premium over a given period of time to cover or protect them from loss of income and unemployment as a result of illness, injury, disability, retrenchment, harvest failure, maternity, old age, etc. This component includes micro and area-based schemes to address vulnerability at the community level such as micro-insurance, agricultural insurance and social support funds.

Social Protection Constitutes policies and programs that seek to reduce poverty and vulnerability to risks and enhance the social status and rights of the marginalized by promoting and protecting livelihood and employment, protecting against hazards and sudden loss of income, and improving people’s capacity to manage risks.

Social Safety Nets Stop-gap mechanisms or urgent responses that address effects of economic shocks, disasters and calamities on specific vulnerable groups. These are measures that specifically target affected groups with the specific objective of providing relief and transition. Measures include emergency assistance, price subsidies, food programs, employment programs, retraining programs and emergency loans.


Social Welfare Preventive and developmental interventions that seek to support the minimum basic requirements of the poor, particularly the poorest of the poor, and reduce risks associated with unemployment, resettlement, marginalization, illness, disability, old age and loss of family care. Social welfare and assistance programs usually comprise direct assistance in the form of cash or in kind transfers to the poorest and marginalized groups, as well as social services including family and community support, alternative care and referral services.

Socialized Housing Provision of affordable housing (usually by the government) through efficient production of housing units for ownership and sustainable housing financing. Currently, socialized housing are house and lot packages costing PhP400,000 and below.

Solar Energy Systems Energy systems which convert solar energy into thermal or electrical energy.Solar Energy Energy derived from solar radiation that can be converted into useful thermal or

electrical energy.Solid Waste Management (SWM) The discipline associated with the control of generation, storage, collection, transfer and

transport, processing, and disposal of solid wastes in a manner that is in accord with the best principles of public health, economics, engineering, conservation, aesthetics, and other environmental considerations, and that is also responsive to public attitudes.

Standardization The creation and use of guidelines for the production of uniform, interchangeable components, especially for use in mass production.

Stock Market Capitalization The sum of the current value of all securities traded on a financial market. Strategic Agriculture and Fisheries Development Zones (SAFDZ)

The areas within the Network of Protected Areas for Agricultural and Agro-industrial Development (NAPAAD) identified for production, agro processing and marketing activities to help develop and modernize, either the support of government, the agriculture and fisheries sectors in an environmentally and socio-culturally sound manner (RA 8435).

Strengthening the Integrity of the Judiciary (SIJ)

A program of the Judiciary that aims to: (a) provide the Judiciary with effective tools and techniques to systematicaly assess the level of integrity of its administrative processes; (b) guide the Judiciary as it conducts a comprehensive review of its administrative processes that will provide the basis for the design of reform measures; and (c) assist the Judiciary in effectively implementing the selected reforms.

Subprime Crisis The global financial meltdown in the housing mortgage market after a sharp increase in mortgage delinquencies when adjustable rates were reset at higher rates. Securities backed with subprime mortgages lost most of their market value. With almost 80 percent of US mortgages being subprime loans and held by banks, these resulted to the decline in the capital of banks and other government sponsored enterprises worldwide but mostly in the US and Europe.

Subsidy A grant or financial aid, usually by a government body, to persons, institutions, or GOCCs; it may also refer to amounts used to cover operational expenses not supported by corporate revenues or to cover corporate deficits and losses.

Subsistence Incidence The proportion of families/individuals with per capita income/expenditure less than the per capita food threshold to the total number of families/ individuals.

Subsistence Incidence of Families The proportion of families whose income cannot provide the basic food requirements called the food or subsistence threshold to the total number of families.

Subsistence Incidence of Population The proportion of individuals whose income cannot provide for the basic food requirements called the food or subsistence threshold to the total number of individuals.

Subsistence Threshold The cost of basic food requirements. This is measured by costing low-cost menus constructed by region, urban-rural, which meet 100 percent adequacy of the Recommended Dietary Allowance (RDA) for energy (2,000 calories) and 80 percent adequacy of other nutrients as recommended by the Food and Nutrition Research Institute (FNRI). The menus are prepared by the FNRI and costed by the TWG using the prices obtained from the NSO and BAS surveys.

Substation A part of an electrical generation, transmission, and distribution system, where voltage is transformed from high to low, or the reverse, or many other important functions.

369Glossary

Sub-transmission Assets Facilities related to the power delivery service below the transmission voltages and based on the functional assignment of assets including, but not limited to, step-down transformers used solely by load customers, associated switchyard/substation, control and protective equipment, reactive compensation equipment to improve customer power factor, overhead lines, and the land, where such facilities/ equipment are located. These include National Power Corporation assets linking the transmission system and the distribution system which are neither classified as generation nor transmission.

Supplier Any person or entity authorized by the Energy Regulatory Commission to sell, broker, market or aggregate electricity to the end-users.

Sustainable Development Development that is compatible with the preservation of the ecosystem in areas where agriculture and fisheries activities are carried out (RA 8435).

Sustainable Land Management The use of the land to meet changing human needs (agriculture, forestry, conservation), while ensuring long term socioeconomic and ecological functions of the land. (The Updated Philippine National Action Plan to Combat Desertification, Land Degradation and Drought 2010-2020).

Tariffs Tax levied on imports and exports.Tax Effort The ratio between the government’s tax revenue collection vis-à-vis GDP at current

prices.Tax Revenues Compulsory charges or levies imposed by government on goods, services, transactions,

individuals, entities, and others, arising from the sovereign power of state.Technical vocational education and training (TVET)

The education process designed at secondary and lower tertiary levels, officially recognized as non-degree programs aimed at preparing technicians, para-professionals and other categories of middle-level workers by providing them with a broad range of education, theoretical, scientific, artistic and technological studies, social services and related jobs skills training.

Technology (ICT) An umbrella term that covers all technical means for processing and communicating information. It defines a broad range of technologies, including methods for communication (communication protocols, transmission techniques, communications equipment, media communication), as well as techniques for storing and processing information (computing, data storage, etc.)

Third Generation (3G) A generation of standards for mobile phones and mobile telecommunications services fulfilling specifications by the International Telecommunication Union. Application services include wide-area wireless voice telephone, mobile Internet access, video calls and mobile TV, all in a mobile environment.

Total Factor Productivity A measure of marginal productivity that takes into account the contribution of technological change and improvements in production efficiency.

Total fertility rate (TFR) The number of births a woman would have on average at the end of her reproductive life throughout her reproductive years (15-49).

Total Suspended Particulates (TSP) Small or liquid particles suspended in the air. Tourism enterprises Facilities, services and attractions involved in tourism, such as, but not limited to: travel

and tour services; tourist transport services, whether for land, sea or air transportation; tour guides; adventure sports services involving such sports as mountaineering, spelunking, scuba diving, and other sports activities of significant tourism potential; convention organizers; accommodation establishments, including, but not limited to, hotels, resorts, apartelles, tourist inns, motels, pension houses, and home stay operators; tourism estate management services, restaurants, shops and department stores, sports and recreational centers, spas, museums and galleries, theme parks, convention centers and zoos.

Tourism receipts The receipts of the country in the form of consumption expenditures or payments of goods and services made by foreign visitors out of foreign currency resources.


Toxic Substances and Hazardous Waste Act of 1990 or RA 6969

An act to control toxic substances and hazardous and nuclear wastes, providing penalties for violations thereof, and for other purposes. It aims to regulate, restrict or prohibit the importation, manufacture, processing, sale, distribution, use and disposal of chemical substances and mixtures that present unreasonable risk and/or injury to health or the environment; to prohibit the entry, even in transit, of hazardous and nuclear wastes and their disposal into the Philippine territorial limits for whatever purpose; and to provide advancement and facilitate research and studies on toxic chemicals.

