Senator Edgardo J. Angara
Senate Committee on Finance
15 November 2011
In today’s knowledge-based and information-driven age, we face multiple challenges unthinkable in previous generations. Not only are we overwhelmed by the dizzying pace of technological change. We are also challenged in raising living standards through quality jobs and access to our far-flung islands, physically and digitally. We need to boost our competitiveness through education, technology, infrastructure and smart governance.
These issue are already rocking the status quo and overthrowing governments abroad. The Arab Spring is remaking the Arab world. Speedily gathering strength is the Occupy Movement overtaking Wall Street and major cities in the United States and Western Europe, protesting against massive unemployment and unrestrained corporate greed.
This radical change is one compelling reason why government-as-usual will be harmful to our nation's health and prosperity—and even more hurtful to our sense of national dignity.
Mr. President, distinguished colleagues, I rise to sponsor the budget of the following agencies: the Department of Education (DepEd), Commission on Higher Education (CHED) and the State Universities and Colleges (SUC’s), the Department of Science and Technology (DOST), the Department of Trade and Industry (DTI), Cultural Institutions and the Housing Agencies.
Education, science and technology, culture and the arts, trade and industry, shelter—these are the core elements that define who we are and what we can become. Let me briefly discuss each of them.
Investing in education
Education, Mr. President, is a precondition to any development. This becomes even more apparent when we evaluate our present situation.
In the latest Global Competitiveness Report of the World Economic Forum, we only ranked 110th out of 183 countries in terms of the quality of our primary education. The quality of our math and science education is even poorer at 115th place. If we allow these to persist, we can only expect the quality of our educational system to decline from its present standing of 61st.
Yet, the country's public expenditure on education amounts to only 2.6 percent of our gross domestic product, and 15.2 percent of total government expenditure—numbers far below those of our neighbors in Southeast Asia.
Basic education: Gearing for the future
During the DepEd budget hearing, Sec. Armin Luistro vowed to work fast to fill the shortages in our physical needs. The present lack of 66,000 classrooms will be reduced to 34,349 by the end of 2011.
The DepEd also pledged to work on overcoming other physical shortages such as seats and desks, water and sanitation facilities.
That is how it should be, so our teachers and educators can then concentrate on the more important issues of curriculum development, effective teaching methods, retraining of teachers in math, science and communication arts, and the use of educational technology.
We pray that future budget discussions will focus on these issues , rather than spending agonizing time looking at the appalling school supply shortfalls, year after year.
There are two other policy issues. First, the need for connectivity throughout our school systems. Universal access to the Internet ought to be a major education reform target for 2012. Second is to scale up the feeding program as 2 million children go to school hungry everyday.
Higher education: Innovation centers
In this fast changing world, we need to build our country’s capacity to innovate through research and development.
The United Nations Educational, Scientific and Cultural Organization (UNESCO) recommends that we spend at least 1 percent of our GDP on research and development. We spent a meager 0.12 percent of our GDP on R&D in 2009—one of the lowest rates in Southeast Asia as opposed to UNESCO's recommendation. In this field, we have a lot of catching up to do.
In the 2012 budget, we have incorporated a model how we can innovate and undertake R&D—an innovation cluster system.
Why the innovation clusters?
For the first time we will have an innovation drive—a consortium of Industry, Academe, Government and International collaboration.
Industry brings the market savvy that understands what new products can be competitive globally, in a wide variety of markets like cloud computing, natural herbal products, algae for feeds, energy and nutritional supplements. Industry is already investing their money to create new products, much more than the government.
The academe gets a chance to demonstrate for the very first time it can do acquisitive R&D in conjunction with Industry. They can find the newest technical breakthroughs and move that technology toward solving industry's problems. They are given a specific set of objectives they need to attain. Government sponsorship goes to researchers who can perform, not to institutions that will not deliver.
Government agencies will collaborate in these multi-disciplinary research by making sure that multi-year funding is available to the consortium as long as they meet or exceed our expectations. In most cases, direct benefits of the research will be a tangible outcome of sponsoring the clusters, because they have clear deliverables to the government.
International collaboration is crucial because foreign institutions' R&D budgets (or the FDI budget) are over 100 times our own internal budgets. We will be leveraging the hottest results of their basic and applied research into our National S&T Programs in food security, health and wellness, energy access, and knowledge access.
The key R&D clusters are:
An Algae Research & Commercialization cluster to focus on algae biology, cultivation and processing. Algae are fast growing organisms that can be harnessed for their natural oils and utilized as carbon sinks. This cluster will drive the Philippine algae industry to specialize in high-value products for aquaculture, animal feed, nutraceuticals and biofuels.
Cebu rivals Manila in ICT prowess, hence, is a prime area to incubate the ICT cluster on Cloud Computing and Software as a Service (SaaS). This cluster will bring together the DOST-Region VII office, Cebu ICT Association, University of San Carlos, Cebu Institute of Technology and the University of the Philippines Cebu, in creating software applications and programs for e-governance, business process and knowledge process outsourcing.
The Smart Agriculture and Precision Farming will utilize remote sensing and satellite imaging for a more accurate assessment of land use, productivity and crop yields. This cluster will provide farmers with invaluable logistics and decision-making support, and at the same time harness the R&D capacity of our regional universities centered on agriculture.
The Responsible Mining Technologies cluster will help us harness our mineral resources in an environmentally sustainable way. Mining investment over the next five years can exceed US$10 billion. A large portion of this investment will go into the development of environment protection systems, biodiversity impact minimization mechanisms and water quality laboratories. Our SUC's will provide the manpower, talent and even location for this cluster and help secure a non-adversarial relationship between the community and industry.
