INTRODUCTION
We have enjoined all branches of government to give full support to the package of reforms we are pursuing to uplift the condition of the nation and our people: economic reforms and social reforms during the first four years of my term, and judicial and electoral reforms in the remaining two years. It is highly significant, therefore, that the four bills before us enacted by the 10th Congress at this time — after lengthy debate and patient effort — are those crucial to our deregulation and liberalization measures leading to greater people empowerment, job generation, investment attractiveness, and competitiveness in the world economy.
AGRICULTURAL TARIFFICATION ACT (R.A. 8178)
The first new law is the Agricultural Tariffication Act (RA 8178) that replaces our quantitative import restrictions (QRs) on agricultural products, except rice, with tariff equivalents, and creates the Agricultural Protection Tariffication Fund.

This law’s key significance is in meeting our commitments as a member of the World Trade Organization (WTO), one of which is the removal of quantitative restrictions on agricultural products except rice.

Our failure to comply would have endangered our membership in that global trade body and would have meant the loss of any or all of our existing privileges such as: the Most-Favored Nation (MFN) treatment enjoyed by GATT member-countries; being possibly charged higher value-added taxes for our exports and thereby putting at risk our markets abroad because of the higher prices of our goods; and being stricken off the list of preferred trading partners to which belong those who have complied with GATT.

This law ushers in new hope for our agricultural producers who would need further safety nets because of GATT before they can be fully competitive in the world market.

Through the imposition of new tariffs and the removal of quantitative restrictions, we avoid becoming the dumping ground of cheaper imports while we enable locally produced agricultural products to remain competitive price-wise. The tariffs to be raised will be administered by the agricultural protection tariffication fund which will provide so-called safety nets or adjustment measures by plowing back to the sectors or industries that may be adversely affected.

We therefore continue to support local producers who need more time to gear up for global competition even as we ensure the continuous productivity of our agricultural and agri-processing sectors. Thus, even as we fulfill our commitments to the WTO, I urge our farmer-producers and our farmers’ cooperatives to focus their efforts on the mid-range benefits and long-term advantages that can be gained by improving the competitiveness of our agricultural products in the world market, in terms of quality, prices and dependability of delivery.
AMENDMENTS TO THE FOREIGN
INVESTMENT ACT (R.A. 8179)
The amendments to the Foreign Investment Act of 1991 as provided for in RA 8179 will fast-forward our socio-economic thrusts as we open up new investment opportunities to the private sector.

This law contains the following major features:

* The deletion of the three-year requirement before a domestic enterprise may change its status to an export enterprise;

* The reduction of the minimum paid-in equity requirement for foreign-owned companies for both domestic and export markets from $500,000.00 to $200,000.00 and the further reduction to $100,000.00 of the paid-up requirement for enterprises involving advanced technology and those with at least 50 direct employees;

* The deletion of the negative list “C” which, during the transitory period, included insurance, licensing distributorship and trading; and,

* The grant to natural-born Filipinos, who have since acquired other citizenships, of investment rights similar to those of Philippine citizens in the fields of cooperatives; thrift, rural and private development banking and financing institutions; as well as the right to become transferees of private lands up to a maximum of 5,000 square meters of urban lands or three hectares of rural lands.

Except those limited in the constitution, we have already simplified our investment rules by opening up all investment areas and activities to foreign participation to a maximum of 100% foreign equity and by further streamlining investment procedures.

With this new law, therefore, we expand the door of opportunity further to foreign investors, including fellow Filipino investors who are now citizens of other lands who have long wanted to participate in the development of their Philippine motherland.
OIL INDUSTRY DEREGULATION (R.A. 8180)
The downstream deregulation of the oil industry now almost fully integrates our local economy to the global economic system. Deregulating the oil industry provides solutions on a sustainable basis to the adverse economic, political and social costs of government’s oil price regulation from which our consumers and business people have suffered for so long.

This new law (RA 8180) programs the implementation of deregulation in two stages: the transition phase and full deregulation.