Transmission (of Electricity) The conveyance of electricity through the high voltage backbone system.Transmission Development Plan The program for managing the transmission system through efficient planning for

the expansion, upgrading, rehabilitation, repair and maintenance, to be formulated by the Department of Energy (DOE) and implemented by the National Transmission Corporation (TransCo)/National Grid Corporation of the Philippines (NGCP) pursuant to Republic Act No. 9136.

Transnational education (TNE) All types of higher education study programs, or sets of courses of study, or educational services (including those of distance education) in which the learners are located in a country different from the one where the awarding institution is based. Such programs may belong to the education system of a State different from the State in which it operates, or may operate independently of any national education system.

UN Security Council Resolution 1325

The resolution reaffirms the important role of women in the prevention and resolution of conflicts, peace negotiations, peace building, peacekeeping, humanitarian response and in post-conflict reconstruction and stresses the importance of their equal participation and full involvement in all efforts for the maintenance and promotion of peace and security. Resolution 1325 urges all actors to increase the participation of women and incorporate gender perspectives in all United Nations peace and security efforts. It also calls on all parties to conflict to take special measures to protect women and girls from gender-based violence, particularly rape and other forms of sexual abuse, in situations of armed conflict. The resolution provides a number of important operational mandates, with implications for Member States and the entities of the United Nations system.

Underemployed All employed persons who expressed the desire to have additional hours of work in their present job or an additional job, or to have a new job with longer working hours. Visibly underemployed persons are those who work for less than 40 hours during the reference period and want additional hours of work.

Underemployment rate Percentage of the total number of underemployed persons to the total number of employed persons.

Unemployed The unemployed include all persons who are 15 years old and over as of their last birthday and are reported as: without work, i.e., had no job or business during the basic survey reference period; and currently available for work, i.e., were available and willing to take up work in paid employment or self employment during the basic survey reference period, and/or would be available and willing to take up work in paid employment or self employment within two weeks after the interview date; and seeking work, i.e., had taken specific steps to look for a job or establish a business during the basic survey reference period; or not seeking work due to the following reasons: (a) tired/believe no work available, i.e., the discouraged workers who looked for work within the last six months prior to the interview date; (b) awaiting results of previous job application; temporary illness/disability; (d) bad weather; and (e) waiting for rehire/job recall.

Unemployment rate Percentage of the total number of unemployed persons to the total population 15 years old and over.

Universal Access Ubiquitous access to ICT services, e.g., at a public place, thus also called public, community or shared access.

Universal Health Care A focused approach to health reform implementation, ensuring that all Filipinos especially the poor receive the benefits of health reform. This is a deliberate focus on the poor to ensure that they are given financial risk protection through enrolment to PhilHealth and that they are able to access affordable and quality health care and services in times of needs.

Universal Service Means every individual or household can have service, using it privately e.g., either at home or increasingly, carried with the individual through wireless devices such as mobile phones, PDAs, etc.

371Glossary

Utilization rate Measures the attractiveness of a preferential regime relative to the Most Favoured Nation (MFN) Treatment. It shows the extent to which imports eligible for the preference rate actually enter or utilize the preferential tariffs rather than the MFN.

Value Chain In agriculture, identifies the set of actors and activities that bring a basic agricultural product from production in the field to final consumption, where at each stage value is added to the product. A value chain can be a vertical linking or a network between various independent business organizations and can involve processing, packaging, storage, transport and distribution. The terms “value chain” and “supply chain” are often used interchangeably (FAO, 2005).

Value Engineering/Value Analysis (VE/VA)

A professionally applied and systematic team management approach used to manage risk, analyze, and improve value in infrastructure projects. It seeks to provide a balance of quality, performance, and functionality in a project by minimizing costs of construction, operation, and maintenance.

Value-Added Service (VAS) A telecommunications industry term for non-core services including all services beyond standard voice calls and fax transmissions.

Vulnerability The susceptibility to deterioration in well-being as a result of risks including external shocks and seasonal fluctuations, as well as of opportunities offered by resources owned or transfers through various means.

Vulnerable groups Groups of people who are susceptible to poverty as a result of risks and external shocks.Warrant of Arrest Information System (WAIS)

Refers to the database of Warrant of Arrests issued by the different courts nationwide accessible by all Philippine National Police (PNP) units and other law enforcement agencies nationwide.

Wasting Current or recent or active malnutrition characterized by very low weight-for-height as a result of deficits in both muscle tissue and fat mass.

Water Quality The characteristics of water, which define its use in characteristics by terms of physical, chemical, biological, bacteriological or radiological characteristics by which the acceptability of water is evaluated.

Water Resources (SCWR) An inter-agency committee with core members as well as sub-sector clusters comprised of representatives from key national government agencies, leagues of cities and municipalities, academe and civil society. Details of the composition and membership of the SCWR are outlined in the Updated Philippine Waters Supply Sector Roadmap (2009).

Waterless Barangay/Municipality A barangay/municipality wherein 50 percent or less of the population has access to safe water.

Watershed Land area drained by a stream or fixed body of water and its tributaries having a common outlet for surface run-off.

Wet Thermal Disinfection Steam disinfection which is based on exposure of shredded infectious waste to high-temperature, high-pressure steam. It inactivates most types of microorganisms if temperature and contact time are sufficient; for sporulated bacteria, a minimum temperature of 121°C is needed. This method is similar to the autoclave sterilization process.

Whole-of-Government approach An approach wherein a government actively uses formal and/or informal networks across the different agencies to coordinate the design and implementation of the range of interventions that the agencies will be making in order to increase the effectiveness of those interventions in achieving the desired objectives.

Wholesale Electricity Spot Market The market where competitive, efficient, transparent and reliable market/trading of electricity will be made.

WiMAX Fixed wireless standard IEEE 802.16 that allows for long-range wireless communication at 70 Mbit/s over 50 kilometres. It can be used as a backbone Internet connection to rural areas.

Wind Energy Systems Machines or other related equipment that convert wind energy into useful electrical or mechanical energy.

Wind Energy Energy that can be derived from wind that is converted into useful electrical or mechanical energy.


Wireless Fidelity (WiFi) A mark of interoperability among devices adhering to the 802.11b specification for Wireless Local Area Networks (LANs) from the Institute of Electrical and Electronics Engineers (IEEE). However, the term Wi-Fi is sometimes mistakenly used as a generic term for wireless LAN.

Wireless Generic term for mobile communication services which do not use fixed-line networks for direct access to the subscriber.

Yield Curve It is a line that plots the interest rates, at a set point in time, of bonds and other financial instruments having equal credit quality but differing maturity dates. It is used as a benchmark for other debt in the market such as mortgage rates or bank lending rates. The curve is also a graphical representation of the range of interest rates available to investors and fused to predict changes in economic output and growth.

Zero-Based Budgeting (ZBB) A budgeting approach which involves a review/evaluation of major on-going programs and projects implemented by different department/agencies, in order to: (a) establish the continued relevance of program objectives given the current development/directions; (b) assess whether the program objectives/outcome are being achieved, and; (c) guide decision makers on whether the resources for the program/project should continue at its present level, or be increased, reduced or discontinued.

