INTERVIEW OF SENATOR WIN GATCHALIAN ON THE SOURCE WITH CHERIE MERCADO (CNN PHILIPPINES)
NFA | TRAIN | INFLATION | THIRD TELCO | TRILLANES
CNN STUDIO

Q: How would you assess our situation now? Currently, the peso is dipping again.

SEN WIN: Correct. If there is one solution that the President should really work on, it is the supply of rice. I think everyone agrees, even the economic managers, that there is now an aberration in the supply of rice that leads to the increase of price as well as the increase in food inflation that we are all feeling right now. For ordinary Filipinos, rice is about 10% of their expenditure. For the poorest 30% in the Philippine Statistics Authority measure, that's about 20% so 20% ng kanilang gastusin ay pumupunta sa bigas. At this time na there is an increase in the price of rice, malaki ang epekto sa ating poor constituents. I think we should fix that and also on an overall scale, fix the policy on rice supply because right now, NFA is not effective anymore. It's not delivering what it tends to deliver which is to help our farmers and to help stabilize the price of rice which is not being met right now.

Q: So you are for the abolition of the NFA?

SEN WIN: Yes, to move forward and this is actually in line with the President's pronouncement during the one-on-one interview that he would rather import rice that he would rather support the rice tariffication program. If we have rice tariffication program, then wala na talagang logic to maintain NFA because the private sector will now import rice, the market will stabilize supply and demand, and even pricing, and the government will still monitor and regulate the activities of rice.

Q: What's the status now of the rice tariffication bill?

SEN WIN: I think yesterday, Senator Villar sponsored it on the floor, it's up for debate. Hopefully, within 30-60 days, we will now have a rice tariffication bill. I think the economic managers have been pushing this for a very long time. NFA, it was created 31 years ago, the intention really is to stabilize rice.

Q: So we don't need NFA anymore?

SEN WIN: Yes, we don't need NFA anymore.

Q: Do you agree that the measures that the government is saying now? They are going to issue an Executive Order so basically, it's flooding the market with supply?

SEN WIN: Temporarily. This will not be sa medium-term or even a long-term solution. Temporarily, yes because we have an aberration in the market meaning, demand is outstripping supply until mag-normalize. Our rice producers and fishermen can catch up with the demand. Temporarily, our government will allow importation. Actually, the Executive Order mentioned was the first time economic managers will have a unified position and a unified strategy on curbing inflation. It's about time, may mga ginagawa in the past but it's a hodge podge of different counter inflationary measures. The economic managers should really talk to each other instead of different departments doing different things.

Q: You don't think that economic managers should be sacked?

SEN WIN: No, not at this point. A lot of these measures, the economic managers have formulated these in the past and they already implemented since January and it's really about time to put a holistic approach to this counter inflationary approach.

Q: Now, we can go to TRAIN 2.

SEN WIN: In TRAIN 1 first, meron doon mga mitigating measures which is to give 200-300 pesos to our poor constituents and yan pa lang ay hindi na nai-implement ng mabuti. During our last hearing, we found out that out of the ten million families that we're supposed to be giving support, only six million has been given the unconditional cash transfer. Ginagawa na but apparently, it's not complete. The concept here is pagpalo ng January, all of these mitigating measures should be given already to the constituents, hindi na dapat nating hintayin na tumaas pa ang inflation.

Q: Bakit daw?

SEN WIN: Many administrative issues like mahirap daw i-distribute, malalayo raw but all of these have been discussed last year. Senate and Congress even put 21 billion to finance these counter inflationary measures, that alone is medyo delayed na. We're calling on the DSWD, who's supposed to implement this counter inflationary measure, to speed up.

Q: But you're not against the excise tax on fuel?

SEN WIN: The excise tax on fuel was used also for other things -- the free higher education, it actually helps lowering down the inflation. Noong naging libre and tuition fees sa mga universities natin, it actually deducted 0.2% from our inflation so nakatulong sya sa pagbaba. It also financed the increase of the salaries of our policemen, firemen, military.

Q: Ito ang mga good news bago ang inflation.

SEN WIN: Correct, dito kinuha sa excise tax ang mga programa ng ating Pangulo. But again, there are other unforeseen events like the rise of oil, the depreciation of peso, that contributed to inflation.

Q: Are you for the suspension of that?

SEN WIN: We are studying carefully. That's the very last suggestion that we would make because revenues are very important to the government, especially in 2019 where all of this excise tax will be used for the Build, Build, Build Program and admittedly, we would need to raise up our infrastructure spending to about 6% of GDP, we're hovering around 4.5 eh so just to catch up para mawala ang traffic, magkaroon tayo ng magandang airport at subway, we need to raise it up to about 6% of GDP.

Q: And then, kailangang balansehin din our own exports.

SEN WIN: Yes, correct. In fact, one of the reasons why the peso is weakening is because we are importing more than we're exporting and that's also a cause for concern, especially in our current account deficit, lumalaki sya. That's why the peso has been slowly depreciating. That contributes also to inflation because we have to remember we are a net-importing country. We import oil, coal and rice so kapag nag-weaken ang peso, definitely, these commodities will also go up.

