Chapter 1 : Tariffs

Objective

APEC economies will achieve free and open trade in the Asia-Pacific region by:

a.                   progressive reduction of tariffs until the Bogor goals are fully achieved; and

b.         ensuring the transparency of APEC economies’ respective tariff regimes.

Guidelines

Each APEC economy will:

a.                   take into account, in the process of achieving the above objective, intra-APEC trade trends, economic interests and sectors or products related to industries in which this process may have positive impact on trade and on economic growth in the Asia-Pacific region;

b.                  ensure that the achievement of the above objective is not undermined by the application of unjustifiable measures; and

c.         consider extending, on a voluntary basis, to all APEC economies the benefits of tariff reductions and eliminations derived from sub-regional arrangements.

Collective Actions

APEC economies will:

a.                   participate and ensure the expeditious supply and updates of the WTO Integrated Database and any other APEC databases;

b.                  arrange for seminars and/or workshops on industrial tariffs negotiations in consultation with international organisations, where appropriate,  including  WTO Secretariat on WTO Integrated Tariff Database; and

c.                   study lessons from modalities for tariff reduction and elimination in regional arrangements.

The current CAP relating to tariffs can be found in the Tariffs and Non-Tariff Measures Collective Action Plan

 The Philippines' Approach to Tariffs in 2002

            The Philippines continues to pursue the Tariff Reform Program, a comprehensive review and rationalization of the country’s tariff structure which started in 1980.  The Program calls for the progressive reduction in applied rates of duty. The targeted final rate under the Program is a uniform rate of 5% by year 2004, except for “sensitive” agricultural products. “Sensitive” agricultural products relate to those agricultural products the quantitative restrictions of which were lifted and converted into tariff equivalents under the WTO Agreement on Agriculture (please see Attachment A for the list of “sensitive” agricultural products).  

            The Philippines continues to reduce bound tariffs in line with WTO commitments. It has eliminated tariffs on substantially all information technology products by the agreed timetable of 2000 under the WTO Information Technology Agreement (ITA).

            The Philippines participates in the Common Effective Preferential Tariff Scheme for the ASEAN Free Trade Area (CEPT-AFTA). Under the CEPT Scheme, the Philippines will reduce tariffs to 0-5% by 2002, with some flexibility. Tariffs on 60% of the products included in the CEPT Scheme will be reduced to 0% by 2003; those on “sensitive” agricultural products to a range of 0-5% by 2010.

Bound Tariffs

Reduced bound tariffs in line with WTO commitments.  As a result, the simple average bound tariff fell from 27.53% in 2001 to 26.18% in 2002.

The Philippines continues to reduce bound tariffs in line with WTO commitments. 65% of the Philippines’ total tariff lines are bound under the WTO. Tariffs on industrial products, except textiles, reached their bound levels in 1999. Tariffs on agricultural and textile products are being reduced and will reach their bound levels in 2003 and 2004, respectively.  

The contact person for further information is:

The Chairman

Tariff Commission

Philippine Heart Center Building

East Avenue, Diliman

Quezon City

Tel: (632) 926-2805

Fax: (632) 921-7960

E-mail: tarcm@pworld.net.ph

            tarcm@mydestiny.net

The Philippines will continue to reduce bound tariffs on agricultural and textile products as per WTO commitments.

Applied Tariffs

Reduced the simple average applied tariff from 6.70% in 2001 to 5.27% in 2002.

The Philippines is implementing the Tariff Reform Program that calls for the progressive reduction of applied tariffs. The targeted final rate is a uniform rate of 5%, except “sensitive” agricultural products. 

Tariffs for products covered under the Early Voluntary Sectoral Liberalization (EVSL) initiative are being reduced in line with the Tariff Reform Program.

Detailed information on the Philippines’ applied tariffs may be obtained from http://www.apectariff.org/tdb.
cgi

The contact person for further information is:

The Chairman

Tariff Commission

Philippine Heart Center Building

East Avenue, Diliman

Quezon City

Tel: (632) 926-2805

Fax: (632) 921-7960

E-mail: tarcm@pworld.net.ph

            tarcm@mydestiny.net

The Philippines will progressively reduce applied tariffs in line with the Tariff Reform Program.

Tariff Quotas

Increased tariff quotas in  line with WTO commitments.

The Philippines maintains tariff quotas for “sensitive” agricultural products, the quantitative restrictions of which were lifted and converted into tariff equivalents under the WTO Agreement on Agriculture. These products include live animals (except live bovine animals), pork, sheep or goat meat, poultry meat, potatoes, coffee, maize and sugar.