385Planning Committees and Schedule of Consultations

Planning CommitteesPhilippine Development Plan 2011-2016

Name Position Agency

Sec. Cayetano W. Paderanga, Jr. Chair NEDA

Sec. Cesar V. Purisima Member Department of Finance

Sec. Corazon "Dinky" Juliano-Soliman MemberDepartment of Social Welfare

& Development

Sec. Jesse M. Robredo MemberDepartment of the Interior &

Local Governments

Plan Steering Committee

Planning Committee 1

Planning Committee Chair: National Economic and Development Authority

Sub-committee on Macroeconomy

Sub-committee Chair: Philippine Institute of Development Studies

Members:Bangko Sentral ng Pilipinas Department of Budget & ManagementDepartment of FinanceDepartment of Labor and EmploymentOffice of the President Presidential Management StaffDevelopment Academy of the PhilippinesCongressional Policy and Budget Research DepartmentSenate Economic Planning OfficeNational Statistics OfficeUniversity of Asia and the Pacific

Sub-committee on Industry and Services

Sub-committee Chair: Department of Trade and IndustrySub-committee Co-Chair: National Competitiveness Council

Members:Bureau of Micro, Small and Medium Enterprise Development Caucus of Development NGO NetworksClark International Airport Corp.Commission on Human Rights


Commission on Information and Communications TechnologyCongressional Policy and Budget Research DepartmentDepartment of AgricultureDepartment of Environment and Natural Resources - Mines and Geosciences BureauDepartment of Labor and EmploymentDepartment of Science and TechnologyDepartment of the Interior and Local GovernmentDepartment of TourismDepartment of Trade and IndustryDepartment of Transportation and CommunicationsDevelopment Academy of the PhilippinesDevelopment Bank of the PhilippinesExport Development CouncilFederation of Philippine IndustriesJoint Foreign ChambersNational Economic and Development AuthorityNational Statistical Coordination BoardNational Statistics OfficeOffice of the President-Presidential Management StaffPhilippine Chamber of Commerce and IndustryPhilippine Economic Zone AuthorityPhilippine Exporters Confederation Inc.Senate Economic Planning OfficeUniversity of Asia and the Pacific

Sub-committee on Modern & Competitive Agriculture and Fisheries

Sub-committee Chair: Department of AgricultureSub-committee Co-Chair: Department of Agrarian Reform

Members:Government Agencies:Department of Trade and IndustryPhil. Council for Agricultural, Forestry and Natural Resources, Research and DevelopmentPhil. Council for Aquatic and Marine Research and DevelopmentDepartment of Environment and Natural ResourcesBureau of Agricultural StatisticsDepartment of Budget and FinanceBureau of Fisheries and Acquatic ResourcesLand Bank of the PhilippinesDepartment of Science and Technology -Philippine Atmospheric Geophysical and

Astronomical Services AdministrationNational Statistics OfficeNational Statistical Coordination BoardPhilippine Institute for Development StudiesDevelopment Academy of the Philippines

Legislative:HOR - Committee on Agriculture and FoodHOR - Committee on Agrarian ReformHOR - Committee on Rural DevelopmentHOR - Committee on Food SecurityHOR - Committee on Natural Resources


HOR - Committee on Aquaculture and Fisheries ResourcesHOR - Congressional Oversight Committee on Agriculture and Fisheries ModernizationHOR - Congressional Policy and Budget Research DepartmentSenate - Senate Economic Planning OfficeSenate - Committee on Agriculture and FoodSenate - Committee on Agrarian Reform

NGOs/POsCaucus of Development NGO NetworksAsian NGO Coalition for Agrarian Reform and Rural DevelopmentAlyansa Agrikultura

Private Sector:Management Association of the Phils.-Agribusiness and Countyrside Development

FoundationNorthern Mindanao Vegetable Producers Association, Inc. Federation of Philippine Industries, Inc.Philippine Exporters Confederation, Inc. Rural Bankers Association of the Philippines

Resource Persons:University of Asia and the PacificUPLB-School of Environmental Science and ManagementNational Academy of Science and Technology


Planning Committee Chair: National Economic and Development Authority

Sub-committee on Transport

Sub-committee Chair: Department of Transportation and CommunicationMembers:National Economic and Development AuthorityDepartment of AgricultureMetro Manila Development AuthorityManila International Airport AuthorityDepartment of Public Works and HighwaysDepartment of Budget and ManagementPhilippine Ports AuthorityMaritime Industry AuthorityClean Air Initiative for Asian CitiesBases Conversion and Development AuthorityNational Computer CenterLight Rail Transit AuthorityCivil Aeronautics BoardToll Regulatory BoardLand Transportation Franchising and Regulatory BoardDepartment of TourismCagayan Economic Zone AuthorityPhilippine National Railways


Sub-committee on Water

Sub-committee Chair: Department of Public Works and HighwaysSub-committee Co-Chair: National Water Resources Board

Members:National Economic and Development AuthorityManila Water and Sewerage SystemLeague of ProvincesDepartment of Interior and Local GovernmentNational Irrigation Administration Local Water Utilities AdministrationPasig River Rehabilitation CommissionDepartment of Environment and Natural ResourcesDevelopment Bank of the PhilippinesBoard of Investments - Department of Trade and IndustryPhilippine Water PartnershipDepartment of JusticeDepartment of Agrarian ReformMayniladManila WaterOffice of the PresidentOffice of Civil DefenseCooperative Development AuthorityMetropolitan Waterworks and Sewerage System

Sub-committee on Energy

Sub-committee Chair: Department of Energy

Members:National Economic and Development AuthorityPower Sector Assets and Liabilities Management National Power CorporationNational Power Corporation-Small Power Utilities GroupNational Electrification AdministrationNational Transmission CorporationPhilippine National Oil CompanyEnergy Regulatory Commission

Sub-committee on Communications

Sub-committee Chair: Commission on Information and Communication Technology

Members:National Economic and Development AuthorityNational Telecommunications DivisionTelecommunications OfficeNational Computer CenterPhilippine Association of TElephone CompaniesDepartment of Interior and Local GovernmentBureau of Internal RevenueDepartment of Science and Technology


Sub-committee on Social Infrastructure

Members:National Economic and Development AuthorityTransparency International PhilippinesPhilippine Constructors Association, Inc.Confederation of Filipino Consulting OrganizationOrganization of Socialized Housing Dev’t. Of the Phils.Makati Business ClubSolid Waste Management Association of the Phils.Departmen tof HealthDepartment of Environment and Natural ResourcesDepartment of Budget and ManagementNational Solid Waste Management CommissionDepartment of Social Welfare and DevelopmentDepartment of Interior and Local GovernmentNational Housing AuthorityHousing and Urban Development Council

Other Participants:Philippine Chamber of Commerce and Industry Office of the PresidentFirst BalfourHOR- Congressional Policy and Budget Research DepartmentSenate Economic Planning OfficeAustralia and New Zealand Chamber of Commerce of the PhilippinesFederation of Filipino-Chinese Chambers of Commerce and Industry, Inc.


Planning Committee Chair: Department of Finance

Sub-committee on Financial Sector

Sub-committee Chair: Bangko Sentral ng Pilipinas (BSP)Members:Bankers Association of the Philippines Board of InvestmentsDepartment of FinanceDepartment of Trade and IndustryBureau of CustomsDevelopment Bank of the PhilippinesExport Development CouncilFinancial Executives Institute of the PhilippinesGovernment Service Insurance SystemLandbank of the PhilippinesNational Competitiveness CouncilPhilippine Institute for Development StudiesPhilippine Stock ExchangeNational Reintegration Center for Overseas Filipino Workers - Department of Labor and Employment


Department of Budget and ManagementNational Statistics OfficeNational Statistical Coordination BoardSocial Security SystemAsian Institute of ManagementSecurities and Exchange CommissionInsurance commissionHouse Committee on Banks and Financial IntermediariesHouse Committee on Cooperatives DevelopmentSenate Committee on Banks, Financial Institutions, and Currencies; Office of Sen. Sergio

Osmeña IIISenate Committee on Finance; Office of Sen. Franklin Drilon

Sub-committee on Good Governance and the Rule of the Law

Sub-committee Chair: Civil Service Commission

Members:Commission on AuditCommission on Human RightsDepartment of JusticeDepartment of the Interior and Local Government Development Academy of the PhilippinesGovernment WatchOffice of the President - Presidential Management StaffPhilippine Judicial AcademySupreme Court of the Philippines Alternative Law GroupsDepartment of Budget and ManagementHouse Committee on Good Government and Public AccountabilityHouse Committee on JusticeOffice of the OmbudsmanSenate Committe on Civil Service and Government ReorganizationSenate Committee on Justice and Human RightsTransparency International-PhilippinesUP National College of Public Administration and GovernanceCongressional Policy and Budget Research Department of the House of RepresentativesTransparency and Accountability NetworkNational Competitiveness Council


