"Bilang undersecretary, tingin ko naman po nagampanan natin iyong mga trabahong hinihiling sa atin na kailangan nating gampanan. Iyong mga ganitong perspektibo na kailangang maibahagi sa Pangulo, ibinabahagi naman po natin ito kay Secretary Diokno. Nagsa-submit po tayo ng mga memorandum sa Malacañang tungkol sa mga ganitong usapin. Beyond our control na po kung paano ang magiging handling ng Malacañang sa mga ganitong usapin. Pero umaasa pa rin tayo sana sa dulo iyong tamang polisiya pa rin ang mananaig. Kung ito iyong tema ng mga polisiya na sinulong, sinuportahan, trinabaho ko habang ako ay nasa gobyerno, ito pala ay taliwas sa interes ng pamahalaan. Ang malaking question mark sa akin, ano pala ang interes ng Malacañang?"
Bago ang kanyang pag-alis sa Department of Finance, ilang polisiya ang tinutukan ni dating Undersecretary Cielo Magno. Ang kanyang silip sa pagkakaroon ng rice price ceiling, pagtataas ng buwis sa pagmimina, pension ng mga military and uniformed personnel at iba pang usapin sa ekonomiya ng bansa, tatalakayin sa #TheMangahasInterviews.
Bago ang kanyang pag-alis sa Department of Finance, ilang polisiya ang tinutukan ni dating Undersecretary Cielo Magno. Ang kanyang silip sa pagkakaroon ng rice price ceiling, pagtataas ng buwis sa pagmimina, pension ng mga military and uniformed personnel at iba pang usapin sa ekonomiya ng bansa, tatalakayin sa #TheMangahasInterviews.
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00:02:51 For everyone to see.
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00:03:50 So I took the opportunity to serve the people
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00:04:05 All right.
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00:04:41 Open to the public.
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00:13:17 product, meaning we consume this every day, we'll really look for where we can buy a good type of product.
00:13:25 So, we might buy from black markets. So in that whole story, who will benefit from the price cap?
00:13:34 Not the farmers, not the small retailers, we're not consumers, so who?
00:13:43 Big traders and sellers. Now, I'll just add, Prof. Shello, what we heard and what happened after the EO39 took effect on September 5,
00:13:58 the DILG, DTI, DSWD met with local government officials and it seems that they are willing to sell rice for P41 and P45, regular and well-milled.
00:14:12 That's rice for the people, not the special rice.
00:14:17 Then we found out that DTI asked for rice from suppliers that can sell for P44, meaning there is rice.
00:14:28 And that's rice from warehouses that are already included in the NARRAID. But the question is, why can the government find a supplier with a low price or lower the price because it's included in the NARRAID warehouses?
00:14:46 The story is a bit confusing. I mean, there is rice. Maybe there is no problem other than there is no regular and well-milled.
00:14:58 It seems like the rice sector is like that. Two tiers, two layers.
00:15:04 The regular and well-milled should be provided by the National Food Authority based on the rice that it collects or buys from the farmers.
00:15:16 Then there are importers or big traders that import rice from other countries. How is that? Isn't what's happening here a bit strange that big rice traders are being seen and now there is a discussion to remove the tariff on rice?
00:15:37 What happened? Because if you wait every day, it seems like there is a special push and they made it happen.
00:15:44 P40,000 high price from the supplies provided by the traders group that is a supporter of EO39.
00:15:55 We can see in the previous press releases of the government that they are saying that there is no problem in the supply of rice until the end of the year.
00:16:06 A few days after the issuance of EO39, there was a government to government arrangement with Vietnam that they will ensure the supply of rice for the next year.
00:16:19 That's good news. For me, what this highlights is that the government has many options to solve the problems we are facing.
00:16:32 Just like you said, the government can buy cheaper rice.
00:16:36 That's right. We can buy cheaper rice and if our concern is families who are having a hard time buying rice, the government can subsidize it directly.
00:16:50 So it's a big question as to why there is a very complex policy on this issue that can be solved with a simple approach and direct help for families who need assistance to buy rice.
00:17:09 Prof. Shello, do you monitor the movement of funds in the Department of Finance like in the NFA?
00:17:16 The Commission on Audit said that almost 76% of their P7 billion subsidy for rice farmers should be bought,
00:17:26 but it was not spent in 2022. It means it underperformed.
00:17:31 On the other hand, this year, as you can see when EO39 was issued, the contras are the farmers groups and the favors are the traders and importers groups.
00:17:43 Why is that? If there is no supply problem, why is there a price problem?
00:17:48 Yes, so I mentioned in our story on supply and demand, the farmers will be the ones to be blamed
00:17:55 because if we impose a price, they will be forced to sell their rice at a low price because traders need to earn.
00:18:06 They also need to pay for their expenses in transporting rice and distilling rice.
00:18:16 So now the pressure to lower the price of rice is on the farmers.
00:18:23 And we know that the farmers are almost subsistence.
00:18:28 They have nothing to do, they need to sell their rice so they can have expenses and they will be forced to sell at a low price.
