Press Release
June 14, 2009

5-POINT ECONOMIC PROGRAM UNVEILED
CHIZ: LOWER COST OF FOOD TO EASE PRESSURE FOR SALARY INCREASES

Opposition Sen. Chiz Escudero said lowering the cost of food could mitigate the effects of economic downturn in the country by easing the pressure for salary increases on employers.

"By lowering food costs, we would be able to give everybody a non-wage increase which would ease and lessen the demand and pressure for salary increases," Escudero said.

The opposition senator spoke at the First National Business Conference of Independent Business Clubs organized by the Makati Business Club (MBC) and the Cebu Business Club (CBC) in Mactan, Cebu last week.

Escudero said 52 percent of the average household income is spent on food compared to only 34 percent in Thailand and Malaysia.

He said cost of food can be lowered by investing in agriculture support facilities such as post-harvest facilities and small water impounding projects, developing more farm-to-market roads, and tripling, at the very least, the government's budget for agriculture research and development from P7 billion to at least P21 billion.

At the Cebu forum, Escudero unveiled his five-point priority plan to achieve a "Progressive Philippines." The five priority areas that need the most urgent attention are: lower costs of doing business, investment in education, lower food costs, more focus on tourism, and promotion of good governance.

He said lower taxes and power energy costs will be the keys to the accelerated recovery of the Philippine economy.

Escudero said power costs can be lowered by completely privatizing all generation plants of the National Power Corp. including all power purchase agreements (PPAs) to generate more competition. He said the government has so far managed to sell off only 40 percent of its generation plants when all plants should have been sold as far back as 2004.

At the same time, he said the country's tax levels are not competitive and should be lowered.

"We should lower taxes to competitive levels. In Hong Kong it is at 17 percent while ours stand at 32 percent. We should bring it down to 20 percent and move toward a flat rate tax system," Escudero said.

"We all seek to improve the quality of life of every Filipinos. To achieve this, we must focus on increasing family incomes by creating new jobs. Jobs, in turn, can only be created if we attract new and added investments, both foreign and domestic," Escudero said.

"But investors will not come in if doing business is not profitable or only marginally profitable. Therefore, our first area of priority should be lowering the costs of doing business in the Philippines," he added.

In line with this, Escudero also said banks need to be convinced to lower their spreads on loans to lower the cost of money, which at about five percent is higher than countries like Singapore, Malaysia, and Thailand where spreads are at around two percent only.

"We can achieve this by providing incentives for mergers among banks, improving our bankruptcy and foreclosure laws, and modernizing and expanding our micro-financing program to make credit available to micro, small and medium enterprises," he said.

Escudero also pushed for lowering legitimate bureaucratic costs and vowed to eliminate "under-the-table" expenses.

"We should find ways and means to further reduce red tape and official discretion because discretion equals corruption especially in revenue and law enforcement agencies including our courts," he said.

Meanwhile, Escudero said there was an urgent need to invest in education to trim the backlog in classrooms which presently stands at 40,000 rooms, expand the conditional cash transfer and nutrition program, and upgrade the skills of teachers with more emphasis on math and the sciences.

"There is simply no excuse for a 35-percent dropout rate in elementary and a 60-percent dropout rate for high school," he said.

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