Press briefing of Cabinet Secretaries on the Public-Private Partnership

MODERATOR: Good morning, sirs.
SECRETARY CARANDANG: Good morning and thank you for joining us and welcome to the Malaca├▒ang Press Corps. As you know, at 2:55 this afternoon President Aquino will leave for a four-day trip to Japan. He will attend the APEC Summit. We will return on Monday. Accompanying the President on his trip will be Foreign Secretary Alberto Romulo, Finance Secretary Cesar Purisima, Energy Secretary Rene Almendras, Undersecretary for International Economic Relations at the Foreign Affairs Department Antonio Rodriguez, Undersecretary for International Trade at the DTI Adrian Cristobal, Jr. and PMS Secretary Julia Abad as well as myself and other staff.
The delegation will total 51 people not including the President. So, that would be 52 including the President. We have some bilateral meetings that we’re expecting to hold with other countries while the President attends the APEC summit. Some of them are still being scheduled for confirmation. But what we have on the table are Chile, China, Indonesia, Papua New Guinea, Russia and the United States.

We will give you more information as to when they will push through and the schedules when we get to Japan. As you know, the APEC summit, many trade international issues will be discussed. So, the President will be meeting again to talk about many international trade issues. Some of the topics that might be discussed at the APEC Summit will be how to move forward with lowering trade barriers. And we expect also on the sidelines a lot of discussions about the weakening US currency and the impact that is having on the global economy.
The President also intends to meet with some Japanese companies to see if there might be some potential investments from Japanese companies to the Philippines and we hope these meeting will be fruitful and we will report on these developments when we are able to firm them up from Japan.
For those of you who might be asking the budget for the trip, according to Executive Secretary Jojo Ochoa, it’s P16.34 million. Again, keeping with the policy of a lean and prudent delegation we are spending only about P16.34 million for this trip.
After the trip, we will be…the next big highlight on the economic agenda will be of course the PPP conference. The Public-Private Partnership program will be launched by the economic team. And we have invited investors from all over the world to participate in this, to attend and to see the different kinds of projects that we have lined up for offer to the private sector for them to invest in.
For more details on that and will take questions on other matters a little bit later but in the meantime let me call Finance Secretary Cesar Purisima to talk a little bit about the PPP conference.
SECRETARY PURISIMA: Thank you, Secretary Carandang. Good morning, everyone. Next week, we will be having our PPP Conference. This will launch the major infrastructure drive of President Aquino. As you know, he’s addressing the three things that has held as back the past many years and that’s corruption, red tape and the wrong policies as well as the infrastructure gap. The focus of our infrastructure conference is to announce the new framework under which we plan to attract private capital as well as expertise. So, that we can free up space in our budget to pursue the other agenda of the President. If you’ve travelled around the region, you will notice that from the airport alone to the roads and other infrastructure, ours have lagged behind our neighbors including those of Vietnam as we saw in the recent trip of the President.
So, we’re revising the framework; we’re announcing next week in the conference. We’re also coming up with the initial list of projects that we will look at. We will be coming up with a list of a hundred projects on which about ten will be ready for bidding next year. We would like to emphasize that in the conference itself. We will not be bidding out projects as we are presently doing the feasibility studies on projects. It’s important from lessons in the past that we need to do our homework to make sure that these projects are properly structured and done in a transparent manner. The other thing that will be very clear we will be going to conduct our PPP initiative in the future is that everything will be done in broad daylight.
There will be no midnight deal; there will be no backroom deal. Everything will be transparent. And that’s why the focus will be on solicited projects rather than unsolicited projects. The focus will be in three major areas which are tourism, the food supply chain and of course general infrastructure to make our cities more liveable and more competitive. The cost of doing business in the country should go down because it’s important in not only attracting investments but in making sure that these things in the country.
One of the biggest drivers of wages is food cost. If you compare our food cost to our neighboring countries such as Thailand, Vietnam and the others, ours is a bit high and big reason for that is the lack of food infrastructure to support our farmers in the Department of Agriculture. So, we will look forward to seeing you next week if something that I think will open new ways of doing business in the country.
SECRETARY PADERANGA: Magandang umaga po sa inyong lahat. As you may already have heard, the BOT center has been transferred or is being transferred to NEDA and will be renamed the PPP Center. We hope that this change, together with some changes in procedures that we will install, will lead to the consistency of these PPP policies and projects with our development objectives. That is one of the reasons for the change. And we hope to realign PPP procedures with the regular investment programming and project evaluation that we hope is  disciplined and transparent as Secretary Purisima had mentioned. We hope that with this, we will be able to cover all PPP program and  projects including all variants and arrangements under the BOT  law and joint venture agreements. But as already been said, we would really prefer to do solicited proposals and subjected to public bidding under transparent rules and regulations. But the PPP center will allow us a certain ability to be in proactive engagements with line agencies and LGUs at project preparations stage in order to minimize delays later on on the project.