Planning Committee Chair: Department of Social Welfare and Development

Sub-committee on Health, Nutrition & Population Management

Sub-committee Chair: Department of Health

Members:Government Agencies:Commission on PopulationNational Nutrition Council


Philippine Health Insurance CorporationPhilippine Institute of Traditional Health CarePhilippine Charity Sweepstakes OfficePhilippine Council for Health and Research DevelopmentPhilippine National AIDS Council SecretariatDepartment of the Interior and Local GovernmentPhilippine Commission on WomenCommission on Human RightsDepartment of Budget and ManagementNational Anti-Poverty CommissionDepartment of Labor and Employment

Legislative:HOR - Congressional Policy and Budget Research DepartmentHOR - Committee on HealthSenate Committee on Health and Demography

NGOs/Private SectorWOMANHEALTHPhilippine Legislative Council for Population and DevelopmentHealth Justice

Sub-committee on Education, Training and Culture

Sub-committee Chair: Department of Education

Members:Government Agencies:Technical Education and Skills Development AuthorityCommission on Higher EducationNational Commission on Culture and the ArtsDepartment of Science and Technology - Science Education InstitutePhilippine Sports CommissionPhilippine Information AgencyPhilippine Commission on WomenCommission on Human RightsDepartment of Budget and ManagementNational Commission on Indigenous Peoples

Legislative:HOR Committee on Basic Education and CultureHOR Committee on Higher and Technical EducationSenate Committee on Education, Arts and CultureSenate Committee on Labor, Employment and Resource Development

NGOs/Private Sector:Philippine Education NetworkPhilippine Business for Education


Sub-committee on Housing and Urban Development

Sub-committee Chair: Housing and Urban Development Council

Members:Government Agencies:Home Guaranty CorporationNational Housing AuthoritySocial Housing Finance CorporationNational Home Mortgage Finance CorporationHousing and Land Use Regulatory BoardHome Development Mutual FundDepartment of the Interior and Local GovernmentPhilippine Commission on WomenDepartment of Budget and ManagementPresidential Commission for the Urban PoorSocial Security SystermGovernment Service Insurance System

Legislative:HOR - Committee on Housing and Urban DevelopmentSenate Committee on Urban Planning, Housing and Resettlement

NGOs/Private Sector:Chamber of Real Estate and Builders’ AssociationSubdivision and Housing Developers’ AssociationOrganization of Socialized Housing Developers of the Philippines

Sub-committee on Social Protection

Sub-committee Chair: Department of Social Welfare and Development

Members:Government Agencies:National Anti-Poverty Commission Commission for the Welfare of ChildrenDepartment of Budget and ManagementDepartment of Labor and EmploymentGovernment Service Insurance SystemPeople’s Credit and Finance CorporationPhilippine Health Insurance CorporationPhilippine Commission on WomenCommission on Human RightsNational Council on Disability AffairsDepartment of Agrarian ReformDepartment of Environment and Natural ResourcesNational Commission on Indigenous Peoples

Legislative:HOR Committee on Labor and EmploymentSenate Committee on Youth, Women and Family Relations


NGOs/Private Sector:Social Watch PhilippinesPambansang Kalipunan ng mga Manggagawang Impormal sa PilipinasCaucus of Development NGO Networks

Sub-committee on Peace and Security

Sub-committee Chair: Office of the Presidential Adviser on Peace Process

Members:Government Agencies:Department of the Interior and Local GovernmentDepartment of National DefenseDepartment of JusticeNational Anti-Poverty CommissionNational Commission on Indigenous PeopleNational Security CouncilCommission on Human RightsDepartment of Agrarian ReformDepartment of Environment and Natural ResourcesPhilippine Commission on WomenRegional Planning and Development OfficeMindanao Development Authority National Commission on Muslim Filipinos

Legislative:HOR Committee on Public Order and SafetyHOR Committee on National Defense and SecurityHOR Committee on Mindanao AffairsHOR Special Committee on Peace, Reconciliation and UnitySenate Committee on National Defense and SecuritySenate Committee on Justice and Human RightsSenate Committee on Peace, Unification and Reconciliation

NGOs/Private Sector:CBCP National Secretariat for Social Action, Justice and PeacePhilippine Human Rights Information Center Free Legal Assistance Group


Planning Committee Chair: Department of Environment and Natural ResourcesCommittee Co-Chair: Department of the Interior and Local Government

Members:Government Agencies:DENR-Planning ServiceEnvironmental Management BureauMines and Geosciences BureauProtected Areas and Wildlife BureauForest Management Bureau


Ecosystems Research and Development BureauRiver Basin Control OfficeNational Water Resources BoardLand Management BureauNational Mapping and Resources Information AuthorityNational Solid Waste and Management CommissionPasig River Rehabilitation CommissionLaguna Lake Development AuthorityManila Bay Coordinating OfficeClimate Change CommissionDOST-Philippine Atmospheric, Geophysical and Astronomical Services AdministrationPhilippine Institute of Volcanology and SeismologyOffice of the Civil Defense - National Disaster Risk Reduction and Management CouncilDepartment of Agriculture - Planning ServiceBureau of Fisheries and Aquatic ResourcesBureau of Soils and Water ManagementDAR Planning ServiceDepartment of Trade and IndustryDepartment of Trade and Industries-Policy and Planning Dept.-BOIDepartment of Budget and Management-Fiscal Planning Department of Budget and Management- OperationsDepartment of Budget and Management- Bureau EDepartment of Budget and Management-Fiscal Planning BureauDepartment of Public Works and HighwaysDepartment of Public Works and Highways-Planning Service and PPPDepartment of Labor and EmploymentDepartment of Transportation and Communications-Planning ServiceNational Statistical Coordination BoardNational Stastistics OfficePhilippines Institute for Development StudiesDevelopment Academy of the Philippines

Legislative:HOR Committee on EcologyHOR Committee on Environment and Natural ResourcesHOR Congressional Policy and Budget Research DepartmentSenate Economic Planning OfficeSenate Committee on Climate Change

Private Sector:Management Association of the PhilippinesPhilippine Business for the EnvironmentChamber of Mines of the Philippines

NGOs/POs:Civil Society Counterpart Council for Sustainable DevelopmentWorld Wide FundConservation InternationalAksiyon KlimaGreenconvergenceAidwatch Philippines


First Meeting of the Plan Steering Committee October 18, 2010

Visioning Group Meeting November 26, 2010

Planning Committee & Sub-committee Meetings November-December 2010

Inter-Planning Committee Meeting December 21, 2010

Regional Consultations

National Capital Region January 14, 2011

Region 1-Ilocos Region January 4, 2011

Region 2- Cagayan January 6, 2011

Region 3 - Central Luzon January 4, 2011

Region 4A - CALABARZON January 6, 2011

Region 4B - MIMAROPA January 5, 2011

Region 5 - Bicol Region January 5, 2011

Region 6 - Eastern Visayas January 6, 2011

Region 7 - Central Visayas January 6, 2011

Region 8 - Western Visayas January 6, 2011

Region 9 - Western Mindanao January 5, 2011

Region 10 - Northern Mindanao January 6, 2011

Region 11 - Southern Mindanao January 5, 2011

Region 12 - Central Mindanao January 5, 2011

Region 13 - Caraga January 14, 2011

CAR January 4, 2011

ARMM provinces joined the consultations in Region 9 and Region 12

Expanded Plan Steering Committee Meeting January 24, 2011

Representatives of Civil Society Organizations January 25, 2011

Representatives of Labor Groups January 31, 2011

NEDA Board Meeting March 28, 2011

Schedule of Consultations


A Social Contract with the Filipino People

A National Leadership in Need of Transformational Change

Its legitimacy is under question;

It persecutes those who expose the truth about its illegitimacy and corruption;

It stays in power by corrupting individuals and institutions;

It confuses the people with half-truths and outright lies;

It rewards, rather than punishes, wrongdoing;

It offers no lasting solutions for the many problems of the country;

It weakens the democratic institutions that hold our leaders accountable.

