Sona 2011

The 2011 State of the Nation Address Technical Report INTRODUCTION “Tuwid na Daan” or the Straight Path is a phrase repeatedly mentioned by President Benigno S. Aquino III to pertain to his governance direction for the country. Essential to this concept of “Tuwid na Daan” is the battle cry “Kung Walang Corrupt, Walang Mahirap. ” The administration believes that corruption is the root cause of the country‘s woes, and eliminating corruption will necessarily lead to renewed investor confidence, eventual growth and development, poverty reduction, and attainment of peace.

The straight path, however, does not only pertain to the President‘s anti-corruption campaign. It also encompasses a way of doing things right, where the process is participatory; the programs are holistic; growth is sustained; the peace policy is comprehensive; and development is sustainable. Through the living examples of our leaders, led by the President, this re-awakened sense of right and wrong continues to be translated to economic value. It is in this light that the accomplishments of the Aquino Administration, since the first State of the Nation Address (SONA) in July 2010, are being highlighted: A.

GOOD GOVERNANCE AND ANTI-CORRUPTION Taking the initial step in the achievement of ? Kung Walang Corrupt, Walang Mahirap? , where eradicating corruption is seen as the key approach to development, President Aquino laid the foundations for a clean, transparent, and responsive government. Key reforms continue to be instituted to reduce red tape, enforce anti-corruption and anti-red tape laws, and penalize those who violate these laws. The government is also fixing the incentive structures to recognize merit and reward good performance with the aim of ensuring the sustainability of the Aquino reform agenda.

These and other initiatives are presented below: 1. Institutionalizing Public Accountability 1. 1. Reforming the budgeting and project identification processes 1. 1. 1. Government‘s prudent expenditure management was a result of the use of the Zero-Based Budgeting (ZBB) approach in 2010. The ZBB enables the government to identify and terminate programs that are no longer delivering intended outcomes. The savings generated from these terminated programs were channelled to programs that are performing well and to other priority programs to address critical gaps in education and health.

As part of the ZBB approach, the Department of Budget and Management (DBM) is also gradually transferring Special Purpose Funds back to the departments for greater accountability and making the Priority Development Assistance Fund (PDAF) more transparent. Due to the prudent management of public funds, the government has been able to provide P12 billion in funding for other key social and economic services that were not included in the 2011 General Appropriations Act, including: ? ? ? P850 million for the salaries of 10,000 registered nurses hired and deployed to poor rural communities in the country; P4. billion to build 20,000 houses for the military and the police; and P423 million for the acquisition of the US Hamilton-class cutter, which will help strengthen the perimeter security within the Malampaya area 1. 1. 2. In an effort to address issues about the quality of road projects, the Road Board strengthened the identification and selection of projects funded by the Motor Vehicle User‘s Charge through the proper use of the Highway Development Management version 4 (HDM-4), a planning tool that prioritizes or selects projects based on actual needs and economic considerations.

The Road Board also implemented standard unit costs nationwide that is 30% lower than previous cost estimates; and clearly defined the design and specification of its projects to make these conform to international standards, where previously, Programs of Work were not required. 1. 1. 3. The President directed the DBM to establish a comprehensive database of government manpower through an enhanced Government Manpower Information System (GMIS).

The GMIS shall provide a complete and accurate database of all positions, incumbents, and authorized compensation in the Executive, Legislative, and Judicial Branches of the government, including Government-Owned or Controlled Corporations (GOCCs), Government Financial Institutions (GFIs), and Constitutional Offices. The GMIS shall also be linked with the personnel information systems of concerned agencies such as the Civil Service Commission (CSC) and the Government Service Insurance System (GSIS). 1. 1. 4.

To eliminate wasteful spending and fund conversion in the military, the DBM changed its previous policy of releasing Personnel Services (PS) allotments in full to agencies. Now, releases of PS are done for filled positions only. This means that no amount is released to the agencies on top of their actual PS requirement. 1. 1. 5. Moreover, the DBM launched on 20 July 2011 the Electronic Transparency and Accountability in Lump-sum Fund System (eTAILS). The eTAILS is a management information system that digitizes the processing of lump-sum funds and supports the timely disclosure of lump sum fund release information on the DBM website.

This helps the government keep track of information on the release, while enabling the public to scrutinize how their money is being allocated. 1. 2. Upholding transparent and competitive bidding Allegations of collusion in the bidding of public works projects are being addressed through transparency reforms and strict adherence to public bidding rules. The DPWH now posts all projects on its website. The DPWH has also simplified bidding procedures by reducing the required 20 documents to just five (5) documents.

It has also adopted a new cost structure for determining the approved budget cost (ABC), which minimizes leakage by reducing the allocation for indirect costs by as much as 8%. To cite an example, the DPWH was able to bid out the 7. 53-km Plaridel By-pass Road Contract Package No. 2 in Bulacan for only P543 million in 2010, at one-third of the cost of the slightly longer 7. 93-km Contract Package No. 1 that was bid out in July 2008. While the two projects are of the same road specifications, the cost of Contract Package No. 1 was 8. % above the approved agency estimate while Contract Package No. 2 cost 23% lower than the agency estimate, saving a total of P163. 2 million. As a result of these reforms, the DPWH generated savings of P2. 51 billion in taxpayers‘ money from the 3,692 projects (civil works, goods, and consultancy services) from July 2010 to June 2011. The DPWH expects total savings of roughly P6 to P7 billion by the end of this year as a result of transparent and competitive bidding. The savings can then be utilized for other priority development projects. The P2. 1 billion savings generated by the DPWH includes the P1. 07 billion saved from the review and bidding of contracts under the Post-Ondoy and Pepeng Short-Term Infrastructure Rehabilitation Project (POPSTIRP). On 26 May 2010, the DPWH was granted a loan by the JICA worth P5. 05 billion for 79 contract packages under the POPSTIRP. Of these contracts, 19 were cancelled due to lapses in the process. The 19 contracts were approved and signed even prior to the release of the Special Allotment Release Order (SARO) for the project, which is against government procurement laws.

Likewise, the government has conducted open and competitive bidding for the reinsurance needs of the National Power Corporation (NPC), the Power Sector Assets and Liabilities Management Corporation (PSALM), the National Grid Corporation of the Philippines (NGCP), and the Metro Rail Transit Corporation (MRTC). This generated savings amounting to over US$8 million or about P370 million from the lower bids of the winning re-insurers compared to the approved budget for the contract and last year‘s premium.

Moreover, the insured agencies get improved coverage by having lower deductibles that allow them to claim for losses or damages at lower participation limits. 1. 3. Ensuring transparency and accountability in local governance 1. 3. 1. The DILG‘s full disclosure policy, issued in August 2010, required all Local Government Units (LGUs) to be transparent to the public by posting in local bulletin boards, newspapers, and websites information on the utilization of government funds and the implementation of projects.

As of 31 May 2011, a total of 1,473 LGUs (68 provinces, 119 cities and 1,286 municipalities) or 86% of the 1,714 LGUs nationwide have fully complied with this policy. For purposes of transparency, the DBM also posted the annual internal revenue allotment (IRA) from 2006 to 2010 per region from the provincial down to the barangay level on its website. 1. 3. 2. The DILG also awarded the LGU Performance Challenge Fund (PCF) to LGUs that have earned the Seal of Good Housekeeping.

