President Gloria Macapagal-Arroyo today signed into law the Special Purpose Vehicle Act or SPV that seeks to save the banking sector from the financial fallout of lending decisions that went sour after the Asian crisis.

In a speech after the signing ceremony held at the Philippine Stock Exchange at the Ayala Tower I in Makati, the President said the banks have been groaning under more than P300-billion bad loans and more than P200 billion of reposed assets.

"The SPV law takes away this burden, for a price, of course," the President pointed out but cited that the new law allows banks to charge the losses against their taxes.

The President said that the SPV Law, Republic Act 9182 , which is an act granting tax exemption and fee privileges to special purpose vehicles which acquire or invest in non-performing assets and setting the regulatory framework, should bring new money to revive bad loans, fund new uses for foreclosed assets, rehabilitate failed businesses, and open wide the lending windows again.

RA 9182 sets out the legal, regulatory and taxation framework for the sale by banks and other financial institutions of their non-performing assets (non-performing loans and acquired assets) with fiscal incentives and some regulatory relief.

The government will not provide funding to buy out non-performing assets, but paves the way for private investors, local and foreign, to set up any number of special purpose vehicles as they deem viable to take out non-performing assets from banks at a price that buyer and seller can both agree to.

The law has adopted this approach for three main reasons:

1. the budgetary situation leaves very little room for government buyout while the opportunity cost of foregone taxes fees is considered minimal since not many asset sales are taking place anyway without incentives;
2. the banking system is largely owned by the private sector; and
3. the magnitude of non-performing assets is relatively smaller and the degree of provisioning is also substantial enough for banks to resolve their own problems with limited assistance.

The Department of Labor and Employment (DOLE) and the People’s Credit and Finance Corporation (PCFC) have made available some P100 million in micro-credit financing for the country’s workers.

DOLE Secretary Patricia A. Sto. Tomas and PCFC President and Chief Executive Officer Iluminada L.E. Cabigas have signed last January 3 the Implementing Rules and Regulations of the P100-M Workers' Microfinance Program (WMP).

"We have further widened the access of the Filipino working man to much-needed financial resources for productive micro-entrepreneurship activities," Sto. Tomas and Cabigas jointly said.

"This is President Gloria Macapagal Arroyo's New Year's gift to the Filipino worker and another concrete reinforcement to her administration's thrust to alleviate poverty through micro-entrepreneurial activity," Sto. Tomas added.

The WMP, known as the Kabuhayang Lingkod Alalay Para sa Manggagawa or "KALINGA sa Manggagawa," is expected to boost the productivity and income of disadvantaged workers, displaced laborers, informal sector entrepreneurs, low-salaried formal and public sector workers, and returning overseas Filipino workers.

The program evolved from an earlier memorandum of understanding (MOU) between the DOLE, Social Security System (SSS), Government Service Insurance System (GSIS), Employees Compensation Commission (ECC), and the Department of Budget and Management (DBM).

The MOU called for a partnership between and among the parties to create income opportunities for workers and workers’ groups.

The GSIS, SSS, ECC and DBM have allocated P25 million each for the program, or a total of P100 million.

The PCFC was designated as the main vehicle for the delivery of micro-credit services to eligible worker-beneficiaries.

The PCFC will implement the WMP through micro-finance institutions (MFIs).

The PCFC will lend to accredited rural banks, cooperative banks, thrift banks, commercial banks, non-stock savings and loan associations, non-government organizations, credit unions, cooperatives and people's organizations.

The MFIs will, in turn, re-lend the money to the qualified workers.

Subsidiary MFI loans carry an interest of 12 percent per annum.

For sub-loans, the first loan should not be more than P6,000 and the second to subsequent loans will depend upon the evaluation of the MFI, based on the performance of the sub-borrower.

The maximum loan size for sub-borrowers is P150,000, with interest pegged at prevailing market rates.

The following sub-projects are eligible for micro-financing under the WMP: handicraft and small manufacturing (rug-making, basket-making, etc.); services (tricycle operation, barber/parlor shop, repair shop, etc.); food production/processing (meat processing, candy making, bakery, etc.); small agribusiness projects (small piggery/poultry, cut-flower production) and production loan for non-traditional crops (vegetables) but should be supplemented by a business activity which yields a daily income.

President Gloria Macapagal-Arroyo today signed into law Republic Act 9184 which provides for the modernization, standardization and regulation of the procurement activities of the government.

"It will fight graft and corruption, improve operational efficiency, bolster transparency in bidding procedures and encourage competition," said the President in signing the bill, also known as the Government Procurement Reform Act, during ceremonies held at the Philippine Stock Exchange at Ayala Tower I in Makati this morning.

