Philippine Reserves another peak high- $82.1 Billion USD; Smoke, liquor tax up +₱32

Gross int'l reserves hit record high

The Philippines' gross international reserves (GIR) reached a new high of $82.093 billion last month, the Bangko Sentral ng Pilipinas (BSP) reported on Wednesday.

The end-October level marked a "modest increase" from $82.028 billion posted in the first nine months, BSP Deputy Governor Juan de Zuñiga said in a statement.

The latest GIR, which serves as buffer in times of external shocks, is well above BSP's 2012 forecast of $77.5-$78 billion, breached as early as July. BSP has said revised forecasts will be revealed this month.

"The modest increase in the end-October 2012 GIR level was due mainly to inflows from the foreign exchange operations and investment income of the BSP," De Zuñiga said.

"These inflows were offset, however, by foreign exchange outflows for the payments by the national government of its maturing foreign exchange obligations, as well as revaluation losses on the BSP's gold holdings resulting from the decrease in the price of gold in the international market," he explained.

Reserves are now good to cover 11.9 months worth of imports of good and payments of services and income, De Zuñiga said. They are also equivalent to 11.7 times the country's short-term external debt based on original maturity and 6.6 times based on residual maturity.

Bill eyes P45B from 'sin' tax

A SENATE committee yesterday unveiled a substitute "sin" tax bill calling for higher tax rates on cigarettes than those proposed by the House, with the revenue take expected to be larger at ₱40-45 billion.

           "Our version adopts that of the Lower House with added features... and amendments," Senate ways and means Acting Chairman Senator Franklin M. Drilon said in his sponsorship speech yesterday.

The earlier version sponsored last month by Senator Ralph G. Recto -- who quit as ways and means chairman after receiving criticism for supposedly watering down the bill -- was expected to generate only ₱14 billion.

House Bill (HB) No. 5727 scrapped the unitary rate proposed by the Finance department and set two tiers for tobacco and three for alcohol products, with standard increases every two years after a transition period beginning 2015. HB 5727 is expected to generate ₱30 billion in incremental revenues.

The National Internal Revenue Code has a four-tier classification for cigarettes and three for fermented liquor and distilled spirits.

Mr. Drilon said the scheme will raise ₱40-45 billion in incremental revenues on the first year -- ₱26.87 billion from tobacco products, ₱7.17 billion from distilled spirits, and ₱12.5 billion from fermented liquor.

The new bill states that "on Jan. 1, 2016, all cigarettes will have a unitary tax rate of ₱32.00."

Before that, rates for cigarettes packed by hand will go up to ₱12.00 per pack on Jan. 1, 2013, ₱22.00 on Jan. 1, 2014, and ₱28.00 on Jan. 1, 2015, from the current ₱7.56.

The House version proposes only two tiers beginning January 2013, with an 8% increase every two years after the transition period, or from 2015 to 2025.

For cigarettes packed by machine, Mr. Recto proposed three tiers for the period March 2013 to 2019, with an 8% increment every two years. The tiers were supposed to be reduced to two by 2020 with an adjustment of 4% every two years thereafter.

"We also wish to introduce amendments to the excise tax provisions governing distilled spirits so that our laws would conform to our WTO (World Trade Organization) obligations. Under our version, we propose a mixed rate of P30 plus 30% of the net retail price (NRP)," Mr. Drilon said.

For distilled spirits, the House version proposed three tiers with specific rates while the substitute bill is a combination of specific and ad valorem rates. The Recto version maintained four tiers, with a two-step increase in rates based on proof per liter on March 1, 2013 and on Feb. 28, 2015.

"With respect to fermented liquor or beer, we shall be introducing a two-tier system with the products whose NRP do not exceed ₱22 taxed at ₱20. For those whose NRP exceed ₱22, the same shall be taxed at ₱25," Mr. Drilon said.

The House version proposed the same number of tiers but the NRP was set at ₱50.60 and below and ₱50.60 and above. Mr. Recto proposed two tiers during the transition period beginning March 2013, with an 8% increase every two years from 2015 to 2019 and 4% beginning March 1, 2020.

President Benigno S. C. Aquino III was amenable to lowering the take to P40 billion from the original Palace proposal of P60 billion.

"At ₱40 (billion), we're happy. At ₱60 (billion), we'll be happier. For ₱40 (billion) is already, I think, sufficient to meet the objectives both in terms of gaining more resources, managing the deficit but most importantly addressing the health issues," he said at the sidelines of the Asia-Europe meeting in Laos.

Philstar, BusinessWorld Online

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Philippine Air-force approved! $1.8 billion USD Air Assets for delivery 2013

T-50-KAI

Philippines Protecting West Philippines (South China) Sea Interests

As published by Aviation week (http://is.gd/gdyjvL), China's increased assertiveness over territorial claims to the South China Sea is leading the Philippines to embark on the biggest military procurement program it has ever undertaken.