We also plan to build technical advisory and technical assistance at all stages of the PPP life cycle. We hope that this will lead to early resolution of PPP related policy issues through our mandate as secretariat to the NEDA Board chaired by the President. We plan to put together, at least even on call, technical expertise that would be very useful for project evaluation, project development before that and finally project assessment. We hope that all of these will lead to and improvement in the whole process and make our investment program and process serve our development objectives even better.
SECRETARY SINGSON: Good morning everyone. As you probably know by now, the Philippines has the lowest in terms of paved roads in the region. We have also the lowest in what we referred to as the high standard highways or the expressways. So, we don’t only have the lowest  in paved roads, we also have the lowest in high standard highways in the region. So, the focus of DPWH moving to 2016 is to upgrade out national roads in terms of quality and safety. Having said that, during this PPP conference and  until 2011,  we are just completing the feasibility studies of several road sections that were designed within   a 200-kilometer radius of metro manila. In other words, we are looking at several expressways, new alignments; this will include even C-6 or the road dike along Laguna Lake. We are also developing new road networks in Metro Cebu and we are also developing new road networks in the Mindanao area and this will covered Tagum all the way to General Santos. So, that is moving  as I said, we are  completing feasibility studies of all these road sections, so that we will continue to launch them  as we complete the feasibility studies.
The reason for the need for a full feasibility study, as Secretary Purusima said, we will be going through a solicited route, in terms of solicited mode for PPP projects. The intention here is, so that we know exactly, what the risk that are involved in these project. How much is the government going to commit and how much is expected   from the private sector?  Aside from the roads, we will be looking into more private sector investments in the form of long term road maintenance program. We want the private sector to also get involved in rehabilitation and the maintenance of existing roads. In other words, they need not be user fee, they will be paid by the government on an annual basis. We are also developing the terms of preference to do more bridge development with the private sector. The other area will be in terms of the private sector operating our way-bridge programs. As you know, we have way bridges across the country. But as you can see, they have been   ineffective in the sense that overloaded trucks still continue run around our national roads.
Now, specifically for the PPP launch on November 18, we will be launching initially two major projects. The first one would be the NAIA Expressway link that will connect from Andrews all the way to Coastal and the other will be the Cavite-Laguna Expressway that will connect the Coastal side of Cavite all the way  to the Skyway and the South Luzon Expressway. The first section that we will be launching  as far as the Cavite-Laguna Expressway is the  Cavite side which is about 27 kilometers that is expected  to have an investment  cost of about Php11 billion. As I said, we will continue to develop more in the pipeline of PPP as we finished feasibility studies for all of these roads sections.
Thank you.
SECRETARY CARANDANG: As you can see, the administration has put in place a program to attract investors to build these projects, which would otherwise have been built by the government. The resources that we will save from the private  sector participation will, of course,  go to much needed social services in line with the President’s program of reducing corruption and reducing poverty. So, it’s a very concrete steps that are being taken to investors  to come in and invest in the Philippines  to  help the economy grow. Next week, we hope that  many of you will cover the PPP conference, it is a major economic initiative of the administration. And so, we do hope for a lot   of international participation in   that.
Now,  having said that I know,   that there are some other issues that you want to ask some questions about economy, let’s make our resource persons, they are here,  if there are other matters and    then we can ask questions.
Q: Secretary Purisima, sir, how many participants were you able to attract with the PPP summit and were you initially concerned that   there wouldn’t be   as much participation because of the travel advisories against the Philippines?
SECRETARY PURISIMA: First, we have sponsors for this conference that are helping us, the WorldBank, the ADB, a couple of private banks and this conference is being organized for us  by Finance Asia.  We are confident that we will be attracting the  right people to the  conference, both proponents, financiers and  there  will, of course, be a healthy number of government people there, not only from the Executive Department, but  from other branches of  government  that we have invited so that we can have a healthy discussion. All of these will be available in the press later.
So, it’s a launch. So the physical attendance is important of a select group of people. So, we are confident that we are getting them to attend in the conference. The travel advisories to the Philippines, for example,   of the US has been there for many years. They just updated it. The Ambassador himself said that he is very happy to be here  in the Philippines. And we have not seen a slow down of arrivals into the country.
Q: To Secretary Purisima, can you tell us which companies or specific people are attending this conference?
SECRETARY PURISIMA: I don’t have the list with me as it is  with the conference  organizer. But basically, we have invited  the people who are in the  PPP space, those that  provide funding, those that  are proponents of  projects, those that act as advisers or consultants to the process, as well as multi-lateral  partners, who  fully support this initiative. In fact, in APEC, the ABAC as one of their recommendations to the leaders is really to  top  private capital in accelerating infrastructure investment  in  the  region.  In the case of the Philippines, this is also one avenue to channel some of the dollars  that have been coming to the country into more productive uses. As you know, infrastructure makes our country more competitive. Our businesses are more efficient and  therefore, it is important that we invest in this infrastructure, so that we can continue to attract investments and accelerate the  growth rate  of the country. Not just grow, but grow at higher levels on a sustained basis so that we can reduced poverty in the country and that is the ultimate goal of President Aquino.
