President Gloria Macapagal-Arroyo today assured the leaders of the country’s petrochemical industry that her administration is working to remove tariff distortions to make the sector more competitive.

"We want you to remain competitive in the market," the President told the downstream petrochemical associations, in a meeting in Malacaņang.

Those who met with the President were officials of the Philippine Plastic Company Inc., Philippine Electrical, Electronics and Allied Industries Federation, Association of Home Appliance Mfg’s, and Consumer Electronic Products Mfg’s Association.

The officials informed the President that they oppose the proposed suspension of the reduction of tariff rates for mid-stream petrochem and resins producers under the ASEAN free trade concept.

They said the suspension would only prolong tariff distortion and this would be detrimental to the growth of the industry.

President Gloria Macapagal-Arroyo today witnessed the signing of a Memorandum of Agreement on the restructuring of the National Steel Corporation.

The MOA, signed by the various shareholders of the firm as well as the various creditors of the NSC at the Ceremonial Hall this morning, will effect write-downs or write-offs by the Malaysian investments "so that while they now own about 90 percent of the entire firm, it will now be reduced to 20 percent ownership," Trade and Industry Secretary Manuel A. Roxas II said.

"So the value of what they’ve invested, about $700 million, will now be reduced so that they would now be owning the equivalent of about P2 billion (about $40 million)," Roxas added.

Meanwhile, the creditors, who have an accumulated outstanding exposure to NSC of about P18 billion, will be left with P2 billion in loans and the balance converted into equity representing 80 percent ownership of the corporation.

The present shareholders of NSC include the Danaharta, the Malaysian government’s equivalent of the Asset Privatization Trust (APT). On the Philippine side, the National Development Corp. also holds a minority stake. So does Marubeni Corporation of Japan.

Among the creditors of National Steel are 16 Philippine-based banks, including some foreign banks with Philippine operation. The Philippine-based banks, led by Philippine National Bank, have an exposure of about P18 billion, including accumulated interest and penalties.

The investment by the Malaysians is estimated at about $700 million.

In 1999, the NSC ceased operations. The plant closed down and shortly thereafter, the firm filed for rehabilitation and subsequently receivership with the Securities and Exchange Commission.

The entire process was embroiled in a number of shareholder vs. creditor vs. shareholder acrimony as threats of suits, actual pleadings, and court actions filed back and forth ensued among the various participants until in 2001, the President stepped in and instructed the Department of Trade and Industry to look for a solution.

Roxas said the key event in all of these was the state visit by the President to Malaysia in late 2001, when the National Steel issue was made a part of the bilateral one-on-one conversation between the President and Prime Minister Mahathir.

Before NSC folded up in 1999, it was one of the biggest contributors to the country’s economic development.

It was paying every year almost P1 billion in taxes to the national government, P200 million in real estate taxes to the city of Iligan, was employing almost 4, 000 people, buying almost 70 percent of the total power output of the National Power Corporation in the region and was providing livelihood to countless people doing downstream business in the area.

I have authorized Justice Secretary Hernando Perez to go on a 30-day leave starting tomorrow in order for him to focus on refuting the accusations made against him by the congressman from Manila.

This is also necessary in order that the functioning of the Justice

Department, one of the most critical agencies of the executive branch, is not in the least affected by the allegations made against its head.

I expect his accuser, Representative Mark Jimenez, to prove to our people within this 30-day period, that his isn’t a political game, or a strategy to evade extradition proceedings against him. The congressman must produce within this 30-day period credible indication that the Justice Secretary extorted money, as he alleges, from the congressman.

If he cannot provide credible indications – and I am not demanding evidence that can stand up in court, but merely plausible substantiation – the congressman must apologize directly to the Justice Secretary and to the Congress, which he has used as a forum to hurl his charges. If he is able to do so, let justice take its course wherever the evidence leads to.

As Chief Executive, I am issuing this direct order to the incoming Officer-in-Charge of the Justice Department and the National Bureau of Investigation to organize a special team to acquire and evaluate all the evidence the Manila congressman claims he has or can produce.

Jimenez has also offered publicly to open his foreign bank accounts for scrutiny to prove his accusations. I am directing the Department of Foreign Affairs to assist the National Bureau of Investigation and the Justice Department to undertake talks with foreign governments or their banking regulatory offices to allow the scrutiny of these pertinent foreign bank accounts.

Finance Secretary Jose Isidro Camacho today stressed that it was never the intention of the government to take over the Manila Electric Corporation (Meralco) when he submitted a draft to the Lopez Group specifying how the government could help in maintaining the financial viability of the firm.

In a press briefing in Malacaņang, Camacho said what was contemplated in the draft was a "share-taking" situation that was meant to forge a partnership and consolidate the different interests of the various stakeholders in the public utility firm.

"We have one common interest here with everybody, including the Lopez Group, the creditors, the other stakeholders and the public, and that is to know the financial viability of the company. That is the one common interest," Camacho said.

Camacho said the draft he gave to the Lopez Group was just a starting point and strictly for discussion purposes only.

"We would like to invite their reaction, their comment and their proposed changes, anything that they want, anything they don’t want out of the draft. That was really the spirit in which it was given," he said. "Because you know, we could have a month of verbal discussions or telephone conversations and lead to nowhere unless you start working on something."

Camacho also said the timing of the draft, which was three days before the Supreme Court decision on the matter, was only incidental. He said the adverse decision of the Supreme Court was clearly something that people were concerned about.

"That’s why we were trying to look for solutions regardless of whatever that decision is, of making sure that the financial viability of the company is maintained," he said.

"What is contemplated here is a share-taking situation because anticipating that there would be some financial instability in the company because of those, you know, adverse decisions that they were anticipating, we deemed that there would be a period of concern from the public, from the stakeholders, from creditors, from the shareholders, financial markets, and the public."

In an effort to address the country’s fiscal deficit and improve revenue collections, Finance Secretary Jose Isidro Camacho today ordered the review of all the rulings of the Bureau of Internal Revenue (BIR) that provide tax exemptions based on their interpretation of the country’s tax laws.

Briefing members of the Malacaņang Press Corps this afternoon, Camacho said the review will be undertaken in two months by a three-man team to be headed by Finance Undersecretary Cornelio Hizon together with BIR Commissioner Guillermo Parayno and Lina Esurena of the National Tax Research Center.

"The objective of this review, which we hope to complete by the end of January, is to harmonize the different tax rulings, because it has been observed that there are tax rulings that contradict each other," Camacho said.

Camacho also said that the project is designed to tighten up on those BIR rulings, particularly those that involve tax exemptions.

"So that if it is deemed appropriate from the review that certain rulings are contracting, they should be harmonized. And if certain tax rulings have provided loopholes to our tax collection, then they should be revoked or repealed," he added.

Camacho pointed out that his directive for a review of all BIR rulings "is really part of our efforts to address our fiscal deficit problem and improve our revenue collection."