Both houses of the Philippine congress have approved the budget and acquisition process for the acquisition of

• 12 -Jet trainer/surface-attack aircraft;
• 6 -Close-air support aircraft;
• 2 -Long-range maritime patrol aircraft;
• 2 -Light-lift and three medium-lift fixed-wing military transports;
• 3 -Ground-based radars
• 10 - Attack helicopters.

All will be assigned to the Philippine air force, says one of its officials.

The country's assistant secretary of defense in charge of acquisitions, installations and logistics, Patrick Velez, says all these procurements are high-priority and that the defense department hopes to begin taking deliveries next year (2013). Congress has approved these specific acquisitions under the first five years (2012-17) of a 15-year military modernization bill. The budget allocated for 2012-17 is at least 75 billion pesos ($1.8 billion).

The Korea Aerospace Industries T-50 is the front-runner to meet the requirement for the jet trainer/surface attack aircraft, Velez says. No contract has been signed yet because the T-50 acquisition must be approved by the Philippine government procurement policy board. He also says the T-50 has yet to achieve certification for medium-range operations—since it was initially developed as a jet trainer—and if it fails to achieve that, then "we may need to look at another platform."

Velez says that for the close-air-support requirement, "at this stage, the Number One in the rankings is the Embraer EMB-314 Super Tucano." Second is the Hawker Beechcraft T-6 Texan II, he says, followed by the Korea Aerospace Industries KT-1 and Aero Vodochody L-159.

In terms of maritime patrol, Philippine air force officials say the Indonesian Aerospace CN235 is a strong contender. It uses the Airbus Military Fully Integrated Tactical System, a series of displays and computers for processing the data and information from the aircraft's sensors. The main issue with this competition is the sensor suite, according to Velez. Besides the CN235, it is understood the other main contender is Raytheon, but it is unclear which platform it is proposing.

Indonesian Aerospace is the most likely candidate to meet the light, fixed-wing military transport aircraft requirement with its C212, Velez says. As for the medium-lift requirement, "it is a close competition between the Alenia C-27J and C295, although we already have approval from the president for the C-27J," he says. Both congress and the president must approve military procurements.

Aviation Week

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PNP & New York Police Department (NYPD) Open new office in Camp Crame Manila

NYPD will open a new office in Camp Crame Manila. NPA Said: Philippine police, NYPD sign agreement that will lead to more human rights abuses

The Communist Party of the Philippines (CPP) denounced the memorandum of agreement between the Philippine National Police (PNP) and the New York Police Department (NYPD) signed Oct. 31, as "part of heightening U.S. government intervention in the Philippines."

The Communist Party of the Philippines further said that "the agreement with the U.S. NYPD, one of the most notorious fascist police organizations in the world, can only lead to worse human rights abuses by police operatives under the Aquino regime."

The memorandum of agreement was signed by PNP Chief Nicanor Bartolome and the head of the NYPD's Singapore satellite office, Lieutenant Gustavo Gutierrez. It purportedly serves to advance "cooperation in addressing transnational crimes" and "capacity building and training" between the PNP and the NYPD. According to information earlier released by the PNP, the NYPD will open a satellite office inside the Philippine National Police's general headquarters in Camp Crame.

"The PNP-NYPD memorandum of agreement will only serve as an additional legal cover for the U.S. government's heightening intervention in the Philippines. It will lead to more extensive and intrusive intelligence and other types of operations by U.S. police and military agents in the country," said the Communist Party of the Philippines.

"Even before the memorandum of agreement, U.S. police and federal agents have already been operating in the Philippines clandestinely with the cooperation of the local police." The CPP pointed out that political prisoners detained at the PNP Custodial Center in Camp Crame were able to uncover the presence of agents of the U.S. Federal Bureau of Investigation (FBI) maintaining their own offices within the camp and in a condominium unit nearby.

Several Indonesian nationals accused of being 'terrorists' and arrested by U.S. agents in Indonesia and Malaysia have been renditioned by the U.S. government and given false Filipino identities at the behest of the FBI to justify their detention at Camp Crame. This is in violation of Philippine national sovereignty and the Indonesian detainees' human rights, added the CPP.

"The NYPD is notorious for being a fascist tool of suppression against the American people," said the CPP. "Recently, the NYPD was employed in the suppression of protest actions at Zucotti Park near Wall Street by American workers, students and ordinary people against the pro-big monopoly policies of the American government," said the CPP.

"Following the pattern of its new partner, the PNP is bound to become even more brutal in dealing with protests, urban poor anti-demolition barricades and other mass actions," said the CPP.

Fight Back News

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