00:18:37 So that is the big issue here in the price gap.
00:18:41 That is why I cannot avoid posting the price gap graph because as a government, we have many options to solve this problem.
00:18:54 The most important thing is to choose the right policy that has least damage and most benefit for the people.
00:19:04 Okay. Now, there is a pending petition from the National Tariff Commission to lower the price to zero or actually 10% of rice tariffs.
00:19:18 There was a law passed several years ago.
00:19:22 Why is this discussion ending there?
00:19:25 So the ones who will favor that are the importers of rice.
00:19:29 How will that lower the price of rice in the market?
00:19:34 Yes. So if we temporarily lower the price of rice, the price will lower when the expectation is met.
00:19:42 The price will also lower when the people buy rice.
00:19:47 The purpose of rice tariffication is for the government to have flexibility to impose various levels of rice tariffs
00:19:56 based on our local conditions because the truth is that only 90% can be supported by our domestic rice industry.
00:20:07 It is still the same in the agriculture sector.
00:20:10 Not only one policy is the one that solves the lack of rice.
00:20:17 We have rice tariffication but at the same time, it is really important to learn how to improve the productivity of our agricultural sector.
00:20:29 How about if we return the net loss to zero, the revenue?
00:20:34 In other words, the price of rice will lower because the 10% that is being raised will lower the price and therefore the price will lower when the local suppliers, the farmers, buy rice.
00:20:48 I don't know how it could result in real benefit if the price will lower but the country will have revenue loss.
00:20:57 So there will be revenue loss with respect to taxation but if there is really a need for rice and there is a high pressure on the price of rice,
00:21:10 what will happen is that the price of rice will be raised instead of a price cap, the alternative.
00:21:16 This will lower the price available in the market but it needs to be accompanied by a strict policy so that our farmers will not be harmed.
00:21:32 So that's it.
00:21:33 The important thing here is the word temporary because this should be flexible in responding to our current condition.
00:21:44 So it is important to monitor if the rice is really lacking and the price is really high, the price can be temporarily lowered.
00:21:54 If it is okay again, it can be returned to the previous price.
00:21:59 Now, what we are talking about is maybe 2 to 3 weeks, what is this price cap? There is no clear end point.
00:22:06 The groups that will harvest are starting to harvest in Pangasinan, Nueva Ecija, Tarlac and even in Ilocos.
00:22:17 So in September and October, the harvest will be good.
00:22:21 It's not a bumper crop but the harvest will be good.
00:22:25 This means that there will be supply from here. How will the local farmers groups that sell rice be at a disadvantage if we still import?
00:22:35 That's why it's a sad situation here.
00:22:39 The stories are not being told.
00:22:43 That's why I said, as a former, well I'm still in the government because the UP is a government, but as a former in the Department of Finance,
00:22:53 especially at our level, for example in USEC or Secretary, I can only recommend USEC.
00:22:59 The context is really important, what is really happening and what is the proper solution.
00:23:07 It can be just a few because it's easy to listen to, easy to use, but the implications in different sectors are negative.
00:23:19 So that's really our problem.
00:23:23 Prof. Shelo, but in a year that you were in the Department of Finance, it's not just the story of rice that is happening now.
00:23:30 There was a problem with sugar, there was a problem with onions, and now it's all about rice.
00:23:37 So how is that? There's nothing clear at the end of the story.
00:23:41 How much are the taxes or customs duties that were collected?
00:23:47 You said you're not in charge of the Bureau of Customs but it seems like you have a reputation of being a hoarder, a cartel member, a smuggler.
00:23:56 But at the end, there's no conclusion.
00:23:58 Is there really hoarding? Is there really a cartel? Or is it price manipulation?
00:24:05 You know, it's been a long time since we've talked about whether there's a cartel in the agricultural sector.
00:24:13 It's always used to impose different policies to control it.
00:24:20 There are studies that say there's no proof if there's a cartel or not.
00:24:25 But from my perspective, for example, if we have data in the Bureau of Customs, we can see who is allowed to import imported agricultural products.
00:24:42 If we have an import cartel, it's easy to find who imports and manipulates the prices of the agricultural products that are bought.
00:24:55 But there's no exit report.
00:24:59 Who are the hoarders? How much did they collect?
00:25:02 How much did the government spend?
00:25:05 And how much did they earn when the government sold the agricultural products that were hoarded or collected?
00:25:13 It's like you can hear the news but at the end, you don't know what happened.
00:25:19 That's why transparency is important in government.
00:25:23 For example, if there's an issuance of a license to import onions and rice, it's good to see the people of the country.
00:25:33 Who are these importers? How many are these importers?
00:25:38 So we can study whether there's a cartel or not.
00:25:42 If this is the price in the global market, why are onions so expensive?
00:25:46 And we have local farmers who can't sell and the agricultural products are being stolen.
00:25:54 So there are really those who are not paying attention.
00:25:57 Okay. Now, there are tomatoes and other vegetables that are being sold.