The contact person for further information is:

The  Chairman

Tariff Commission

Philippine Heart Center Building

East Avenue, Diliman

Quezon City, Philippines

Tel:  (632) 926-2805

Fax: (632) 921-7960

E-mail:  tarcm@pworld.net.ph

            tarcm@mydestiny.net

The Philippines will gradually expand tariff quotas according to WTO commitments.

Tariff Preferences

Reduced the simple average preferential tariff from 3.87% in 2001 to 3.39% in 2002.

The Philippines participates in the Common Effective Preferential Tariff Scheme for the ASEAN Free Trade Area (CEPT-AFTA). As of 2000, the Philippines has phased in 100% of all manufactured products in the CEPT Scheme (except those in the General Exception List), with preferential tariffs of 20% and below.  97% of products in the Philippines’ Inclusion List are now dutiable at 0-5%. 

The contact point for further information is:

The National AFTA Unit

Bureau of International Trade Relations

Department of Trade and Industry

361 Senator Gil J. Puyat Avenue

Makati City 1200 Philippines

Tel: (632) 890-5149

Fax: (632) 890-4812

E-mail: bitr_mon@dti.dti.gov.ph

Under the CEPT Scheme, the Philippines will:

-           reduce tariffs to 0-5% by             2002, with some             flexibility;

-           reduce tariffs on 60% of             the products included in              the CEPT Scheme to             0% by 2003; and

-           reduce tariffs on             “sensitive” agricultural             products to a range of

             0% - 5% by 2010

Transparency of Tariff Regime

No improvements implemented.

The Philippines conducts public hearings/consultations on petitions for tariff modification as well as Philippine participation in tariff schemes, e.g., WTO, CEPT-AFTA and EVSL. Tariff changes are published in two newspapers of general circulation before they take effect.  Any new issuances are reflected in the Tariff and Customs Code of the Philippines.  The Philippines also provides updates on tariff changes to the APEC Tariff Database and the WTO Integrated Database.

The contact person for further information is:

The Chairman

Tariff Commission

Philippine Heart Center Building

East Avenue, Diliman

Quezon City

Tel: (632) 926-2805

Fax: (632) 921-7960

E-mail: tarcm@pworld.net.ph

            tarcm@mydestiny.net

No further improvements are required.

Bound Tariffs

In 1996, the Philippines’ simple average bound tariff stood at 31.56%.

Reduced the simple average bound tariff to 26.1853% (1997-2001).

Applied Tariffs

In 1996, the Tariff Reform Program was already being implemented, including the progressive reduction of tariffs on products covered under EVSL. The simple average tariff was 13.99%; those on EVSL sectors were as follows:

>  environmental goods – 6.14%

>  fish and fish products – 19.12%

>  toys  - 25.45%

>  gems and jewelry – 9.11%

>  medical equipment and instruments - 3.58%

>  forest products – 17.89%

>  oilseeds and oilseed products – 18.09%

>  chemicals – 6.39%

>  natural and synthetic rubber -  4.84%

>  fertilizers – 3.47%

>  food sector – 28.02%

>  energy sector – 9.15%

>  automotive – 14.80%

>  civil aircraft  - 11.46%

Reduced the simple average applied tariff to 5.27% (1997-2002).

The simple average applied tariffs on EVSL sectors have been reduced significantly:

>  environmental goods – 2.56%

>  fish and fish products – 6.02%

>  toys  - 5.50%

>  gems and jewelry – 4.59%

>  medical equipment and instruments – 2.57%

>  forest products – 5.77%

>  oilseeds and oilseed products – 5.29%

>  chemicals – 2.67%

>  natural and synthetic rubber -  2.26%

>  fertilizers - 1.10%

>  food sector – 8.21%

>  energy sector – 4.27%

>  automotive – 7.21%

>  civil aircraft  - 3.82%

Tariff Quotas

In 1996, the Philippines had already promulgated the administrative order providing for the gradual expansion of tariff quotas according to WTO commitments.

Gradually increased tariff quotas according to WTO commitments (1997-2002).

Tariff Preferences

In 1996, the Philippines had already signed on to the CEPT-AFTA Scheme. The simple average preferential tariff was at 10.56%.

Reduced the simple average preferential tariff to 3.39%  (1997-2002).

Transparency of Tariff Regime

In 1996, the Philippines was already conducting public hearings/consultations on petitions for tariff modifications. Any new issuances are reflected in the Tariff and Customs Code of the Philippines.  Updates were being provided to the APEC Tariff Database and the WTO Integrated Database.