The Disaster Science and Management cluster is, perhaps, the most critical at this time when natural disasters and extreme climatic conditions hit us repeatedly. It will provide accurate science forecasting and modeling, as well as train local governments and school administrators on disaster mitigation. Key here is disaster risk reduction and integrated risk governance, not just emergency response which does not minimize our vulnerabilities.
With the growing interest in wellness treatment, especially for the elderly, we have a cluster on Natural Health and Nutritional Products, which is fast becoming a US$50 billion a year industry. We cannot afford to sit idly as other countries begin to offer natural cures based on lagundi, virgin coconut oil, coconut water, malunggay, amplaya. These herbal medicines can have the same effect, it is hoped, as maintenance medicines following Western medicine.
This cluster will ensure that our development of natural health products is founded on world class science. Despite the scientific propaganda against virgin coconut oil in favor of soy bean oils, there are a lot of scientific studies that speak to the curative nature of VCO. Here is an example where Filipinos need to perform peer-reviewed studies into the effectiveness of different herbal preparations and mixtures, to help the herbal industry grow.
The DOST, CHED, Department of Agriculture, and E-Government Fund have all fully cooperated to concretize these innovation clusters by providing government's contribution to the consortium.
In the area of intercultural relations, we recommend a modest amount for the National Historical Commission allotted for the first-decade celebration of the Philippine-Spanish Friendship Day on June 30.
This important celebration, which puts us in touch with our hispanic roots, has not gone unnoticed abroad. In August this year, Spain's Congreso de los Diputados passed a momentous parliamentary declaration expressing their nation's gratitude toward ours for recognizing our mutual friendship by law.
Our relationship with Spain is opening new doors of friendship with other Ibero-American nations. The Dia del Galeon festival, instituted by the UNESCO, prompts us to look to our shared history and culture in order to strengthen future relations with other Galleon Trade nations. We have likewise established Sentro Rizal in Madrid and Prague—a cultural center where Filipinos abroad can access resources and books about our national heritage.
For the preservation of our tangible cultural heritage, we propose funding for the digitization and preservation of priceless papers and documents in the National Library.
For the people of the Cordilleras, we included a special proviso under the CHED's Higher Education Development Fund (HEDF) to fund extension services of SUC's in the Cordilleras, for cultural preservation, biodiversity protection and climate change adaptation.
Housing and public works are among the principal creators of jobs in our country. These are stimulative activities that create direct and indirect jobs in places where they are needed most: in rural and poor areas.
According to the Housing and Urban Development Coordinating Council (HUDCC), every 100 jobs generated in the housing sector creates an additional 18 jobs in ancillary industries. The building of one house with land development over a two-month period guarantees the employment of eight workers.
Moreover, it only takes P6,504 to create one job in the housing sector. Construction also yields a notably high multiplier of 1.92, meaning that a one peso change in the output of the industry translates to P1.92 (one peso and 92 centavos) worth of additional output in the economy.
We need some P361 billion from now until 2016 to provide housing assistance for 1.5 million Filipinos. However, only a total of P6.975 billion is proposed for the following housing agencies: HUDCC, Housing and Land Use Regulatory Board, Home Guaranty Corporation, National Home Mortgage Corporation and the National Housing Authority, which will get P5.63 billion of the total.
Clearly, the government cannot bear the massive funding requirements of housing on its own. We have to call in the private sector to get actively involved in housing and land development and tap our very liquid banking sector to leverage limited public funds in reducing our housing backlog.
Trade and industry
We are witnessing the re-emergence of the Pacific-rim economies as the center of the global economy. Trade and economic activity is shifting back to the Galleon Trade of the 16th and 17th century and to Asia where up to a fourth of global GDP will be produced in the next ten years.
We are witnessing U.S. President Barack Obama pushing vigorously for a Trans-Pacific Partnership (TPP), a free-trade initiative among the U.S. and eight APEC members: Australia, Brunei, Chile, Malaysia, New Zealand, Peru, Singapore and Vietnam. Please note that we are not one of the club members.
We have to take full advantage of the new Asian renaissance. The Philippines is already in talks to join the TPP, but we still have to implement reform measures to comply with the set of platinum standards required for entry.
The Department of Trade and Industry (DTI) will continue funding the “Doing Business in Free Trade Areas (DBFTA's),” a series of information seminars on trade agreements our country has entered into in the Association of Southeast Asian Nations (ASEAN) and through ASEAN with China, Japan, Korea, and Australia-New Zealand. The DBFTA's discuss market opportunities that exporters, distributors, traders, customs brokers, freight forwarders, members of the academe and other government agencies may harness through existing FTA's.
This measure encourages our industries to maximize the benefits of free trade, and expand their markets with our trade partners.
At the same time, we will continue to foster the growth of our micro, small and medium enterprises (MSME's), which comprise 99 percent of all businesses registered in the country.
Mr. President, economic turbulence is engulfing the European Union, Japan and the United States. Recent economic downturns are highlighting how a world that has become more prosperous, by and large, has also become more inequitable—stoking widespread unrest and discontent.
The Philippines has a unique opportunity to escape this turmoil relatively unscathed if we do the right things at the right time.
The government can no longer afford to be a passive actor. We in public service must have a keen eye and clear vision to come to grips with reality—social, political, economic and financial events. Unless we are wide-eyed and awake, we will be swept away by the tsunami pace of change.
Fortunately, we are not without hope or remedy. The national budget is our foremost weapon, hence it is critical that we purposefully channel it toward creating a knowledge-based and innovative-driven nation that will lift the Filipinos’ living standards—and hope for the future.