Arroyo calls for ‘urgent talks’ with MILF

President Gloria Macapagal Arroyo’s Speech During the 16th Annual General Assembly of the Federation of Philippine Industries, Inc., Hotel Intercontinental, Makati City, 13 August 2007

Thank you very much, Secretary Peter Favila, and thank you, Chairman Ito Carlos for reminding me about the G 11 that we used to have every Thursday when I was Undersecretary of Trade and Industry. I understand after I left it hasn’t been continued so I�m asking Secretary Favila to revive the G 11 (Applause). President Arranza, congratulations also and thank you for all of the many ways by which FTI partners to the government as you enumerated in your speech. Members of the federation, directors of the federation, member corporations and industry associations, Congressman Monico Puentebella, ladies and gentlemen:

I am glad to address the champions of Philippine industry. Ito addressed you as captains but I prefer to addressed you as champions because you work very hard to make sure that Philippine industry is not left behind (Applause). And as Jess Arranza said in his speech, enumerated, you are indispensable partners in development as well as in security. So let me begin by giving you a report on our security situation. Even as I speak, our government forces are in a full offensive against terrorist cells in Sulu.

I have ordered the Commanding General of the Philippine Army Romeo Tolentino to pitch camp in Zamboanga. Tolentino will oversee that theatre of operations. I am sending my army chief to the frontlines so he can be near my soldiers. The Army Headquarters is temporarily set up NOW in the Western Mindanao Command in Zamboanga until the situation normalizes. Tolentino is about to retire but he has been a soldier�s soldier, so this soldier’s soldier will not just orchestrate punitive actions against those who maim and kill but study the peaceful overtures of those who will demonstrate remorse. As I said he is about to retire and usually at this stage of the Philippine armed forces career, retiring three-star generals do their farewell tour. Well, this will be Tolentino�s farewell tour but not his last assignment. Because he will spend his last days in service in the place and the way it began: in Mindanao as the defender of the flag in a mission of peace.

In addition, this morning I issued the following security directives:

First, keep Basilan and Sulu operations firmly controlled to minimize civilian casualties, with NDCC help in evacuating them, and respect ceasefire guidelines in close consultation with the International Monitoring Team, whose mandate we should seek to be extended before it expires next month, and with the GRP-MILF ceasefire committee.

Second, hold urgent talks with the MILF under the Malaysian auspices to contain and resolve the Basilan/Sulu situation, making it clear that the government has to secure its forces and areas as part of peace efforts and law enforcement, but will not overrun MILF areas.

Third, brief the OIC Committee of Eight on Mindanao developments, underlining both the limited military operations and the continuing peace and development efforts, including huge outlays in the 2007 and 2008 budgets for Mindanao, including Basilan and Sulu.

Next, harness the Bishops-Ulama Conference and other religious and civil society groups for peace efforts, and the other civil society groups include your federation with myself and other national leaders joining them in prayers and peace rally in Mindanao, and meeting with them on the need to work together for peace and against forces and ideologies promoting violence.

Next, accelerate the development initiatives in ARRM, especially high-profile public works and social programs, including health, housing, livelihood and Muslim education. If it would not adversely affect the Philippine negotiating position and provoke alarm among Christians, a pilot implementation of the envisioned Muslim ancestral domain regime shall be undertaken, to demonstrate our sincerity to achieve peace. We have declared many ancestral domains among indigenous peoples, I really don’t see why anybody should be scared if there is an ancestral domain declared for the Muslim people. Then also, hold the first peace and security assembly in Bohol. This should happen on the 23rd and 24th of August. And elsewhere, to wind down insurgency in other areas, further demonstrating the government�s peace resolve while freeing up troops in case they would be needed in Mindanao. I give you this report because national security and political stability are the foundations of a strong economy.

So, today I am here to ask you first, to help me appeal to all not to exploit the peace and security issues and initiatives for politicking. After all many of the champions of industry here are very important political supporters as well. And second, to harness private sector support for revenue and anti-smuggling efforts.

I have been looking forward to meeting with major business chambers to call on you to work with government in boosting tax collection and fighting smuggling, which is a major complaint of top business leaders. And it’s a good time to start with you because your federation, that’s why I call you champions of industry. Your federation has especially been active in anti-smuggling advocacy to protect Philippine industry and Philippine labor. (Applause)

We take the shortfall in revenue collection by the BIR and the BOC seriously. We have taken immediate steps to address this. We remain committed to the implementation of our economic reform agenda. The measures we are taking to improve the efficiency of the revenue-enhancing agencies are enabling us to increase revenue collection and get our collection efforts back on track. We also remain committed to doing everything necessary to maintain the economic delivery (recovery) that has delivered 26 consecutive quarters of economic growth and that is enabling us to invest in modern infrastructure and much needed social services. (Applause)

Let us put the shortfall into context. We were not on target for the first half of this year but we have met our target for July. This shows that we knew what has to be done to get back on target. This shows that we have been taking the required actions. And if you remember in 2006 our dedication and discipline to raise revenues led to 20-percent growth in revenues from the previous year. Revenues from collection efficiency and tax administration reforms alone reached 41 billion pesos in 2006 about seven-tenths percent (0.7%) of GDP � higher than the conservative plan of one-third percent (0.3%). We have demonstrated our ability to meet the challenges of revenue generation. And we are confident that we will succeed again in this instance.

Let me describe some of the actions we have taken and will take to address this situation. We have asked our senior team to take responsibility for the actions of their agencies. We have made tough decisions regarding organization and leadership. We’re vigorously implementing Actions Plans with the BIR and the BOC with the support from our development partners and our industry partners like you to improve tax collection efficiency. Some of these measures include holding separate command conferences in the BIR, which I will hold after coming from here and the BOC which we held last Friday, reviewing performance and transferring or at least warning poor performers among revenue district officers and port collectors.

To get the complete Customs picture, last Friday we did a section-by-section dissection of the revenue output of two major ports, the Port of Manila and the Manila International Container Port. Fifty-five centavos for every peso raised by the BOC come from these ports. The transaction value (volume) in these ports is so huge that a mere section of the Port of Manila has the collection equivalent of most ports outside the National Capital Region. If that is the case, I found it more productive for us to scrutinize the performance of the 15 sections in each of the two ports rather than waste time evaluating the yield of, say, the port of Surigao. Port of Manila and MICP section officials are more vital than a collector of a backwater port. To pinpoint responsibility in collection slippage it does us well to go beyond port-level performance and dissect how each of the sections fare.

I am forming a revenue enhancement task force under Secretary Gary Teves and an anti-smuggling task force under the Presidential Anti-Smuggling Group under the National Competitiveness Council. This will be similar to the anti-red tape task force under Secretary Peter Favila.

I invite the Federation of Philippine Industries to join the anti-smuggling task force. Together, let us continue to pursue peace and explore new horizons of Filipino competitiveness, more partnerships and reforms.