APEC INDIVIDUAL ACTION PLAN:  TARIFF SUMMARY REPORT FOR 2002

(PLEASE COMPLETE BOXES)

All Goods

Agriculture excluding Fish

Fish and Fish Products

Petroleum Oils

Wood, Pulp, Paper and Furniture

Textiles and Clothing

Leather, Rubber, Footwear and Travel Goods

Metals

Chemical & Photographic Supplies

Transport Equipment

Non-Electric Machinery

Electric Machinery

Mineral Products, Precious Stones & Metals

Manufactured Articles, n.e.s

ITEM

Bound tariff lines as a percentage of all lines

64.58

12.18

0.11

*

2.02

14.51

1.12

3.61

11.68

0.96

7.68

4.17

2.42

4.10

Duty-free tariff lines as a percentage of all lines

5.87

0.80

0.07

0.00

0.14

0.04

0.07

0.14

0.36

0.23

1.63

1.55

0.33

0.51

Preferential tariff lines as a percentage of all lines

99.75

12.33

1.97

0.18

5.35

14.73

3.11

11.69

16.41

2.91

10.23

6.99

5.66

8.19

Ratio of tariff lines with quotas to all lines

-

-

-

-

-

-

-

-

-

-

-

-

-

-

Simple average bound tariff rate

26.18

36.24

33.50

*

24.48

30.67

32.84

25.97

20.20

20.00

18.04

19.76

22.29

22.73

Simple average applied tariff rate

5.27

6.81

7.06

2.60

6.02

9.53

5.63

4.49

3.59

7.91

1.88

3.93

4.13

4.09

Simple average applied preferential tariff rate, where applicable

3.39

4.18

4.36

2.60

3.42

4.50

4.02

3.15

2.82

5.90

1.57

2.52

3.40

3.34

Average applied tariff rate for all lines subject to duty

5.60

7.28

7.33

2.60

6.18

9.55

5.77

4.54

3.67

8.61

2.24

5.06

4.38

4.35

Import-weighted average applied tariff rate (CIF 2001)

3.05

4.64

2.95

2.98

4.97

6.33

6.01

3.89

4.86

8.73

1.71

1.17

3.78

2.26

Import-weighted average bound tariff rate (CIF 2001)

19.95

31.81

11.49

*

22.66

27.75

30.33

25.97

22.05

14.51

23.90

5.77

13.93

 8.79

                                Notes

                                * No tariff binding was offered on this product group  (petroleum oils).

                        -   The figures do not include "sensitive" agricultural products under E.O. 313 and E.O. 328.

                        -   Preferential  tariff rates refer to CEPT-AFTA rates.

                        -   Import-weighted average tariff rates are based on 2001 CIF

APEC INDIVIDUAL ACTION PLAN:  TARIFF DISPERSION TABLE FOR 2002

(PLEASE COMPLETE BOXES)

All Goods

Agriculture excluding Fish

Fish and Fish Products

Petroleum Oils

Wood, Pulp, Paper and Furniture

Textiles and Clothing

Leather, Rubber, Footwear and Travel Goods

Metals

Chemical & Photographic Supplies

Transport Equipment

Non-Electric Machinery

Electric Machinery

Mineral Products, Precious Stones & Metals

Manufactured Articles, n.e.s

NUMBER OF TARIFFS AT OR BETWEEN

0%

325

44

4

-

8

2

4

8

20

13

90

86

18

28

0%<X<=5%

3,385

329

29

10

153

197

115

452

799

94

438

200

226

343

5%<X<=10%

1,271

276

76

-

 93

277

53

165

35

27

38

67

69

95

10%<X<=15%

498

 4

0

-

42

339

  -

22

54

2

 0

32

 -

 3

15%<X<=20%

  5

-

-

- 

 0

-

 0

-

5

-

 0

-

0

>20%

49

29

-

-

-

-

-

-

-

20

-

-

-

-

Specific

TOTAL

5,533

682

109

10

296

815

172

647

908

161

566

385

313

469

                                 Note

                                 Excludes "sensitive" agriculture products under E.O. 313 and E.O. 328.

HDG No.

Description

01.02

Live bovine animals other than pure-bred breeding animals and feeder cattle weighing not more than 330 kg

01.03

Live swine, other than pure-bred breeding animals

01.04

Live goats other than pure-bred breeding animals

01.05

Live poultry, that is to say, fowls of the species Gallus domesticus, ducks, geese, turkeys and guinea fowls other than for breeding and game cocks.