These LGUs have exhibited strong performance along the four (4) core governance areas, as follows: ? ? ? ? Sound fiscal management, i. e. , growth in local revenues over three (3) years, and no adverse report from the Commission on Audit (COA); Transparency and accountability, i. e. , strict adherence to the full disclosure policy, transparent procurement process, compliance with Anti-Red Tape Law, and functioning local special bodies; and Valuing of performance monitoring, i. e. use of performance monitoring tools and regular reports to the public. Good planning, i. e. , having a comprehensive development plan and an ExecutiveLegislative Agenda; In 2010, 30 or 4. 85% of the 619 4th to 6th class municipalities successfully obtained the Seal of Good Housekeeping. Beginning 2011, the coverage of the PCF was expanded to all provinces, cities and municipalities. Assessment is now ongoing and is focused on the COA audit opinion for CY 2010 and the posting of local budget and finances, bids, and public offerings.

As of 17 June 2011, 13 or 46. 43% of the 28 4th to 5th class cities and 218 or 35. 22% of the 619 4th to 6th class municipalities subjected to assessment may now be conferred with the Seal and have the chance to get the PCF. 1. 4. Providing quality service lanes to fast-track the provision of frontline services 1. 4. 1. In 2010, the Citizen‘s Charter of the PNP was recognized by the CSC as one of the fully compliant government agencies implementing RA 9485 or the Anti-Red Tape Act (ARTA) of 2007. 1] Also, the DILG Project Comprehensive Response to Eliminate (CURE) Red Tape in the LGUs is successfully being implemented at the local level wherein 94% or 1,613 LGUs (consisting of 75 provinces, 121 cities, and 1,417 municipalities) of the 1,714 LGUs nationwide have their respective citizen‘s charters, public assistance or complaint desks, one-stop shops and/or courtesy lanes, thus improving the efficiency and effectiveness of LGUs in the delivery of basic goods and services. 1. 4. 2. The Department of Trade and Industry (DTI) also improved its mechanisms for redress.

From 2010 until the first quarter of 2011, 91,828 consumer complaints were received by its Consumer Welfare Desk, 90,577 or 98. 7% of which were resolved. [2] 2. Addressing Graft and Corruption 2. 1. Addressing allegations of corruption in the military and implementing reforms in the AFP. 2. 1. 1. In order to ensure transparency in the use of funds, apart from regular audits, the AFP has conducted five (5) unprogrammed or special audits on cash examinations and retiring special disbursing officers.

Three (3) of these are on-going, one (1) report is being drafted, and one (1) completed. The AFP-Office of Ethical Standard and Public Accountability (OESPA) noted 100% compliance with accountability measures, such as the filing of SALNs. [3] In compliance with the rules and regulations to minimize discretion on government deposits, particularly in line with the provisions of Executive Order (EO) No. 338, the AFP transferred a total of P159 million of the residual UN Reimbursement Fund (UNRF) to the Bureau of Treasury (BTr) on 28 February 2011.

To date, the total UNRF amount deposited with the BTr is P426 million. Moreover, all reimbursements from the UN are now directly being deposited to the BTr by the DFA. 2. 1. 2. From July 2010 to June 2011, the AFP filed cases before the Sandiganbayan against 31 AFP officers for corruption-related charges while the cases of 21 AFP officers are with the Office of the Ombudsman. 2. 1. 3. The government also pursued the cleansing[4] of the AFP Retired and Veterans Pension Lists, which resulted in fund recoveries amounting to P4. 685 billion.

This amount was used to pay government‘s current pension obligations and arrears to the veterans and pensioners. Moreover, through the anti-fixer campaign, three (3) Philippine Veterans Affairs Office (PVAO) employees have been dismissed, 27 cases have been filed, and three (3) cases resolved. 2. 1. 4. On 14 June 2011, the Office of the Deputy Executive Secretary for Legal Affairs (ODESLA) formally charged Ombudsman Special Prosecutor Wendell Sulit with acts and/or omissions constituting graft and corruption and betrayal of public trust.

The case involves her entering into a Plea Bargaining Agreement with Maj. Gen. Carlos Garcia, wherein Gen. Garcia was allowed to plea to the lesser offense of indirect bribery and facilitating money laundering. The Ombudsman also ordered Gen. Garcia to restore to the government the amount of P135 million despite being accused of plundering P350 million. Special Prosecutor Sulit was placed under preventive suspension for 90 days. The Office of the President will form a panel that will conduct the formal investigation on the case. . 2. Addressing abuses and irregularities in government agencies 2. 2. 1. Arrested the abuses and funds misuse in the Autonomous Region in Muslim Mindanao (ARMM). An Audit of the ARMM Office of the Regional Governor covering the period January 2008 to September 2009 revealed that the funds received by the ORG for its operations were not properly utilized and managed and that transactions amounting to P1. 003 billion could not be considered as valid and legitimate. Also, a total of P866. 1 million in cash advances, or 80% of total disbursements made by the ORG, were released to the disbursing officers, in violation of the general rule that payments must be made by check. As a result of these findings, the current ORG stopped the payment order against all checks drawable against the bank accounts of the ARMM Regional Government, terminated all contractual and co-terminus employees hired by the previous Regional Governor, conducted inventory reports on personnel and assets, and posted bids and awards and the ARMM budget on the ARMM website.

Likewise, the DILG recommended the filing of administrative charges against some ARMM officials and personnel for dishonesty, abuse of authority, gross misconduct, and conduct prejudicial to the best interest of the service. The DILG also recommended the filing of criminal cases because of the abuse of regional government resources. An audit of the Province of Maguindanao had similar findings: that financial transactions amounting to P865. 88 million were considered to be fictitious, as these were either denied by suppliers or supported with spurious documents.

Meanwhile, the DPWH-ARMM failed to properly utilize, manage, and record public funds amounting to P1. 12 billion. Moreover, the COA found that the utilization of funds and implementation of programs and projects by the ARMM Social Fund Project – Project Monitoring Office (ASFP-PMO) fell short of the desired improvements as the purpose intended was not maximized and the implementation was found deficient. A DILG-proposed roadmap aims to bring ARMM to the sustainable path of good governance.

This entails the strengthening of bureaucratic reforms, sustained transparency and performance, improved ORG oversight and assistance to LGUs, stricter COA and Civil Service Commission (CSC) oversight on ARMM and LGU implementation of development projects, stepped up peace and order initiatives, and reforms in the electoral process. The postponement of the August 2011 ARMM elections (as mandated by RA 10153) will provide an opportunity for ARMM to pursue this roadmap. 2. 2. 2. Suspended Local Water Utilities Administration (LWUA) officials.

The Office of the Ombudsman found the LWUA Chairman and two other officers of the LWUA guilty of Grave Misconduct and of violating Republic Act (RA) No. 6713 (Code of Conduct and Ethical Standards for Public Officials and Employees) for the alleged unlawful investment of LWUA funds in the amount of P780 million in Express Savings Bank, Inc. (EXSBI), [5] without securing prior approval of the Monetary Board. On 4 July 2011, the Ombudsman ordered the dismissal of the LWUA Chairman and the two LWUA officers.