00:26:01 It's like they don't want us to mix with chopped ginger.
00:26:04 They say it's prohibited to saute.
00:26:07 It's prohibited to saute.
00:26:08 Anyway, so in your work…
00:26:10 We are the ones who are sauteed.
00:26:12 Yes, we are the ones who are sauteed.
00:26:13 In your work in the Department of Finance, it seems like your focus is on a committee or project or program.
00:26:21 Fiscal policy reforms.
00:26:23 Now, we have the Create Law and you mentioned in your first interviews that it's okay if someone is exempted and not exempted.
00:26:32 Suddenly, there's a review of what happened and what is the Create Law.
00:26:38 The Create Law is a reform that was helped by the previous administration.
00:26:43 This law is very important because it promotes transparency and accountability in the exchange of incentives.
00:26:52 This is when you don't have to pay income tax, you will pay a lower rate because of the expected economic impact of an industry in the Philippines.
00:27:06 Why is this important?
00:27:08 Because when we give them income tax holiday, this has an opportunity cost.
00:27:15 This means that these are taxes that the government did not collect or the government will not collect that we should use to provide other services such as education, health programs.
00:27:29 Now, we need to prove that if we forego these taxes that we will collect, what benefits will we get from them?
00:27:40 Will they be able to create a livelihood?
00:27:43 This is how big an investment they will bring to the Philippines and there will be a wide economic activity.
00:27:51 So that's what the Create Law did.
00:27:54 It also clarified, especially when we apply the Create and Train Law that was also helped by the previous administration,
00:28:03 that it clarified the value-added tax because this is a consumption tax.
00:28:09 So if it's a consumption tax, it means that if you consume it, you will be paid VAT.
00:28:15 So the Train Law clarified that VAT when you consume it in other countries, naturally we export the goods, we will not VAT it because it is not consumed in other countries.
00:28:32 It also said that all industries now, aside from the exemptions specific to the law, all domestic industries should pay VAT because our target market is in the Philippines.
00:28:50 But there is still pressure from the domestic sector to give some companies continuous benefits and zero VAT rating.
00:29:03 But now, because of the amendment of our laws in the tax code, they are already being paid VAT.
00:29:10 So there are still some initiatives and pressure to return that and we are still pursuing that.
00:29:19 So there are also some issues, we have VAT credit, that's a long explanation, the concept of VAT.
00:29:30 There are also concerns from other industries in refunding their VAT credit which is being delayed.
00:29:40 So since this year when I was in the Department of Finance, Secretary Pasqual and Secretary Giocno ordered me to fix that problem.
00:29:51 So we have produced a lot of regulations, issuances, the DPI, Bureau of Internal Revenue to clarify and make it easier to solve the problems we are facing related to credit.
00:30:09 So in short, you are pushing for the create and train law but on the other hand, there are still some lobbying that we should be with the exempted, whether it's a company or an industry.
00:30:21 What about tax holidays? Actually, what's in the law and it seems like it's being enjoyed by tax holidays, real estate sector, BPO, are there still people who are asking for special treatment,
00:30:35 that we should not be included in that, we should be given tax incentives or holiday and that's it.
00:30:41 The good thing about the system now is that when the DPI, Department of Finance and other agencies coordinate, we have what we call an investment priority plan.
00:30:58 The DPI issued by the SIPP. There are different tiers that are identified as our priority industries that should be given incentives because we believe that they can help in growing the business in the Philippines.
00:31:16 So that's what we are following. The create law has removed the discretion on how to give incentives. It's really defined.
00:31:25 This is when you are in tier 1, tier 2, tier 3, where you are located, this is the income tax holiday that you will receive.
00:31:33 Another thing that was removed is if the investment that you will invest in the Philippines is more than 1 billion, economic zones will not evaluate it unless it is included in the fiscal incentives review board.
00:31:48 So that was removed from the economic zones. There are still some push to return it to the economic zones.
00:31:58 I think that the system has been fixed and I am just concerned that once we open the create law, because we see and the economic managers agreed that we have solved the issues of create.
00:32:18 Now if we open it again in Congress, we know that if it passes through Congress, for example, our champion is Congressman Joey Salceda.
00:32:31 We know that he knows the importance of this law and the integrity of this law. But once we open it, we cannot stop and limit what will change in this law.
00:32:44 So I am hopeful that Congressman Salceda will really watch over us and limit the changes that will happen.
00:32:53 So it means that these talks that you have been talking about when you were in the DOF and until now, it continues to be closed but you opened it again.
00:33:04 Yes, I mean, in the details, the people don't know. It means that whoever will give favor to these issues, in the end, it will be a secret.
00:33:17 We have noticed that tax holidays, for example, in some of the stories we have done, even in the import of equipment, heavy duty goods, elevator, supplies, they claim holidays.
00:33:34 In other words, the use of goods is really abused. Is that included? Because if ever, our MSMEs are poor.
00:33:43 The beauty of the policy of CREATE is that we have a cost-benefit analysis.
00:33:51 So that is included in the elements that we consider when we are giving incentives.