02.01

Meat of bovine animals, fresh or chilled

02.02

Meat of bovine animals, frozen

02.03

Meat of swine, fresh, chilled or frozen

02.04

Meat of goats, fresh, chilled or frozen,

02.07

Meat and edible offal, of the poultry of heading No. 01.05, fresh, chilled or frozen

02.10

Meat and edible meat offal (other than bovine meat), salted, in brine, dried or smoked, dried or smoked; edible flours and meals of meat or meat offal

07.01

Potatoes, fresh of chilled other than seed potatoes

07.03

Onions, shallots and garlic, fresh or chilled

07.04

Cabbages, fresh or chilled

07.14

Manioc and sweet potatoes, fresh, chilled, frozen or dried, whether or not sliced or in the form of pellets

09.01

Coffee, whether or not roasted or decaffeinated; coffee husks and skins; coffee substitutes containing coffee in any proportion.

10.01

Wheat used as feeds

10.02

Rye

10.03

Barley

10.04

Oats

10.05

Maize (corn) other than seed

10.06

Rice

10.07

Grain sorghum

10.08

Other cereals

11.03

Groats and meal of wheat (other than durum semolina), of oats, of maize (corn), of rice and of other cereals. 

11.04

Other worked grains (for example, hulled, pearled, sliced or kibbled) of barley, of oats, of maize (corn) and of other cereals.

16.01

Sausages and similar products, of meat, meat offal or blood; food preparations based on these products

16.02

Other prepared or preserved meat, meat offal or blood

17.01

Cane or beet sugar and chemically pure sucrose, in solid form

21.01

Extracts, essence and concentrates of coffee and preparations with a basis of these extracts, essences or concentrates or with a basis of coffee

23.02

Bran, sharps and other residues of maize (corn), whether or not in the form of pellets, derived from the sifting, milling or other working

23.06

Oil-cake and other solid residues of maize (corn), whether or not ground or in the form of pellets, resulting from the extraction of fats or oils

23.09

Animal feeds

Chapter 2 : Non-Tariff Measures

Objective

APEC Economies will achieve free and open trade in the Asia-Pacific Region by :

(a)           Progressively reducing non-tariff measures

(b)          Ensuring the transparency of APEC economies’ respective non-tariff measures

Guidelines

Each APEC economy will:

(a)                 take into account, in the process of progressive reduction of non-tariff measures, intra-APEC trade trends, economic interests and sectors or products related to industries in which this process may have positive impact on trade and on economic growth in the Asia-Pacific region;

(b)                ensure that the progressive reduction of non-tariff measures is not undermined by the application of unjustifiable measures; and

(c)                 consider extending, on a voluntary basis, to all APEC economies the benefits of reductions and eliminations of non-tariff measures.

Collective Actions

APEC Economies have agreed to take collective actions to help achieve these goals.  These actions are contained in Collective Action Plans (CAPs) which are updated annually.  The current CAP relating to non-tariff measures can be found in the Tariffs and Non-Tariff Measures Collective Action Plan.

The Philippines' Approach to non-Tariff Measures in 2002

The Philippines continues to pursue its import liberalization program which calls for the elimination of non-tariff measures other than those necessary to: (a) safeguard public health, safety, security and welfare; and (b) meet international treaty obligations related to the regulation of certain products/commodities as well as medical, scientific and other legitimate needs of the country.

In addition, the Philippines maintains export licensing requirements for certain products classified as: (a) “regulated” for reasons of national interest and international agreements; and (b) “prohibited” for environmental reasons or to conserve depletable raw materials.  Regulated and prohibited export products require export clearance from the appropriate government agencies. Exports classified as prohibited may not be exported except for scientific and testing purposes. 

To ensure the transparency of its non-tariff measures, the Philippines, through the Bangko Sentral ng Pilipinas (BSP), maintains a list of regulated commodities which is circularized and made available to the public.  The Philippines fulfills annual notification obligations to WTO bodies such as the Committee on Import Licensing. 

Quantitative Import Restrictions/

Prohibitions

No change since the last IAP.

The Philippines maintains quantitative import restrictions on rice as per flexibility provided under Annex 5 of the WTO Agreement on Agriculture.  See import licensing

Quantitative Export Restrictions/

Prohibitions

See export licensing

Import Levies

No import levies collected.

Export Levies

No export levies collected.

Discretionary Import Licensing

No discretionary import licensing maintained.     

Automatic Import Licensing

No change since the last IAP.

