Socioeconomic Planning Secretary Karl Kendrick T. Chua
Public Hearing of the Committee on Finance (Subcommittee “A”)
Proposed 2022 Budget of the following: National Economic and Development Authority and attached agencies
October 13, 2021
I will begin the presentation on the budget proposal of NEDA and the attached agencies. For this presentation, Mr. Chair, I will focus on the NEDA as the agency because I have presented the economic recovery and plan in the DBCC hearing. My presentation will cover the overview of NEDA, our key accomplishments in 2020 and 2021, and our goals for 2022. Then the proposed budget and an update on our fund utilization in 2020 and 2021.
On the overview of NEDA, just very quickly, there are actually two NEDA bodies. The first one, as you know, is the NEDA Board and that is headed by the President. And as Director-General and Socioeconomic Planning Secretary, I head the NEDA Secretariat.
Under the NEDA Board, as you know, there are several cabinet-level committees, the Development Budget Coordination Committee, the Investment Coordination Committee, the INFRACOM, the Social Development Committee, the Committee on Tarrif and related matters, Regional Development Committee, and the Land Use Committee. Under the Office of the Secretary, or the NEDA Secretariat, presently, we have four groups, each headed by a USec. Later on, I will be presenting a proposal on our comments on the NEDA bill to reorganize a bit the NEDA Secretariat so that we can deliver as we enter a new phase in our economic history.
We also have the following attached agencies to the NEDA in the next slide, the Philippine Statistics Authority, one of its biggest mandates this year, and last year was the National ID and the 2020 census. We also have the Philippine Statistical Research and Training Institute. One of its biggest mandates as we enter this new phase of devolution is for them to train all the local government units on statistics so that they can use it as input to better planning. We also have the Philippine Institute for Development Studies, the Philippine National Volunteer Services Coordinating Agency, the Public-Private Partnership Center, the Tarrif Commission, and the Commission on Population and Development. Mr. Chair, let me now go to the key accomplishments of the NEDA Secretariat and I will go through it one by one according to the budget priorities.
On the program one, socioeconomic policy and planning. Let me just highlight six of the major accomplishments. On the overall economic management, we prepared We Recover as One Report and Updated the Philippine Development Plan. And the various regional development plans. All of them to respond to the challenges brought about by COVID-19. These were used as inputs in the preparation of the 2021 and 2022 budget. We also were active on producing the analysis to provide advice the IATF on the opening of the economy, the schools, mobility, and estimating the total cost of the pandemic and the quarantine. Also, we oversaw the implementation of the National Action Plan Phase 3 and Phase 4, which are under the IATF.
On regional development, number four, we assisted in the crafting of a national policy framework for guiding the implementation of the 2022 devolution. On disaster recovery, we as vice chair of the NDRRMC recovery cluster, we lead the formulation of the various rehabilitation and recovery programs. For instance, for Taal volcano, and a series of typhoons and flooding last year.
On policy reform, we supported the passage of the Retail Trade Liberalization Act and the Foreign Investment Act, I understand passed by the Senate, and we are eagerly awaiting the passage of the Public Service Act.
Let me now go to the second program, National Investment Programming. Let me highlight five of our achievements. The first is the continuous management of our investment program. We have updated the Public Investment Program, the various Regional Development Investment Programs, and the Three-year Rolling Infrastructure Program. All of these are inputs to the annual preparation of the budget, in particular, the infrastructure proposal.
On project appraisal, the NEDA Board-ICC approved 31 projects in the past one and a half years, amounting to 940 billion, including four new projects worth 101 billion to augment our COVID response.
On ODA review, this is one of our major mandates, we approved and endorsed 135 ODA-funded programs. On project monitoring, we continue to monitor and update the list of Infrastructure Flagship Projects. The current list is now 112, last updated in April to reflect those projects that are crucial to respond to the pandemic, the new normal, and the flooding that happened last year.
And on process modernization, we have commenced the business review of the entire project preparation and appraisal process and improving the budget linkages. We plan to introduce a unique project ID, a project that we are doing with DBM, which I can expound later.
