Govt to extend EO to keep zero tariffs on wheat imports
The Department of Trade and Industry (DTI) announced today that the national government may extend the zero tariff and duties on wheat imports by another six months to cushion the impact of rising flour prices in preparation for the yuletide season.
In a press briefing this morning, Trade Secretary Gregory Domingo said the technical committee on Tariff and Related Matters (TRM) is recommending to President Benigno S. Aquino III the extension of Executive Order 863, allowing the duty-free entry of wheat and flour in the country to stabilize prices of bread in the local market.
He said technical committee will now fast-track preparing the details of the executive order before it will be presented to the Cabinet “so that the EO can be issued between the period of October and November.”
Executive Order 863, issued on Feb. 19 this year, allowed the duty-free entry of wheat and flour in the Philippines to stabilize prices and supply. The EO has expired this month.
Domingo said extending the zero duty on milling wheat would help stabilize, if not bring down further, the prices of bread and other flour-based products in the local market. (PCOO)
RP to take part in Trans-Pacific Partnership
The Philippines, under the leadership of President Benigno S. Aquino III, aims to participate in the Trans-Pacific Economic Partnership Agreement or Trans-Pacific Partnership (TPP) to be able to forge bilateral trade agreements with the participating nations, including the United States.
Trade Secretary Gregory Domingo, in a press briefing at Malacanang on Thursday, said forging a bilateral agreement with the United States, the Philippines leading trading partner, will be remote if the Philippines will not join the TPP, as the US recently made a policy of not entering into bilateral agreements.
“The only way we can have a trade agreement with the US right now is through the TPP so it makes a lot of sense for us to be with TPP. Otherwise, we will be left behind,” Domingo said.
Domingo, however, recognized the fact that the TPP agreement requires the government to work harder and strengthen its laws on human rights, child labor, environmental protection, property rights, among others. Besides, he said, joining the TPP is “by invitation.”
“We have to do a lot of work on our side,” he added, saying “laws are difficult to get but quite achievable, but constitutional amendments are difficult to get. We don’t even know when it could be done.”
He noted that the TPP is a long process, but what is important for now is that the Philippines has made known its intentions, and informal talks with the group have begun.
The TPP agreement is a multilateral free-trade agreement with an objective of creating a platform for promoting economic integration among nations in the Asia-Pacific region. The framework currently comprises eight countries---Australia, Brunei, Chile, New Zealand, Singapore, Peru, Vietnam and the US. (PCOO)
Palace keeps expenses low despite creation of 2 offices
Despite the creation of two offices—the Truth Commission and the Presidential Communications Development and Strategic Planning Office—by President Benigno Aquino III, Malacañang will not be asking for additional budget for 2011 from Congress.
The Palace has even slashed its budget request for the next fiscal year by 4.3 percent to P4.075 billion from the previous administration’s P4.259 billion in line with the cost-cutting policy of President Aquino, Executive Secretary Paquito N. Ochoa Jr. told the Senate budget hearing on Thursday.
It is the same budget that was approved by the Committee on Appropriations of the House of Representatives last week.
To keep the expenses low, Ochoa explained, the Office of the President reduced the spending plan across the various services within Malacañang and abolished 10 attached offices. It has also realigned the money from the Palace intelligence funds and the Presidential Anti-Organized Crime Commission to cover the funding requirements of the two new offices.
Ochoa said next year’s appropriation for Maintenance, Operating and Other Expenses (MOOE), for example, has been reduced by P163.9 million, with professional services getting the biggest cut of P152.7 million. There is also a cutback in expenses for printing, advertising, travel and representation allowance.
“Addressing our growing deficit will require a team effort on the part of all government offices. We all have to use our resources wisely, and the President’s office is doing its share by cutting back on various expenses,” Ochoa said.
“We believe it is incumbent upon those of us in government to live within our resources. Almost all government instrumentalities are getting budget cuts, and if we do not learn to pinch pesos we will not be able to make a dent in our deficit,” he added.