00:33:59 So if this will be lost to the government, what benefits will they contribute?
00:34:04 And what is important is that there is annual monitoring. So we are looking at if they are monitoring and doing their commitment.
00:34:13 If they did not do it, there will be a suspension of the benefits that they are receiving.
00:34:20 So the conclusion of this law is really good.
00:34:24 It is also important that you mentioned what is for the people here, us as ordinary workers.
00:34:32 Because CREATE is really focused on the industry, private sector.
00:34:37 Because if you look at it, it will create more jobs for the people.
00:34:44 But what is important to talk about is VAT. Because if you look at us compared to other countries, our VAT rate is a bit high, 12%.
00:34:54 So that is the additional tax on every product we consume that we pay.
00:35:01 But in taxation, if more people are paying tax, we can lower the rate of tax.
00:35:09 Now if we will make a hole in our VAT system, there will be exemptions for some industries.
00:35:18 It means that the chance of our VAT rate will be reduced.
00:35:25 Maybe it is a bit harder economic discussion because they always say that VAT is to incentivize the industry, especially the industries that we favor.
00:35:36 As an economist, my opinion is that if you lower the VAT rate, there will be an increased demand for this product.
00:35:47 But if our goal is to make the industry competitive, it seems that we should not address the demand side or consumption.
00:35:58 We should not just increase consumption. If not, we should support technology, lower the price of production,
00:36:07 introduce new technologies so that our product will not only be affordable in the Philippines but also competitive globally.
00:36:17 But those are the issues. You have told us about the good and complete economic team.
00:36:25 But those are not the counterpoints of your opinion about the BBM admin.
00:36:32 You are just trying to help or clarify the fiscal policies and tax reforms.
00:36:41 But in the end, what is lacking is why should the people pay the VAT consumption.
00:36:50 We accept it, we have to support the government but now, there is a discussion that even e-commerce should be taxed
00:36:58 or online shopping activities or Netflix and other things.
00:37:04 Why is it going to where most people are used to?
00:37:09 Because what is happening there is we are lowering our income tax. If you notice, our income tax has been lowering in the past few years.
00:37:19 It is transferring our tax to consumption, what we are consuming.
00:37:25 So the logic there is if we don't want to pay tax, we should avoid consuming these products.
00:37:34 That is why VAT is exempted. Basic commodities are not exempted, especially food from the market.
00:37:46 Let's go to another issue under you, the mining sector.
00:37:51 You have been with the group called EITI, Extractives Industries Transparency Initiative since 2013.
00:38:02 This year, there was an announcement, actually last year, that the Philippines will return to EITI.
00:38:10 What are your goals in the mining sector in this project and what reforms should be done?
00:38:16 Actually in the Philippines, in the year 2017, we implemented what we call Extractives Industries Transparency Initiative.
00:38:26 This is a program that is connected to a bigger global level movement to push for good governance in the extractive sector.
00:38:35 What is the center of this policy?
00:38:38 That communities and civil society should be a part of the decision-making of the extractive sector.
00:38:46 At that time, I was a member of the civil society when we implemented EITI in the Philippines.
00:38:55 I was also on the global board of EITI before as a civil society.
00:39:01 So it is very important to ensure that civil society and communities have equal opportunities to give opinions and monitor the mining sector.
00:39:17 The second important element in EITI is beneficial ownership.
00:39:25 The people of the country should know who owns the mining operations in the Philippines.
00:39:33 Why is that important? Because the minerals are owned by the people of the country.
00:39:38 So they should know if there is a conflict of interest among the miners and who is the powerful interest behind the mining sector.
00:39:48 So we should have a law regarding that.
00:39:51 We are also pushing that because we own these minerals, we should have a fair share in the income from the mine.
00:40:02 At the moment, our tax rate is only around 38 to 40% of the share of the government from the income of the mine.
00:40:12 So I am pushing, even though I am not yet an undersecretary, that we should raise the tax on mining.
00:40:20 I just want to know, they say that the Philippines is rich in mineral ore and our resources including nickel, zinc, silver, copper.
00:40:33 But to be honest, you said that we are only getting a small amount of money or tax from these mining companies.
00:40:42 It seems like it is not yet reaching 8% of the total revenues.
00:40:48 Yes, because only 1% of our GDP comes from mining.
00:40:54 And if we look at the income, for example 100% profit, the government is only getting 38 to 40% of the profit.
00:41:05 You are an ordinary businessman and you own the resources. Would you allow yourself to be in a partnership where you only get 38 to 40% of the profit?
00:41:19 You own the minerals and you have a contractor who is in charge. I think that is not fair.
00:41:26 In a study by Austrade, it was found that the untapped mineral resources of the Philippines are worth 1 trillion dollars.
00:41:34 But the operating metallic mines are only 56.
00:41:41 The operating smelter or processing plant is 7.
00:41:47 This has increased since 2020 and has increased since 2022.
00:41:53 So, who are the owners of these 56 and 7?