On our third mandate in the budget, national development, monitoring and evaluation, we would like to highlight five key accomplishments. The first is the completion of our annual review in 2019 and 2020, which we are required to submit to Congress every June 30th of the year. On the program and project monitoring, we have developed a national evaluation portal, basically where we put all evaluation reports of key projects and programs and also the evaluation of the Infrastructure Flagship Programs. And also on evaluation we have conducted six evaluation studies on agriculture, water resources and transport under our Monitoring and Evaluation Fund.
We are also in partnership with the PIDs for a complimentary set of evaluation. On results monitoring, we continuously review and adjust our PDP result matrices, especially because the pandemic has changed the landscape. And finally on regional monitoring, we continue to prepare the various Regional Development Reports and our Regional Project Monitoring and Evaluation Report.
Mr. Chair, let me now go to the forward-looking aspect. Again for each program, what we plan to do as our key priorities for 2022. Let me highlight seven. The first is the preparatory work for the 2022-2028 PDP or Philippine Development Plan and the accompanying Regional Development Plans. I have instructed my staff to focus on five key areas: our continuous recovery, smart infrastructure, innovation, regional equity, and climate change. To support that, we are undertaking flagship studies, researches, surveys, and master plans to support our next planning process. I have requested the staff to focus on agriculture, human development, government organization, and the labor market.
And there are also several other studies that we want to focus on to improve efficiency in government. For instance, number one, the Philippine government governance statistics framework. Number two, the contract price escalation database. Third is creative industries. The fourth is measuring awareness and perception with regards to our long-term vision in the AmBisyon Natin 2040, longitudinal cohort study of Filipino children, which we follow over time to see progress against various programs, and non-tariff barriers on food to address the inflation issue today.
The third one is to continuously provide our macroeconomic analysis for all post-disaster needs assessment and the reformulation of our rehabilitation and recovery programs.
Number four is, as part of our mandate in the Innovation Act, is to spearhead the formulation and implementation of the national innovation agenda and strategy document. The fifth is the preparation of our SDG acceleration roadmap because we have to also catch up given the pandemic. We are also improving the regional distribution of investment by strengthening the linkages among planning, investment programming, and budgeting. And as I mentioned the introduction of a unique project ID for all projects, whether emanating from the national or the local level. So we can keep track and monitor and evaluate all the way from the conceptualization to the end of the project, including accounting for the results.
And finally, we are helping the local governments by strengthening the underpinnings for RDC proposals and the support to their devolution transition.
On our second program, on national investment programming, we have three major goals. The first is the continuous improvement of our business process in project development and appraisal through better linkages between the master plans, the PIP, and rolling budget for infrastructure or the TRIP.
The second is we are pursuing the following executive initiatives. We are reviewing the BOT Law IRR, proposing some amendments. We are also reviewing the Joint Venture guidelines. And we are preparing the framework for the water resource allocation to help our LGUs address water and sanitation concerns.
And finally, we are enhancing the appraisal of projects submitted to the ICC. We are proposing that apart from our present method of quantifying economic benefit only based on efficiency, meaning time or cost savings, we also look at equity and environment issues. The equity part will allow more rural areas to get better projects. And also we have to cost out what each project contribute to, for instance, carbon emissions.
The next one is our monitoring and evaluation program, we will be preparing the last socioeconomic report. This is our annual review of the progress of the achievements against the PDP and our report on the achievement of our SDG. We are going to operationalize the National Evaluation Policy Framework also to make evaluation as an intrinsic part of the NEDA function. And we are investing on data science so that we can make our business process more efficient. This is one of the key projects that I have for the NEDA.
Let me also talk about our general administration and support. All of these are related to the proposed NEDA bill. We are proposing to reorganize the NEDA Secretariat by adding three more groups. I will explain this in the following slide with illustration. We also have to invest in our building. Our building in NEDA sa Pasig is, I think, 45 years old. We have to review the structural integrity and retrofit as needed. As you know, we have another building in Makati, which is already closed down because of structural issues. So we are focusing on them. Also on information and communication technology, for instance, one-to-one laptop assignment.