Administrative complaints were also lodged with the Office of the President against five members of the LWUA Board of Trustees, including the Chairman, for grave misconduct arising from the acquisition of shares of stock of EXSBI. The Office of the President placed the members of the Board of Trustees on preventive suspension for 90 days. 2. 2. 3. Rationalized GOCC bonuses. Early in the term of President Aquino, the administration discovered that officers and board members of several GOCCs enjoyed questionable bonuses and allowances.

For example, a COA report disclosed that Metropolitan Waterworks and Sewerage System (MWSS) employees received more than P150 million in improperly authorized allowances and bonuses in 2009. Also, the current Board of the PNCC has reviewed actions by the previous members of the Board who allegedly benefited from undue privileges and bonuses during their tenure. The current PNCC Board has also reduced manpower, terminated unnecessary positions, and rationalized administrative and support services. These cost-saving measures and reforms have resulted in the reduction of monthly expenses from about P22 million to P11 million.

The President thus ordered a comprehensive review culminating in the signing of the GOCC Governance Act of 2011. The Act strengthens government‘s oversight of GOCCs through the creation of a Governance Commission for GOCCs. As a result of the Department of Finance‘s (DOF) better oversight, GOCCs remitted a total of P34. 47 billion to the national government, inclusive of P27. 29 billion in dividends, as of May 2011. This is one of the highest remittances made by GOCCs to date. In contrast, GOCC remittances in 2010 amounted to 26. 99 billion. 2. 2. 4.

Reforming the National Food Authority (NFA). The Food Staples Self-Sufficiency (FSS) Program and NFA Roadmap were formulated to attain self-sufficiency in the country‘s staple and to implement fundamental reforms in NFA Operations. NFA‘s role is focused at maintaining buffer stocks of rice (30 days) and providing price support to small farmers. Stocks for buffer stocking are accumulated by increasing domestic procurement while reducing the volume of importation by encouraging the private sector to participate more on importation. NFA‘s policy of ? uy high-store long-sell low? has shifted to a policy where NFA selling prices of rice are gradually increased to approach market levels with social welfare agencies handling subsidized rice if needed but buying stocks from NFA at market prices. A system audit was conducted with the help of the private sector in order to evaluate the previous administration‘s unusually large NFA rice importations and evaluate the agency‘s legacy problems, with the end in view of not only ferreting out the truth but to recommend prescriptive measures to rehabilitate and strengthen the NFA. . 3. Investigation of Disadvantageous Projects and Contracts 2. 3. 1. Addressed PCSO’s exorbitant spending for advertisements. The Philippine Charity Sweepstakes Office (PCSO) overspent its advertising budget by more than P2. 14 billion from 2004 to 2010. [6] To conceal the expenses, parts of the amounts were debited to different accounts. Despite COA‘s repeated recommendations to cut PCSO‘s advertising expenses, the former PCSO Board still authorized more advertising expenses during the campaign period.

The PCSO also sponsored concerts and produced a full length movie. These were done despite having unrecorded payables to TV, radio, and other media companies in the amount of P740 million. As a result of these anomalies, the current PCSO Board stopped the production of the television dramas, which saved P110 million; and, reduced its 2011 advertising budget by 40. 8% from P928. 3 million to P549. 02 million. The current PCSO board was also able to obtain a 25% discount on all outstanding and valid advertising contracts.

The savings from these reductions can now be rechanneled to more meaningful charitable projects. The PCSO also spent an estimated P325 million for its intelligence funds from 2008 to 2010. The intelligence funds were allegedly used to pay for anti-jueteng operations, blood money, and for other discretionary uses. This practice has been discontinued by the present Board. 2. 3. 2. Cancellation of the Laguna Lake Rehabilitation Project. On 17 June 2011, the President cancelled the P18. billion Laguna Lake Rehabilitation Project (LLRP) due to inconsistencies between the project components and its intended objectives; and the lack of transparency in the review and approval of the project. A DENR study found out that due to heavy deforestation and erosion, the areas to be dredged would end up being silted again in three (3) years without massive rehabilitation of the watersheds. The DENR further noted that the approval of the supply contract was done without any thorough review. In addition, the Project‘s Economic Internal Rate of Return (EIRR) of 7. 4%, which considers only the project‘s quantified economic benefits, does not meet the 15% minimum hurdle rate or the minimum acceptable rate of return. In the end, despite the laudable objectives, the questionable project components of the LLRP justified its cancellation. 2. 3. 3. Reviewed the anomalous procurement of second-hand helicopters for the PNP Special Action Force. In 2009, the PNP procured three (3) Light Police Operational Helicopters (LPOH) for P104. 99 million on the assumption that these were brand new.

However, in 2011, the PNP Directorate for Logistics discovered that two (2) helicopters supplied by the Manila Aerospace Products Trading Corporation (MAPTRA) were previously owned by Asian Spirit, which leased the same to Lion Air, Inc. The PNP further discovered that two (2) helicopters, which were supposedly brand new, were used for five (5) years prior with flying times of 536. 3 hours and 489. 9 hours, respectively. [7] The PNP Procurement Office also failed to recognize that MAPTRA was not an eligible supplier because it was just a newly-registered corporation at the time it transacted with the PNP.

Thus, it had no record yet of completing a single contract similar to the contract to bid and of good standing as a supplier, which are requirements set by the law. [8] There was also an absence of authorized observers during the entire procurement process. [9] Lastly, the members of the inspection and acceptance committee (IAC) failed to exercise their duties with diligence as they did not possess the technical qualifications to perform the duty of the IAC that resulted in the acceptance of inferior goods. 2. 4.

Increasing Civil Society Participation in Governance 2. 4. 1. Implemented participatory budgeting. Six (6) national government agencies and three (3) GOCCs have piloted participatory budgeting with civil society organizations (CSOs), namely: the Department of Agriculture (DA); the Department of Agrarian Reform (DAR); the Department of Education (DepEd); the Department of Social Welfare and Development (DSWD); the Department of Health (DOH); the DPWH; the National Housing Authority (NHA); the NFA; and the National Home Mortgage Finance Corporation (NHMFC).

Participatory budgeting helps increase governance transparency by engaging CSOs in the determination of the expenditure priorities of government. The DPWH conducted its first CSO budget consultation for FY 2012 on 28 April 2011. CSO participation included the review, assessment, and evaluation of DPWH projects programmed for 2012. A Budget Partnership Agreement (BPA) was signed between the DPWH and ? Bantay Lansangan? (Roadwatch) on 15 March 2011 to ensure a continuous budget consultation process with the private sector.

As of May 2011, at least 46 CSOs had been accredited as partners of the DPWH, while 52 others had pending accreditations prior to their submission and completion of the required documents. 2. 4. 2. Forging an integrity pact between government and the private sector. A private sector initiative to forge a pact of integrity between the government and the private sector is rapidly gaining momentum. As of June 2011, ten (10) agencies have signed on to the Integrity Initiative, namely: DTI, DBM, DepEd, DOF, DOLE, DND, DPWH, DOT, DOE, and DOTC as well as 550 private companies.