Q: Sir, how much is this first ten projects worth and how soon next year can be them out?
SECRETARY PURISIMA: I think, what we need to focus on is first change in the framework because this is going to be important, because if we don’t make adjustments from our previous framework then we may face the  same issues that we faced in the past. So, that is the main focus of this conference to announce the new framework. The second is the list of projects. As I mentioned earlier, as  mentioned by Secretary Singson, it’s important that we do the right homework, our  homework in these projects, that we do the right feasibility studies and we  hired  the right consultants  to make sure these  are structured properly  a lot of problem in the past is  the  fact that we did not  do our homework, the process was not transparent.
And as I said earlier, in the Aquino Administration, everything will be done in broad daylight,  there will be no backroom deals or midnight deals. That is why the focus is solicited projects. We estimate that there  are going to be about ten projects that will be ready, where we done our feasibility study that will be ready for bidding  next year. There can be more depending on the phase of the work done by the other departments.  But our plan is to accelerate that  even more beyond  2011. That is why we are releasing initial     list of about a hundred projects that cover Luzon, Visayas and Mindanao. Then we will refresh at least every quarter as we learned about a needs  of the LGUs, the region, the NEDA comes out with updates on their economic development priority. So, this will be in the billions. And we will mobilize local resources at the start, because as you know there is enough liquidity in the banking system. So, we would like to tap closed to a trillion pesos part in the SDAs, in the Central Bank into more productive uses. At the same time, there is a lot of money from abroad for this purpose. So, the first ten would be, if all bided out, would be in expense of, I think, over hundreds  of billion. As you know, infrastructure is expensive, that is why we need to mobilize private capital and expertise, not just their money, but their skills in running things.
Q: Sir, Malaysia is also seeking to tap the private sector to help them build their infrastructure. How are we going to convince these foreign investors to come to the Philippines instead of somewhere else in the region?
SECRETARY PURISIMA: For one, there is a lot of money.  The queue into of the  U.S.     will result into at least  600 maybe 900. They are talking about 75 to 100 billion dollars a month that they are going to release to the  U.S.  economy in terms of purchase of U.S. Treasuries and most of us believed that  a portion of that money  will end up in this region because the growth    projections  and prospects for this part of the world is going to be much higher in the future than that in the US. And therefore, there will be  a natural attraction  of money going into this part of the world.
So, we are not concerned, plus the fact that the Philippines’ market is bigger than Malaysia. We are close to a hundred million people, Malaysia is, I don’t know, 20 plus million people. In terms of market opportunities, the Philippines is bigger. Thirdly, the infrastructure situation in the country   is not as advance as of that Malaysia. In our case, the needs our more obvious and there are more opportunities, I believe and I think our framework is very competitive.
Q: To Secretary Purisima, what guarantees do investors have to  get them and return on investment  and in particular? Will there be a sovereign guarantee for these PPP projects?
SECRETARY PURISIMA: We will announce all of these in the conference and we would like to ask you to be there to cover the conference. The one guarantee that I can announce now is a guarantee of level playing field—that everything will be transparent, that they will get all the support from the Aquino Administration. We will make it easier for them to do business in the Philippines as compared to the past. We will hold their hands and  the whole cabinet has been working as a team and  we are working with the local governments as well. So, that is a guarantee that we can give you. These projects will be done, as I said, in broad day light as opposed to the past.
Q: Sir, on  the  another matter. What is the structure of the funding mechanism that is in place for this PPP projects?
SECRETARY PURISIMA: We will also announce in the conference. As you know, we cannot announce it now, or else, they won’t come to the conference anymore.
We need to help Secretary Lim also to bring tourists to the country. But basically, there are couple of features that’s very important. Infrastructure projects are long term by nature, and therefore, we need to create a pool of funds   that will match that. So the treasury will be doing a local bond swap, money exchange that will increase the  liquidity in the longer end of the peso curve in the 25 year range. So that   not just the government, but  also private sector can also  issue 25 year papers  in the country. That is the first big thing. So, we are going to offer opportunity to raise funding that  matches the nature of the  project  and it will be in pesos as you know there is liquidity in Philippine market. That again, will allow for better matching of revenues and  costs. Unlike in the past,  also. And third,  given the prevailing condition, it will be  at the lower cost, again compared to the past that  will allow them now  to charge hopefully more reasonable  user fees, if there is a need to charge user fees. Because  some PPP projects will  not be  user-fee based, it will be in the nature  of social infrastructure that would involved obligations of the budget on a multi-year basis. So, those are things that we’re announcing.
