MANILA, MARCH 3, 2007 (STAR) By Paolo Romero - Foreign business groups in the country hailed President Arroyo yesterday for implementing vital economic reform and security measures that helped restore investor confidence.

The Joint Foreign Chambers cited the immediate passage of vital economic legislation and the anti-terrorism bill by Congress, which they said had greatly enhanced the economic stability of the country and boosted international confidence.

The Joint Foreign Chambers led by Roger Dallas, president of the American Chamber of Commerce of the Philippines, Inc., and Richard Barclay of the Australian-New Zealand Commerce of the Philippines, Inc. sent a letter congratulating the President for "restoration of international confidence in the macroeconomic management of the Philippine economy under your administration."

The foreign businessmen who signed the letter included Stewart Hall, president of the Canadian Chamber of Commerce of the Philippines, Inc.; Tertius Vermeulen, president of the European Chamber of Commerce of the Philippines, Inc.; Shinsuke Ike, president of the Japanese Chamber of Commerce & Industry of the Philippines, Inc.; and Hong Woo-Hyun, president of the Korean Chamber of Commerce of the Philippines, Inc.

The foreign business leaders cited the passage of Republic Act 9334 or the Alcohol Tobacco Excise Tax Law; RA 9335, Lateral Attrition Law; RA 9337, Expanded Value-Added Tax (EVAT) Law; RA 9343, Special Purpose Vehicle Act Extension Law; and RA 9361, EVAT Amendments, removing 70 percent cap on input VAT.

The foreign business chambers also noted the recent enactment of the Bio-Fuels Act, the ratification of the bicameral conference committee report on amendments to the Bases Conversion Development Authority Act and the One-Time Tax Amnesty to Locators in Special Economic Zones, which are all awaiting the President’s signature.

The businessmen also lauded the enactment of "significant" legislation like the Anti-Red Tape Act, Credit Information System Act, Customs Brokers Act Amendment, Lending Company Regulation Act, National Tourism Act, Personal Equity and Retirement Account (PERA) Act.

"These bills represent part of a ‘Second Reform Wave.’ We commend your call of a Special Session of Congress of February 19 to 20 through Proclamation 1235 and urge the final passage of these bills by both the Senate and the House," they said.

The foreign businessmen particularly noted the passage by Congress of the controversial Human Security Act of 2007, more particularly known as the Anti-Terror Bill, which formed part of the "Second Reform Wave" of the Philippine government.

The Human Security Act 2007 was approved last January and is now awaiting the signature of the President.

Mrs. Arroyo hailed the bill as a potent weapon of the country against the global scourge of terrorism.

The bill - which was also ratified by the Senate - was watered down following opposition from concerned groups on fears the legislation would endanger human rights.

Under the new law, security forces have the power to detain suspects without warrant or charge for up to three days.

It also allows authorities to access bank accounts they believe are being used to launder money for terrorist purposes.

In a bid to allay fears of abuses, the measure provides that people wrongly detained will be offered compensation.

The international community has been urging the Philippines to enact its own anti-terror law to fulfill its obligation to fight terrorism in the region.

Foreign investors had been restless over the perceived slow pace of reforms urgently needed to improve the country’s difficult business climate and check eroding competitiveness.

They are particularly concerned with red tape and bureaucratic corruption, as well as the slow pace of formulating laws and insufficient implementation, on top of security problems.

Foreign businessmen noted the efforts of Mrs. Arroyo to introduce economic reforms as well as to increase the country’s security against the global threat of terrorism.

Despite her unpopular decisions to implement forceful tax measures and reforms, her efforts paid off, analysts said.


The efforts paid off and in fact, the country’s economy became strong enough to withstand the shock wave brought about by the one-day worldwide stock market rout Wednesday.

Mrs. Arroyo said the Philippine economy had remained impervious to the one-day slump in reaction to the sharpest decline in global stocks in years, apparently sparked by heavy losses in Shanghai.

"World markets may go up and down but the Philippine economy can no longer be pulled back," Mrs. Arroyo said.

She said the country’s improved fiscal position and the heavy remittances of eight million Filipinos working abroad had bolstered the economy despite the 7.92 percent slump in Philippine share prices on Wednesday.

She stressed the Philippine economy emerged strong in spite of the fluctuations in the world markets.

"Confidence in the Philippines and the region is unsullied. Sustained growth will carry the day," Mrs. Arroyo said, just after the Philippine stock market showed signs of recovery with a 4.0 percent rebound earlier Thursday.

Francis Estrada, president of the Asian Institute of Management (AIM), a major regional business school, agreed that the effect of the stock market fall would be limited, saying "there are no underlying fundamentals" for a wider downturn.

"Nobody seems to look at this as a form of contagion," he said.

The market rebounded Thursday closing 4.0 percent higher at 3,190.12 as investors took comfort in Wall Street’s recovery, dealers said.

Investors have expressed fears that the sudden plunge of world stock markets last Wednesday could result in a slowdown of the economies of the United States and China.

As two of the world’s largest economies, a slowdown would inevitably impact the smaller markets because of the amount of trade generated by the two alone.

Mrs. Arroyo reiterated the government has already put in place strong economic fundamentals that would shield the economy from the sudden movements of the global economies.

"The fundamentals of growth are firmly laid on our agenda of fiscal stability, building sturdy pillars for investment, good governance, blossoming enterprise at the grassroots and a vibrant democratic system," the President said.

"Our fundamentals are rooted well and spread over a wide range and cannot be overcome easily in a single sweep," she said.

Mrs. Arroyo acknowledged the resiliency of the entire Asian region has also helped.

She cited China in particular for bouncing back immediately after its bourse suffered its biggest decline in a decade.

"East Asia is a dynamo of growth and will continue to be a leader in trade, security and economic consolidation," Mrs. Arroyo said.

The Philippine Stock Exchange has rebounded since suffering from a historic drop last Wednesday with bargain hunters taking advantage of the decline by purchasing blue chip stocks led by telecommunications giant PLDT.

Analysts were not surprised about the recovery of the bourse as market correction was expected after the sudden drop.

Sen. Manuel Roxas II, former secretary of the Department of Trade and Industry, assured the worldwide stock plunge will not affect the general population.

He explained the local stock market’s performance should not be considered as an accurate barometer of economic performance.

More accurate indicators include gross domestic product and unemployment, he pointed out.

Roxas said the "people’s sacrifice" in fiscal reforms such as the RVAT — which increased VAT by two percentage points to 12 percent — is more important.

"For the Philippines, our focus should be still on translating fiscal reforms to immediate, tangible benefits for our people," Roxas said. - with Marvin Sy, AFP

Chief News Editor: Sol Jose Vanzi

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