The Integrity Initiative aims to reduce corruption in the public and private sectors through the voluntary enforcement of good governance norms based on a mutually agreed code of conduct. Agencies will soon ask suppliers and bidders to sign on to their agency integrity pacts. On 22 February 2011, the DepEd forged an integrity pact with more than 80 of its suppliers and civil society partners to promote ethical, clean, and transparent business transactions, particularly with regard to the procurement of basic education goods and services. . 4. 3. Entered into a Memorandum of Agreement (MOA) with civil society groups and nongovernment organizations (NGOs) on the Conditional Cash Transfer (CCT) Program. As of 22 July 2011, 222 national and local non-government organizations (NGOs) and civil society organizations (CSOs) signed a MOA with the DSWD to empower their active participation in the implementation of the CCT Program to ensure good governance and transparency. 2. 4. 4. Invited CSO participation in monitoring infrastructure projects.

The DPWH has also entered into a Memorandum of Understanding (MOU) with a broad coalition of CSOs, NGOs, church organizations, and the academe for the purpose of monitoring the implementation of DPWH projects. 3. Professional, Motivated, and Energized Bureaucracy and Armed Forces The government is committed to support the combat readiness and effectiveness of the Armed Forces; recruitment and retention of quality personnel; and upliftment of soldier morale and family wellness. From July 2010 to June 2011, a total of P21. 37 million was used to repair and maintain various AFP housing units; P39. 0 million was also released for the housing assistance of AFP battle casualties; another P15. 19 million has been released to support AFP battle casualties; and a total of 4,535 dependents of killed in action/wounded in action were awarded educational assistance. 3. 1. The President committed to provide at least 20,000 housing units for the AFP and PNP in 2011. In this light, Administrative Order (AO) No. 9 “Directing the National Housing Authority to Formulate, Implement and Manage a Housing Program for the Military and Police

Personnel” was issued on 11 April 2011, which authorized the NHA to adopt the Community Initiative Approach Program (CIAP) to implement the housing program. Under the NHA‘s Socialized Housing Program, a soldier with a rank of Private, receiving a P400 monthly quarters allowance, will now be able to acquire a housing unit in any of the twelve (12) housing project sites in Brgys. (1) Buena Vista and (2) Biclatan in Gen. Trias, Cavite; (3) Brgy. Conchu, Trece Martires, Cavite; (4) Brgy. Timbao, Binan City, Laguna; and Brgys. (5) Looc and (6) Kay-Anlog in Calamba City, Laguna; (7) Brgy.

Gaya-Gaya, San Jose Del Monte City, Bulacan; (8) Brgy. San Mateo, Norzagaray, Bulacan; and Brgys. (9) Batia and (10) Tambubong in Bocaue, Bulacan; and (11) Brgy. Pinugay, Baras, Rizal and (12) Brgy. San Isidro, Rodriguez, Rizal. A housing beneficiary is required to pay the housing unit for 30 years, with a monthly amortization of at least P200. 00 for the first five (5) years. The Aquino Administration will subsidize P35,000. 00 for each housing beneficiary. The ground breaking of the AFP-PNP Housing Project in Barangay Batia, Bocaue, Bulacan was held on 23 May 2011.

The first 4,000 Certificates of Land Entitlement and Lot Allotment (CELA) were awarded and 90 housing units were turned over to AFP and PNP personnel in Brgy. Looc, Calamba City, Laguna; Brgy. Batia, Bocaue, Bulacan; Brgy. Gaya-Gaya, San Jose Del Monte, Bulacan; and Brgy. Pinugay, Baras, Rizal on 15 July 2011. 3. 2. The President signed EO No. 15 on 20 December 2010, which increased the current combat duty pay of soldiers from P240 to P500 effective January 2011. 3. 3. To further unify and strengthen the AFP, the President issued Presidential Proclamation No. 5 granting amnesty to individuals who participated in the 25 July 2003 Oakwood Mutiny, the February 2006 Marines Stand Off, and the 29 November 2007 Manila Peninsula Hotel Incident. 4. Revenue Generation Enforcement In his first SONA, the President pledged that the Bureau of Internal Revenue (BIR) and Bureau of Customs (BOC) would file weekly cases against tax evaders and smugglers. Through the implementation of the Run After Tax Evaders (RATE) of the BIR and the Run After the Smugglers (RATS) of the BOC, the leaks in the government‘s coffers continue to be plugged.

Moreover, the DOF‘s Revenue Integrity Protection Service (RIPS) investigated allegations of corruption in the DOF and its attached agencies. 4. 1. The current administration intensified the implementation of its RATE program that in just one year, the tax evasion cases filed with the DOJ reached almost half of the 129 cases filed during the previous administration. From July 2010 to 07 July 2011, the BIR was able to file 55 tax evasion cases, involving a total taxable amount of over P22 billion. 4. 2. As of 19 July 2011, filed with the DOJ 39 criminal cases involving 179 suspected smugglers with a total dutiable value of P54 billion.

Of the 39 cases, one (1) has been filed in court, 21 have been submitted for resolution by the DOJ, seven (7) are under preliminary investigation, while 10 are up for preliminary investigation. 4. 3. As of 19 July 2011, the DOF has filed 86 cases against allegedly corrupt government employees before the Office of the Ombudsman since 2003. A total of 53 officials have been suspended since the beginning of the RIPS program in 2003, 17 were suspended under President Aquino‘s watch. A total of 19 officials have been dismissed from the service since 2003, three (3) of whom were dismissed under the term of President Aquino. . Making the Country an Attractive Investment Location. 5. 1. Streamlined business name registration. The DTI successfully implemented measures to reduce the time span of business name registration from an average of 4 to 8 hours to within 15 minutes. The Enhanced Business Name Registration System (EBNRS) simplified the application process by reducing the required information fields from 36 to 18, resulting in the reduction of the application form from nine (9) pages to a single page. 5. 2. Streamlined issuance of local government business permits.

The DILG also signed a Joint Memorandum Circular with the DTI to streamline the Business Permits and Licensing System (BPLS) of 480 priority cities, capital towns, and municipalities from 2010 to 2012. Out of these 480 priority LGUs, 18% or 86 LGUs have already streamlined their BPLS. Meanwhile, for all 1,634 cities and municipalities in the country, at least 21% are ready for the streamlining of their BPLS. As a result, LGUs utilizing the new and improved BPLS offer better service to applicants for business permits in their respective areas of jurisdiction.

LGUs are encouraged to use a single or unified form in every transaction, with a maximum of five (5) steps and five (5) signatories. The outcome is a ? Business Friendly LGU? that offers reduced processing time for business permits and licenses, i. e. , 10 days or less processing time for new applications and five days for license renewals. 5. 3. Developed an electronic payment system. The PEZA has completed the development of an Electronic Payment System for four (4) out of five (5) selected transactions of PEZA enterprises.

