ECONOMIST COMMENTARY: DAP AND ITS IMPLICATIONS - DEMOCRACY, PRESIDENTIAL POWER AND THE FORM OF GOVT 

By G. Sicat: JULY 30 --The engaging concern of the moment is the DAP (Disbursement Acceleration Program) of the Aquino administration. The Supreme Court has ruled the DAP unconstitutional. “Two critical points.” In commenting on the DAP controversy, I highlight two critical issues that go beyond the current discussions concerning its grip on the nation’s attention. Last week (July 23, 2014), I devoted attention to the first of these: the public expenditure system is ‘broken’ and it needs fixing.

Today, I take up the second point: fiscal flexibility is needed by all governments to do well in their work. The issue goes to the heart of how the President is empowered within the political framework. The overarching premise of fiscal flexibility is “democracy,” that the power of the purse belongs to the elected representatives of the people. In the present context, Congress has the power and the President implements the budget. The Constitution tells us this. “Aquino administration’s defense of DAP.” President Aquino has indicated that he will submit a petition to the Supreme Court to reconsider its decision. Given the near unanimous decision of that court, could a reversal be expected?

Of course, the President’s defiance is designed to show that this program was for the country’s good. The just delivered SONA (state of the nation) speech ignored the Supreme Court decision and simply trumpeted the administration’s achievements, presenting a confident unconcern. Indeed, in an early speech in which he defended DAP, he asserted that he was in compliance with law, under the administrative code and that what he did helped the nation achieve its current level of success. More specifics came out when Secretary Butch Abad of Budget appeared before the Senate committee investigating the DAP the other day. The hearing was essentially political theater, giving the government a formal forum to explain the DAP more extensively and to defend it more fully before a generally supportive Senate. “Fiscal flexibility is essential.” Conditions change, priorities become more urgent in some cases, and adjustments in budgeting levels and attention often are necessary. * READ MORE...

ALSO: Palace submits proposed P2.6-T budget to Congress 

Malacañang on Wednesday submitted to Congress its proposed national budget for 2015, which amounted to P2.6 trillion. The Aquino administration's proposed expenditure program for next year is 15.1 percent higher than the P2.265-trillion budget of 2014 and represents 18.4 percent of the country's gross domestic product. Budget Secretary Florencio Abad, who submitted the budget to House Speaker Feliciano Belmonte, said the proposed spending program aims to bring inclusive socio-economic development to Filipinos. "[W]e're working harder at bringing inclusive growth to the country through transparent, accountable, and participatory budgeting," Abad said in a statement. Social services will still take the lion's share of the proposed 2015 budget with an allocation of P967.9 billion. Social protection and welfare services, including basic education and universal health care, account for 37.1 percent of the proposed expenditure program. * READ MORE

ALSO: ‘Pork’-less 2015 national budget amounts to P2.6T 

Something’s different in the Aquino government’s proposed P2.606 trillion national budget for 2015 submitted to the House of Representatives on Tuesday. This is a 15.1-percent increase from the P2.265 trillion approved by the President as budget for 2014.
The proposed budget also represents 18.4 percent of the Gross Domestic Product reflecting the target GDP growth of 7 to 8 percent. It’s now free from funds from the graft-tainted Priority Development Assistance Funds (PDAF) or pork barrel funds, which the Supreme Court (SC) has already struck down as unconstitutional. The budget will also no longer be a source of savings that may be pooled to other projects, as was the practice of Aquino’s outlawed Disbursement Acceleration Program (DAP) that critics say is the source of the president’s “pork barrel.”
That is, if the SC decision is to be followed.

But President Benigno Aquino III in his latest State of the Nation Address (Sona) said the executive would submit a joint resolution asking to define savings after such practice of pooling these unspent funds to other projects not itemized in the budget was declared unconstitutional by the SC. If savings would be redefined, then government might still continue with its DAP practice despite the SC decision. The president had also proposed submitting a supplemental budget on top of the P2.265-trillion budget in 2014 to augment the lack of funds for projects stalled due to the court’s prohibition of the DAP practice. DAP became controversial after Senator Jose “Jinggoy” Estrada, now detained for plunder over the pork barrel scam, bared that funds from DAP were used as incentives to senators who voted to convict ousted Chief Justice Renato Corona. * READ MORE...