During the transition phase, oil importation and the entry of new refineries will be liberalized, not only in support of our bid for increased foreign investment but also, and more importantly, to assure us of the participation of new players in the domestic oil industry. This removes the de facto monopoly of big established oil companies by enabling market forces to prevail.

In leveling the playing field in the industry, the Oil Price Stabilization Fund (OPSF) coverage will be expanded to include processors and consumers who directly import oil products. Moreover, an automatic oil pricing mechanism will be adopted to enable the domestic price of petroleum products to approximate and promptly reflect oil prices in the international market.

When full deregulation will have been implemented, all regulations on oil price setting, including the OPSF and the foreign exchange (Forex) cover, will be removed. And, to ensure reasonable costs for petroleum products, as well as high product quality protection of the environment and other safety measures, government will strengthen its capacity to promote fair trade practices.

With such deregulation, we foresee a number of benefits to the total economic recovery of the country — attributable to the government’s overall economic policy of encouraging and supporting the private sector as the primary engine of development.

Likewise, deregulation will result in long-term aggregate benefits to the economy, especially: the depolitization of oil pricing, increased competition, and a better climate for investments. Pricing devoid of political and vested interests institutionalizes market-driven practices which are attuned to world market realities and enables actual international and domestic market forces to reflect the true costs of inputs — oil importation, refining, marketing, and environmental protection.

Needless to say, increased competition will lead to more reliable supply, reduced prices, increase in consumers’ choices and better efficiency in production and consumption.

The ripple effect created by deregulating this basic industry will be far-reaching and will include the development of new enterprises and the creation of more quality jobs.
HCV TO TRANSACTION VALUE TAX (R.A. 8181)
The fourth new law (RA. 8181) protects our consumers by ensuring that the cost of the goods they buy have been paid for with the correct taxes by importers.

We shift our import valuation system from home consumption value (HCV) to export value, in the interim, and then to transaction value — not just to be consistent with a WTO requirement, but to join the community of nations in exploiting to the fullest the benefits of open international trade. The net effect of this valuation shift is to provide consumers with goods at the lowest possible prices.

The advent of increased global competition and greater interdependence among countries necessitates that our local industries be given the leverage to better compete in the global market. This what this new system intends to accomplish — to make our exporters more efficient and competitive in the international arena.

We have discarded protectionist policies of the past which had plunged us into intermittent recessions and even setbacks. We have continued to institutionalize by law various liberalization and deregulation policies. We have further reduced the spread and level of tariff rates and allowed the freer entry of imported inputs for the benefit of our export sector and consumers at large.

RA 8181 complements the trade liberalization thrusts we have already put in place. While it levels the playing field by ensuring more equitable tariff protection of domestic industries, it does lead to lower costs of inputs for domestic industries and overall lower costs of products, and — just as important — it enables our exporters to receive the same treatment afforded to their competitors in the world market.

The expanded export sector that results from RA 8181 will again generate more employment, create new labor skills, expand managerial and technical expertise, all of which contribute to the realization of higher incomes and improved quality of life for our people.
CLOSING
The signals are clear: the Philippines is determined, ready and eager to compete in a liberalized multi-trade order. We have united to transform our beloved Philippines into a newly industrializing economy — to be a tiger cub in the dynamic Asia-Pacific community — and then, to become, sooner than we think, a tiger ourselves.

In closing, I thank on behalf of our people and government, all the Congressmen and Congresswomen and the Senators who have acted as authors, sponsors and pushers of these four vital laws and those members of the bicameral conference committees who made the final, harmonized versions possible.

I especially commend the leaders of both houses of Congress — Senate President Nepali Gonzales and Speaker Jose de Venecia of the House of Representatives — for their continuing support of our vision of people empowerment and global competitiveness through these timely, high-impact laws.

I continue to urge all of you — legislators, cabinet officials, field workers and the private sector — to join me in our drive to free our nation from the shackles of poverty and to bring ourselves to sustained social development and economic prosperity.

Mabuhay ang Kongreso!

Mabuhay ang bayang Pilipino!