Aquino Seeks Congress Backing to Cement Philippine Overhaul

Philippine President Benigno Aquino asked lawmakers to pass measures that will improve governance and bring lasting peace to the nation’s south, while touting economic growth that’s become the fastest in Asia in the first half of his six-year rule.

Aquino said Congress should amend laws on tax breaks for investors and transportation costs in a bid to increase business competitiveness, without giving details of the changes he’s seeking. He vowed to continue his anti-corruption drive and right injustices in a system of administration that he said has long blighted the country.

“Let us not allow this transformation to be temporary,” the president said yesterday in his annual state of the nation address that lasted almost two hours. “Let us seize this opportunity to make the change permanent.”

Aquino, 53, has overseen an economic resurgence with first-quarter growth outpacing China, even as he faces pressure to boost job creation and curb corruption before his term ends in 2016. He was this year rewarded with two investment-grade ratings from Standard & Poor’s and Fitch Ratings Ltd. Aquino said yesterday that a third “will soon follow.”

The president is “on top of his game,” Ramon Casiple, executive director of the Institute for Political and Electoral Reform in Manila, said by phone after the speech. “At this point, if he wants a bill passed, nobody will object unless it’s really unpopular.”

‘Ready to Ride’

“From the prudent expenditure of funds to the effective collection of taxes; from infrastructure development to the transparent conduct of business that generates jobs, our message to the world could not be clearer: the Philippines is ready to ride the tides of progress,” Aquino said.

The president, who polls show has the support of more than 70 percent of voters, has used his popularity to pass laws for higher taxes on tobacco and liquor and provide free contraceptives to the poor. Rising tax collection will permit a boost to spending on education and social services, he said.

Aquino asked Congress -- where he has a majority -- to reform the pension system for the police, military and other government employees. The state-owned Social Security System has 1.1 trillion pesos ($25.4 billion) in unfunded liabilities, and funds will dry up in 28 years if the system isn’t changed soon, he said.

He also asked lawmakers to pass a bill creating a new political entity of Bangsamoro in the south next year so his government will have time to set up the new autonomous Muslim region by 2016. The government and Muslim rebels signed on July 13 a wealth-sharing agreement after eight months of talks, and Aquino said peace is within reach in a region that has long been in conflict.

Customs Smuggling

Aquino criticized the customs and immigration bureaus for lapses that lower government revenue and aid the smuggling of contraband, including drugs.

Customs Commissioner Ruffy Biazon told reporters today he offered to quit yesterday after hearing the president’s speech. “My confidence in you remains the same,” Biazon, who belongs to the administration’s Liberal Party, quoted Aquino as telling him via a mobile-phone message.

Biazon, who was appointed by Aquino in September 2011, said the bureau would probably fall short of its collection target this year. The agency, which accounts for a fifth of government revenue, missed its 2011 and 2012 targets by more than 50 billion pesos each time, according to Treasury data.

Biazon said he has a professional relationship with Aquino, even as he noted the ties between their families. His father Rodolfo Biazon, whom the late President Corazon Aquino appointed Armed Forces chief of staff in the 1990s, had defended her from several coup attempts, he said.

2014 Budget

The $250 billion Philippine economy expanded 7.8 percent in the first quarter from the previous year, the fastest among the 17 biggest economies in Asia. At the same time the jobless rate climbed to 7.5 percent in April, the highest in three years, according to a report out last month.

Bangko Sentral ng Pilipinas Governor Amando Tetangco said in June that the country also may be upgraded from the highest junk rating by Moody’s Investors Service.

The Philippine Stock Exchange Index rose 1.4 percent at the noon trading break in Manila and the peso climbed 0.2 percent against the U.S. dollar.

Aquino said he would ask Congress today to approve a 2.27 trillion-peso budget for 2014 -- 13 percent higher than this year, according Budget Secretary Butch Abad -- so he can continue reforms and quicken the momentum toward “inclusive progress.” The government will target about 2 trillion pesos in revenue next year to support record infrastructure spending, Abad said on July 17.

To contact the reporters on this story: Norman P. Aquino in Manila at naquino1@bloomberg.net; Joel Guinto in Manila at jguinto1@bloomberg.net

To contact the editor responsible for this story: Rosalind Mathieson at rmathieson3@bloomberg.net

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