PEZA‘s E-payment System is a cashless payment solution that allows clients to pay for transactions with PEZA online, 24 hours a day, and from anywhere. This system promotes greater transparency and efficiency. 5. 4. Promoted competition. The President issued EO 45 on 9 June 2011, designating the DOJ as the Competition Authority. This will encourage competition and open markets. EO 45 mandates the DOJ to conduct investigations, enforce competition laws, and prosecute violators.

It also authorizes the DOJ to supervise competition in the markets; monitor and implement measures to promote transparency and accountability in the markets; and to call on government agencies to submit reports and provide assistance to the agency. With this EO, the government will be able to strengthen its enforcement of existing antitrust laws and policies to promote a level playing field, while Congress deliberates on the pending antitrust bills. B. ECONOMIC DEVELOPMENT 1. Sustaining Economic Growth and Employment In the first quarter of 2011, real GDP grew by 4. 9%, slower than the 8. % growth in the same period in 2010 but very close to the 5. 0%-6. 0% forecast of the Development Budget Coordination Committee (DBCC) for the year. Furthermore, this growth is within the NEDA‘s forecast for the first quarter of 4. 8%-5. 8% and higher than the growth rate of Malaysia, Korea, and Thailand[10] for the same period. The strong performance of the industry and agriculture sectors, increased investments in capital formation, and increased household final consumption expenditure boosted growth. In April 2011, the unemployment rate went down to 7. 2%, significantly lower than the 8. % rate in April 2010 due to stronger growth of agricultural employment. The number of unemployed persons decreased by 228,000 from 3. 099 million in April 2010 to 2. 871 million in April 2011. Employment level grew by 4. 0% in April 2011, translating to a net addition of 1. 408 million employed persons in the private sector. 1. 1. Expanded Trade and Investments. Crucial to the goal of generating jobs is the promotion of key investment areas and expansion of trade and investment activities where the country could be globally competitive (e. g. , tourism, business process outsourcing and information technology, among others). . 1. 1. Increase in Philippine Exports. Exports increased by 33. 7% from $38. 4 billion in 2009 to $51. 4 billion in 2010, even surpassing the $50. 27 billion record set in 2007. The 2010 export growth is the highest in 11 years since 1999. Exports grew by 7. 5% from US$19. 2 billion from January to May 2010 to US$20. 6 billion in the same period in 2011. 1. 1. 2. Increase in Investments. For the period July 2010 to May 2011, the BOI and PEZA approved a total of P535. 19 billion worth of investments, a 73% increase compared to the P309. 87 billion approved investments in the same comparative period in 2009 and 2010.

The P535. 19 billion investments are expected to generate 137,118 employment opportunities once fully operational. The larger part or 68% of the total investment approvals during the period July 2010 to May 2011 came from local investors with committed investments worth P366. 62 billion, 95% larger than the P187. 53 billion in July 2009 to May 2010. Foreign investors contributed a total of P168. 57 billion or about 32% of the total. Just looking at the first five months of 2011, the strong business confidence, particularly from local investors, was evident as overall domestic investments soared by 258% to a total of P224. 7 billion from the P62. 78 billion level posted during the same period in 2010. The bulk of these domestic investments went into manufacturing (e. g. , refined petroleum products, metals, and electronic products), power, and real estate activities, among others. 1. 1. 3. Investments in Major Sectors. The following major investments in key sectors form part of the approved investments for the period July 2010 to May 2011: ? Manufacturing. The manufacturing sector tops the list of sectors with the highest committed investments worth P283. 07 billion during the period July 2010-May 2011, a 131% increase compared to the P122. 0 billion posted in the same period in 2009-2010. Electronics. The Semiconductor and Electronics Industries in the Philippines (SEIPI) reported that electronics investments in the country broke an all-time record high as fresh capital expanded by 369% from $484 million in 2009 to $2. 27 billion in 2010. This is also the 7th year the industry hit over $1 billion in investments. As a result, 24,552 direct jobs will be generated. Of the 100 companies, which registered in 2010, 10 are expansions while the rest are new projects. The industry hopes to double its exports in six (6) years from $22 billion in 2009 to $50 billion in 2016.

The industry is bullish for 2011 as its exports are expected to hit over $31 billion noting that the electronics sector will continue to be the driver of growth of Philippine exports. Information Technology – Business Process Outsourcing (IT-BPO). A total of 30,198 ITBPO jobs were created for the first quarter of 2011. At least 84,000 more jobs are expected to be generated in the BPO industry within 2011. The BPO industry includes call centers, legal and medical transcription, accounting services, software development and animation, and other services for overseas principals.

To help fill up the projected vacancies, the Technical Education and Skills Development Authority (TESDA) will offer free six-month training courses for prospective BPO workers. Graduates will be absorbed by the BPO companies. TESDA has allotted a total of P20 million for the free training of workers. Shipbuilding. Investments in shipping increased because of foreign investors‘ access to 100% ownership of companies engaged in shipbuilding and repair. Mining. The mining and quarrying sectors recorded the highest increase in approved FDI, from P0. 6 billion in 2009 to P 6. 0 billion in 2010.

The 2010 investments in mining are about nine times larger than the 2009 mining investments. Mass Housing. Investments are huge at P59. 02 billion. These investments, which represent about 50,000 units, are also expected to generate around P900 billion[11] worth of investments in related industries. Energy. On 30 June 2011, the DOE launched the fourth Philippine Energy Contracting Round (PECR4), the biggest of all contracting rounds, in which 15 blocks with a total area of more than 10 million hectares were offered. The PECR4 is envisioned to address the country‘s energy supply through the exploration of local indigenous resources.

This will help the country meet its daily demand and reduce the importation of petroleum and petroleum products. ? ? ? ? ? ? The PECR4 road shows have attracted at least 140 independent and large-scale international exploration companies expressing their interest to tender bids in the offered blocks. The DOE expects around US$300-500 million for each service contract[12]. Interested investors will have until December 2011 to signify their intent to bid while the contracts are expected to be awarded next year. 1. 2. Improved fiscal consolidation 1. 2. 1. The government deficit in 2010 was at P314. 40 billion, 3. 3% lower than the P325 billion programmed deficit for the year. [13] The lower deficit was due to the implementation of measures to improve collections and spend wisely. 1. 2. 2. For the first five months of 2011, the government posted a deficit of P9. 54 billion, 94. 11% lower than the P162. 107 billion deficit in the same period in 2010. However, excluding interest payments on debt, the National Government (NG) incurred a primary surplus[14] of P108. 26 billion as of May 2011 due to increased revenues and sound spending, along with the strict observance of the principles of zero-based budgeting. . 2. 3. Revenue collection increased to P1. 21 trillion in 2010, 7. 5% higher than the P1. 12 trillion in 2009. The BIR‘s collections increased from P750. 30 billion in 2009 to P822. 60 billion in 2010. The BOC‘s collections increased by 17. 7% from P220. 30 billion in 2009 to P259. 2 billion in 2010. 1. 2. 4. Revenues grew by 16. 30% from P500. 01 billion in the first five months of 2010 to P581. 50 billion in the same period of 2011. 1. 2. 5. The government lowered its disbursements by 10. 73% from P662. 12 billion in the first five months of 2010 to P591. 4 billion in the same period of 2011 due to more prudent planning and sound spending of agencies. Government disbursed P1. 52 trillion in 2010, or about 94% of the P1. 62 trillion programmed for that year. 1. 3. Other important initiatives to improve the fiscal position include the following: 1. 3. 1. Congress‘ prompt enactment of the 2011 General Appropriations Act (GAA) on 27 December 2010, the first budget passed on time since the 1999 National Budget. The P1. 65 trillion 2011 national budget is in favor of the poor and the vulnerable, as social services were allotted the lion‘s share (34%).