Q: Sir, clarification on first ten projects.  Is this the same list that you gave out during the  economic briefing last September?
SECRETARY PURISIMA: Some of them are there but  there  may be new ones. Because again, just a clarification, the first ten are not necessarily the most important projects. It’s just that these projects are the ones that are ready for bidding out. They  are important; they are part of our priorities.  But these projects happened to be, have been studied in the past already. Some, in fact, If I am not mistaken, Secretary Paderanga, has been around since the ‘80s or early ‘90s and that shows you the issues that are country faced in the past. Inability to execute on our program and that our focus  really in the Aquino Administration to  make it easier to execute projects. That is our goal.
Q: Are the two expressway projects mentioned by Secretary Singson included in the  first  ten list?
SECRETARY PURISIMA: I believe so. I believe so.
Q: What is the role of the state banks like DBP and Landbank on these PPP projects?
SECRETARY PURISIMA: As a state bank, as owned by the government, they are there to support the program of the Aquino Administration. So,  we are working closely with them, in particular the DBP in  creating the funding pool; with the  Landbank of the agri(culture) part of the equation because a key component  of this is the food supply chain also.
Q: Secretary Purisima, Secretary Singson mentioned that the project will be bidded out next year. But you expect commitment to be made as early as next week?
SECRETARY PURISIMA: As I mentioned, our goal is to announce the framework Announce the preliminary list of projects. Get them to know the people that they will be dealing with  in the process. And with that, I think we have accomplished our objective. And then, next year, we will start bidding out projects as they  become ready and hopefully  in an accelerated basis as we are able to complete  feasibility studies.
Q: So no commitment, sir, basically  it is marketing the projects that will   be brought out next year?
SECRETARY PURISIMA: Even if they make commitment, as we said, we are  going  to focus  unsolicited projects and we are not soliciting during  the conference. So, if they make commitment, that is probably unsolicited  bid, we will say thank you and we appreciate it and we  will tell them to  wait  for  when we  bid this out. But even while we speak, there are people who have expressed interest in one infrastructure or other. And in fact, when the Aquino Administration came in there were live  unsolicited proposals. In fact, I believe there  were proposals  that were already accepted by the previous  administration  that  we  just have to  finish and complete the work.  But with this set, because  that is the key agenda  of the president, change of governance, change in the way  things are done in telling the world that Philippines is now open for business  under new management, under good governance. That is why we are launching this program.
Q: We just want to review the figures that were given put about the PPP. I remember during the Philippine Business Conference, in a speech.  I think it was presented by someone else from NEDA. You gave a figure of  106.8 billion for the ten projects and  for the 70 projects, If I am not mistaken, 718.8 that was the investment of the government. The number is still hold, are they correct?
SECRETARY PADERANGA: Yes,  those are still the numbers that we are going with. Although the 700 million  that is really  soft.  These are initial  estimates. Some essentially  small part estimates because we do have to process this even more. The ten is a little firmer, but then, you can see that in the list, there are at least two projects, where the cost has not yet been complete.
Q: How much of this,  do you think can be funded by   the private sector? How much the government want the private sector participation, maybe, how big? For instance, the 106.8 billion, would that be a fifty-fifty, ninety-ten percent. How much?
SECRETARY PADERANGA: There will be a restructuring of the financing and it will depend on what project per project and sometimes you get feeling  from  the market as to how things will go  and it will be structured by the Department of Finance mainly  among others. And then, there is also a bidding will have to come out.
Q: To Secretary Purisima, sir.  Sir, with this new PPP framework, are you confident that this administration can surpass the alleged achievements of the previous administration in terms of infrastructure?
SECRETARY PURISIMA: I‘m confident that  if we do  things the right way, if we have a level  playing field,  predictable regulatory environment,  simpler business processes, government that’s friendly to business and to the people, I am very confident that  we will not only exceed but will beat it by a mile. Because you know, this country, our country really has a lot of potential.  And the sad thing is, we have not been able to  tap that potential because of as the  President  has rightly identified  because of corruption, because of red tape and the wrong policies, and because of  lack of investment  in infrastructure that has made us  less competitive.  So, if we address these three things, you’d be surprised what you guys can accomplish. It’s less the government, it’s the private sector, that really make things happen which is to provide the environment. And that is what we are trying to do make the Philippines more friendly, making things happen.
Q: Sir, will the PPP projects subject the country to so much long term debt that the goal of reducing the GDP ratio is forfeited?
SECRETARY PURISIMA: No, that is precisely the reason. Infrastructure can come either from taxes, government expenditure or a combination of government and user fees or just user fees. And our thrust is tapping private capital.  And I think by the end of the Aquino Administration, the debt to GDP of the Philippines would be lower. More importantly, the foreign currency component of our debt will be much lower, reducing our vulnerability  to foreign currency risks.