The Truth Commission was created by the Chief Executive a few days after he assumed office on June 30 to look into the wrongdoings committed by the previous government. The Presidential Communications Development and Strategic Planning Office, on the other hand, is in charge of crafting and disseminating the policies and programs of the government. (PCOO)
U.S. power company to expand business in RP, help reduce power cost
An additional 600-megawatt power generation capacity is coming in to help boost the power generators in the country and will eventually reduce power costs in the years ahead.
In a press briefing at the New Executive Building Wednesday morning, Energy Secretary Rene Almendras said that AES, one of the world’s power generating companies, will expand its power-generating plant in Masinloc, Zambales. The expansion project will add 600 megawatts of generation capacity to its existing thermal plant in the country.
Almendras explained that the project was part of the $2.4 billion in new investments President Aquino brought home from his week-long working visit to the United States last week.
He said three weeks before the US trip, a senior team of AES officials met with him to discuss the company’s immediate concerns regarding the expansion.
Part of their discussions was the power company’s experience in other developing countries particularly Chile and the South America. Almendras said these nations actually face the same problems that the Philippines has, which could be addressed through liberalization of the energy sector and encouragement of private sector investments.
The AES expansion project is expected to help lower power costs. Being an additional base load generation and coal-fired, which is one of the cheaper options for power sources, it will help stabilize cost structure in the energy sector.
Compared to diesel- and fuel-fired power plants, base load generation is a much cheaper source of power.
“Ang problem natin tuwing magkukulang tayo ng base load generation from the geothermals, the hydros and the coal-fired, we end up running our diesel-fired and bunker fuel-fired plants. When we do that, tumataas ang cost,” Almendras explained. “Kaya it is very important for us to have a base load generation,” he added.
In April 2008, AES expanded into the Philippines, completing the $930 million purchase and transfer of assets of the 660 MW (gross) Masinloc coal-fired thermal power plant in Luzon.
The acquisition was a key component of AES’s strategy to invest in areas where there is a significant need for new capacity. It also offered the company an excellent entry point into the growing Philippine economy through one of the lowest cost thermal plants in the system.
The Masinloc project is a particularly attractive investment because the existing facility has the infrastructure in place to allow AES to add an additional 600 MW of generation capacity.
As it has done through similar acquisitions in other parts of the world, the company expects to improve the overall efficiency and output of the existing plant, providing more reliable energy to the Philippine market.
Originally constructed in 1998, the plant uses coal from a variety of sources in the Pacific Rim. Through the project, AES operated the Philippines’ first privatized thermal plant. (PCOO)
Aquino hopes act will be passed by U.S. Congress soon
The Aquino Administration expressed hope that the Save Our Industries Act or SAVE Act introduced in the US Congress will be enacted into law before the October US mid-term elections.
Trade Secretary Gregory Domingo, in a press briefing in Malacanang on Thursday, said the united effort of the Filipino-Americans whom President Benigno S. Aquino III rallied to lobby for the bill’s passage in the US Congress, could contribute to the passage of the bill, just like what they did for the Veterans Equity Law.
Domingo said the proposed measure stand to boost US textiles and Philippine garments and will create some 200,000 jobs in the Philippines.
For the government part, the Trade Secretary said he has sent Undersecretary Cristino Panilio to Washington D.C. to meet American senators and congressmen to push the measure before the October US mid-term elections.
The US textile and the Philippine apparel industry have been suffering from dwindling trade and loss of jobs caused by the massive entry of subsidized and inexpensive textile and apparel products from China, Australia, New Zealand, Pakistan and other producers, after the lifting of the US import quota regime on these products.
Domingo said the Save Act is a win-win formula as it will help both the troubled US textiles industry and Philippine garments manufacturers.
The SAVE Act would grant duty-free treatment to garments wholly assembled in the Philippines, provided that these are made from US-made fabrics, such as yarn and cotton. US yarns and fabrics will also be granted duty-free entry to the Philippines, as they are sold to the apparel manufacturers in the country.
The deal could be worth $500 million for American fabric manufacturers and the equivalent of P350 billion for Philippine apparel makers by the fifth year of implementation
The US market accounts for 80 percent of Philippine garment exports. The level of these exports declined from US$2.1 billion in 2006 to US$1 billion in 2009. Tariffs imposed on imported garments in the US range from 17 to 33 percent.