We are also using data science to improve our internal service delivery. And I think very important, institutionalizing knowledge management. So that in the NEDA family and the government, we have a single source of truth for all data so that we have no problems with different data from different sources.
And we are also reviewing what activities or submissions are only for compliance purposes. Maybe these are some of the fats that we would like to cut. On the proposed NEDA organization, we would like to propose to the NEDA bill that is currently being tackled by Senator Marcos, the addition of three groups. The blue ones are the existing ones. The orange ones are the new ones.
We want to have a Strategy and Results Group, which is basically our Futures Thinking Group. We also want to have a permanent and independent Monitoring and Evaluation Group. Presently these functions are spread out in the NEDA. I think it is best practice to have them separate to be more objective.
And since we are commenting on almost all bills in Congress, we are reviewing big contracts from infrastructure projects and PPPs and joint ventures, we propose the creation of the Legislative, Legal and Institutions Group. There will be seven USecs. in our proposal. This will bring us from one of the lowest to the average, because there are, on average, seven USecs. per agency. Some agencies have 10 or more. As to the breakdown, in the next slide, we will show the different officers. We are proposing the creation of additional staff offices headed by Director IVs. Under the Strategy and Result, there will be the Innovation Staff, as mandated by the Innovation Law and our Strategic Foresight Staff, which is in charge of the cutting-edge and futures thinking.
In Monitoring and Evaluation Group, we are proposing the creation of the Evaluation Staff. This is to independently evaluate key programs. And I understand from the Senate budget hearing last year, this is one of the key requests of the senators, for us to look at all the major programs.
Under investment programming, we will split the Infrastructure Staff. Currently, this staff has almost 70 members or employees so we will split it into Connectivity and Social Infrastructure. We will also elevate our small Legislative Liaison Office to be a full staff.
Mr. Chair, all of these, we will propose as amendments to the NEDA bill. And it is not necessarily that we will ask for a big budget. We will try our best to do efficiency and internal reorganization so that we try to live within our means. I think that is what we will do first before asking for more budget. We will also do scrap and build.
Finally, in the NEDA Regional Offices, because of the further devolution, we propose to strengthen our NEDA Regional Offices. Presently, there is no lawyer, so we will propose an Attorney IV position. Presently, our support as Secretariat to the Regional Development Council is on an ad hoc basis. We propose to make it more permanent by creating the RDC unit. We do not have permanent procurement and ICT people as we move to the digital economy and devolve more functions, we propose the creation of some positions for procurement and information technology. The rest are existing or just a renaming to align to the emerging priorities.
Mr. Chair, let me now go to the key accomplishments of our attached agencies. The first one is the Philippine Statistics Authority. Let me highlight their major accomplishments. As of October 8, the PSA has registered 43.2 million to step one of the National ID. This is the capture of demographics. And 35.9 million to step two. This is the capture of biometrics. Our target by the end of the year is 50 million. We are confident that we will achieve that despite the challenges of the pandemic.
We have also opened 5.6 million bank accounts for those low income with no bank accounts. My target for the end of the year is 100% financial inclusion at the family level. That means we will have to open around 8 million total bank accounts. We released the 2020 Census of Population and Housing. And we made the Labor Force Survey monthly so that we can have more up-to-date data to guide policy in this pandemic.
We are also piloting the Community-Based Monitoring System this year. As for the goals next year, we will register 22 million more and 5 million OFWs, and release 37 million PhilID cards. We will conduct the National Demographic and Health Survey, which is important, especially given the pandemic, and our preparation for the Census of Agriculture and Fisheries, which is done every 10 years.
We will also roll out the CBMS to the fifth and sixth class municipalities, as mandated by the law. Next slide, we have two more accomplishments, we will conduct the pilot of the Provincial Product Accounts. Basically, this is the provincial level GDP, and we will rebase our CPI index from 2012 to 2018. We will also conduct the 2021 Family Income and Expenditure Survey and for the first time, use province as domain. These are all aligned to the devolution.