In 2000, for example, it was a high of 68% external debt to GDP. Now, we’re around 34% and we hope to bring that down farther.
Q: Sir, can the government be waiving taxes on bonds that PPP participants may issue on the projects?
SECRETARY PURISIMA: If it’s issued in the local market, there will be withholding taxes. We have not changed that. If they issue Global Peso Bonds just like we did. And if it’s the government that issues it, there will be no withholding tax. If it’s a private sector, there will be.  So, we are not changing and we  don’t have plans  at this point to change it. In fact, Thailand removed the exemption, they re-imposed that withholding tax. I think in their case, 15%.
Q: Good afternoon, sir. I don’t know if it’s you or Secretary Paderanga  who will answer the question.
Sir, with this PPP, does that mean that we are going to reduce our availment of ODA loans?
SECRETARY PADERANGA: Well, not necessarily. It might actually mean that there will just be a much bigger volume. Although, I think in percentage terms that really will probably happen.
Q: Like how many percentage is left, increase or decrease?
SECRETARY PADERANGA: We still haven’t look at those numbers at this point.
Q: So, we are still seeking ODA from other funding sources aside from Japan or else?
SECRETARY PADERANGA: Oh, yes. Well, we have our traditional partners. Several of them, of course, the multilaterals are there and we have several bilateral partners. Some of them actually have been increasing their appetite for assistance to the Philippines. Because among others, they have been beneficiaries of the economic shifts that have been happening in the world over the past ten years.  Some of them are actually in the Asian region.
Q: Secretary Purisima, sir. Sir, the President has instructed you to  look for ways to cushion the impact of the strong peso on exportation of OFWs. May we know what measures would you be   considering?
SECRETARY PURISIMA: First, you know, it’s important that we fully understand what’s happening.  As you know, the US dollar has weakened. And the reason most of the currencies around the world are strengthening   is because of that.  In the case of the Philippines, it’s the same case; it’s less our strength; it’s  more  their weakness and, therefore,  given that there is very little that we can do to change that fact.
There are several three things that are happening in the  world. One is the developed economies for various reasons. Partly, demography, partly problems that they have like the housing problem that triggered by US problems.  Their growth prospect is going to be flat or very low. Whereas, the emerging markets, such as the Philippines, for reasons of demography like us and we will have  fast growth rates and, therefore, money will really continue to flow from  them to us. And when that happens, when the supply is a lot and currency will continue to decrease, what the Central Bank is aiming for and I don’t want to speak for Governor Tetangco, but what I think they are trying to do is make sure that this process is done in a smooth manner. What we are is a country should do is take advantage of the situation. This is something that we have been looking forward to for a long time before, you know, money would not  come here. We must channel this to  productive uses and the PPP  program of the President is a very good way  to make sure  that this  happens and this goes to productive purposes. And I think,  from the Department of Finance, on our funding program,  we will always  be driven  by what the market offers to us. If there is opportunity to borrow  locally, we will do so.  If there is opportunity  to borrow  outside at the better terms for us , we’ll also continue to do so, but we will  not lose sight to our focus which is to reduce our foreign currency component of our debt, to lengthen our maturities and to reduce the  bunching up as well as reduce the cost of  borrowings. So, we’ll be driven  by those objectives and that’s, I think, what we should expect.
Q: Sir, why did the government consider of setting up some kind of both exporters on OFWs as the previous government has done?
SECRETARY PURISIMA: I don’t know what the previous government has done in this matter because the situation really is just  happening now.  I would liken trying to fight this trend to trying to stop the waves in Manila Bay.  There is very little you can stop in doing that.  You can only create some breakwater to smoothen and that’s what we are trying to do, just smoothen it. Because ultimately, the trend will  be whatever the fundamentals are and the fundamentals right now is pointing to the fact that  the good prospects in the emerging markets is going to be better and, therefore, that attracts money. And our goal is to attract, point that money to productive uses rather than to speculative purposes.
Q: Sir, what can the government tell the OFWs and exporters just to allay their concerns over the stronger peso?
SECRETARY PURISIMA: That the President is addressing the three issues that have made them go out of the country to look for jobs and that is corruption. That is the wrong policy and red tape and the lack of infrastructure. The goal of the President—he doesn’t want to stop people from going abroad, if they want to go abroad.  But he wants to change the fact that he wants to give people the options. That if they want to stay in the Philippines, they’d be able to gain employment here and not leave their family for long periods of  time.  But for those people who really wants  to leave, they can go ahead. But  in the past, our people didn’t really have the option.  And that’s because we have really not tap our potential  and, you know, this takes   a long term, this is a process, it will go beyond the Aquino Administration. What President Aquino would like to establish the foundation, point our country to the right direction and, in fact,  he says this was successful that the next administration will have  no choice but to follow what he did. That’s a goal.