Import licensing is intended mainly to safeguard public health, safety, security and welfare and to meet international treaty obligations related to the regulation of certain products as well as medical, scientific and other needs of the country.  It is also used to administer the tariff quotas (minimum access volumes (MAV)) for sensitive agricultural products the quantitative restrictions of which were lifted and converted into tariff equivalents, as part of the Philippines’ commitment under the WTO Agreement on Agriculture.

The list of regulated/prohibited products the importation of which requires clearance/permits from appropriate government agencies include:

-           Dangerous drugs and exempt dangerous drug preparations

-           Precursors (various chemicals for the manufacture of             dangerous drugs)

-           Diagnostic kits for drugs of abuse

-           Rice

-           Cyanide, cyanide compounds and chlorofluorocarbons

-           Asbestos

-           Penicillin and its derivatives

-           Mercury and mercury compounds

-           Color reproduction machines

-           Various chemicals for the manufacture of explosives

-           Firearms, ammunitions and parts

-           Pesticides, including agricultural chemicals

-           Used motor vehicles, parts and components

-           Used tires and tubes, used

-           Warships

-           Coins, banknotes and gold

-           Video machines

-           Used clothing

-           Toy guns

-           Radioactive materials

Products subject to tariff quotas include live animals (except live bovine animals), pork, sheep or goat meat, poultry meat, potatoes, coffee, maize and sugar.The contact points for further information are:

The Director

Bureau of International Trade Relations

Department of Trade and Industry

361 Sen. Gil J. Puyat Ave.

Makati City 1200 Philippines

Tel: (632) 890-4883

Fax: (632) 890-4812

E-mail: bitr_mon@dti.dti.gov.ph

The Executive Director

MAV Secretariat

Department of Agriculture

Elliptical Road, DilimanQuezon City,

Philippines

Tel: (632) 920-1786

Fax: (632) 920-1786

The Philippines will:·      

-           review existing non-tariff             measures; and

-           update NTM             notifications, as may be             necessary.

Discretionary Export Licensing

No change since last IAP.

Export licensing is required for certain products classified as: (a) “regulated” for reasons of national interest and international agreements; and (b) “prohibited” for environmental reasons or to conserve depletable raw materials.  Regulated and prohibited export products require export clearance from the appropriate government agencies. Exports classified as prohibited may not be exported except for scientific and testing purposes. 

The list of regulated items include those required as a result of the existence of quotas in other countries such as garments and textiles and sugar. Others include: copper concentrates; all plants, planting materials and plant products capable of harboring pests, insect specimens, live and dead; animals, animal products and animal effects; coffee; antiques, cultural artifacts and historical relics; logs, poles and piles and lumber.

Prohibited items include: abaca and ramie seeds, seedlings, suckers and root stocks; buri seeds and seedlings, buri fibres; mangrove; Bangus fry; Mother Bangus; prawn-spawner and fry; certain species of plant and animal wildlife and shells; matured coconuts and coconut seedlings; stalactites and stalagmites; and certain raw materials of cottage industries like bamboo, rattan and buri fibres.

See voluntary export restraints

The contact point for further information is:

The Director

Bureau of International Trade Relations

Department of Trade and Industry

361 Senator Gil J. Puyat Avenue

Makati City 1200 Philippines

Tel: (632) 890-4883

Fax: (632) 890-4812

E-mail: bitr_mon@dti.dti.gov.ph

The Philippines will:

-           review existing non-tariff             measures; and

-           update NTM             notifications, as may be             necessary.

Voluntary Export Restraints

The Philippines maintains bilateral quotas on exports of textiles and garments to Canada, the European Union and the United States. The Philippines is also a member of the International Sugar Agreement and the International Coffee Agreement. It has quota covering the export of sugar to the United States.

See export licensing

The contact points for further information are:

The Executive Director

Garments and Textile Export Board

357 Senator Gil J. Puyat Avenue

Makati City 1200 Philippines

Tel: (632) 890-4810

Fax: (632) 890-4653

E-mail:  gtebphil@dti.gov.ph

The Administrator

Sugar Regulatory Administration

North Avenue, DilimanQuezon City

Tel: (632) 9204367

Fax: (632) 920 4325

Export Subsidies

No exported subsidies granted.

Minimum Import Prices

No minimum import prices maintained.

Other Non-Tariff

Measures Maintained

General Policy

Position

In 1996, the Philippines was pursuing an import liberalization program which called for the elimination of non-tariff measures other than those maintained for reasons of health, safety and national security reasons.  The Philippines’ remaining NTMs affecting imports were on rice and those necessary for health, safety and national security reasons.