00:41:57 You said beneficial ownership because it is clear that some political families and rich businessmen are included.
00:42:07 So, this is a sector that is vested with a lot of economic and political interest.
00:42:14 Yes, and currently we do not have a clear list of who really owns the land.
00:42:21 The only extent we can see is if we are willing to pay the SEC because there is a fee to get SEC registration documents of these companies.
00:42:32 That is the first layer we can see there.
00:42:35 But when it comes to beneficial ownership, sometimes in SEC registration, we cannot see if they are the beneficial owners.
00:42:44 When I was in civil society, I had an attempt to study and we can see that there are almost six layers of documents that we need to look for before we can determine who are the true beneficial owners of these minerals in the Philippines.
00:43:02 If we are to offer solutions or reforms, what is your idea?
00:43:06 You said that you hope that the mines will have rehabilitation before our miners and companies leave.
00:43:14 But is that not a part of it?
00:43:16 Because when the Mines and Geosciences Bureau gave a permit, what is the agreement?
00:43:22 Is it a commitment that you will pay the rehabilitation cost at the end of the 25 years or should you pay it upfront?
00:43:35 Yes, actually that is one of the good provisions of the 1995 Mining Act.
00:43:41 When you go to the Philippines, you should have a trust fund to rehabilitate this mine.
00:43:48 But we believe that there should be transparency on how the fund should be spent, what the rehabilitation plan of these mines is.
00:43:58 Because I live in a community that is affected by the mine.
00:44:02 I also want to know if they are doing their job, are they making sure that the water I drink is clean and if I have water to get from the well because the mining industry is water intensive.
00:44:16 For example, under the 1995 Mining Act, I think there are three or four mines that should have been closed and rehabilitated.
00:44:26 But if you Google, I said that this should be public information, very limited information on the status of the rehabilitation of these three or four mines.
00:44:37 I was still in the civil society then and I have been asking for documents for a long time.
00:44:41 What is the status of the rehabilitation of these operations? Nothing is happening.
00:44:47 Another important thing, because you mentioned earlier that of the size and quantity of minerals in the Philippines, we only have 56 mining operations.
00:44:56 I think this is a very important consideration that we need to look at.
00:45:04 Because we have so many mines in the Philippines, we will also be able to use all of them.
00:45:10 In other countries, it is easy to say that especially if the mineral is in the desert.
00:45:17 But in the Philippines, we know that the rich areas of the country are very beautiful and not only the minerals are in one place, there are forests.
00:45:30 So, in some sectors, fishing will be affected because we know that if there is a mining, it will be a disaster for the ocean.
00:45:38 If the mining is not done properly, the ocean will be damaged.
00:45:43 The other mineralized areas are in the tourism area.
00:45:48 So, if we look at this, it is not enough to say that this will create 100 jobs
00:45:55 and this will contribute to the construction of schools in our area.
00:46:01 We need to look at the opportunity cost.
00:46:04 What is the importance of an agricultural industry that will be damaged?
00:46:08 That is a different perspective but it is very important.
00:46:14 That is why in the policy of the government, if you are in the government, you need to be clear.
00:46:20 Why are we supporting mining? What are the tasks that we should collect?
00:46:26 Do we just want to increase, multiply, and destroy all the minerals?
00:46:31 Or just focus on where their negative effects will be minimized, where there are no other economic activities that are happening?
00:46:40 Okay.
00:46:41 And where the mining is really needed.
00:46:45 For example, the NEDA or the Philippine Institute for Development Studies,
00:46:51 do you have a study on the socio-economic cost of mining?
00:46:55 Because in reality, it is not just the agricultural land or fisheries that are being destroyed,
00:47:02 but also the pollution.
00:47:05 Because the stories of the black sand mining or the quarrying in different provinces,
00:47:12 when it passes through the barangay, it causes a lot of smoke and diseases.
00:47:19 Is there a study by the government that we really need it?
00:47:22 What should we collect exactly?
00:47:26 Actually, on the side of the government as a regulatory body,
00:47:32 before any mining is approved, there should be an environmental impact assessment.
00:47:38 What does this mean? It is a study on the potential environmental and social impact of mining in a place.
00:47:45 It is also not publicly available.
00:47:49 We tried to do that in EITI, that every mine, before it starts,
00:47:55 that document should be available to us.
00:47:58 Okay.
00:47:59 It is still not there.
00:48:01 But before, in the academy, when I was researching, I did my own study with some of my students
00:48:10 on the impact of mining on health, the impact of mining on water.
00:48:16 So if I remember correctly, because it has been a few years,
00:48:20 it really has a negative effect on the health of the people living in the areas of the mine.
00:48:29 I think in my study, there is not a significant contribution in terms of human capital development,
00:48:37 meaning in increasing the class of people in the area where mining is happening.
00:48:45 I looked at a specific mine, very limited data, but using the data that are available to us,
00:48:54 I looked at the impact on water.
00:48:57 And it is true that when this mine started to operate,
00:49:03 there was a strong extraction of water and it affected the lack of water of the community
00:49:10 that is near the place where they operate.