ALSO: Tan set to take back full control of PAL: Taipan eyes Etihad as new partner 

The group of taipan Lucio Tan expects to take back full control of flag carrier Philippine Airlines Inc. (PAL) as early as this month. After reclaiming management control of PAL, the taipan’s next move is reportedly to take in Abu Dhabi-based Etihad Airways as partner. A source said negotiations regarding the buyback of the 49 percent interest of diversified conglomerate San Miguel Corp. (SMC) is expected to be completed in the next few weeks, paving the way for the return of full ownership of PAL back to the Tan Group on Aug. 27. The source said talks between the Tan Group and SMC have narrowed down to the value of the buyout as well as the terms of payment.

SMC president and chief operating officer Ramon S. Ang confirmed that the Tan Group had made a formal offer to buy back the conglomerate’s stake in PAL. However, he clarified that negotiations are still ongoing. “Yes, still in talks,” Ang said in a text message. Ang is president and COO of PAL while Tan serves as chairman of Asia’s first airline. Tan chairs the 11-man board of PAL while directors include Lucio Tan Jr., Harry Tan, Michael Tan, Inigo Zobel as well as Ang, Aurora Calderon, Roberto Ongpin, Ferdinand Constantino and independent directors Antonio Alindogan and Enrique Cheng. Estelito Mendoza serves as the airline’s corporate secretary. * READ MORE...

ALSO: 'Dialogue In The Dark' arrives in Manila

JULY 29 --The Dialogue in the Dark, a unique development tool in complete darkness, will be presented at the Asian Institute of Management (AIM) in Manila, in cooperation with Dialogue Social Enterprise, from August 1-6, 2014. Internationally renowned for 25 years, Dialogue in the Dark aims to provoke a change of perspective and help people understand diversity and inclusion. In its initial introduction in the Philippines, Dialogue in the Dark workshops offer a unique opportunity for corporate leaders and management to test and participate in an experience that will have a profound impact on how they do things. Blind trainers will be taking the participants through a set of inventive team activities in complete darkness. * READ MORE...


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DAP and its implications – Democracy, presidential power and the form of government


JUSTIFYING HIS DAP: President Benigno S. Aquino III. Ryan Lim / Malacañang File Photo


THE WRITER: Gerardo P. Sicat is a Filipino economist, educator and public servant. He is the first Director-General of the National Economic and Development Authority (NEDA), the Philippine's national economic planning agency. Later, he was named Minister of Economic Planning and member of the now defuct Batasang Pambansa (National Legislature) under President Ferdinand Marcos. A graduate of the prestigious Massachusetts Institute of Technology, he founded the Philippine Institute of Development Studies (PIDS), currently an attached agency to NEDA, and contested in the 1999 selection of the University of the Philippines president together with prominent figures such as former senator Leticia Ramos-Shahani and sociologist Ledivina V. Cariño but ultimately lost to political scientist Francisco Nemenzo, Jr. Sicat is a Professor Emeritus of the University of the Philippines School of Economics.(WIKIPEDIA)

MANILA, AUGUST 4, 2014 (PHILSTAR)  CROSSROADS (Toward Philippine Economic and Social Progress) By Gerardo P. Sicat - The engaging concern of the moment is the DAP (Disbursement Acceleration Program) of the Aquino administration. The Supreme Court has ruled the DAP unconstitutional.

“Two critical points.”

In commenting on the DAP controversy, I highlight two critical issues that go beyond the current discussions concerning its grip on the nation’s attention.

Last week (July 23, 2014), I devoted attention to the first of these: the public expenditure system is ‘broken’ and it needs fixing.

Today, I take up the second point: fiscal flexibility is needed by all governments to do well in their work. The issue goes to the heart of how the President is empowered within the political framework.