So, I think, that’s what we have to tell them. They have been there already continue, you are heroes of our country, you are keeping us, you know afloat, but we are now addressing the issues finally. And as President Aquino likes to say, we are bringing daylight back to the country.
Q: Sir, some multinational banks were predicted that peso will close at 40 to one dollar by the end of the year? Do you think this is realistic estimate?
SECRETARY PURISIMA: Well, you know, banks like to make prediction you should also ask them how accurate their predictions have been. I am not in the habit of making predictions. I  just like to  look at  fundamental issues and I may have explained the fundamental situation right  now and that is something that we,  as a smaller country  in this world, has no choice but to work on our own situation  and make sure  that we  make the most out of the opportunities that are presented  to us and that is what we are trying to  do.
Q: Secretary Purisima, can you share your discussions with the ratings agencies was it Moody’s and (unclear)?
SECRETARY PURISIMA: Moody’s, the last meeting is Moody’s.
Q: Sir, have you met it all the three?
SECRETARY PURISIMA: I’ve been meeting with them ever since I took my position last July.
Q: In the last meeting sir, what concerns did they raise?
SECRETARY PURISIMA: I think they still have the same concerns. But our message to them is this, the last time the Philippines was rated a notch higher. In fact, in some cases two notches higher than where we are right now. If you compare the matrix then and now, one by one, isa-isahin niyo mas maganda ang itsura natin ngayon sa kanila kaysa dati. And I asked them this question, if you rated us a notch higher then, when the numbers were these, I think now, that our numbers are so much better shouldn’t you just upgrade your rating and in fact, I told them that the market is actually doing so already. In fact, our credit default swap is better than Indonesia which is rated one notch higher than us. And that is for me, the most objective based its market determine, measure of risk. So, the message is, I believe we deserve ratings increased but that’s your job. And I was kidding them also that if they delay the decision of upgrading past too long, it might affect their reputation. Because ultimately the market will prove to be correct as we’re addressing the fundamental, you can look at it reserves. Governor Tetangco and his team have done a wonderful job of managing our macro economy and our reserves now are at historic high. As compared to them when it was, I think, three months imports. The banking system, the NPLs are also much lower than what it was before. We’re a balance of payment surplus country. We’ve continued to grow since then. In fact, we have 45 straight quarters of growth. We don’t have the credibility issue that hounded the previous administration. The President was elected with the largest mandate ever of a Philippine President running under a program of good governance. And our debt to the GDP is much lower than what it was. You go down, it’s much better. I am confident that if we just focus on what we can do and that’s on doing our job, working on the fundamentals that should happen, that should follow. The market is already saying so. It’s a question of time, I guess. When you compare ourselves against peer countries, again, we should be rated at least a notch higher.
Q: So, do you think it’s likely that we will be upgraded both iyong ratings and the outlook?
SECRETARY PURISIMA: That’s their call, that’s not mine. What we need to focus on is what we’re doing. They do have valid concerns on the revenue to GDP and on the debt to GDP but its improved and its continuing to improve.
Q: Any specific concern nila about collections and the deficit?
SECRETARY PURISIMA: They’re just comparing us against our peer countries and they’re zeroing in on those two things. But there are, of course, things that counter that. For example, the fact that we are balance of payment surplus country. Our external debt to GDP is much lower than before. Our vulnerability is much less. So, I think we’re happy. The important thing is what the market does, not the market is rating us much higher than what our credit rating is. What we pay is what the market says. And I think, that’s what more important to us.
Q: Sir, just one for Secretary Paderanga. Sir, given iyong strong performance ng experts what’s your outlook for third quarter?
SECRETARY PADERANGA: We actually…I haven’t looked at that. I’m sorry. I know the exports are 46% growth but the third quarter outlook we hope it’s still be good. But we really haven’t look at it in a systematic way.
Q: Sir, do you think it will surpass the previous quarters?
SECRETARY PADERANGA: We will just wait for the results that are coming. Thank you, I’m sorry. We haven’t done the systematic.
Q: Kay Secretary Purisima. I think the other day, the market is quite surprising. The Central Bank decided to…its currency swaps thereby…some of…gain and now it’s trading Php 43, I think. Is that the level which the government is comfortable with?
SECRETARY PURISIMA: Well, here of course, that’s the territory of Governor Tetangco. The only thing I can say is we’d like our exchange rate to be what the market determines it to be. Because we believe that’s the best thing to do and we’ll work on the things that we should do to make sure that we address the issues that will continue to improve our ability to attract investments, continue our ability to create jobs which again a major focus of the President Aquino and continue our ability to increase the competitiveness of our country. And I think the rest will follow if we’ll focus on these fundamentals.
Q: To Secretary Paderanga, Sir, what has the stand of NEDA on the holiday economics principle? Will you recommend that the President keep it by next year?