We are also going to, as goal, release the 2020 full report of the Census [of] Population and Housing. And we will be reporting the full poverty statistics for all regions, provinces, and highly urbanized cities next year. We also plan to have at least six additional regions estimated for the Provincial Product Accounts or the provincial GDP.
Let me now go to the timeline of the PhilSys or National ID. As of the fourth quarter of 2020, we registered 9 million low-income families. Our target was 9 million. We exceeded that and registered 10.6 million. Mr. Chair, we did this house-to-house so that they will not fall in line in the registration center.
In the third quarter of 2021, we are starting the on-boarding pilot of relying parties. These are basically those institutions that will connect to the National ID, for instance, the DSWD, the ayuda, the financial institutions, and so on. By the fourth quarter of 2021, we will pilot the online authentication and E-KYC, because the National ID precisely will function as a way to digitally verify the authenticity of a person’s identity. By the end of 2021, our goal is to register 50 to 70 million.
API is automated program interface. Basically, when another system, for instance, in the banks connect with the PhilSys. ‘Yan yung parang interface for them, for the two systems to talk.
So by the end of 2021, we will aim 50 million. If we if we see more relaxation of the economy and mobility we will go as high as 70 million.
Next year, before the end of the term, we want to register the 22 million. So by the end of the term, our target is to register all 15 years old and above. Of course, by 2022 also, we will shift from the physical ID to the mobile ID. Because the National ID ultimately is designed to be a digital ID. The last mile is 24 million below 15 years old that we will register as they become adults. So that is the full program.
Let me now go, Mr. Chair, to the POPCOM. The POPCOM continues its work on responsible parenthood and family planning. They have reached out to 1.5 million couples and individuals, and referred 188,000 individuals with unmet family planning to our health centers.
We have trained 1,734 LGUs on population and development integration. And we believe our advocacy has prevented a lot of adolescent pregnancies. We have reached out to half a million adolescents.
In 2022, our goal is the Devolution Transition Plan assistance to the LGUs on basic family planning services. And to institutionalize and sustain the demand generation and service delivery for family planning services. We want to bring this up from 10 to 50 percent of all LGUs.
Let me now go to the PPP Center. Our main project right now is to monitor the contingent liabilities, because, during the pandemic, we do not want PPP projects, which rely on pre-pandemic economic or financial analysis to be much affected. The PPP Center has added 13 projects to its pipeline these are the projects they have proactively supported, mostly in the LGUs. They have conducted 24 of the 29 planned capacity building to help more LGUs improve their PPP codes. Because of the importance of the BOT implementation and the consequence of bad projects, we are thinking of preparing, we have prepared, rather, a BOT law exam to make sure all those doing PPPs are well-qualified. We have also prepared five of the eight targeted number of PPP policy instruments to strengthen our monitoring and reduce risk of contingent liabilities.
The goals for 2022, they plan to add more projects that will cater to health and IT, climate change and resiliency, and helping the local PPPs. We are also going to improve our monitoring of the fiscal impact of PPP projects. And one of our major goals is the amendment to the BOT Law IRR as input to the improvement of our policies and processes.
This is now PIDS. They have prepared research as input to the COVID-19 response. They have conducted the National ICT household survey expanded data analysis. This is important as we prepare for the digital economy. They have helped assess the fiscal sustainability and efficiency in light of the 2022 devolution and they are working to conduct a study to improve the livestock industry.
As for the goals, we continue to assess the effectiveness of the 4Ps. This is required under the CCT law. We are conducting the survey of innovation activities. This is to support the implementation of the Innovation Act. And we are going to publish key studies as inputs to the next PDP cycle.
The PSRTI is our Research and Statistical Training Institute. They have conducted several research on key areas to support our recovery program and the SDGs. They are conducting capacity building activities for LGUs, and they have commissioned ongoing projects on the agriculture and fishery modernization. Mr. Chair, all of these, together with NEDA and PIDs are well-coordinated. So we farm out studies, we avoid duplication so that we can get more analytical underpinnings done.
