President Gloria Macapagal-Arroyo today assured the business community that the government would be able to meet its deficit ceiling for this year as she cited positive economic indicators during the past six months.

In her keynote speech at the opening of the 59^th Council Meeting of the Association of Southeast Asian Nations-Chamber of Commerce and Industry (Asean-CCI) held this morning at the Ceremonial Hall of Malacanang, the President said if her administration was able to meet its target deficit ceiling last year, it will also be able to achieve its target of P130 billion for 2002.

"We believe we will be able to achieve (the target) this year because our five-month deficit so far is smaller than the five month deficit that we had last year at this time," the President said.

The President said that one proof that the government could meet its deficit target is that the bonds recently floated by the Department of Finance at 12 percent, which she said is too high, were oversubscribed.

"And so, that’s why we’re quite liquid. And even if we have a deficit right now, the liquidity is there to finance it. And that’s why we have interest rates going down again," the President said.

For the first five months of this year, the deficit stood at P107.5 billion, or almost 83 percent of the full year 2002 target. .

Earlier, Finance Secretary Jose Isidro Camacho said he too is confident that the government will be able to achieve its deficit target of P130 billion for this year, saying that the situation would reverse before the end of the year through improved tax collections.

"The wider gap between revenue and expenditures for the five month period in 2002 is not indicative of our full-year performance," Camacho said.

Aside from the low interest rates, the President said the June inflation rate went down to 3.0 percent from the 3.6 percent in May, which is even below the projected 4.5 to 5.5 percent average target for this year.

The President said that interest rates are at their lowest during her administration in the last 15 years, adding that she has lowered the cost of capital by developing and strengthening the country’s financial markets.

She said that in her government’s quest for more jobs, it has improved the competitiveness of industries and services in a number of ways.

For example, the President said, the government has taken measures to reduce the cost of power, transportation and communications, which are the lifeblood of commerce.

The President said that with these measures, the ranking of the Philippines from being number six among the most expensive country in Asia in terms of electricity rate, will improve to number two.

President Gloria Macapagal-Arroyo today said that more and more foreign policy decisions of her more than 18-month-old administration will have to be made in the context of the Association of Southeast Asian Nations (Asean).

In her speech at the 59^th Asean-Chamber of Commerce and Industry (CCI) Council Meeting and 15^th Asean-CCI Conference held this morning at Malacanang’s Ceremonial Hall, the Chief Executive said the commitment to Asean "is a cornerstone of Philippine foreign policy."

The President, who will assume the position of a Foreign Affairs Secretary in a concurrent capacity effective July 15, thanked the officers and members of the Asean-CCI led by its president, Jose Concepcion, Jr., for its efforts in pushing for the causes and concerns of the developing world.

The President said she places great importance to regional trading arrangements. "I have faith in the viability of the Asean Free Trade Area," she added.

"We cannot generate adequate investments unless we become part of a larger, integrated regional market. This is the only way we can compete for markets and investments with the giants elsewhere in the world," the President stressed.

The President said that Asean member-countries are also "looking beyond our immediate borders to extend the benefit of regional integration to our major trading partners in the region – the so-called Asean plus Three with China, Japan and South Korea."

At the beginning of the year, the President said, the Asean Free Trade Area (AFTA) process reached a significant milestone when the first signatories of the AFTA agreement -- namely, Brunei Darussalam, Indonesia, Malaysia, the Philippines, Singapore and Thailand – "achieved tariff levels of zero to five percent on almost all goods traded among us."

The President pointed out that the Philippines will remain firm in implementing its commitments to Asean as a strategy to achieve global competitiveness towards attaining sustainable growth and development.

However, she said, that AFTA has a long way to go before becoming an effective means for strengthening the region’s competitive position in the global market.

It is for this reason, the President said, why she supports Asean’s resolve to go beyond tariff cutting. She added that the leaders of Asean are now meeting and working on the elimination of non-tariff trade barriers.