Disinvoked GATT Article XVIII:B (restrictions for balance of payments reasons), subject to a phased elimination of restrictions until December 1997.       

Quantitative Import Restrictions/

Prohibitions

In 1996, the Philippines maintained quantitative import restrictions on rice as per flexibility provided under Annex 5 of the WTO Agreement on Agriculture.

Quantitative Export Restrictions/

Prohibitions

See export licensing

Import Levies

No import levies were collected.      

Export Levies

No export levies were collected.

Discretionary Import Licensing

No discretionary import licensing requirements were maintained.

Automatic Import Licensing

In 1996, the Philippines maintained import licensing requirements to safeguard public health, safety, security and welfare and to meet international treaty obligations.

Discretionary Export Licensing

In 1996, the Philippines maintained export licensing requirements for products classified as  “regulated” for reasons of national interest and international agreements and “prohibited” for environmental reasons or to conserve depletable raw materials. 

Voluntary Export Restraints

In 1996, the Philippines had bilateral quotas on exports of textiles and garments to Canada, the European Union and the United States. It was already a member of the International Sugar Agreement and the International Coffee Agreement and maintained a quota covering the export of sugar to the United States.     

Export Subsidies

No export subsidies were granted.

Minimum Import Prices

In 1996, the Philippines was using the Home Consumption Value as the method of valuation for customs purposes.

Shifted to transaction value as method of valuation for customs purposes beginning 1 January 2000.

Other Non-Tariff

Measures Maintained

Chapter 3 : Services

Objective

APEC economies, in accordance with the APEC Policy Framework for Work on Services, will achieve free and open trade and investment in the Asia-Pacific region by:

a.                   progressively reducing restrictions on market access for trade in services;

b.         progressively providing for inter-alia most favored nation (MFN) treatment and national treatment for trade in services; and

c.         providing, in regulated sectors, for the fair and transparent development, adoption and application of regulations and regulatory procedures for trade in services.

Guidelines

Each APEC economy will:

a.                   contribute positively and actively to the WTO negotiations on trade in services;

b.                  expand commitments under the General Agreement on Trade in Services (GATS) on market access and national treatment and eliminate MFN exemptions where appropriate;

c.                   undertake further actions, where appropriate, to implement the APEC Menu of Options for Voluntary Liberalization, Facilitation and Promotion of Economic and Technical Cooperation in Services Trade and Investment;

d.                   make efforts to provide for the participation of concerned parties in regulations and regulatory processes, the fair and transparent application of regulations, and the prompt consideration of applications; and

e.                   support APEC capacity building efforts to supply services by, inter-alia, strengthening infrastructure, promoting the use of advanced technologies and developing human resources.

Collective Actions

APEC economies will take the following Collective Actions with regard to services in the telecommunications, transportation, energy and tourism sectors[1], and continue to seek Collective Actions in other sectors

TELECOMMUNICATIONS
In accordance with the Cancun Declaration, APEC economies will:

a.       work to bridge the digital divide at the domestic, regional and global levels, and to cooperate and collaborate with the business/private sector in this effort;

b.      foster discussion between business/private sector and governments on appropriate means to assess and reward the value of products and services exchanged in the provision of converged Internet services among APEC economies, consistent with the APEC Principles on International Charging Arrangements for Internet Services;

c.       foster the development of effective policies that support competitive markets in the domestic and international telecommunications and information industries;

d.       accelerate the pace of implementation of the Mutual Recognition Arrangement on Conformity Assessment for Telecommunications Equipment (MRA);

e.       work to ensure that policy and regulatory environments better foster the uptake of e-commerce;

f.        implement within voluntary time frames the APEC Interconnection Principles and consult on the need for further discussions on interconnection; and

g.       give attention to user requirements for open standards and systems to support interoperability

In addition, APEC economies are encouraged to conform, where appropriate, to:

1.       The WTO Telecommunications Regulatory Principles Reference Paper;

2.       The Information Technology Agreement (ITA); and

3.      The Guidelines for Trade in International Value-Added Network Services (IVANS).

TRANSPORTATION  
APEC economies will:

a.                   respond to the Leaders ‘Auckland Challenge’ of 1999, by implementing the eight steps for more competitive air services on a voluntary basis and by identifying further steps to liberalize air services in accordance with the Bogor Goals, and provide annual progress reports to Leaders through SOM (Note:  some components of this project may fall under Part II Ecotech, subject to further developments);

b.         develop by 2005 an efficient, safe and competitive operating environment for maritime transport, including ports, in the region through improved transparency of maritime and port policies (Note:  some components of this project may fall under Part II Ecotech, subject to further developments);

c.                   complete the Road Transport Harmonization Project and encourage the development of mutual recognition arrangements for certification of automotive product and harmonization of economies’ vehicle regulations through cooperation within United Nations Economic Commission for Europe; and

d.         seek to eliminate the requirement for paper documents (both regulatory and institutional) for the key messages relevant to international transport and trade as soon as practicable by 2005.