The President said the new law conforms to the administration’s three pillars of good governance: a moral foundation to guide leadership at all levels, a philosophy of transparency of government actions, and ethic of effective implementation throughout the bureaucracy.

She said RA 9184 will help government procurement officers stick to the straight and narrow path.

As a bonus, the Chief Executive pointed out, the money that can be saved by making procurement more effective, efficient and less prone to corrupt practices, will reduce the budget deficit.

Among the salient features of the law are:

1. A shift from pre-qualification to simple eligibility screening and post-qualification.

Under conventional pre-qualification procedures, all required documents submitted by a bidder are validated and checked for veracity. This can take seven months and can provide opportunities for the procuring agency to purposely disqualify prospective bidders not favored by the agency, thus creating conditions conducive to corruption.

The new law mandates that "eligibility screening" using transparent criteria be used in pre-qualifying prospective bidders. If the documents of the bidder with the lowest calculated bid are all verified and validated, then he will automatically be declared the winner.

2. A shift to "lowest calculated responsive bid" as the criterion for award.

Under the conventional process, pre-qualification is followed by a determination of the bidder with lowest evaluated bid.

Under RA 9184, the basis for award will shift to the "lowest calculated responsive bid," which is grounded on non-discretionary, objective criteria.

3. Removal of bracketing in evaluating bid prices, and the use of the approved budget for the contract as the ceiling on bid prices.

Under the act, the approved budget for the contract will be used as the ceiling and made public at the time the Invitation to Bid is published.

4. Standardization of the procurement process and forms.
5. Procurement by electronic means. There shall be a single and centralized portal for government procurement to enhance transparency, accountability, equity, efficiency and economy in government procurement.
6. Increased transparency of the procurement process. Bids and Awards Committees are to allow a representative each from a duly recognized and relevant private sector association, chamber or association, and a non-government organization to participate as observers in all proceedings.
7. Professionalization of procurement officials.
8. Inclusion of penal clause and civil liability.
9. Providing procurement rules for local government units.

President Gloria Macapagal-Arroyo announced today that she will convene the Legislative-Executive Development Advisory Council (LEDAC) and the chairs of the various congressional committees in Malacaņang on Tuesday, January 14, "to deliberate on my key prescriptions for renewal and reform" in the next 18 months of her term.

"What we will not talk about is charter change," the President said after signing two laws designed to widen the opportunities for business in the country and shore up good governance – the Special Purpose Vehicles Act and the Government Procurement Reform Bill.

The President said she does not want the people to misunderstand the reason for her decision not to run in 2004.

"The focus of discussion must therefore be, exclusively, the economy," the President said of the expanded LEDAC meeting next Tuesday.

"By 2004, I want to see a revitalized economy that adequately serves the needs of our people, creates even more jobs, and raises our people’s income levels and pushes poverty to the margins," she said.

The President also pointed to the fact that one of the means proposed for healing the deep division within the society is a government of national unity.

The President said this is a good idea, provided that the basis of unity is her national agenda. "Because no so-called team can supply the energy and focus of a singular executive, where everyone is picked by the President and serves solely at her pleasure," she said.

Saying to each his appointed task, the President asked Congress to give her the good laws and she will give them firm and efficient implementation.

To avoid the wrong impression of an on-going civil conflict that has reached a stalemate, the President said she would like to substitute the term "government of national unity" with "government of national cooperation."

President Gloria Macapagal-Arroyo today lauded the officers and men of the Western Police District (WPD) for their efforts in maintaining law and order in Manila and their commitment to carry on principled and courageous deeds to achieve unity, peace and progress in the country.

The President was the special guest at today’s celebration of the 102^nd foundation anniversary of the WPD and led the distribution of awards to WPD personnel, government officials and private individuals for their outstanding performance and distinguished contributions to the goals and visions of the police organization.

In her message, the President noted the WPD’s worthy crusade to promote a society where justice, peace and progress reign even as she asked them to adhere to the highest standards of law enforcement befitting the country’s democratic society.

During the ceremonies held at the Philam Life Auditorium along United Nations Avenue in Manila, the President, assisted by WPD director Chief Superintendent Pedro Bulaong, handed over awards to this year’s WPD Heroes Awardees. The awardees included Manila Mayor Jose "Lito" Atienza, Senator Robert Barbers, a former WPD officer, Philippine National Police Director General Hermogenes Ebdane, Jr., Emilio Yap of the Manila Bulletin, and retired Brig. Gen. Narciso Cabrera, former WPD chief.