For 2022, I have instructed them to train all LGUs on basic statistics so they can plan better. They are conducting studies on SDG indicators, focusing on health and environment, so that we can have better data sets. They are developing training materials for various LGUs on the SDGs because we are devolving many of them also and training for the CBMS.
Let me now go to the Tariff Commission. The Tariff Commission as a quasi-judicial body reports only to me for administrative purposes. They have issued 540 advance rulings on tariff classification. They have updated their online tariff finder system. They have submitted nine reports and findings and recommendations on various tariff adjustment and helped draft six EOs and they have completed five investigations on safeguard and one expiry review on an anti-dumping duty.
In 2022, they are spearheading the implementation of the revised 2022 Harmonized Tariff Nomenclature for ASEAN. They want to maintain 100% upheld tariff classification, meaning it’s done well, walang magco-contest. They want to sustain 100% approval of all the recommendations on tariff or non-tariff measures. And they plan to issue at least two recommendations on trade remedy measures.
Not the least, our smallest attached agency is the Philippine National Volunteer Service Coordinating Agency. This is basically the agency in-charge of coordinating all volunteer activities from international and also starting this year, from more focusing on the local. They have added three relevant policy and common framework on the Philippine Volunteerism agenda, our National Volunteer Deployment Framework, and the Standards for Volunteerism. They are also implementing the BalikaBayanihan. This is basically the campaign to have more support the OFWs. In terms of goals, they intend to improve knowledge management, coordinate better the national and local volunteer programs, and to provide technical assistance to other agencies or private sectors with volunteer activities.
Given these goals and achievements, let me now go finally to the proposed budget. And before that, let me first inform the committee that since the pandemic, we have contributed back 900 million pesos to the COVID response. These are funds that we save or we do not find very urgent. So they are back to the General Fund to support Bayanihan I, Bayanihan II, and the other ayuda programs.
In 2022, our proposed budget as an agency, as a family, is 14.126 billion. The biggest is PSA with 11 billion. That is largely to fund its mandate, the National ID, the various censuses and surveys, and the CBMS. Notice it is 93 million less than 2021. But we will do with what is provided to us. The NEDA OSec is 1.8 billion, and the Commission of Population and Development is 537 million.
PPP Center 217 million, PIDS 259 million, Tariff Commission 103 million, the Philippine Statistical Research and Training Institute 67 plus million, and PNVSCA, our volunteer service coordination agency, 36 million. So most agencies were given marginal increase, except for the PSA.
There are several funds that are being managed by NEDA. We have proposed a total of 390.7 million to DBM. But the DBM approved only 148 million. You will see, Mr. Chair, the breakdowns. Our Research and Development Fund has been slashed. So it is 40.7 million, as presented in the NEP. Our Conduct of the National and Regional Survey on Quality of Life as input to our regular monitoring of the AmBisyon Natin 2040 is 35 million, that is maintained.
Our Monitoring and Evaluation Fund was maintained at 25.9 million. Our Value Engineering Fund maintained at 8.6 million. However, we have no funds for Infrastructure Master Plan and the Innovation Fund. But we have a little budget to start the Innovation Council Secretariat at 17.2 million and the SDGs at 20.6 million.
Our fund utilization, Mr. Chair, for 2020 full-year, overall, obligation-to-allotment ratio is 74.7 percent and disbursement-to-obligation ratio is 80.5 percent. The main reason for this number is driven by the inability of the PSA to conduct the National ID and the Census on time due to the pandemic, but we are catching up in 2021.
In the next slide, our budget utilization performance, as of the first half of 2021, is 51.1 percent for obligation-to-allotment. I think this is good because we committed half of the budget as of the first half, and our disbursement-to-obligation ratio is a bit higher at 59.6 percent. With that, Mr. Chair, I end my presentation and look forward to Committee’s questions. Thank you.
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Access the presentation here: bit.ly/2022NEDAbudget