It hinders our local governments from delivering basic services;

It has no vision of governance beyond political survival and self-enrichment.

A People Crying out for Change

Corruption robs our children of their protection, nutrition and education.

Corruption destroys our families and communities.

Corruption steals from our farmers and workers.

Corruption deters businessmen from investing in our economy.

This has eroded our spirit as individuals, as communities, as a people.

We have lost trust in the democratic institutions we so courageously re-established after the dictatorship.

Our proven capacity for collective outrage and righteous resistance has been weakened.

We have ceased to depend on the patriotism and civic engagement that used to animate many of our efforts.

We have become divided and alienated, focusing only on ourselves and on our individual pursuits.

Our moral faculties as a people have been paralyzed.

BENIGNO S. AQUINO IIIPLATFORM of GOVERNMENT

397A Social Contract with the Filipino People

We have retreated into a dark world of self-absorption and cynicism. Our collective despair has reached its lowest point.

Then finally, the gift of Light

Cory Aquino passed on to the next life. From our sadness, we awakened to a shaft of light cutting through the darkness. She left the Filipinos a legacy of selfless love for country and people. Filipinos’ connection with each other was rekindled. In death, she enabled us to hope again for decent government. The millions who connected with Cory at her funeral represented something more than euphoria, sentiment or transient emotions. They represented the reverent memory of a good leader in the past and the firm hope of having a similarly good leader in the future.

A People’s Campaign of Renewed Hope…

Anchored on Ninoy’s and Cory’s legacy of change through the ways of democracy

Embraces the qualities of integrity, humility and trust-worthiness in public leadership

Recognizes the absence of these qualities in government as a major cause of widespread poverty, misery and despair.

The Vision for the Philippines:

A country with…

1. A re-awakened sense of right and wrong, through the living examples of our highest leaders;

2. An organized and widely-shared rapid expansion of our economy through a government dedicated to

honing and mobilizing our people’s skills and energies as well as the responsible harnessing of our natural resources;

3. A collective belief that doing the right thing does not only make sense morally, but translates into economic value as well;

4. Public institutions rebuilt on the strong solidarity of our society and its communities.

Our Mission:

We will start to make these changes first in ourselves—by doing the right things, by giving value to excellence and integrity and rejecting mediocrity and dishonesty, and by giving priority to others over ourselves.

We will make these changes across many aspects of our national life.

A Commitment to Transformational Leadership:

1. From a President who tolerates corruption to a President who is the nation’s first and most determined fighter of corruption.

2. From a government that merely conjures economic growth statistics that our people know to be unreal to a government that prioritizes jobs that empower the people and provide them with opportunities to rise above poverty.

3. From relegating education to just one of many concerns to making education the central strategy for investing in our people, reducing poverty and building national competitiveness.

4. From treating health as just another area for political patronage to recognizing the advancement and protection of public health, which includes responsible parenthood, as key measures of good governance.


5. From justice that money and connections can buy to a truly impartial system of institutions that deliver equal justice to rich or poor.

Economy

6. From government policies influenced by well-connected private interests to a leadership that executes all the laws of the land with impartiality and decisiveness.

7. From treating the rural economy as just a source of problems to recognizing farms and rural enterprises as vital to achieving food security and more equitable economic growth, worthy of re-investment for sustained productivity.

8. From government anti-poverty programs that instill a dole-out mentality to well-considered programs that build capacity and create opportunity among the poor and the marginalized in the country.

9. From a government that dampens private initiative and enterprise to a government that creates conditions conducive to the growth and competitiveness of private businesses, big, medium and small.

10. From a government that treats its people as an export commodity and a means to earn foreign exchange, disregarding the social cost to Filipino families to a government that creates jobs at home, so that working abroad will be a choice rather than a necessity; and when its citizens do choose to become OFWs, their welfare and protection will still be the government’s priority.

Government Service

11. From Presidential appointees chosen mainly out of political accommodation to discerning selection based on integrity, competence and performance in serving the public good.

12. From demoralized but dedicated civil servants, military and police personnel destined for failure and frustration due to inadequate operational support to professional, motivated and energized bureaucracies with adequate means to perform their public service missions.

Gender Equality

13. From a lack of concern for gender disparities and shortfalls, to the promotion of equal gender opportunity in all spheres of public policies and programs.

Peace & Order

14. From a disjointed, short-sighted Mindanao policy that merely reacts to events and incidents to one that seeks a broadlysupported just peace and will redress decades of neglect of the Moro and other peoples of Mindanao.

Environment

15. From allowing environmental blight to spoil our cities, where both the rich and the poor bear with congestion and urban decay to planning alternative, inclusive urban developments where people of varying income levels are integrated in productive, healthy and safe communities.

16. From a government obsessed with exploiting the country for immediate gains to the detriment of its environment to a government that will encourage sustainable use of resources to benefit the present and future generations.

This platform is a commitment to change that Filipinos can depend on.

With trust in their leaders, everyone can work and build a greater future together.

399NEDA Secretariat

NEDA Secretariat

Augusto B. SantosDeputy Director-GeneralRegional Development Office

Nestor R. Mijares IVDeputy Director-GeneralCentral Support Office

Margarita R. SongcoDeputy Director-GeneralNational Development Office, Planning and Policy

Rolando G. TungpalanDeputy Director-GeneralNEDA National Development Office, Programming

Marcelina E. BacaniAssistant Director-GeneralRegional Development Office

Ruperto P. Majuca Assistant Director-GeneralPlanning and Policy

Central Office

Administrative StaffDir. Librado F. QuitorianoOIC-AD Lelina A. Quilates

Agriculture StaffOIC-Dir. Sheila M. EncaboOIC-AD Ma. Luisa Isabel L. Jolongbayan

Development Information StaffDir. Victoria V. QuimboOIC-AD Celine De Castro

Information Technology Coordination StaffOIC-Dir. Justina A. Adina

Infrastructure StaffOIC-Dir. Kenneth V. Tanate

Legal StaffOIC-Dir. Romeo T. Telpo

Management StaffOIC-Dir. Jocelyn P. ReyesOIC-AD Joseph T. Lalog

National Planning and Policy StaffOIC-Dir. Myrna Clara B. AsuncionOIC-AD Maritess B. Oliva

Project Montoring StaffDir. Roderick M. PlantaOIC-AD Violeta S.Corpuz

Public Investment StaffDir. Jonathan L. UyAD Florante G. Igtiben

Regional Development Coordination StaffDir. Susan Rachel G. JoseAD Remedios S. Endencia

Social Development StaffDir. Erlinda M.CaponesAD Cleofe F. Pastrana

Trade, Industry and Utilities StaffDir. Brenda Joyce R. MendozaOIC-AD Amelia M. Menardo

Cayetano W. Paderanga, Jr. Director-General andSocioeconomic Planning Secretary


NEDA Regional Offices

NRO CARRD Juan B. NgalobARD Florida P. Faculo

NRO IRD Leonardo N. Quitos Jr.ARD Nestor G. Rillon

NRO IIRD Milagros A. RimandoARD Maria Ann E.R. Darauay

NRO IIIRD Remigio A. MercadoARD Lynette Y. Bautista

NRO IV-AOIC-RD Severino C. Santos

NRO IV-BRD Oskar D. Balbastro

NRO VRD Jose Romeo C. Escandor

NRO VIRD Ro-Ann A. BacalOIC-ARD Raul S. Anlocotan

NRO VIIRD Marlene C. P. RodriguezARD Efren B. Carreon

NRO VIIIRD Buenaventura C. Go-SocoARD Ma. Purisima E. Sanop

NRO IXRD Arturo G. Valero

NRO XRD Leon N. Dacanay

NRO XIRD Ma. Lourdes D. LimARD Bonifacio G. Uy

NRO XIIRD Teresita Socorro C. Ramos

NRO XIIIRD Carmencita S.ConchingcoARD Cecilia M. Lopez

401Index

Index1991 Local Government Code, 209

Aabsorptive capacity, 48adaptation tools, 319adaptive management, 325Adopt-an-estero program, 329agri-business and forest-based

industries, 63agriculture, 37–60, 40–60Agriculture and Fisheries Modernization

Act, 320air pollution, 329alienable and disposable lands, 306alternative delivery modes, 178Alternative Dispute Resolution, 212ancestral domain, 333, 336ancestral domains, 309, 310, 324anticorruption drive, 27Anti-Graft and Corrupt Practices