"We are harmonizing our product standards and developing mutual recognition arrangements. We are negotiating the liberalization of trade in such important areas as financial services, telecommunications, construction, air and maritime transport, and tourism," she declared.

The President also cited the efforts of Asean in binding the region together by expanding the transportation and energy networks and easing the flow of goods, people and power throughout the region.

"We are drafting an agreement to make it easier and less expensive for tourists to come and travel within Asean. Closer integration is necessary for the long-term survival and prosperity of each of the Asean countries," she said.

The President lauded the organizers of the conference for having successfully brought together the leaders of the various chambers of commerce and industry of Asean.

She also congratulated the Chambers of Commerce and Industry of the Lao People’s Democratic Republic and the Kingdom of Cambodia for their accession to the Asean-CCI. "All 10 Asean countries are now part of the Asean Chamber of Commerce and Industry," she said.

President Gloria Macapagal-Arroyo today said that China, Japan and the United States and their relationships "will be the determining influence in the security situation and, therefore, the economic evolution of East Asia."

Keynoting the 59^th Association of Southeast Asian Nations-Chamber of Commerce and Industry (Asean-CCI) and the 15^th Asean-CCI Conference opening ceremonies held this morning at Malacanang’s Ceremonial Hall, the President said that this aspect is one of the primary realities of the regional and international environment that drives her eight-point foreign policy guidelines.

"With China’s entry into the WTO (World Trade Organization), the nations of Asean and Asean as a region must reflect on our own economies to determine how we can best position ourselves to ensure the continued competitiveness of our exports and capitalize on the opportunities presented by a more open China," the President said.

The President, who will assume her post as Foreign Affairs Secretary on July 15 in a concurrent capacity, said the China-Asean Free Trade Area will create a market of 1.8-billion people and a combine of Gross Domestic Product (GDP) of $2 trillion.

"It is projected that this would boost Asean exports to China by 48 percent and increase Asean’s GDP by nine-tenths of one percent," she stressed.

According to the President, the Philippines will benefit from expanding exports to the rapidly growing Chinese market and developing, manufacturing and service facilities in Asean that can feed the expanding mainland operations of Chinese and multinational companies.

"This is an excellent opportunity for our logistic service, manufacturing and commodity firms to develop strong business links with post-WTO China," she added.

The President said Japan’s trade with Asean totaled more than $120 billion last year.

In this connection, the President announced that the outline of an Asean-Japan economic partnership is "being worked out." But in the meantime, she said, a so-called New Age Partnership arrangement with the Philippines is under study.

The President noted that this has become more significant now that Japan is out of recession.

"The rapid phase, depth and breadth of global integration is the foremost reality we face," she said, adding that this involves not just the flow of goods but also of services, people, ideas, best practices of governance, doing business and investing.

The President pointed out that this factor is linked to another reality in the regional and international environment that guides her foreign policy – "that the country’s economic growth will continue to heavily involve direct foreign investments."

President Gloria Macapagal-Arroyo today stressed the growing importance of multilateral and inter-regional groups in pushing common interests, particularly trading.

In a speech before the 59^th Asean-Chamber of Commerce and Industry (CCI) council meeting and 15^th Asean CCI Conference at the Malacaņang Ceremonial Hall, the President said the recognition she placed on multilateral and inter-regional groups was one of the factors that "drives my foreign policy."

She stressed the importance of Asean, a regional grouping whose members are the Philippines, Malaysia, Indonesia, Brunei Darussalam, Thailand, Singapore, Vietnam, Laos, Cambodia and Myanmar.

She said she supported the Asean’s "rules-based multilateral trading system."

This is what "the World Trade Organization (WTO) is supposed to be," she said. "Our support is pragmatic, not ideological. We want what works for the people."

"It is imperative that the rules underpinning the system ensure economic growth, employment and development for all," she added, pointing out that everyone should benefit from trade.

If this does not happen, developing nations may be unable to sustain the imports of capital equipment and raw materials. Further, the benefits of trade liberalization will be put in doubt.