ENERGY

APEC Economies, by developing and building on the 14 non-binding policy principles endorsed by APEC Energy Ministers at their Sydney meeting in 1996 which are consistent with the vision, objectives and strategic themes of the recently endorsed Future Directions Strategic Plan that will guide their work over the next five years:

a.                   will facilitate trade and investment in the energy sector by

                     i.      responding to the outcomes of a current study on "Strengthening the Operational Aspects of APEC Energy Micro -Economic Reform" that will, inter-alia, inform on barriers to investment in the energy sector and how to remove the barriers.

                   ii.      analysing the broad economic impacts of micro-economic reform policies to deregulate energy markets.

                  iii.      responding as appropriate to the identification of the barriers (policy, technical, regulatory and legal) to the interconnection of power grids in APEC member economies.

                  iv.      actively pursuing the Implementation Strategy and considering the use of Implementation Facilitation Assistance Teams (IFAT) to assist in further reform of the energy markets.

                   v.      strengthening policy dialogue among member economies on important issues affecting energy markets.

                  vi.      supporting the APEC 21st Century Renewable Energy Development Initiative which seeks to advance the use of renewable energy for sustainable economic development and growth in member economies.

                vii.      encouraging in the longer term a greater strategic input from business through the Energy Working Group Business Network (EBN).

b.                  will seek to reduce barriers to trade created by differing energy performance test methods and energy performance requirements by supporting the establishment of an APEC Energy Efficiency Test Procedures Coordinator.

c.      will strengthen energy security in the region by developing and implementing an energy security initiative with the aim of improving the functioning of energy markets; energy efficiency and conservation; diversification of energy resources; renewable energy development and deployment; and enhance short term preparedness such as oil stocks and surge production of oil; and explore the potential for alternative transport fuels

TOURISM

APEC economies will:

a.     Remove impediments to tourism business and investment by:

(i)     promoting and facilitating the mobility of skills, training and labor;

(ii)    promoting and facilitating productive investment in tourism and associated sectors;

(iii)   removing regulatory impediments to tourism business and investment; and

(iv)   encouraging liberalization of services trade related to tourism under General Agreement on Trade in Services (GATS)

b.    Increase mobility of visitors and demand for tourism goods and services in the APEC region by:

(i)     facilitating seamless travel for visitors;

(ii)    enhancing visitor experiences;

(iii)   promoting inter- and intra-regional marketing opportunities and cooperation;

(iv)   facilitating and promoting e-commerce for tourism business;

(v)    enhancing safety and security of visitors; and

(vi)   fostering a non-discriminatory approach to the provision of visitor facilities and services.

c.     Sustainably manage tourism outcomes and impacts by:

(i)    demonstrate an appreciation and understanding of natural environment and seek to protect the environment

(ii)    foster ecologically sustainable development opportunities across the tourism sector, particularly for small and medium sized enterprises, employment and providing for open and sustainable tourism markets

(iii)   protect the social integrity of host communities with particular attention to the implications of gender in the management and development of tourism

(iv)   recognize, respect and preserve local and indigenous cultures together with our natural and national cultural heritage

(v)    enhance capability building in the management and development of tourism.

d.     Enhance recognition and understanding of tourism as a vehicle for economic and social development by:

(i)    Harmonizing methodologies for key tourism statistical collections, consistent with activities of other international tourism organizations

(ii)    facilitating the exchange of information on tourism between economies

(iii)   promoting comprehensive analysis of the role of tourism in member economies in promoting sustainable growth

(iv)   expanding our collective knowledge base on tourism issues in order to identify emerging issues and assist in the implementation of the Seoul Declaration on an APEC Tourism Charter. 

The current CAP relating to services can be found in the Services Collective Action Plan

The Philippines' Approach to Trade in Services in 2002

            The Philippines recognizes the important contribution which the services sector makes to the Philippine economy. In this respect, it pursues reforms aimed at promoting the growth and development of the services sector and at enhancing its global competitiveness.

            The Philippines participates in the ongoing negotiations under the ASEAN Framework Agreement on Services. It has submitted its initial package of commitments for the second round of negotiations covering business/professional services, construction, information technology and telecommunications. This improves on earlier commitments made in the areas of air transport services, business/professional services, construction, maritime transport, tourism, and telecommunications.