Act, 221Anti-Money Laundering Act, 221Anti-Red Tape Act, 208APEC Code of Conduct for

Business, 211aquifer recharge, 305, 306Arangkada Philippines 2010, 64armed conflict, 31, 292, 294, 295, 296,

297, 298Association of Southeast Asian Nations

(ASEAN), 47asset, 52Asset price, 52Autonomous Region in Muslim

Mindanao (ARMM), 144, 163, 170, 177, 295, 297, 298

Bbalance of payments, 51Bantay-Dagat, 317Barangay Health Stations, 175Basic Education Sector Reform

Agenda, 28

basic sanitation, 134, 137, 139Biochemical Oxygen Demand, 304Biodiversity, 307, 315, 336bio-eco-engineering technology, 329Biological Oxygen Demand (BOD), 304Board of Investments, 71border security, 299Brand Philippines, 83broadband Internet, 160Bangko Sentral ng Pilipinas (BSP), 46,

47, 50, 51, 57, 59, 60budget deficits, 26Build-Operate-Transfer (BOT), 58Bureau of Internal Revenue (BIR), 48, 53Bureau of Treasury (BTr), 56, 58Business Process Outsourcing (BPO), 37,

63, 67, 68, 69, 81, 82, 88, 89Bureau of Customs (BOC), 48, 53Bureau of Internal Revenue, 48business environment, 62, 64, 70, 75, 79,

80, 82, 83, 89business process outsourcing, 63Business Registration/Permits and

Licensing System, 80

CCalamity Fund, 323campaign finance, 223capital and financial account, 51Capital formation, 37carbon stock, 323, 324Career Executive System (CES) bill, 216case-monitoring, 225causes of conflict, 292, 293, 296caves, 307, 315, 325Cave Strategic Action Plan, 315Cost-Benefit Analysis (CBA), 304China, 37, 54Citizen-centered government, 219Citizen’s Charter, 208Citizens’ participation, 212Civil Service Academy, 216civil society organizations, 58Clean Air Act, 319, 328, 329


Clean Water Act, 141client-satisfaction surveys, 28climate change, 31, 125, 137, 138, 139,

141, 142, 146, 147, 159, 164, 313Climate Change Act, 317, 318, 330, 331,

336Climate Change Adaptation (CCA), 82,

125, 130, 134, 135, 137, 145, 147, 148, 175, 176, 317, 320, 321, 322, 324, 325, 331, 332, 334

climate change resilient, 304climate change scenarios, 319, 323coastal and marine resources, 308, 315,

316, 323, 326coastal resources, 308, 317, 333, 335Code of Conduct and Ethical Standards

for Public Officials and Employees, 221

Codes of Conduct for law enforcers, 227coliform, 305Commission on Audit, 58Committee on Infrastructure, 134Communal Irrigation Development

Fund, 145communal irrigation systems, 143community-driven development, 29, 30Competency Needs Assessment, 216competition policy, 28competitiveness, 62, 63, 64, 65, 75, 79, 80,

83, 84, 85, 87, 90, 91, 94, 95, 96, 98Competitiveness indicators, 63Compliance and Integrity Programs for

Business, 221comprehensive anticorruption

program, 215Comprehensive Land Use Plans, 175conditional cash transfers, 29consolidated public sector deficit, 48, 53Construction and Related Materials, 94Consumer Policy, 78Consumer Price Index, 50consumer welfare, 62, 78, 99Contingent Liability Management, 58Continuous Quality Improvement, 176coral reefs, 308, 325, 326Coral Triangle, 308, 315, 316, 325, 326Corruption Perception Index, 211cost-benefit analysis, 304, 312, 315, 323cost of doing business, 62, 64, 75criminal elements, 293, 298culture of competitiveness, 62, 63, 83, 84current account balance, 51

Ddebt, 47, 49, 50, 51, 53, 54, 58, 60Debt management, 58deficit, 46, 48, 49, 53, 54, 55Department of Budget and Management

(DBM), 54, 55, 56, 58Department of Environment and Natural

Resources (DENR), 141, 173, 305, 307, 309, 310, 312, 314, 315, 316, 318, 319, 320, 321, 322, 324, 328, 333

Department of Environment and Natural Resources- Ecosystems Research and Development Bureau, 319

Department of Environment and Natural Resources-Mines and Geosciences Bureau, 310, 312

Department of Finance (DOF), 55, 58Department of Health (DOH), 129,

139, 140, 170, 171, 172, 175, 176, 177, 178

Department of Public Works and Highways (DPWH), 130, 141, 146, 147, 176, 178

Department of Science and Technology - Philippine Atmospheric, Geophysical and Astronomical Services (DOST-PAGASA), 313

Department of the Interior and Local Government (DILG), 148

Developing Human Resources, 84Digital Terrestrial Television

broadcasting, 162disaster preparedness, 318, 332Disaster Risk Reduction, 82Disaster Risk Reduction and

Management Act, 319, 320, 323, 331

disasters and extreme events, 317dissolved oxygen, 304Doing Business Report, 64, 80Disaster Risk Reduction (DRR), 318,

319, 320, 321, 323, 331, 332, 334Disaster Risk Reduction and

Management (DRRM), 125, 134, 135, 145, 147, 148, 175, 176, 317, 318, 319, 320, 323, 331, 332

duty-bearers, 215

403Index

EEase of Doing Business, 209East Asian, 54eco-efficiency, 139, 147ecoefficient water infrastructure, 136ecological integrity, 31Ecological Solid Waste Management Act

(ESWMA), 169, 170, 171, 313, 328, 330

Economic Regulation, 138Economic Zones, 72, 73, 83ecosystem profiling, 334ecotourism, 328education, 43, 49, 53, 54, 59, 60Education For All, 177e-governance services, 218e-Government system, 162, 164Electric Power Industry Reform

Act, 50electronic Prosecution Case

Management, 225electronics, 63, 67, 69, 73, 85, 89electronic waste, 330El Niño, 40employment, 32, 36, 42, 43, 44, 45, 48,

58, 59, 62, 67, 68, 73, 74, 75, 76, 77, 79, 80, 83, 85, 86, 88

employment generation, 29Enhanced Case Flow Management

(eCFM) System, 226entrepreneurial culture, 63environmental governance, 332, 333Environmental Impact Assessment

(EIA), 304, 331environmentally critical areas, 330Environmental Management Bureau

(EMB), 173environmental safeguards, 314, 327environment and natural resources, 25,

31Environment and Natural Resources

Framework Plan, 321e-waste, 330, 334, 337excise tax, 46, 54Exclusive Economic Zone, 293, 301Executive and Legislative Advisory

& Consultative Council (JELACC), 228

Executive Development and Strategic Management, 216

Expansion of Court-Annexed Mediation, 226

Expansion of e-JOW, 226exports, 42-60, 62, 64, 66, 67, 69, 70, 80,

83, 84, 86, 89, 90, 91, 92, 93, 96, 97export sector, 54exports of services, 51external, 37, 46, 47, 51, 52, 53, 59, 60external debt, 47, 51, 59, 60external debt-to-GDP ratio, 51external security, 299Extractive Industry Transparency