"The system itself could lose credibility. This could undermine our ability to mobilize support for trade policy reforms. And it does not help when developed countries persist in maintaining protectionist barriers against products of interest to developing countries like the Philippines and many of the Asean countries," she said.

The products include textiles and garments and tropical, agricultural and fishery products.

The President lamented that while developed countries promote the virtues of a market-driven economy, they subsidize their farm production with billions of dollars.

This prejudices the global commitment to trade flow while emboldening protectionists and complicating the work of officials in developing nations.

The President also stressed that the Philippines would remain focused on several goals that would make the Doha Round -- or the 4^th WTO Ministerial Conference conducted in Doha, Qatar from November 9 to 14, 2001 -- live up to its billing "as truly a development round."

She said one of the goals focused on how to do away with "tariff escalation and tariff peaks for products of interest to developing countries."

Philippine trade officials and negotiators should "make these part of the early harvest of results," she said.

They should likewise convince the WTO to "make corollary efforts to lessen the burdensome requirements for developing countries to meet the stringent standards in developed country markets," she added.

She noted that compliance, in many cases, has proven to be onerous and expensive.

She noted that Philippine mangoes and bananas have a hard time penetrating the markets in some developed countries that seek exhaustive data collection and certification requirements lasting for years.

She said that "sanitary requirements and technical standards seem to be the weapon of choice of protectionists."

The Chief Executive also sought greater liberalization of the temporary entry of service providers in the General Agreement on Trade in Services.

She said this has a lot of potential for developing countries and where support for such liberalization is strong such as in the information and communications technology (ICT) sector.

Further, she asked trade negotiators to work on "raising the requirements for the initiation of anti-dumping actions and rationalizing the standards for determining injury" due to dumping.

Dumping occurs when a company exports a product at a price lower than what it normally charges for the same product in the home market.

Another goal she stressed was how to "make special and differential treatment truly operational by providing more funds and resources for capacity building to enhance supply-side capacities, improve private sector competitiveness, implement trade agreements and meet continuing obligations under those agreements."

The trade negotiators should also focus in assessing the feasibility of providing for the further differentiation of treatment among developing countries.

She stressed that this was imperative, given the wide range of levels of development from the current two categories of least developed and developing. "Because even in the developing category, there are wide variations and circumstances," she said.

The President said the Philippines would remain supportive of the consensus of the Cairns Group – a coalition of 18 agricultural exporting countries -- "that export subsidies in the agricultural sector should be eliminated."

But she said that "we will make a strong case for special and differential treatment on other agricultural issues to enable us to have sufficient flexibility to pursue vital development goals."

She cited poverty alleviation as one of the Philippines’ development goals and as a cornerstone of her administration.

Late last May, during the Asean Free Trade Area conference in Makati City, the President noted that she placed great importance in regional trading arrangements which she viewed as building blocks towards a more open multilateral trading system.

"They prepare us to compete effectively and give us the confidence to take on multilateral commitments," she said.

The WTO Ministerial Conference is the organization’s highest-level decision-making body that meets at least once every two years, as required by the Marrakesh Agreement establishing the global trade grouping.

The Doha Round declaration mandates negotiations on a wide range of subjects, and other work including issues concerning the implementation of present agreements.

As a result of the order of President Gloria Macapagal-Arroyo to reduce the Purchased Power Adjustment (PPA), the inflation rate for fuel, light and water (FLW) in the National Capital Region (NCR) significantly went down by 19.7 percentage points for the month of June, the National Statistics Office said yesterday.

In a report, the NSO also said this is on top of the decrease in the year-on-year inflation from 3.6 percent in May to 3 percent in June as the inflation rates of all the commodity groups also slowed down.

Notably, the NSO said, the 3.0 percent inflation rate in June is the lowest year-on-year rate registered since May 2000.

In its summary inflation report on the Consumer Price Index (CPI) for the months May and June, the NSO also noted that inflation rate of FLW went down by 19.7 percentage points at 7.1 percent in June from 26.8 percent in May.

The NSO said the decrease is "mainly due to the 14.3 percent annual reduction in the PPA for electricity (from P2.38 per kilowatt per hour in June 2001 to 2.04 per kwh in June 2002)."