The overarching premise of fiscal flexibility is “democracy,” that the power of the purse belongs to the elected representatives of the people. In the present context, Congress has the power and the President implements the budget. The Constitution tells us this.

“Aquino administration’s defense of DAP.”

President Aquino has indicated that he will submit a petition to the Supreme Court to reconsider its decision. Given the near unanimous decision of that court, could a reversal be expected?

Of course, the President’s defiance is designed to show that this program was for the country’s good. The just delivered SONA (state of the nation) speech ignored the Supreme Court decision and simply trumpeted the administration’s achievements, presenting a confident unconcern.

Indeed, in an early speech in which he defended DAP, he asserted that he was in compliance with law, under the administrative code and that what he did helped the nation achieve its current level of success.

More specifics came out when Secretary Butch Abad of Budget appeared before the Senate committee investigating the DAP the other day.

The hearing was essentially political theater, giving the government a formal forum to explain the DAP more extensively and to defend it more fully before a generally supportive Senate.

“Fiscal flexibility is essential.”

Conditions change, priorities become more urgent in some cases, and adjustments in budgeting levels and attention often are necessary.

* Changing times or challenging developments require quick and pragmatic budgetary flexibility. For effective work, the Executive has to have room for maneuver.

In national government budgeting, the budget is generally and automatically spent for the intended purposes. This is for the bulk of appropriations because departments and agencies have continuing programs and serve fixed constituencies.

As an instance, salaries and maintenance activities of standard government departments take up at least 60- to 70-percent of the total budget.

Yet, delays in disbursements often end in claims against the government by suppliers being delayed releases of public money. The process is slowed down by cumbersome rules, by layers of decision-making, by a ‘broken’ system of expenditure.

Such delays end in a low absorptive capacity for expenditure. It leaves opportunities for budgetary savings. And budgetary authorities could anticipate these and yet would need the flexibility to adjust to the circumstances as they occur.

“The budget law process: PD 1177 and EO 292.”

During the public hearing, the neophyte Senator Sonny Angara, pointed out, through questioning of Secretary Abad, that the current DAP is being justified under the administrative code.

Also, the senator further pointed out, still by way of questioning, that this administrative code, or EO (executive order) 292, was signed by President Cory Aquino shortly after she had assumed political power.

Moreover, this provision of law was based on PD (presidential decree) 1177, of President Ferdinand Marcos.

This comment is very relevant to the current issue of DAP and budget flexibility: it highlights the fact that fiscal reforms under martial law continue to influence present day actions and governance. Without those reforms, the budgetary process would be even more ‘broken’.

“The political framework: presidential versus parliamentary.”

In fact, despite the political rhetoric used by many against martial law and the dictatorship of the period, the budgetary process in the country has been underpinned by PD 1177.

The aspects pertaining to budgeting in this law is the basis of EO 292, the administrative code. There is no shame in that.

Few of us have historical memory. The political reforms planned by Marcos during the martial law period veered toward a parliamentary system of government composed of popularly elected representatives.

This was put into effect with the Batasang Pambansa and the election of its constituent members. It is recalled too that the democratically elected Constitutional Convention of 1970 adopted a parliamentary system of government.

In fact, when martial law was lifted in 1981, a parliamentary government had taken over. Cory Aquino sought the presidency in 1986 under that system. Had it been given more time to flourish, we would have a different country today.

Who can say that the parliamentary governments as exist in many modern democracies are not democratically composed? Under the parliamentary system of government, the Executive and the Parliament are one and not distinctly separate.

The political process should take the place of checking and balancing of political forces to institute the necessary reforms in government. In the parliamentary form, there is no separation of powers between leader and Parliament.

It is also self-correcting. If the leadership is deemed wanting, the system corrects itself by replacing the leader by those holding political power. An alternative in such scenario is a change in the composition of parliament through new elections.

“Supreme irony.”

But Cory Aquino adopted the 1987 Constitution that restored most of the institutions of the old republic: the current system of president, Congress, and the courts. By this decision, the parliamentary government was supplanted by the presidential.