SECRETARY PADERANGA: It has had some beneficial effects, I think. What the businesses are against is one, of course, proliferation of more holidays. What I hear from them is that there are already many holidays compared to other countries. And the other one is when it’s difficult to look ahead and plan on when it will happen. I supposed the administration will look forward to declaring or announcing it more in advance than it had been before.
Q: Sir, but if the President were to ask for your opinion would you recommend that this holiday economics policy be kept? Even in a modified scale next year.
SECRETARY PADERANGA: It’s a law. I was just reading the newspaper this morning but supposed there were some suggestions there would be some opportunities to look at it again there’s actually some advantage to keeping the working days continuous rather than have breaks. That’s one of the reasons especially if you’re in some continuous form of production. And in the other part, of course, is that this also allows people to take advantage of domestic tourist destinations and allow them to enjoy. There are going to be pros and cons but, I think, business is more focused on the number of non-working holidays and also their ability to plan ahead. That’s really what their thinking on that. Thank you.
Q: Sir, pahabol lang po sa PPP projects. Why will the government …two projects partners when the government has already cash trap and … left and right?
SECRETARY PURISIMA: Project that we will be choosing will all definitely be economically desirable. That means that they are good for the economy, they are  good in making our lives easier, for example  reducing our traffic but they are not financially feasible. So when they’re not financially feasible, if the government doesn’t do anything, no one will do it. Even though as a country, we gain by having that projects. For example, if didn’t build those light trails,  I don’t know who among the senators was telling me in the hearing the other day that EDSA would be a big parking lot. Because there’ll be  so many people riding the buses,  Senator Recto so I think so I’ll have  to give him the right attribution. But he is correct, that it is economically desirable project  but it may not be financially feasible and therefore our goal, as a  role, as a country and government is to re-enclose so that it will becomes one and becomes done. So if we just focus blindly and try  to do populist arguments then we’re going to hurt ourselves because  in the end nothing will be built. And the  country will be so backward that  all of us will have to go abroad to make our living. That’s  why it’s hard to fight  populist arguments but when you look at from a sober manner, in a more clinical manner,  infrastructure, specially the one’s we’re going to lease are all going to be economically desirable. Food supply chain infrastructure will make food more available and cheaper but it may not be financially feasible and so we need to close that gap.
Q: Thank you Secretaries for that hopeful outlook in our economy. Secretary Carandang, just a quick reaction on Labor attach├ę Romulo viral video in Youtube… in OFW in Hong Kong?
SECRETARY CARANDANG: I haven’t seen the video myself but just off hand, I  think, our workers and our  citizens in Hong Kong  and anywhere should be treated with dignity by our very own officials. I’m not pronouncing judgment as whether or not there was guilt or not. I have not seen the video. But as a general rule I think our embassies and our consular offices should be treating our people there with dignity and respect because that’s what they… that’s why they are there to serve those  people.
Q: … been done at  this moment sir?
SECRETARY CARANDANG: I’m sorry, I am not aware but I’ll try to find out.
Q: One more thing, has President able to watch that viral video?
SECRETARY CARANDANG: I am not sure if he’s seen it.
Q: Sir,  why did the President decide to keep November 29 as a holiday?
SECRETARY CARANDANG: I think there was some reaction to the fact that the last holiday  that was supposed to be three days was not and we’re making the announcement earlier this time. Basically, we’re giving the people what they  seem to be asking for the last time. There’s holiday economics and  I know it’s confusing so we’re working on something  to make it less confusing. So,  it’s something we’re working on pa lang but for the meantime.
As you  know, the 29th will be holiday in lieu of the  30th which is the Bonifacio Day. But nevertheless let’s not forget the importance of that day in our history  kahit minove (move) natin ‘yan it’s Bonifacio day the  30th so let’s remember why this  holiday were declared.
Q: Sir, next year can we expect more of that, because as provided by the law the holiday can be moved to a Monday?
SECRETARY CARANDANG: Yes, I think, we’re going to be more systematic with that.
Q: About doon sa PAL… like before ano po  ang development and what is our  safety guidelines?
SECRETARY CARANDANG: Well, pinag-aaralan ni Pangulong Aquino  itong kaso na ito at hindi pa siya nagsasabi.  Wala pa siyang sinasabi kung ano ang magiging hakbang niya. But he’s watching the case very carefully. ‘Yung paramount interest dito ‘yung  interest of the riding public—the ability of our people to travel both overseas and domestically. It’s  something that should not be hampered by  problems of one company. So kung ano  muna ‘yung maging intervention ng administrasyon diyan, it will be with the goal of  ensuring that the public has uninterrupted service.
Q: Go pa rin ba ‘yung sinasabi ni Presidente dati na  ‘pag hindi pa ito nag-ayos mayroon gagawin ang gobyerno?