Meanwhile, the inflation rate of food, beverages and tobacco (FBT) slid to 1.1 percent in June from 1.4 percent in May; housing and repairs (H&R), to 6.8 percent from 7 percent.

But inflation rates of clothing and services have slightly increased to 3.5 percent and 5 percent in June from their May rate of 3.4 percent and 4.4 percent respectively.

Inflation in the NCR decreased by 1.4 percentage points at 3.7 percent in June from 5.1 percent in May, the lowest inflation rate since July 2000.

According to NSO, this was mainly effected by the 19.7 percentage points decline in the inflation rate of fuel, light and water (FLW).

President Gloria Macapagal-Arroyo today outlined four important realities in the regional and international environment that drives her administration’s foreign policy.

In her speech before the 59^th council meeting of the Association of Southeast Asian Nations Chambers of Commerce and Industry (Asean-CCI), the President stressed that first of these realities is that more and more Philippine foreign policy decisions have to be made in the context of Asean.

Asean is composed of the Philippines, Malaysia, Indonesia, Brunei Darussalam, Thailand, Singapore, Vietnam, Laos, Cambodia and Myanmar.

She said the country’s commitment to Asean is a cornerstone of Philippine foreign policy, citing in particular the role of the Asean-CCI in pushing for the causes and concerns of the developing world.

"We cannot generate adequate investments unless we become part of a larger, integrated regional market. This is the only way we can compete for the markets and investments with the giants elsewhere in the world," she said.

The second and primary realities, according to the President, is the that China and Japan and the Unites States and their relationships will be the determining influence in the security situation and economic evolution of Asia.

With China’s entry to the World Trade Organization (WTO), the President said the nations of Asean as a region must reflect on their own economies to determine how they can best position themselves to ensure the continued competitiveness of their exports and capitalize on the opportunities presented by a more open China.

The President pointed out that this reality has become more significant now that Japan is out of recession.

She said the rapid phase, depth and breadth of global integration is the foremost reality that the region is facing.

"This involves not just the flow of good but also of services, people, ideas, best practices of governance, doing business and investing," the President said.

The third reality that guides her foreign policy is that the country’s economic growth will continue to heavily involve direct foreign Investment.

Each of the Asean member, she explained, is taking an enlightened and balanced approach to the third reality, saying that for the Philippines, "this starts with our vision of winning the battle against poverty within the decade which is mainly by creating jobs and that is mainly by having investments."

Fourth, the President said is that the coming years will see the growing importance of multilateral and inter-regional organizations to promote common interests.

In this context, the Chief Executive said her administration is supportive of the rules-based multilateral trading system which the WTO is supposed to be.

"Our support is pragmatic, not ideological. We want what works for our people," she said.

Moreover, the President said it is imperative that the rules underpinning the system ensure economic growth, employment and development for all.

President Gloria Macapagal-Arroyo today was assured by officials of the Commission on Elections (Comelec) headed by Chairman Benjamin Abalos that the Comelec, with the assistance of its deputies, is ready and capable of ensuring the conduct of free, honest, orderly, peaceful and credible Barangay and Sangguniang Kabataan elections on July 15.

Briefing the President and the members of her Cabinet in today’s Cabinet meeting on the preparations for the synchronized elections, to be held in ten days, Abalos said that in 41,935 barangays, there will be a total of 671,120 officials to be elected, with more or less 40-million voters going to the polling places on election day.

For these elections, there will be separate ballots, separate election returns and separate tally sheets, with one board of election tellers, and one ballot box per precinct for the Barangay and Sangguniang Kabataan elections.

The Comelec has reactivated its different working committees and has promulgated resolutions to implement the Omnibus Election Code, RA 9164 and other elections laws, Abalos said.

Abalos also said the Comelec has also strictly implemented the gun ban.

"We have likewise provided safeguards and ensure the timely delivery of election form supplies and paraphernalia to the field offices," Abalos said.