Under the current presidential system, presidential power is separate from congressional power. Conflicts can arise on what laws are prioritized or passed and how they are implemented. And the referee, the Supreme Court, the third independent branch, can rule certain laws and acts of government unconstitutional.

But under the parliamentary system, such conflicts as we know them cannot arise!

If Noynoy Aquino were leading a parliamentary government, then, all the powers of budgeting and flexibility such as those that his government has undertaken with DAP would not be questioned by a Supreme Court.

The DAP would be legal and implemented under an Executive unified with the Parliament.

Palace submits proposed P2.6-T budget to Congress By Louis Bacani (philstar.com) | Updated July 30, 2014 - 5:20pm 2 0 googleplus0 1


House Speaker Feliciano Belmonte and Budget Secretary Florencio Abad presents the 2015 National Expenditures Program. DBM Twitter account

MANILA, Philippines — Malacañang on Wednesday submitted to Congress its proposed national budget for 2015, which amounted to P2.6 trillion.

The Aquino administration's proposed expenditure program for next year is 15.1 percent higher than the P2.265-trillion budget of 2014 and represents 18.4 percent of the country's gross domestic product.

Budget Secretary Florencio Abad, who submitted the budget to House Speaker Feliciano Belmonte, said the proposed spending program aims to bring inclusive socio-economic development to Filipinos.

"[W]e're working harder at bringing inclusive growth to the country through transparent, accountable, and participatory budgeting," Abad said in a statement.

Social services will still take the lion's share of the proposed 2015 budget with an allocation of P967.9 billion. Social protection and welfare services, including basic education and universal health care, account for 37.1 percent of the proposed expenditure program.

* Economic services will receive P700.2 billion or 27 percent of the expenditure program for the next fiscal year. At least P339.4 billion will go to various infrastructure programs, including the construction of national roads and integrated transport systems nationwide.



Among the departments, the Department of Education will get the biggest allocation with P364.9 billion, followed by the Department of Public Works and Highways with P300.5 billion and the Department of National Defense with P144 billion.

Abad said the present challenge for the government is to make public spending more efficient, especially in the wake of the calamities last year.

"Thousands of Filipinos are still recovering from the effects of Super Typhoon Yolanda and other disasters that struck the country in 2013, and this budget—in line with the Administration’s Philippine Development Plan—will carefully account for these communities' needs," Abad said.

FROM THE INQUIRER

‘Pork’-less 2015 national budget amounts to P2.6T By Marc Jayson Cayabyab |INQUIRER.net4:13 pm | Wednesday, July 30th, 2014


Aquino signs P2.265-T 'pork-less' budget for 2014. PHOTO COURTESY OF BALITA.COM

MANILA, Philippines — Something’s different in the Aquino government’s proposed P2.606 trillion national budget for 2015 submitted to the House of Representatives on Tuesday.

This is a 15.1-percent increase from the P2.265 trillion approved by the President as budget for 2014.

The proposed budget also represents 18.4 percent of the Gross Domestic Product reflecting the target GDP growth of 7 to 8 percent.

It’s now free from funds from the graft-tainted Priority Development Assistance Funds (PDAF) or pork barrel funds, which the Supreme Court (SC) has already struck down as unconstitutional.

The budget will also no longer be a source of savings that may be pooled to other projects, as was the practice of Aquino’s outlawed Disbursement Acceleration Program (DAP) that critics say is the source of the president’s “pork barrel.”

That is, if the SC decision is to be followed.

But President Benigno Aquino III in his latest State of the Nation Address (Sona) said the executive would submit a joint resolution asking to define savings after such practice of pooling these unspent funds to other projects not itemized in the budget was declared unconstitutional by the SC.

If savings would be redefined, then government might still continue with its DAP practice despite the SC decision.

The president had also proposed submitting a supplemental budget on top of the P2.265-trillion budget in 2014 to augment the lack of funds for projects stalled due to the court’s prohibition of the DAP practice.

DAP became controversial after Senator Jose “Jinggoy” Estrada, now detained for plunder over the pork barrel scam, bared that funds from DAP were used as incentives to senators who voted to convict ousted Chief Justice Renato Corona.