00:49:13 And the flooding, because it really pours not only rainwater but also rainwater.
00:49:20 Like that, in many towns where there are mines.
00:49:23 That's right. So part of what we are pushing for is the 1995 Mining Act.
00:49:28 There is a provision where civil society has space to monitor the activity of the mines in their area.
00:49:37 And this should produce a quarterly report on whether they are compliant with our environmental regulations.
00:49:44 There is that now. These reports are not publicly available.
00:49:49 And I am also asking, we are working on this with our counterparts in the Department of Environment and Natural Resources
00:49:59 to have a clearer selection of who will be the civil society that will sit in the mining monitoring team.
00:50:09 Because first of all, if there is someone who will sit there,
00:50:12 for example, I am a civil society that will be part of the monitoring team,
00:50:16 I should have accountability to my community.
00:50:19 There should be transparency on why I will be the one to sit.
00:50:23 I think the most important element there is that I should have the ability and I should understand the operation of the mine,
00:50:29 the technical skills to say and conclude and to sign that paper saying that this mining company is compliant.
00:50:37 But I don't think there is such a capacity building for civil society.
00:50:43 There are many gaps.
00:50:46 Some people said that in the provinces, not the medium or large scale mining operations,
00:50:54 there are many cases of the mayor or governor who is behind the operation of mining or quarrying, black sand mining, etc.
00:51:05 How can we handle that? It looks like you will build a huge political wall.
00:51:13 That's true. But if we are afraid, nothing will happen.
00:51:19 And before I became a USEC, it was already part of my advocacy.
00:51:25 Not only large scale mining but also the organization of our small scale mining.
00:51:32 But like you mentioned, yes, many are being hit and many will be hit.
00:51:40 But if we don't speak up and we don't support our fellow citizens, who will speak up?
00:51:49 So in short, your Facebook post is not the only platform for you to share your ideas and proposed reforms.
00:51:59 There is another issue, the issue of military and uniformed personnel pension fund.
00:52:04 What happened there?
00:52:06 Because what Col. Gene Fajardo told us is that the police is okay with 4% initial payment, net base pay,
00:52:16 up to 9% for those in service and 9% for those who will be in the service.
00:52:22 Suddenly, it's quiet.
00:52:24 What happened? Is the Department of National Defense cutting?
00:52:28 Actually, we had a roundabout and we made a very inclusive and consultative approach for military and uniformed personnel.
00:52:39 We had almost 30 roadshows to talk to all stakeholders.
00:52:47 We want that if we pass a law or if we have a policy to support, it will be beneficial to everyone.
00:52:54 We thought we would be there because when we went around,
00:53:00 there was an acceptance from our military and uniformed personnel.
00:53:05 They were ready to help us to solve our financial situation regarding their pension.
00:53:14 They said that the police and rank and file are okay because you were talking about fiscal collapse.
00:53:22 If they will not contribute, how much will it be?
00:53:26 Who contributed to that study that is not sustainable?
00:53:31 Yes, you know, GSIS is doing a study on this.
00:53:37 They looked at what is the equivalent increase in the salary of our military and uniformed personnel every year.
00:53:47 This is about 10%.
00:53:52 So if 10% is the increase in wage base pay of our military and uniformed personnel,
00:54:00 my status will not change, there is still indexation, there is still one rank higher.
00:54:06 How much will be the government's debt to pay the pension?
00:54:12 Not only the current but also the active, this is what we call contingent liability.
00:54:18 Because once you hire an employee, you have a responsibility until he retires.
00:54:24 So the last estimate of GSIS is that the contingent liability is almost 14 trillion.
00:54:32 The government will not pay that now but it will be paid over the years.
00:54:37 But at the moment, the government is spending almost 140 billion for the pension of our retired military and uniformed personnel.
00:54:50 And what is worrying is that the pension is even higher than the operating and capital expense of our MUT.
00:55:04 So when we talk about modernization, it is a bit worrying because we are spending more for the pension
00:55:12 than what we can afford for the modernization of the military and uniformed pensioners.
00:55:19 So we explained that to our military and uniformed personnel and they understood.
00:55:27 And in those times, it seems that there will be an agreement on the contribution.
00:55:35 But suddenly there is a change.
00:55:37 Because the problem is, you explained to them what the option is.
00:55:42 If we don't do this now, how will we pay the pension using the contingent liability
00:55:52 that the government is paying for the soldiers, police and other uniformed personnel?
00:55:57 What is the concern?
00:55:59 The soldiers cannot afford to pay or you are really worried that our soldiers might go bankrupt?
00:56:08 You know, from any perspective, for a pension system to be sustainable, it really needs to be contributory.
00:56:17 Just like in the Philippines, where we have a tight fiscal situation.
00:56:23 We can see that we still have a lot of debts that need to be paid.
00:56:27 So one solution is to make our pension system contributory.
00:56:32 And our MUT said that they are willing to contribute to solve this.
00:56:39 So that's why we sometimes mention solutions to problems.