Initiative, 328

Ffees and charges, 48, 50financial markets, 46, 51, 52, 58, 59Financial Sector Forum, 60financial stability, 52, 59fiscal, 36, 37, 39, 45, 46, 48, 49, 50, 52,

53, 54, 55, 56, 57, 58, 59fiscal consolidation, 48, 52, 53, 54fiscal deficits, 45, 49fiscal incentives, 54, 55fiscal policy, 36, 53fiscal responsibility, 54Fiscal Responsibility Bill, 55fiscal stimulus, 39Fiscal Year, 48Fisheries and Aquatic Resources

Management Councils, 316Fishery Code, 320Flood and Drainage Management, 145flood management, 133, 134, 146, 147,

148flood management infrastructure, 146food security, 144forest cover, 307, 313, 323, 324forestland, 307, 315, 320, 324, 327, 328,

336forest lands, 315Forward Estimates, 55Freedom of Information Act, 213Functional Competency Development, 216

GGarments, 93General Appropriations Act (GAA), 57, 58Gender Development Index, 214gendered interests, 214gender mainstreaming, 334General Appropriations Act, 57


General Procurement Reform Act, 125genetically-modified organisms, 325geographic positioning system, 321geohazard mapping, 332Gini ratio, 21Global And Regional Integration, 98global commodity, 52Global Competitiveness Report, 63, 64global crisis, 39global financial crisis, 39, 46, 50, 51, 52,

59global information system, 321, 324Global Integrity Report, 211global recession, 39Government Owned and Controlled

Corporations (GOCC), 58Good governance, 206governance, 22, 27, 62, 80Governance and Public Leadership, 216Government Compensation and Position

Classification System, 209Government Corporate Council, 58Government Integrated Financial

Management Information System, 57, 220

Government Procurement Policy Board, 222

Government Quality Management Committee, 219

Government Quality Management Program, 219

Government Rationalization Program, 55green architecture, 330Greenhouse Gas, 322green house gas emissions, 330greenhouse gasses emission, 323, 324Green ICT, 164, 168Green Industry, 330greening of industry, 329green jobs, 329Gross Domestic Product (GDP), 36, 37,

38, 39, 40, 41, 46, 47, 48, 50, 51, 53, 54, 57, 62, 64, 68, 69

gross international reserves, 51Gross National Product (GNP), 37, 40, 41groundwater, 305, 306, 330Guidelines and Procedures for entering

into Joint Venture (JV) Agreements between Government and Private Entities, 124

Hhabitats, 307, 308, 315, 316, 325hazard identification, 331hazard maps, 146hazardous waste generators, 173hazardous wastes, 305, 313, 334, 337hazards, 311, 312, 313, 329, 331health care wastes (HCW), 171, 172Health Facility Enhancement

Program, 176higher education, 31Homestyle Products, 93housing, 63, 91human capital, 62, 63, 84, 92, 96Human development, 25Hyogo Framework for Action, 318

Iinclusive growth, 26, 53, 80, 95Inclusive growth, 18Induction Program, 216industrial peace, 63industries with high growth

potential, 63industry, 62, 63, 67, 68, 69, 72, 73, 74,

75, 76, 77, 78, 79, 80, 81, 82, 84, 85, 86, 88, 89, 90, 91, 92, 93, 94, 96, 97

industry-cluster approach, 63inflation, 37, 39, 45, 50, 51, 52, 53, 57,

58, 59Inflation, 46, 50, 57Information, education, and

communication, 142Information Systems Strategic

Plan, 321infrastructure, 26, 45, 49, 53, 54, 55,

56, 59, 60, 63, 64, 65, 70, 80, 83, 86, 87, 88, 89, 92, 97, 98, 100

Inmate Information System, 226institutional and regulatory

environment, 124institutions, 22integrated coastal management, 316,

326Integrated Coastal Resources

Management Project, 321integrated ecosystem-based

management, 323Integrated Water Resources Management

(IWRM), 135, 136, 139

405Index

Integrity Development Review, 224, 226

Integrity of the Judiciary, 226Internal Control System, 56, 221Internal Revenue Allotment, 48, 209internal security program, 294internal security system, 300internal stability, 292, 298International Labor Organization, 41International Organization For

Standardization (ISO) Quality Management System (QMS), 219

invasive alien species, 307investment, 50, 51, 52, 54, 58, 59, 60Investment Coordination Committee-

Development Budget Coordination Committee (ICC-DBCC), 58

investment promotion areas, 62, 83investment ratio, 22investments, 40, 62, 63, 64, 68, 69, 70,

71, 72, 73, 74, 80, 81, 82, 83, 84, 86, 89, 90, 92, 96, 97, 99

irrigable lands, 145irrigated agriculture, 143irrigation, 133, 134, 142, 143, 144,

145, 147irrigation management transfer

(IMT), 145irrigation service fees, 143irrigators’ associations, 143irrigation service fee (ISF), 143, 144,

145islands of good governance, 206

JJoint Foreign Chambers of the

Philippines, 221Judiciary, 228Judiciary Case Management

System, 225Justice Sector Coordinating Council

(JSCC), 228justice system infrastructure, 225

KKatarungang Pambarangay Law, 228

L

Labor Force Survey (LFS), 38, 40, 41, 42labor mismatch, 43ladderized HRD program, 216land-use mapping, 145Lateral Attrition Law, 46, 53learning-by-doing, 29Level II (communal faucet system or

standpost), 136Level III (waterworks system or individual

household connections), 136Level I (point source), 136Light Rail Transit Authority, 50loan portfolio, 52loan-to-value ratio, 52Local Government Code, 319, 320, 327Local Government Unit (LGU), 147, 160,

165, 169, 170, 171, 175, 176, 179Local Water Utilities Administration

(LWUA), 137, 138logistics, 63, 66, 74, 92, 98, 100

Mmacroeconomic stabilization, 46, 53Macroprudential regulations, 52Magna Carta of Women, 316mangrove, 307, 308, 313, 325, 326mangroves, 308, 326Manila Bay Coastal Strategy Goal

2020, 329marine protected areas, 317, 337Market Access, 98Materials Recovery Facilities, 170materials recovery systems, 171Medium-Term Expenditure Framework, 55merchandise exports, 39, 51Merchandise exports, 36Merchandise imports, 51Metropolitan Waterworks and Sewerage

System (MWSS), 137, 138, 141Metropolitan Waterworks and Sewerage

System–Regulatory Office, 137microfinance, 30micro, small, and medium enterprises, 63Millenium Challenge Corporation, 207Millenium Development Goals

(MDG), 19, 134, 136, 137, 138, 139, 140

Millenium Development Goal 7 (MDG 7), 134, 138

minimum wage, 50


mining, 63, 71, 82, 85, 90, 97, 308, 309, 310, 312, 314, 315, 326, 327, 328, 335, 336

Missionary areas, 156monetary, 36, 45, 46, 50, 51, 52, 53, 58,

59, 60Monetary authorities, 50, 52, 59monetary policy, 36, 45, 51, 52, 58, 59Motor Vehicle Parts and Components, 93Multi-Sectoral Anticorruption Council, 210Municipal Development Fund Office, 138

NNagoya Protocol, 325National Anticorruption Plan of

Action, 210National Biosafety Framework, 325National Brand and Identity Awareness, 62National Capital Region (NCR), 163, 170,

171, 172, 174, 177National Citizen Satisfaction Index, 219National Commission on Indigenous

Peoples, 324National Consumer Affairs Council, 79National Ecology Center (NEC), 170, 171National Environmental Awareness and

Education Act of 2008, 318National Food Authority (NFA), 50National Framework Strategy on Climate

Change, 316, 317, 318, 323National Government (NG), 46, 48, 49, 53,

56, 58, 60National Government Agency (NGA), 123,

136, 142, 162, 164, 165, 168, 169National government deficit, 48, 53National Health Insurance Program, 29National Integrated Protected Areas