Q: What's the status of TRAIN 2 in the Senate?

SEN WIN: The House has already approved TRAIN 2 and now it is moving to the Senate and the Senate Ways and Means Committee will be undertaking a few hearings in the next few months but beyond those hearings, we have been talking to a lot of stakeholders, from the semi-conductor industry and the BPO industry, we are trying to understand the impact of TRAIN 2 on the different industries and studying it very carefully.

Q: What are your reservations? What are the things that you want to understand more?

SEN WIN: Conceptually, we're the only country giving away perpetual incentives. Tayo lang ang nagbibigay ng walang katapusang incentives and conceptually, these incentives are meant to attract industries, let them make money in our country and at one point, help in nation-building naman by paying your taxes. But, if you don't pay your taxes, you are not helping in nation-building so there must be some formula to giving out incentives. The approach should be per sector or per industry approach because not all industries are the same. We cannot apply the same approach to all industries.

Q: The people are asking now, is TRAIN 2 going to be passed in the Senate?

SEN WIN: TRAIN 2 is revenue neutral. We will lower down our corporate income tax, bababaan natin from 30% to 20% eventually. Ang pagbawas ng revenue natin doon, babawiin naman natin doon sa rationalization na binigay natin in the past.

Q: So wala syang kinalaman sa presyo ng pagkain?

SEN WIN: Wala, this is purely incentives so wala syang effect on the price of basic commodities. Wala ring kinalaman sa fuel. We are studying carefully in various industries, for example, power -- pinag-aaralan naming ang power sector because if rationalized inadvertently, it might increase the prices of electricity so we are looking at per industry basis. Hindi yung buo. We're meeting a lot of different industry stakeholders, like oil and gas and power sector. Ang target namin is hopefully in two months, we will have some clarity in TRAIN 2 but conceptually, TRAIN 2 is meant to make our country competitive by lowering corporate income tax because we are one of the highest in the region. We also have to rationalize the incentives given in the past.

Q: How are we preparing para sa papalapit na bagyo dahil baka tamaan na naman ang rice-producing areas?

SEN WIN: Region 1, 2 and 3 are rice-producing areas of which nasa diameter sya ng bagyo so hopefully, hindi magkaroon ng malaking damage because this is also critical in the fight against inflation because what we want here is a bumper harvest this coming end of the year, mas maraming supply ng palay which will eventually lead to lowering down of the price of rice. We are really hoping for a good harvest this fourth quarter to help in the supply of rice. The long-term goal really is to catch up. If you analyse things, our economy is growing at the average of 6% but our agriculture is not growing, our population is growing at an average of 3% but at some points in 2016, I think agriculture even went down so hindi maka-catch up ang agriculture natin sa population.

Q: Why is it so difficult to improve the agriculture? We're supposed to be an agricultural country.

SEN WIN: Correct. Well, hindi imposible yun because at one point we were exporting rice. It just so happened that the strategy being put in place is not yielding results which is NFA -- it is really a strategy to strengthen agriculture sector but NFA is a failure in the past years. Strategy is a big factor and we really need to review the strategy to move forward and also review so that every peso spent will yield to productivity of our farmers.

Q: Let's talk about the third telco player.

SEN WIN: The Senate approved last February the Lifetime Cellphone Number Act. In Congress, they approved it two days ago. Itong batas na ito will enable us bring our mobile number anywhere so for example, this telco will come in, nag-offer sya ng magandang service and you want to switch, you don't have to change your number, you can bring it to your new telco.

Q: Pero hindi pa ito batas?

SEN WIN: Magiging batas na sya. Hopefully, within two to three weeks ay magiging batas na sya. The President has promised that middle of this year ay meron na tayong bagong telco.

Q: Ano ang biggest challenge bakit tumatagal?

SEN WIN: I think in this case, it's the task force or the group that was assigned to study this situation. They want to make sure that the telco that will come in is financially capable and has the technical capability. There is no more bidding, they are just reviewing if the third telco will be a serious player. It's about time to decide. It will take about six months before we see the actual player operating.

Q: Do you have any preference on the third telco player?

SEN WIN: Wala naman as long as they can lower down the prices and they can improve the services, especially the internet speed.

Q: What are your thoughts on the destabilization plots on what the President said he has information from a friendly country that there are actual destabilization plots related to your colleague, Senator Trillanes?

SEN WIN: From a business standpoint and aside from inflation, there are other pieces of good news:

1) Unemployment has gone down to 5.2%, that is a very good number, it came from a 7-8% so meaning mas maraming tao ang may trabaho;

2) Foreign direct investments went up to 42% so mas maraming nag-iinvest sa atin so mas maraming trabaho.

What we don't want is uncertainty, many of the credit rating agencies have already flagged this na kung may uncertainty, there is a very big risk that your credit rating might go down and it will also affect us. These talks about destabilization, coup d'etat, even federalism creates this atmosphere of instability that we don't want because everything now is moving towards good news and all of these talks might create a negative environment that would lead to uncertainty for our business sector. What we want is a stable nation so that investors will come in and we can grow our economy.