The budget is based on the principle of zero-based budgeting, the objective of which is to cut wastage. 1. 3. 2. The 2012 Budget preparation is ahead of schedule, again, the first budget prepared ahead of schedule since 1998. As early as 30 December 2010, the DBM had already issued National Budget Memorandum (NBM) No. 107, s. 2010 providing all heads of departments, agencies, bureaus, offices, commissions, state universities and colleges, and other instrumentalities of the national government the overall policy framework and thrusts for the FY 2012 Budget.

The NBM also set specific guidelines for the budget preparations. 1. 3. 3. Liability Management. Various upgrades in the country‘s ratings were obtained. Debt watcher Standard & Poor‘s revised its long-term foreign currency credit rating for the Philippines upwards to BB stable from BB- last November, reflecting the country‘s strong fiscal fundamentals. The Moody‘s Investors Service and the Japan Credit Rating Agency, Ltd. also raised their outlooks for the Philippines from ? stable? to ? positive? in January and April 2011, respectively.

The upgraded outlook from Japan “reflects greater possibility that the Philippine economy will resume momentum for the improving trend of its fiscal position after successfully weathering the challenges of the world financial crisis. ” For the second time in 2011, Moody‘s Investors Service has upgraded the Philippines‘ Ba3 foreign and local currency long-term bond ratings to Ba2, with a stable outlook, on the back of sustainable fiscal consolidation process of the Aquino administration. On 23 June 2011, Fitch Ratings upgraded the Philippines‘ LongTerm Foreign Currency Issuer Default Rating (IDR) to ? BB+‘ from ?

BB,‘ with a stable outlook, just one notch below investment grade. This rating was last achieved in 1997 just before the Asian financial crisis. With the upgrade, the country is now one step closer to attaining an investment grade rating, which is crucial in further lowering borrowing costs and attracting more foreign direct investments. The Aquino administration moved early in executing its first Global Exchange last September 2010 wherein a total of US$2. 29 billion worth of short-term, high coupon U. S. dollar bonds were exchanged into less costly but longer dated Republic of the Philippines (ROP) global bonds.

This represented one of the largest liability management exercises from an emerging market issuer at the time and was immediately followed by the P199 billion domestic bond swap in December 2010, which offered 10 and 25-year securities to holders of maturing bonds. Debt exchanges and the issuance of longer-termed securities increased the average maturity of government debt to 8. 8 years in December 2010 from 7. 9 years in June 2010. The debt-to-GDP ratio dropped from 57% in 2009 to 55. 4% in 2010, well within the 2010 target of 56. 5%. This means that the Philippine government is in a better position to settle its liabilities.

The government decreased debt servicing by 2. 14% year-on-year from P339. 34 billion in the 1st quarter of 2010 to P332. 07 billion in the first quarter of 2011 as the Aquino government cut down on interest payments. 1. 4. Ensuring Monetary and Banking Stability The government maintained an effective balance on policies to preserve price stability and support economic growth. As a result, inflation for 2010 averaged at 3. 8%, which was within the Government‘s 2010 inflation target of 3. 5%-5. 5%. The inflation rate for the first five months of 2011 averages at 4. 2%, which was likewise, within the Government‘s target of 3%-5%. 1. 4. 1.

Government also ensured a stable, market-driven peso. The peso appreciated by 6. 8%, from P47. 46/US$1 average in July-December 2009 to P44. 45/US$1 in July-December 2010. The peso appreciated by 4. 8%, from P45. 66/US$1 average in January to May 2010 to 43. 55/US$1 average in January to May 2011. The sustained foreign exchange inflows of portfolio and direct investments, overseas Filipinos (OF) remittances, receipts from exports, BPO, and travel continued to support the peso‘s strength. The country‘s international reserves were built up, taking advantage of the strong inflows of foreign exchange to cushion the economy from external shocks.

As a result, the country‘s gross international reserves (GIR) grew by 44% from US$47. 7 billion in end-May 2010 to $68. 8 billion as of end-May 2011. [15] The country is expected to achieve the 2011 GIR target level of $70 billion as it anticipates sustained foreign exchange inflows from portfolio and direct investments, OF remittances and receipts from exports, BPO and travel. 1. 4. 2. The government continued to pursue reforms and implement new regulations to maintain the soundness and stability of the banking system. The total resources of the banking system rose by 9. % to P7. 1 trillion as of end-March 2011, spurred by the robust growth in bank deposits which grew by 9. 3% to P5. 0 trillion. Asset quality continued to improve with the non-performing loan ratio[16] of universal and commercial banks falling to 2. 95% as of end-April 2011. This is well below the pre-1997 crisis level of 4%. The banking system‘s overall capitalization also remained strong, with a 17% capital adequacy ratio (CAR) [17] as of end-September 2010. This is way above the BSP regulatory requirement of 10% and the Bank for International Settlement (BIS) standard of 8%.

With stability and ample liquidity in the banking system, banks continued to perform their critical function of channeling credit to the productive sectors of the economy. Bank lending grew at a healthy pace of 14. 2% as loans for production activities increased by 15. 7% in April. 1. 4. 3. Stock Market. Since the start of the Aquino Administration, the Philippines Stock Exchange Index (PSEi) hit all-time high levels on seven (7) different occasions: on 20 July 2011 at an all-time high of 4,507. 04 points; 19 July 2011 at 4,485. 65 points; 18 July 2011 at 4,476. 01 points; 15 July 2011 at 4,458. 74 points; 5 July 2011 at 4,439. 1 points; 4 July 2011 at 4,421. 56 points; and 4 November 2010 at 4,397. 30 points. Mining and Oil, holding firms, and industrial sectors are among those industries that outperformed their own previous performances in the stock exchange. 2. Ensuring Vital Infrastructure and Energy Sufficiency 2. 1 Improved infrastructure support to sustain economic growth. The following are some of the major infrastructure projects completed during the first year of the Aquino Administration: Name of Project Amount Completion Date Valderrama Bridge and P53. 07 million 28 March 2011 Approaches, Antique (UK-ODA) Bugo Bridge and P148. 7 million 31 March 2011 Approaches, Antique (Austria-ODA) Estrella–Pantaleon Bridge P189. 32 million 15 January 2011 and Approaches, Makati and Mandaluyong City (GOP and Austria-ODA) Butuan City Bypass Road P177. 96 million 30 April 2011 (Bonbon-Banacasi Airport Section and Lemon-Antongalon Section), Agusan Del Norte Butuan City-Cagayan de P105. 12 million 26 October 2010 Oro-Iligan Road (Agusan-Misamis Road), Agusan del Norte Tiniwisan-Maguinda P335. 03 million 23 April 2011 Road (Lemon-Pigdaulan Section), Agusan del Norte Metro Iloilo Radial (R4) P1. 21 billion 23 April 2011 Bypass Road and Iloilo City-Sta.