The Comelec head said it has deputized other government agencies to help them ensure an orderly conduct of the upcoming elections.

To ensure peace and order, Abalos said the Comelec has deputized the Department of National Defense, the Armed Forces of the Philippines and its four major services, as well as the Department of Interior and Local Government, the National Bureau of Investigation and the Bureau of Penology and Jail Management.

On election duties, the Comelec has deputized the Department of Education, whose members will compose the board of election tellers.

And for custody and safekeeping, Comelec has deputized the Department of Finance.

The powerful Organization of the Islamic Conference (OIC) has found no problem in granting the Philippines an observer status.

In a report during the Cabinet meeting, Presidential Adviser on the Peace Process Eduardo Ermita said OIC Secretary General Dr. Abdelouahed Belkeziz has proposed the formation of a team to visit the country.

Ermita said the OIC team would assess the implementation of the 1996 peace accord between the Government of the Republic of the Philippines (GRP) and the Moro National Liberation Front (MNLF).

The team would be composed of the Committee of the Eight headed by Indonesian Foreign Minister Nur Hassan Wirayuda and other members.

Ermita said a positive OIC report would merit consideration on the country’s application for observer status during the 30^th Islamic Conference of Foreign Ministers (ICFM) in Tehran, Iran in June 2003.

Ermita, together with Governor Parouk Hussin of the Autonomous Region in Muslim Mindanao (ARMM), met with Belkeziz on June 25 during the three-day (June 25 to 27) ICFM in Khartoum, the Sudan.

During the Khartoum ICFM, the OIC Final Draft Resolution on the "Question of Muslims in Southern Philippines" noted that the Islamic group:

• Recognized the successful conduct of the plebiscite in the ARMM on August 14, 2001 and the election of Hussin as the new regional governor;

• Renewed its support for the 1996 GRP-MNLF peace pact and called on both parties to preserve the gains achieved as a result of its signing;

• Reaffirmed its position that the question of the MNLF leadership is an internal concern of the MNLF;

• Adopted a forward-looking position in relation to the implementation of the peace pact based on actual conditions on the ground;

• Maintained the observer status of the MNLF;

• Stressed the necessity for the Philippines to finalize the remaining procedures for the full integration of MNLF members into the Armed Forces of the Philippines and the Philippine National Police;

• Welcomed the ceasefire between the government and the Moro Islamic Liberation Front (MILF) and the agreement for unity between the MNLF and the MILF;

• Urged all OIC member-states and subsidiary organs, including the Islamic Development Bank, to increase their economic, financial, technical and material assistance for the rehabilitation and development of Southern Philippines through the ARMM;

• Appealed to all Islamic and other charitable organizations in OIC member-states to continue extending economic, humanitarian and other assistance through appropriate channels to help displaced people in conflict-affected areas; and

• Commissioned the Committee of the Eight and the Secretary General to continue the necessary contacts with the government and the MNLF to define a timetable to finalize the implementation of all the articles of the peace pact.

The presidential adviser said he also had discussions with Wirayuda on the status of the remaining three Indonesian hostages taken by pirates in Philippine waters.

He said he had assured the Indonesian official that President Gloria Macapagal-Arroyo has ordered the military to pursue the kidnappers and recover the hostages.

Ermita said Wirayuda reiterated Indonesia’s stand to pull out its monitoring team from Mindanao as "it believes that Phase I of the (1996 GRP-MNLF) Peace Agreement has already been completed."

The Indonesian foreign minister also disclosed that the peace talks between the GRP and the MILF" were not "covered by the mandate of the OIC Committee of the Eight," he added.

Ermita told the Cabinet that on June 26, the Committee of the Eight convened with Belkeziz in attendance, a first in the organization’s history, "which showed his real concern over the GRP-MNLF issue."

Besides the positive outlook of OIC member-nation’s on the country’s efforts to uplift the lives of Muslims, Libyan Foreign Minister Ali Treki disclosed the establishment of the Islamic Development Foundation that would extend assistance to Muslims in the Philippines, Ermita said.