* Meanwhile, the PDAF figured in an alleged scam of pouring these funds to ghost projects for kickbacks under the scheme of accused mastermind Janet Lim-Napoles. Three senators and their aides are detained for plunder over the scam.

The breakdown of the P2.606 trillion budget:
Social services – P967.9 billion up from P841.8 billion in 2014
Economic services – P700.2 billion, up from P593.1 billion
General public services – P423.1 billion up from P362.6 billion
Debt burden – P399.4 billion up from P377.6 billion
Defense – P115.5 billion up from P89.5 billion

Social services topped the sector with 37.1 percent of the pie, followed by economic services with 26.9 percent, general public services with 16.2 percent, debt burden with 15.3 percent, and defense with 4.4 percent.

The Department of Education topped the government agencies with the lion share of the budget with P365.958 billion.

It is followed by:
Department of Public Works and Highways – P300.519 billion
National Defense – P144.036 billion
Interior and Local Government – P141.423 billion
Social Welfare and Development – P108.97 billion
Health – P102.178 billion
Agriculture -P88.818 billion
Transportation and Communication – P59.463 billion
Environment and Natural Resources – P21.290 billion
Judiciary – P20.285 billion

Tan set to take back full control of PAL: Taipan eyes Etihad as new partner By Lawrence Agcaoili and Jerome C. Morales (The Philippine Star) | Updated August 3, 2014 - 12:00am 0 101 googleplus0 0

MANILA, Philippines - The group of taipan Lucio Tan expects to take back full control of flag carrier Philippine Airlines Inc. (PAL) as early as this month.

After reclaiming management control of PAL, the taipan’s next move is reportedly to take in Abu Dhabi-based Etihad Airways as partner.

A source said negotiations regarding the buyback of the 49 percent interest of diversified conglomerate San Miguel Corp. (SMC) is expected to be completed in the next few weeks, paving the way for the return of full ownership of PAL back to the Tan Group on Aug. 27.

The source said talks between the Tan Group and SMC have narrowed down to the value of the buyout as well as the terms of payment.

SMC president and chief operating officer Ramon S. Ang confirmed that the Tan Group had made a formal offer to buy back the conglomerate’s stake in PAL.

However, he clarified that negotiations are still ongoing.

“Yes, still in talks,” Ang said in a text message.

Ang is president and COO of PAL while Tan serves as chairman of Asia’s first airline.

Tan chairs the 11-man board of PAL while directors include Lucio Tan Jr., Harry Tan, Michael Tan, Inigo Zobel as well as Ang, Aurora Calderon, Roberto Ongpin, Ferdinand Constantino and independent directors Antonio Alindogan and Enrique Cheng.

Estelito Mendoza serves as the airline’s corporate secretary.

* The Tan Group is reportedly raising close to $1 billion to buy back the 51 percent of SMC and to pay the advances made by the diversified conglomerate to PAL for the purchase of brand new aircraft.

In April 2012, SMC’s wholly-owned subsidiary San Miguel Equity Investments Inc. (SMEII) acquired a 49 percent equity interest in Trustmark Holdings Corp. for $500 million. Trustmark owns 97.71 percent of PAL Holdings which in turn owns 84.67 percent of PAL through PR Holdings Inc.

Since then PAL embarked on a massive fleet renewal program program with an end view of acquiring 100 brandnew aircraft. It placed an order for the delivery of 65 Airbus aircraft worth $9.5 billion.

Ang earlier said that he was confident that the buy out talks would be concluded within the third quarter of the year so as not to derail the improvement in the airline’s financial performance.

He earlier has vowed to bring PAL back to profitability after posting heavy losses over the past few years.

Another source said the Tan Group wants to buy back the shares sold to the SMC Group more than two years ago as the national flag carrier is back in the black and is set to expand its flights to the US with the upgrade in the country’s safety aviation rating back to Category 1 from Category 2 and Europe with the lifting of the ban in July last year.