00:56:45 It's obvious what is rational and what is right.
00:56:49 But when it undergoes a political meal, it changes and changes because of many reasons.
00:56:58 So one of the things we studied and laid out by the team of the Department of Finance
00:57:07 is how we look at the salary of our military and uniformed personnel.
00:57:12 And it's right that some of them are already receiving monthly because of the high debt
00:57:19 and loan of our military and uniformed personnel.
00:57:23 So the proposal of the Department of Finance is like what we did with the teachers,
00:57:30 they will have a loan restructuring, the GSIS will buy their debts
00:57:37 so that they can pay for a longer period of time.
00:57:41 So it means that the premium that they pay monthly will be lower,
00:57:44 and the interest can also be lowered so that they can have more freedom for months.
00:57:50 We also said that when we talk about it, it doesn't need to be the immediate 9%,
00:57:55 it can be a transition. So that's the direction we are talking about.
00:58:00 What's unclear now is what state of the reforms are in the MUP pension fund.
00:58:05 Yes, so we have a technical working group and that's what we are talking about.
00:58:12 Before I left the Department of Finance, our next direction was to ask the Department of Finance
00:58:21 to hold a meeting with Secretary Chodoro to present the updated study of the GSIS.
00:58:28 Because when we went around, we used 2019 data but the results are almost the same.
00:58:36 Now, there is a study of the GSIS using the 2022 data.
00:58:44 We would like to share that with Secretary Chodoro.
00:58:49 So hopefully, the DOF team, the economic team would be able to have that opportunity to present it to Secretary Chodoro.
00:58:57 One pending work that I left that should happen this week is to hold a meeting with the retired generals.
00:59:04 I really want to engage them because I believe that when we talk, we can find a solution.
00:59:13 So we should have a meeting this week but because of the events, the meeting was not continued.
00:59:18 So hopefully, the economic team will still be able to meet.
00:59:22 So it's easy to say, if the economic team is the one to talk, there are practical solutions that are now available.
00:59:30 It means that it's better to do it now than to postpone it.
00:59:34 But if it's in the political cluster, there are a lot of considerations.
00:59:40 That includes the big service that our soldiers, police, and uniformed personnel are providing.
00:59:47 So honestly, it's for their own good to pay, even if it's small, for their base pay but it's sustainable.
00:59:56 What is that?
00:59:57 The political and economic team are meeting.
01:00:00 Who is the moderator or conductor of these talks?
01:00:06 Who is the ultimate arbiter role?
01:00:10 I think there is an agreement with respect to the service that our military and uniformed personnel are providing.
01:00:21 This is reflected in the different structure of their salary, in the salary of the civil service.
01:00:28 Their retirement package is also different compared to the retirement package of the civil service.
01:00:34 So there is no debate on the importance of the service that our military and uniformed personnel are providing.
01:00:43 We just need to talk with respect to the political aspect.
01:00:48 So in short, your story is that you posted on Facebook but you also went through some productive discussions or discourses inside the Cabinet.
01:01:01 As an undersecretary, I think we have fulfilled the tasks that we were asked to fulfill.
01:01:10 The perspectives that need to be shared by the President, we are sharing this with Secretary Giocno.
01:01:17 We are submitting memorandums to Malacanang regarding these talks.
01:01:23 We are not beyond our control on how Malacanang will handle these talks.
01:01:31 But we are still hoping that in the end, the right policy will be the one to be followed.
01:01:42 It's saddening that despite all of this, the Executive Secretary Versa Meen said that I am against the policy of the government.
01:01:55 So if these are the policies that I am supporting, I am a bit nervous about this.
01:02:00 If this is the theme of the policies that I supported and worked on while I was in the government,
01:02:06 if this is the one that is left in the interest of the government, the big question mark for me is what is the interest of Malacanang?
01:02:15 Your work is a waste but you are a bit stubborn and you are a bit of a pink.
01:02:20 Do you have regrets and do you have doubts that you did something wrong?
01:02:26 I have no regrets, I have no doubts.
01:02:29 I can say that I had a good night's sleep because from the very beginning, I was very transparent.
01:02:36 Just google my name, I had a lot of interviews before.
01:02:41 I am very honest on where I stand on issues and on policies.
01:02:47 I have a clean conscience, I have a clear position, I am happy to return to UP.
01:02:53 And the interest that I am supporting is the interest of the people of the country.
01:03:00 So I have no regrets.
01:03:03 I am very thankful to those who worked in the government.
01:03:07 Because I was a student activist before, we often fought with the government because the government is what we all believe in.
01:03:16 But from my experience while I was in the DOF, there were many honest citizens who were doing their job to make the people better.
01:03:27 And I am very thankful for that experience.
01:03:30 But Secretary Diok, do you have a last story?
01:03:34 Do you have a type of events that he overran? Like the price control on rice and the ES statement that tells him that the expiration of the US-export loan is now.
01:03:49 He is a very busy person. It is really hard to be the head of the economic team.
01:03:57 We talked and it is clear to us that we have no bad intentions.