She also presented special awards to the following: Associate Justice of the Supreme Court Renato Corona; Human Rights Commission Chairperson Ma. Purificacion Quisumbing; Civil Service Commissioner Waldemar Valmores; Fiscal Nelson Salva, Second Assistant Prosecutor and Chief of the Inquest Division; Councilor Arlene Koa of the First District of Manila; and WPD Press Corps president Francis Naguit.

The President also presented the Educator’s Awards to the Pamantasan ng Lungsod ng Maynila represented by its president, Benjamin Tayabas, and Saint Paul’s College of Manila, represented by Sister Hilaria Suzette Bautista.

President Gloria Macapagal-Arroyo today underscored the need to fast track the implementation of various infrastructure projects – particularly roads, railway systems, and air and sea transport facilities that serve as vital arteries of commerce – for the economy to flourish.

Speaking at the signing into law of two measures designed to widen the opportunities for business in the country and shore up good governance – the Special Purpose Vehicles Act and the Government Procurement Reform Bill -- the President said that after having built the Batangas Port after a decade of red tape, she will soon open the Ninoy Aquino International Airport (NAIA) 3 under fair conditions to the public and will also soon complete the San Roque Dam in Pangasinan.

Thanks to the investment support and official development assistance from South Korea, China and Italy, the President said the rehabilitation and expansion of the country’s railway system will soon commence.

Work on the Luzon Railway has started with the relocation of urban poor communities along the right of way of the Philippine National Railways, she said.

She also pointed out that within the year, the construction of the Balintawak-Malolos (Bulacan) and the Manila-Cabuyao (Laguna) legs, and the expansion of the North Expressway and the extension of the South Expressway up to Batangas will soon begin.

The President also said the Metro Rail Transit and the Light Rail Transit will soon start interconnecting "so that my successor’s administration will enjoy a Metro Manila relieved of the traffic jams that we are suffering now."

The President reiterated her decision not to run in the 2004 elections, saying she will devote the next 18 months of her term to do more to alleviate present miseries and institute deep and far-reaching reforms that will lead to stronger political and social stability and to sustained economic recovery.

According to the Chief Executive, the Development Bank of the Philippines has P20 billion to lend to credit-worthy businessmen and local governments who will invest in the roads and roll-on, roll-off terminals and ferries that will bring down the cost of cargo from Mindanao to Luzon.

To demonstrate this project, the President said she was inviting the members of both houses of Congress and the leaders of the business community to a caravan in the Boracay to Batangas leg, in an eight-hour trip in their own cars.

The President also said she will unveil soon a master plan for the power sector that will cure the blackouts that the people are beginning to experience in Panay and prevent the power outages that threaten to darken the country by the year 2005.

"By 2004, I want to see a revitalized economy that adequately serves the needs of our people, creates even more jobs, and raises our people’s income levels and pushes poverty to the margins," the President said.

President Gloria Macapagal-Arroyo today called on the two houses of Congress to pass vital measures to speed up the country’s economic growth even as she thanked the legislators for their careful crafting and passage of two laws that are expected to widen business opportunities in the Philippines and eliminate graft in government transactions.

"I thank Congress, which has given me key pieces of legislation I have sought, though I must say, our investors and creditors are not yet satisfied with the harvests," the President said in her speech after signing the Special Purpose Vehicle (SPV) Act, now Republic Act 9182, and the Government Procurement Reform Act, now Republic Act 9184.

Showing her impatience, the President said that while she appreciated the careful crafting done by Congress of the SPV and the e-procurement bills to avoid or minimize unintended consequences, there is also a "point where too much care is worse than too much recklessness."

The President called the Senate and the House of Representatives to immediately work on the following bills that would help return the country’s fiscal balance and spur economic development:

• The Transco franchise that will facilitate the sale of the National Power Corporation’s distribution assets for the best possible price to bring in reputable investors to rehabilitate and expand the power grids;

• The indexing sin taxes to inflation that should raise P40 billion to 50 billion yearly in additional revenues without introducing new taxes.

• Rationalization of motor vehicle taxes and the registration of heavy construction equipment; and

• Corporatizing the Bureau of Internal Revenue into a National Revenue Authority that would bring in fresh talent, and also infuse the almost century old agency with energy;

The President also asked Congress to finally pass the 2003 General Appropriations Act.

The President called on the business community, whose leaders were present at the PSE gathering, to also make their own sacrifices "to get this country going forward."

"We in government are doing our part. We are taking the risks. We are making the sacrifices. I now ask you to make your sacrifice," the President said.

In her address, the President said in the fight against graft and dishonesty, the private sector must work in tandem with the public sector.

"Trust is the heart of business. A vibrant financial system cannot function without it. However, there can be no trust where businessmen are not afraid to break contracts because they can buy judges, and where public officials are not afraid to extort businessmen because they are the law," the President said.