SECRETARY CARANDANG: Tingnan natin. I think hindi naman natin pababayaan na mangyari yan. So, may gagawin  tayo diyan. It’s just a question of, there’s of many of options kung ano ba ang puede nating gawin at pinag-aaralan natin ngayon  kung alin doon sa mga options na yon ang mas  makakabuti.
Q: Secretary, you mentioned that the President  is going to have a bilateral talks with China and the US?
SECRETARY CARANDANG: Well, we’re hoping for that.  We haven’t gotten confirmation yet but ‘yun ‘yung mga gusto nating i-schedule. Again, let me repeat there are  six countries that  we hope to have bilaterals with. Some are confirmed; some are not, Chile China, Indonesia, Papua New Guinea, Russia and the United States.
Q: Sir,  so hindi pa firmed up ‘yung China and the US?
SECRETARY CARANDANG: Oo, pati ‘yung Russia hindi  pa rin firmed up. We we’re supposed to  meet during the ASEAN Summit. Hindi natuloy because  of the busy schedules. So, we’re trying to get another one this time around.
Q: Sir even if it’s not firmed up  is the President planning to bring up the  issue of the hostage taking to the China and the  threat assessment and the VFA with  the US?
SECRETARY CARANDANG: In the case of the China, if they bring it up, we will be prepared to engage them with that. In the case of the United States, I’m not sure what exactly the issues will be discussed. But if they’re going, kasi hindi ko alam how extensive the discussions if ever will be.
There are many things in our  bilateral relations with the US that needs to be discuss and obviously the issues you brought up, the VFA or some of them hindi ko lang alam kung  mailalagay ‘yan sa agenda because at this point, we don’t even know  if we’re going to get the bilateral.
Q: Sir, doon sa issue ng hostage taking crisis, it will only be taken up if China brings it up?
SECRETARY CARANDANG: Well, most likely they will. And if they do, we’re prepared to talk to them about that. But we want to do here is to achieve a closure on that finally and resolve any lingering issues that may remain. And we are already taking steps towards that.
Q: Sir, do we have an update on review of VFA yesterday,  the former president said that the  VFA is very important amid these prevailing  travel advisories against the Philippines, sir?
SECRETARY CARANDANG: There’s no specific update on the status of the VFA review. As you know, it comes under regular review period which we are under now.
There  are many different considerations here. There is the regional security architecture which the VFA is part of.  So, it’s not just a the Philippine-US issue. It takes place in the regional architecture. There are many other concerns outside of that. In the past, the issues have been jurisdiction in terms of criminal cases.
‘Yun ang naging  issues sa ating dalawa, sa ating bansa noong  nagkaroon ng kaso ni Nicole. And I wouldn’t be surprised if that was one of the issues that was  discussed. But right now there’s no status of the review that I am aware of.
Before we get to the questions of Vanz, there was  an item about the PCSO. I spoke to PCSO Chair Marg Juico this morning. Ang sabi niya nag-usap na daw sila ni Ricky Reyes at nakahanap na ng dalawang alternative sites ang  PCSO. ‘Yung isa sa East Avenue Medical Center. ‘Yung isa sa V. Luna Medical Center. Inalok ng PCSO ito doon sa Foundation  na pinapatakbo ni Ricky Reyes na  namamahala dun sa mga bata.  Ang sabi ni Ricky Reyes, mukhang mas gusto n’ya ‘yung site sa V. Luna. So, sometime today, Chairman Juico will go to the V. Luna Medical Center to personally inspect the site.
Again, the building is condemned where they are in, it’s not safe for them to be there.  We’re doing everything we can to make sure the children are safe and that  they will have a relocation site  and there will be no problems with them in the future. So, the programs will continue, they will be relocated and we have found a suitable site. Kapag in-okay na ‘yan ni Chairman Juico at ni Ricky Reyes upon inspection, then,  I think, we’ll begin the process of transferring them.
Q: I got two questions sir. First question ko po, can you give us an update on the OFW’s stranded in Los Angeles, California for human trafficking?
SECRETARY CARANDANG: I’m afraid I don’t have an update on that at this time.
Q: Mayroon na daw napaulat na si Liz Uy and the President will  have their wedding day this coming  October 2011, can you confirm this?
SECRETARY CARANDANG: As you know, I never comment on the President’s private life but kailan  daw iyon?
Q: 2011 October kasi nai-lagay na Sir, sa isang newspaper?
SECRETARY CARANDANG: Well, I don’t know anything about that. Honestly. Saka hindi ako, katulad ng sinabi ko hindi ako nagko-comment sa private life ni Pangulo.
Q: Siguro naman, Sir paminsan-minsan pwede?
SECRETARY CARANDANG: Baka magalit si Pangulo.
MODERATOR: That’s it. Thank you, Secretary and to all of our guests today, thank you, Malacanang Press Corps and to  RTVM.