The source pointed out that PAL is set to report a profit of P1.5 billion for the second quarter of the year the first time in years that the airline would be in the black.

PAL is looking forward to booking a profit of more than P1 billion this year given improving operations.

“PAL under Mr. Ang’s management, is confident it will end the year with profits given its current position. It is currently projecting net profits of more than a billion for the year ending December 2014,” the source added.

Meanwhile, another source said the Tan Group could offer up to 40 percent of PAL to Etihad Airways as a foreign strategic partner after completing the buy-back of the shares of SMC in the national flag carrier.

In April, both PAL and Etihad Airways entered into a strategic partnership agreement covering codeshare flights, loyalty programs, airport lounges, joint sales and marketing programs, a Philippines domestic air pass, cargo, and the coordination of airport operations to provide a better guest experience at their Abu Dhabi and Manila hubs.

During the formal signing of the agreement last July 10, Ang said PAL was open to taking in Etihad Airways as equity partner.

Etihad Airways president and chief executive officer James Hogan earlier said the Philippines is a very important market for the airline but pointed out that the agreement does not cover equity partnership.

Hogan clarified that the broad scope of the commercial agreement reflected the strength of the relationship between the airlines and the close ties between the United Arab Emirates and the Philippines.

Etihad Airways is finalizing the acquisition of a stake in Alitalia. It holds equity investments in Airberlin, Air Seychelles, Virgin Australia, Aer Lingus, Air Serbia and Jet Airways,

SMC associate general counsel Mary Rose Tan earlier confirmed to the Philippine Stock Exchange (PSE) that there are ongoing talks with the Tan Group.

Atty. Ma. Cecilia Pesayco, assistant secretary of PAL Holdings, also confirmed the ongoing talks between SMC and the Tan Group.

SMC’s plan to exit PAL is seen to shore up the conglomerate’s warchest in line with an aggressive expansion plan.

In 2007, the conglomerate started selling parts of key businesses into high-growth and capital-intensive sectors like power generation, mining, infrastructure and telecommunications.

Since the entry of SMC, PAL has embarked on a massive refleeting program aimed at acquiring 100 new aircraft to replace its fleet.

'Dialogue In The Dark' arrives in Manila (philstar.com) | Updated July 29, 2014 - 11:20am 0 0 googleplus0 0


"Dialogue in the Dark sparks thoughts that dissolve old mindsets and allow access to new people and a new world" PHOTO FROM DID WEBSITE.

MANILA, Philippines - The Dialogue in the Dark, a unique development tool in complete darkness, will be presented at the Asian Institute of Management (AIM) in Manila, in cooperation with Dialogue Social Enterprise, from August 1-6, 2014.

Internationally renowned for 25 years, Dialogue in the Dark aims to provoke a change of perspective and help people understand diversity and inclusion.

In its initial introduction in the Philippines, Dialogue in the Dark workshops offer a unique opportunity for corporate leaders and management to test and participate in an experience that will have a profound impact on how they do things.

Blind trainers will be taking the participants through a set of inventive team activities in complete darkness.

* The Immersion Week on August 1 to 6 will showcase Dialogue in the Dark to various corporations in ASEAN through the partnership with AIM.

During this week, AIM will offer two Dialogue in the Dark workshops per day for 24 participants per session, plus a Dinner in the Dark experience for 17 participants in the evenings.

Dr. Andreas Heinecke, Founder and CEO of Dialogue Social Enterprise, would also be present during this unique Workshop week in Manila to facilitate the sessions.

“We are very proud to launch Dialogue in the Dark in the Philippines and to blend inclusion, social entrepreneurship, and executive education,” stated Heinecke.

AIM President Steven J. DeKrey noted, “AIM’s mission is to mold the next generation of development leaders and change agents. When we talk about leading in ASEAN, we need to have leaders who have an inclusive mindset to be able to bring about genuine development across all communities.”

Interested participants to Dialogue in the Dark may contact Nyssa Bernal at nbernal@aim.edu or (632) 892 4011 loc. 1604 or Mit Somayia at mit.somayia@dialogue-se.com.


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