Thus, the Chief Executive asked Congress to reform the pay scale of judges and encourage mediation as an alternative to costly and time-consuming court litigations.

She said government will wage an unrelenting war against business frauds on the general public, and against official extortion of business. "If anyone in my government tries it, tell me," the President warned.

The President said she has instructed Budget Secretary Emilia Boncodin to double the budget of the Presidential Anti-Graft Commission to further empower it to make lifestyle checks on government officials and file the appropriate cases.

She also instructed BIR Commissioner Guillermo Parayno and Customs Commissioner Antonio Bernardo to crack down on big-time tax evaders and smugglers.

Saying these reforms require broad-based cooperation, the President said that on the part of the Executive Branch, she will make her Cabinet members realize the urgency for policy coherence and coordination or they might lose their jobs.

As a boost to the stock market, the President also announced a new government policy to revive the mining industry, where the Philippines holds one of the richest ore reserves in the whole world.

Chairman Gennady Nikolayevich Selesnev of the State Duma or Lower House of the Russian Federation’s Federal Assembly or Parliament today lauded the efforts of President Gloria Macapagal-Arroyo in the global war against terrorism.

During a courtesy call and luncheon meeting with the President, Selesnev said "your country’s efforts in the serious fight against terror is a good sign that you have a strong political will and leadership to end this menace."

"Our common program is to fight terrorism. This program is not the initiative of one country but of all countries in the world," Selesnev further told the President.

Selesnev, who led a 22-member delegation from the Russian Federation, also informed the President of the Russian government’s desire to expand bilateral ties with the Philippines.

"Although the Philippines and Russia are far away from each other, we want to maintain our close bilateral relations with your country," Selesnev said.

Selesnev also informed the President that the Russian government is interested in expanding trade ties with Asia and is looking at potential investments areas in the Philippines.

The President welcomed the Russia Federation’s desire to pursue closer economic ties with the Philippines and other countries in the region.

The President also informed Selesnev that the Philippines is looking towards the Russian Federation as a source of crude imports for the country.

"Right now, we are seeking to widen our sources of oil…If you open your door to be our alternative source of oil, this is a great help for us," President said.

Malaysian businessmen today expressed continued confidence in the Philippines, vowing to further strengthen bilateral trade between the two countries.

Members and officers of the Philippine-Malaysian Business Council conveyed their assurance to President Gloria Macapagal-Arroyo during a courtesy call in Malacanang this afternoon.

Among those who attended the meeting were council chairman Tan Sri Dato Mohammed Basir Bin Ahmad, the chairman of the Malaysian Banking Berhad; businessmanTun Bri Shamsudin Abdul Kadir, Len Hun Kiang and Chon Teik Huat; and Malaysian Ambassador Noor Taufik.

From the side of the Philippines, those who attended included Trade and Industry Secretary Manuel Roxas II, Philippine Ambassador to Malaysia Jose Brillantes, and businessman Tomas Alcantara, Guillermo Luz of the Makati Business Club, businessmen Felipe Alfonso and Peter Rodriguez.

During the meeting, the businessmen discussed with the President the development on the continued rehabilitation of the National Steel Corp. as well as the latest efforts to develop the palm oil industry in Mindanao.

The businessmen also discussed ways on how to promote international tourism, as well as local tourism.

The President noted that the Philippines experienced a double-digit growth last year in its tourism industry.

Meanwhile, the President conferred on Ambassador Saleh Mohammed Al Ghamdi of the Kingdom of Saudi Arabia the Order of Sikatuna with the rank of Datu in ceremonies in Malacanang.

Ghamdi, who paid the President a farewell call at the Music Room, is due to return to Saudi Arabia after a tour duty in the Philippines of almost five years.

In bestowing the Order of Sikatuna with the rank of Datu, the President noted the contribution of Ghamdi to the strengthening of bilateral relations between the Philippines and Saudi Arabia. He was also instrumental in the exchange of visits of the two countries’ officials in the last five years.

"I’m grateful to you, to the Republic of the Philippines. I’ll never forget my stay here," Ghamdi said, adding that he hopes peace would finally reign in Mindanao.

The President, on the other hand, said the Philippine government would surely invite Ghamdi once a peace agreement would be forged with the Moro Islamic Liberation Front as the Saudi envoy has played a great part in the peace efforts with the secessionist group.

Ghamdi said bilateral relations have improved very much during the last 30 years especially with the influx of overseas Filipino workers to Saudi Arabia. The OFWs population in Saudi Arabia run into millions, next only to the Filipino population in the United States.

Ghamdi said he loves it here in the Philippines that he looks forward to becoming a Philippine resident when he retires.

His next assignment is India.