The US textile exports to the Philippines is expected to grow from US$13.5 million in 2009 to US$500 million in five years. (PCOO)
Gov’t eyes nuclear energy to address power shortage
The government will be conducting a study on the possible use of nuclear energy to address an impending power shortage in the country.
In a media briefing in Malacañang, Energy Secretary Jose Rene Almendras said the Department of Energy (DOE) is now working for the approval of some P50-million budget for the study on nuclear technology.
“If that is approved, hopefully we can start that next year,” Almendras said.
Almendras said the Philippine study is in line with the commitment of member countries in the Association of South East Asian Nations (ASEAN) to implement activities on the peaceful and safe use of nuclear energy when he attended the 28th ASEAN Ministers on Energy Meeting (AMEM) in Da Lat, Viet Nam last July.
“The study we want to do is non-military use of nuclear energy. This is really along the lines of something that we agreed to with the rest of the Association of South East Asian Nations in Da Lat where we agreed with all the ministers of energy that we would like to work together in preparing the safety standards for non-military nuclear use,” Almendras said.
Almendras said the ASEAN energy ministers will finalize the terms of reference for the base consultancy in the upcoming 29th ASEAN Ministers on Energy Meeting in Brunei Darussalam to be scheduled about July or August next year.
“So the resources that we will get if our budget is approved will actually help us in working with the rest of the ASEAN in determining the parameters or guidelines in nuclear energy use,” Almendras said.
During the recent US trip of President Benigno S. Aquino III, Almendras said several groups have expressed interest in building a nuclear power plant, including the rehabilitation of the mothballed Bataan Nuclear Power Plant. But he told them the Philippines still has to review its national policy on the use of nuclear energy.
“There were interests to try to bring nuclear energy to the Philippines but I have to let them know that we have not yet resolved the question of whether we are going to be open to it or not,” Almendras said.
Earlier, the DOE called for the efficient use of energy, including the tapping of other renewable sources of energy, projecting that the country will likely experience a power shortage as early as 2015. (PCOO)
Malacañang conducting study to amend EPIRA law
The Department of Energy has created a Task Force to study what possible amendments could be done to the Electric Power Industry Reform Act, otherwise known as the EPIRA law, to make the law more attuned to the “realities that we are presently in,” Energy Secretary Jose Almendras said today.
In a press conference in Malacañang this morning, Almendras said it was high time to affect changes to the law to entice more power companies to invest in the country.
He said that during President Benigno S. Aquino III’s recent trip to the United States, American power provider AES’s pledge to invest $1-billion in the country was based on the Philippine government’s commitment to work on amending the EPIRA law.
“You know very well that the EPIRA law does not allow the government to sign take-or-pay arrangements anymore or participate in an active guarantee structure for such things,” Almendras said, referring to a provision of said law that disallows the government to “guarantee” the economic viability of power consumers such as electric cooperatives.
“So I had to explain to them what the programs were that we in the energy family are thinking of in order to enhance the credit-worthiness as well as the strategic sustainability of the electric cooperatives, that eventually they have to sign contracts with power companies in order to guarantee that off-take arrangement,” he added.
An off-take arrangement is an agreement between a producer of a resource and a buyer of a resource to purchase/sell portions of the producer's future production.
An off-take agreement is normally negotiated prior to the construction of a facility such as a power plant in order to secure a market for the future output of the facility.
If lenders can see the company will have a purchaser of its production, it makes it easier to obtain financing to construct a facility.
Almendras said he had told AES of the government’s energy reform plan which included “discussing with them some of the amendments we will be proposing for the EPIRA.”
“We are nine years into the EPIRA implementation so it’s really about time that we do these changes,” Almendras said.
“These companies are actually looking for signals such as that: that we are willing to look at the laws, rules and structure that we have today and adjust it to the realities that we are presently in,” he added.
“There’s a group within the energy sector under my office that’s studying reforms to the EPIRA law,” Almendras said.
He stressed however that the government will not “rush” these amendments to ensure that the all bases are covered and that its “implementation is done well.”
“We’re not going to rush this. We’ve agreed with both houses of Congress that we will do a really good job of doing this, so we are not going to rush this. We’re going to do it quite slowly and make sure the implementation is done well,” Almendras said. (PCOO)