Barbara Road ODA and partnerships with the private sector augment government‘s infrastructure spending to ensure the timely and full completion of our infrastructure priorities. The DPWH‘s management philosophy of ? Doing the right projects at the right cost and right quality? also resulted in increased savings. The DPWH aims to use these savings for prioritization of other development projects. For 2011, P16. 20 billion or 24. 3% of the total DPWH Capital Outlay has been allocated for infrastructure development in Mindanao. This will help facilitate economic growth in the region. 2. Upgrading the quality and safety of national roads. 2. 2. 1 Strictly enforced the anti-overloading program pursuant to RA No. 8794 (MVUC Law). The DPWH deployed additional mobile weighing stations to augment the 22 weighbridge stations nationwide. Out of 92,279 weighed trucks in the 22 weighbridge stations nationwide, 37% or 34,026 trucks were overloaded and apprehended from January to May 2011, while 4,188 trucks or 3% of 143,928 weighed trucks in the 13 mobile weighing stations in Metro Manila were apprehended from February to May 2011. 2. 2. 2 Enhanced road safety and minimized traffic congestion on major roads.

A total of 757,809 violators of transport laws and regulations were apprehended for the period July 2010-April 2011. This is 45. 79% higher than the DOTC‘s target to apprehend 519,780 errant drivers for the same period. 2. 3 Working Towards Energy Sufficiency 2. 3. 1 Energy Efficiency and Conservation. The DOE took the following initiatives to promote the conservation and efficient utilization of energy resources: 2. 3. 1. 1 Established the Wholesale Electricity Spot Market (WESM) in Visayas, which immediately stabilized electricity supply and eliminated the manual load dropping of customers.

WESM Visayas has also provided good market signals for investors. Currently, there are already 180 market participants for the integrated Luzon and Visayas market. On the other hand, the Effective Settlement Price (ESP) in the WESM for both Luzon and Visayas from January to April 2011 ranged from a high of P3. 33/kWh in February to a low of P2. 30/kWh in March 2011. These prices are lower than the NPC regulated price of P4. 6727/kWh. This is a big reduction from the 2010 ESPs which ranged from a high of P10. 63/kWh in March 2010 to a low of P3. 63/kWh in August 2010.

This means that the more players in the market translate to a more stable and reliable supply of electricity, as well as better power pricing for the benefit of consumers. With the commercial operations of the WESM in the region, power outages were eliminated as it allowed even the power plant‘s generating capacity not covered by bilateral contracts to be dispatched by trading its capacity in the power spot market. This kind of set-up provides better market condition and structure to entice more investors to address future power needs. 2. 3. 1. Increased the Visayas generation capacity by 610 MW with the commissioning of new power plants in the Visayas region. These power plants are the 246 MW coal-fired power plant of the Cebu Energy Development Corporation (CEDC), the 164 MW clean coal-fired power plant of the Panay Energy Development Corporation (PEDC), and the 200 MW coal-fired power plant of the KEPCO Salcon Power Corporation. This gave the Visayas surplus power of about 600MW. Increased and constant investor interest, in turn, will provide a long-term solution in terms of power sustainability for the region. 2. 3. 1. A Shareholders‘ Agreement was recently signed to develop a 600-MW circulating fluidized bed coal-fired power plant project within Subic Bay Freeport Zone. The project consists of two (2) 300-MW generating units. The total cost of the project is estimated at US$1 billion and its commercial operations is scheduled in October 2014 (for the first 300-MW unit) and April 2015 (for the second unit). Said power plant will use an environment-friendly clean coal technology known worldwide to cut down environmental impacts of operating a coal fired plant. The power facility is expected to augment generation capacity of the Luzon Grid. . 3. 1. 4 Promoted the ? Don Emilio Abello Energy Efficiency Awards? [18], whose recipients, including some 61 industrialized, commercial, and transport companies, were able to post total savings of 156 million liters of oil amounting to P5 billion, and reduced carbon emissions equivalent to 269,000 tons. 2. 3. 1. 5 Conducted 12 energy audits[19] for industrial, commercial, academe, and government buildings to ensure the efficient use of energy. Total energy savings reached P24. 6 million after the conduct of such audits. 3. Achieving Food Security for More Equitable Economic Growth

The country has been highly dependent on the importation of food staples. To lessen the nation’s dependence on imports, Government has placed top priority on agricultural development. 3. 1 The Agriculture sector (Agriculture, Hunting, Forestry and Fishing) grew by 4. 2% in the first quarter of 2011 from a negative growth of 1. 08% in the first quarter of 2010. The Bureau of Agricultural Statistics (BAS) reported a 4. 04 million metric ton (MT) palay production in January to March 2011, 15. 6% higher than the 3. 49 million MT produced in the same period in 2010. The yield per hectare is estimated to reach 3. MT from January to June 2011, a 4. 3% improvement from the 3. 64 MT per hectare in the same period in 2010. As such, the farmer‘s profit per hectare would reach P14,782. 00 from January to June 2011, a 4% improvement from the P14,159. 00 profit per hectare in the same period last year. Expansion in palay harvested area, availability of irrigation water and services, and aggressive advocacy of the DA in the implementation of its Rapid Seed Supply Financing Project, which distributes high quality seeds to qualified palay farmers, contributed to the increase in palay output. . 2 Completed projects to strengthen the agricultural sector 3. 2. 1. Under the continuing regular fund from the DA, a total of 1,814 kilometers of Farm to Market Roads (FMRs) were completed from July 2010 to May 2011, out of the targeted 2,567 kilometers. In addition, 687 kms more FMRs were completed under the locally-funded and foreign assisted projects. Overall, a total of 2,501 kms of completed FMRs provide better access to markets and social services and boost economic activities by allowing goods and products to flow in and out of the barangays.

FMRs also help reduce transport costs, spoilage and deterioration of quality of agricultural products, and facilitate delivery of farm inputs. 3. 2. 2. From July 2010 to June 2011, a total of 65 tramlines were completed connecting remote areas to FMRs. A total of 67 agricultural tramlines were completed since project start-up in 2009, which is 63% of the targeted 107 units to be completed by December 2011. The use of these tramlines cuts the cost of hauling by half from P2 to P1 per kilogram of produce and reduces hauling time significantly from hours to just a few minutes.

Inaugurated on 13 April 2011 at Twin Peaks, Tuba, Benguet, a 400-meter tramline has reduced hauling time from 2 hours to five minutes. Farmers pay P1 per kilo of produce to cover the cost of diesel fuel, engine maintenance and other repairs and allowance for the tramline operator. On 25 February 2011, a tramline built by DA-Philmech at a cost of P1. 6 million was inaugurated in La Paz, Zamboanga City, a barangay located 970 meters above sea level. A 370 meter distance between the barangay and the closest national road used to take 12 hours to traverse. With the tramline, travel time over this distance has been reduced to three minutes.