01:04:04 I am thankful to him for giving me the opportunity to work in the Department of Finance.
01:04:12 And it is clear to us that I was just borrowed by the Department of Finance in the UP School of Economics and now he is returning me.
01:04:22 So we are on good terms.
01:04:26 So you have no expiration date because your service in the UP is still ongoing?
01:04:30 Yes, there is no expiration because until now I am a civil servant and I am a tenured faculty of the UP.
01:04:37 That is a bit unusual that Secretary Bersamin's statement is expiration.
01:04:42 Did you ask Professor Danggat Maitan what that means? Is there such a thing?
01:04:47 I mean that's the first time I'm hearing it.
01:04:49 So is it a nomenclature that you are either fired or you resign or you're suspended?
01:04:56 Actually when we received that letter, that's what we talked about with Secretary Jokdo.
01:05:03 What does expiration mean because it was the first time we encountered that term in the long term of Secretary Jokdo's service in the government.
01:05:15 Nevertheless, when we talked about it, it was clear to us that I will return to the School of Economics.
01:05:22 And I think that's the right solution in this situation.
01:05:29 The economic team, there are a lot of people from the UP School of Economics.
01:05:32 Former BSP Governor Felipe Medalla, NEDA, Director General RC Balisacan, and of course Secretary Ben Jokno.
01:05:43 It seems that you got support from the UP School of Economics.
01:05:47 Is there a division of the ranks?
01:05:51 In the School of Economics, there is none.
01:05:55 They welcomed me and they are happy that I will return.
01:06:00 It's the same in the School of Economics.
01:06:02 This is a usual event for us.
01:06:05 There is a deep and frequent discussion, disagreement in the discussions, positions on various issues.
01:06:15 But there is still respect as colleagues.
01:06:19 We will have different views on different issues.
01:06:25 I think that's the important contour in the University of the Philippines.
01:06:30 Whatever our views, we have the freedom to express our thoughts and there is a very healthy debate.
01:06:40 That's why I'm excited to return.
01:06:43 But Secretary Ben Jokno is in a tight spot.
01:06:46 What happened to you, even if he didn't intend it and you finished, you said in friendly terms.
01:06:54 But it's hard to face your fellow professor in the School of Economics because this is what happened.
01:07:01 Yes, there are many challenges and tricky problems that he is facing as the Secretary of the Department of Finance.
01:07:13 But he's been in government since 1986.
01:07:17 He has been going back and forth to different agencies several times.
01:07:22 I know that he knows the best approach to this situation.
01:07:28 It's probably not even an issue because there are bigger problems that we should talk about and solve.
01:07:37 My final question, this Maharlika, investment fund.
01:07:41 Our economic managers are now on a roadshow to invest there.
01:07:46 On the other hand, the context is that our debt is growing, it's trillionaire and the revenue collection is decreasing in the foreseeable future.
01:07:57 How is that?
01:07:58 Does this Maharlika have a hope of having a big success or should we keep an accountability and transparency lens?
01:08:07 What should we do?
01:08:08 Did you talk about that with Secretary Ben Jokno?
01:08:10 No, I did not. Maharlika was not in my portfolio when I was in the Department of Finance.
01:08:17 This is a law. We can only wish that this will be successful and will really help in raising the government's revenue to reduce our debt.
01:08:32 Before I joined the Department of Finance, I was supportive of having a sovereign wealth fund.
01:08:38 The Maharlika fund is a bit different but I'm bringing it back to the context that my support for the sovereign wealth fund is related to my advocacy on the issue of mining.
01:08:50 Because mining is a non-renewable resource.
01:08:53 If we are to use it, we are denying the future generation to benefit from these resources.
01:09:01 We, now, in our discussion, have a responsibility that these minerals will be beneficial.
01:09:08 This is what we call intergenerational equity.
01:09:11 Correct.
01:09:12 So, this is an approach that is being done globally, global practice.
01:09:17 For example, in Norway, the proceeds or income from extractives like mining were put in a sovereign wealth fund
01:09:27 so that the income will be beneficial to the future generation.
01:09:32 You have been away for almost two weeks. How are you now? You seem to be happier and relaxed.
01:09:39 Yes, I am really happy and relaxed.
01:09:42 I had a class yesterday at the UP School of Economics.
01:09:47 I am handling a course in public economics.
01:09:52 Our discussion was good.
01:09:57 But before you, there are some who resigned or left the service in the BBM Cabinet.
01:10:04 ES Vic Rodriguez, Presidential Spokesperson Trixie Angeles, and others in the middle level.
01:10:12 Why did you become noisy and became a big issue? Why do you think?
01:10:18 I don't know. I think the context of our departure is different.
01:10:24 For me, it was because of a graph.
01:10:27 So, a graph made my head hot in Malacañang.
01:10:32 Thank you very much, Dr. Shelo Magno. Good day, Professor Shelo.
01:10:38 Thank you very much, Malou, and thank you very much for being a part of this year's program.
01:10:46 [Music]
01:11:09 (electronic music)