System, 315National Irrigation Administration

(NIA), 143, 144, 145National Irrigation Authority, 143National Irrigation Management Fund, 145National Irrigation Systems (NIS), 143,

145National Justice Information System, 223National Power Corporation, 50National Quality Infrastructure, 96National Renewable Energy Program, 151,

157National Sanitation Code, 141national security, 292, 294national sovereignty, 292National Telecommunications

Commission, 160, 162, 167National Transport Policy (NTP), 130,

131National Urban Development and

Housing Framework, 174National Water Resources Board

(NWRB), 134, 136, 137, 138National Water Resources Policy, 138National Wetlands Action Plan for the

Philippines, 315National Wildlife Research

Center, 335natural hazards, 312Next Wave Cities, 68, 89

OOfficial development assistance, 141one-stop shops, 215open defecation, 140, 141, 142open for business, 82, 83Organizational Performance Indicator

Framework, 55Organizational Performance Indicators

Framework, 217Overseas Filipino remittances, 51

PPaper on Budget Strategy, 55part-time workers, 43Patubigayan Trust Fund, 145Payapa at Masaganang Pamayanan

Program (PAMANA), 296pay-as-you-pollute, 330Payment for Environmental Services

(PES), 324, 325, 335peace process, 292, 293, 294, 295,

296, 298People’s Survival Fund, 336per capita income, 32Performance Management

System, 217peso, 50, 51, 52Philippine Agenda 21, 323Philippine Amusement and Gaming

Corporation, 176Philippine Charity Sweepstakes

Office, 176Philippine Disaster Risk Reduction and

Management Act of 2010, 317, 318

Philippine Ecological Solid Waste Management Act of 2000, 169

407Index

Philippine Economic Zone Authority, 71, 72, 73

Philippine Fisheries Code of 1998, 320, 337

Philippine Government Electronic Procurement System, 56, 222

Philippine Inventory of Chemicals and Chemical Substances, 173

Philippine Strategy on Climate Change Adaptation 2010, 146

Philippine Water Supply Sector Roadmap (PWSSR), 134, 136, 138, 139, 141

policy interest rates, 50policy rates, 39pollution control, 134potable water, 134, 138, 173, 175poverty, 19poverty incidence, 20, 44, 45poverty threshold, 45Power Sector Assets and Liabilities

Management Corporation, 50PPP, 28, 58, 60, 123, 124, 125, 127,

130, 132, 141, 142, 173, 175, 179precautionary approach, 304price shocks, 52Priority Chemical List, 173private irrigation systems, 143privatization, 48, 50Procurement law, 221Procurement Reforms, 56productivity and efficiency, 62, 63, 79,

84, 94project preparation, development, and

implementation, 122property rights, 24, 26prosecutors and judges, 227Protected Area Management

Boards, 321protected areas, 307, 315, 316, 317,

320, 325, 331, 336, 337Philippine Sustainable Sanitation

Roadmap (PSSR), 141, 142Public Financial Management, 57public financial management (PFM)

system, 220public order and safety, 294, 298, 299Public-Private Partnership, 26, 83public procurement, 27

RRA 7718, 124RA 9003, 313, 330RA 9710, 316RA 9729, 317, 318rafflesia, 317Ramsar Convention, 325RA No. 9003, 169rationalization, 27, 54Rationalization Plan, 143, 210real effective exchange rate, 52Regional Development Councils, 58reglementary period, 225regulatory, 52, 59, 60Remittance, 40remittances, 37, 39, 40, 44, 51, 59, 60Remote area electrification, 157Renewable Energy Act of 2008, 151research and development, 75, 81Resource regulation, 139resource valuation, 327, 335Revenue effort, 46Risk Analysis and Management, 122risk evaluation, 331Risk transfer mechanisms, 319rule of law, 206, 297, 300Rules for Setting EC Wheeling Rates, 156Rural Health Units, 175

Ssaltwater intrusion, 306sanitation, 133, 134, 136, 137, 139, 140,

141, 142, 178, 180Sanitation Code, 139, 141Sanitation Code of 1975, 141science and technology, 31, 75, 98Science, Technology and Innovation, 95sea grasses, 326sea-level rise, 308Security Sector Reform and

Modernization, 300self-employment, 30Self-sufficiency level, 148septage, 134, 139, 140, 141, 142services, 62, 63, 64, 65, 66, 67, 68, 69, 71,

73, 74, 75, 77, 78, 79, 80, 82, 83, 84, 85, 86, 87, 88, 89, 92, 94, 95, 96, 97, 98, 99, 100

services sector, 39–60, 40sewerage, 133, 134, 139, 140, 141, 142shipbuilding, 63, 73, 92


short-term external debt, 47, 51single, independent economic

regulator, 138, 142single website/portal, 217single-window service channels, 216sin products, 47social and economic services, 57social protection measures, 29social services, 45, 48, 49, 53, 54solid waste, 305, 313, 321, 322, 330, 334,

335Sparkplugs for Governance and Economic

Development, 208Strategic and Integrated HRD, 216Strategic National Action Plan on Disaster

Risk Reduction, 318streamlining bureaucratic procedures, 62Subcommittee on Water Resources, 134Subic Bay Regulatory Board, 137Sulu-Celebes Seas, 316Sulu-Sulawesi Marine Ecoregion, 316, 326Supervisory Development, 216Supply Chains, 100sustainable development, 316, 317, 320,

332, 336sustainable environment, 133, 141

TTariff and Customs Code, 81tax administration, 53, 54tax effort, 46, 53Tax effort, 46tax reforms, 37, 47, 54tax system, 53, 54technical barriers, 65Ten-point Agenda, 80territorial integrity, 292, 293, 294, 298, 299Thailand, 54total factor productivity, 32tourism, 63, 67, 68, 69, 70, 74, 81, 82, 83,

84, 85, 86, 87, 88, 94, 95, 97, 98, 99Toxic Substances and Hazardous and

Nuclear Waste Control Act of 1990, 313

trade, 39, 40, 60transcript of stenographic notes, 226transparency, 62, 80, 83Transparency International’s Corruption

Perception Index, 64Transport, Storage, Disposal, 172tropical cyclones, 312typhoon Ondoy, 49

Uunderemployment, 42, 43, 44Underemployment, 19unemployment, 38, 41, 42, 43, 44United Nations Convention against

Corruption, 221United Nations Framework

Convention on Climate Change (UNFCCC), 317, 321, 322

universal access, 160, 165, 167, 168unpaid family workers, 42Updated National Wetland Action Plan

for the Philippines, 325urban parks, 330

Vvalue-added tax, 46Value Engineering/Value Analysis, 122Verde Island Passage, 316, 317Vietnam, 54Volumetric (volume-based)

pricing, 145Vulnerabilities, 52vulnerability assessment, 324, 331,

332Vulnerability assessments, 319

WWarrant of Arrest Information

System, 225water and sanitation (WATSAN), 180waterless areas, 134, 137, 138water pollution, 304, 329Water Quality Management Fund, 329water resource management, 305water resources, 133, 134, 136, 137,

145, 305, 306water-service providers, 136watershed management, 134, 146, 147watersheds, 146, 305, 319, 322, 324water supply, 123, 133, 134, 135, 136,

137, 138, 139, 140, 141, 142, 147, 172, 174

Wearables, 93wetlands, 307, 323, 325Whistleblower Protection Law, 223

wildlife, 308, 325, 327, 328Wildlife Act, 322, 335Women in Nation Building Act, 214Workplace Basics, 216

409Index

World Bank, 134, 137world-class forensic laboratories, 225World Health Organization/United

Nations Children’s Fund Joint Monitoring Program on the Millenium Development Goals (WHO/UNICEF JMP on the MDGs), 137, 139

World Justice Project Rule of Law Index 2010, 211

Worldwide Governance Indicators, 206

ZZero-based budgeting (ZBB), 27, 48,

56, 57, 218Zero Backlog Project, 226

411Index


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