A local group, the La Paz Farmers‘ Association operates the tramline collecting a fee of one peso for a load of 350 kilos of corn and vegetables. 3. 2. 3. All in all, in the first 11 months of the Aquino Administration (July 2010 to May 2011), 11,611 hectares of new areas were irrigated, 40,053 hectares were restored, and 171,910 hectares were rehabilitated both for current and carry over projects. Restoration entails repairing the irrigation facility that is currently not functional while rehabilitation means upgrading or improving the facility, which is currently working but has not attained the maximum or designed irrigation efficiency. . 2. 4. Put up the following post-harvest facilities: ? One hundred eighty seven (187) food terminals from July 2010 to April 2011 benefiting 1,155 small farmers and fishers. These food terminals provide affordable basic food commodities to around 457,859 households who are able to save not only from lowpriced commodities but also from cuts in transportation expenses and reduction of middlemen costs. The savings on transportation cost ranges from P8–P200 for every trip to the market. Thirteen (13) or 68% of the targeted 19 Corn Post Harvest Trading Centers (CPHTC) in major corn producing areas nationwide.

These centers ensure continuous supply of corn even during the wet season, guarantee premium quality, and open opportunity for other investments in the corn industry. A total of 1,342 small scale composting facilities in the different regions nationwide, reaching 100% of the target, and generating 5,368 jobs. This forms part of the government‘s promotion of organic farming through the Organic Fertilizer Production Project, which will enable farmers to produce their own organic fertilizer to reduce dependence on expensive synthetic fertilizers.

A total of 56 units of flatbed dryers from July 2010 to April 2011, attaining 100% of the target and generating 402 jobs. These will reduce post-harvest losses during the drying stage of palay and ensure quality drying during the rainy season. Four (4) cold chain facilities[20] from July 2010 to May 2011 would enable farmers of high value crops to store their fruits and vegetables in the appropriate temperature and prolong the quality and shelf life of perishable crops, obtaining for the farmers a better selling price for their produce.

These facilities were turned over to three (3) cooperatives in Benguet, Palayan City, and San Jose City, benefiting 139 farmers. Ten (10) units of Village-Type post-harvest facilities as of June 2011, in key corn production areas and strategic demand sites nationwide. Thirty-one (31) more units are expected to be completed and operational by the end of 2011. ? ? ? ? ? 3. 3. Fostered a culture of self-reliance 3. 3. Some of the strategies under the Food Staple Self-Sufficiency program include the termination of direct input subsidies to farmers and front-loading of irrigation investments in 2012 and 2013 to increase output as early as possible, thus decreasing the need to import rice. These actions are already bearing fruit as seen in the bumper crop harvest from January to March 2011. 3. 3. 2 The country‘s rice importation dropped significantly by 80% from an import volume of 2. 02 million MT from July 2009 to June 2010 to 386,243 MT from July 2010 to June 2011.

The decrease in volume of actual rice import arrivals can be attributed to the good harvest and the comfortable stock position of the country. Likewise, rice shipments were scheduled better. From here on, NFA buffer stocks will consist mainly of palay purchased from local farmers—a long standing demand of the rice farmers. From January to June 2011, the government through the NFA has procured some P7. 64 billion worth of palay from all over the country. This is 16% of the NFA stock. The NFA targets to increase this volume from the harvest from the main cropping season later this year. The total rice imported in 2010 was 2. 8 million MT. For 2011, the government shall import 64% less or 860,000 MT, with 200,000 MT imported by the government, and 660,000 MT by the private sector. For 2012, rice imports shall further decline to 500,000 MT, with 100,000 MT imported by the government and 400,000 MT imported by the private sector. 3. 3. 2. The government was able to increase the average farm gate price of palay by 2. 89% within a short period, thereby immediately increasing the farmer‘s income. Strategic reserves and placements made it possible for the price of rice to remain stable, thereby assuring the affordability and availability of rice to the public. . 3. 3. Production in the crops subsector was also up by 8. 19% and the main contributors were palay, corn, sugarcane, and banana. The country has regained its status as net sugar exporter for the current crop year, having recovered from the sugar shortage in 2009-2010 when the country imported raw and refined sugar. 3. 3. Other Agribusiness Interventions Livestock. Today, the Philippines is both avian flu-free and foot-and-mouth disease (FMD) free. The OIE[21], or the World Animal Health Organization, last May 2011 certified the Philippines as ? FMD-free without vaccination.?

This accreditation opens the gates for the country‘s hog raisers to export meat products. 4. Improving National Productivity and Competitiveness 4. 1. National Competitiveness Council (NCC). NCC was reconstituted through the issuance of EO No. 44, s. 2011. NCC is working on improving the Philippine standing on competitiveness indicators where the Philippines had the lowest rankings including infrastructure, governance, and ease of doing business. 4. 2. Tourism Industry. In 2010, visitor arrivals surpassed the 3. 3 million target for the year reaching an all-time high of 3. 52 million, 16. 67% higher than the 2009 visitor arrivals of 3. 1 million. In just the first year of the Aquino administration, a 15. 60% increase in visitor arrivals was recorded from 3. 2 million arrivals in the period July 2009-June 2010 to 3. 7 million arrivals in the period July 2010-June 2011. More particularly, in the first six months of the Aquino Administration, visitor volume grew by 21%, faster than the first semester of 2010‘s 12% growth. Total receipts from visitors increased by 11. 3% from $2. 24 billion in 2009 to $2. 49 billion in 2010. This may be attributed to the confidence in the new administration, as well as the improved economic conditions in tourist source markets.

The continued growth in visitor volume is the result of sustained marketing and promotions efforts undertaken jointly by the public and private sectors in key source markets, such as attendance to travel fairs, invitational programs and very selective advertising. The Civil Aeronautics Board (CAB) granted new permits to operate regular air services to the following: Korean Airlines, Gulf Air, Continental Airlines, Pakistan International Airlines, which are expected to provide weekly seat capacity of 12,090 from Korea, Bahrain, Guam, and Palau.

The CAB also granted permits to Jin Air, Jetstar Airways, Air Busan, Mandarin Airlines, Air Nippon Airways, and Jeju Air. These airlines are expected to bring in 1,498 and 2,265 tourists weekly from Japan and Korea, respectively. The DOT further estimates that there will be an additional 37,623 potential Japanese tourists and 56,888 potential Korean tourists in the country with these additional seat capacities. It may be noted that in 2010, Korean tourists accounted for the biggest chunk of visitor arrivals or 21. 04% (740,622) while Japanese visitors accounted for 10. 9% (358,744) of total tourist arrivals. 4. 3. Pocket Open Skies Policy. EO Nos. 28 and 29 were issued on 14 March 2011, which aims to reorganize the Philippine Air Negotiating Panel and Philippine Air Consultation Panel; and authorize the CAB and the Philippine Air Panels to pursue more aggressively the international civil aviation liberalization policy. The Implementing Rules and Regulations (IRR) was approved by the CAB Board and published in Manila Bulletin on 09 May 2011. It is also available in the CAB website. 4. 4. Encouraging Local Innovation.

The DOST is concentrating its efforts on innovating and promoting technology as eco

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