            The Philippines participates in the mandated negotiations on trade in services, including in the development of negotiating guidelines. It is currently undertaking a national assessment on trade in services with a view to identifying priorities for the negotiations.

Foreign Investment or Right of Establishment (including Joint Venture Requirements)

No improvements implemented.

All lands of the public domain are owned by the State.  Only citizens of the Philippines or corporations or associations at least 60 percent of whose capital is owned by such citizens may own land other than public lands and acquire public lands through lease.  Foreign investors may lease only private-owned lands.

Telecommunications and Transport

Under the Philippine Constitution, franchises, or any other authority for the operation of a public utility shall be given only to Philippine citizens or to corporations organized in the Philippines (and registered with the Securities and Exchange Commission), at least 60 percent of whose capital is owned by such citizens. 

See Sectoral Annexes on Telecommunications and Broadcast Services, and Maritime and Air Transport Services.

Energy

RA 8479 (Downstream Oil Industry Deregulation Act of 1998) provides for the liberalization of downstream activities such as importation, exportation, manufacturing, marketing and distribution.

RA 9136 (Electric Power Industry Reform Act of 2001) provides the framework for the restructuring of the Philippine electric power industry and the privatization of the state-owned National Power Corporation (NPC).

See Sectoral Annex on Energy Services.

Tourism

Foreigners can invest as much as 100% in almost all tourism activities pursuant to RA 7042 (Foreign Investments Act of 1991) as amended by RA 8179, except for tourist transport which is limited to Philippine nationals pursuant to the Philippine Constitution.

See Sectoral Annex on Tourism and Travel Related Services.

Distribution

RA 8762 (Retail Trade Liberalization Act of 2000) allows the entry of foreign investments in the retail trade sector, subject to certain categories and qualification requirements.

See Sectoral Annex on Distribution Services.

Financial

The entry and amount of foreign equity participation in banks, insurance companies, investment companies, investment houses and financing companies have been liberalized through various laws.

See Sectoral Annex on Financial Services.

The contact point for further information is:

Trade, Industry and Utilities Staff

National Economic and Development Authority

12 Blessed Josemaria Escriva Drive

Pasig City, Philippines

Telefax: (632) 631-3734

E-mail:  mrsongco@neda.gov.ph; brmendoza@neda.gov.ph   

The Philippines will review existing laws on tourism movement and investment, including investment plans and areas.

Temporary Entry and Stay of Service Providers and Intra-Corporate Transferees

No improvements implemented.

Non-resident aliens may be admitted to the Philippines for the supply of a service after a determination of the non-availability of a person in the Philippines who is competent, able and willing, at the time of application, to perform the services for which the alien is desired.

See Sectoral Annexes on  Maritime and Air Transport  Services and Tourism and Travel related Services.

The contact point for further information is:

Trade, Industry and Utilities Staff

National Economic and Development Authority

12 Blessed Josemaria Escriva Drive

Pasig City, Philippines

Telefax: (632) 631-3734

E-mail: mrsongco@neda.gov.ph; brmendoza@neda.gov.ph 

No further action planned.

Foreign Exchange Control/

Movement of Capital

In general, there are no restrictions on foreign exchange requirements for current account  (trade and non-trade) transactions.

Supporting documents have to be presented for commercial banks to sell foreign exchange to service payments for imports, regardless of amount as well as for non-trade purposes exceeding US $5,000 (effective 26 July 2001 from US $10,000 previously).

With regard to capital account transactions, all public and publicly-guaranteed private sector obligations  to foreign creditors, including foreign shareholders and offshore banking units,  have to be referred to the Bangko Sentral ng Pilipinas (BSP) for prior approval.  Other private sector borrowings as well as financing arrangements involving foreign exchange payments require prior approval and/or registration by the BSP if  to be serviced using foreign exchange purchased from the banking system.Similarly,  foreign investments have to be registered with the BSP only if the foreign exchange  needed to service the repatriation of capital and the remittance of dividends, profits and earnings which accrue thereon is to be sourced from the banking system.  The foreign exchange required for servicing  of unregistered foreign currency obligations and foreign investments will have to be sourced outside the banking system.

Only BSP-authorized banks/non-banks with quasi-banking functions can engage in financial derivative transactions.

See Sectoral Annex on Financial Services.

The contact point for further information is:

The Director

International Operations Department

Bangko Sentral ng Pilipinas

Vito Cruz cor. Mabini Streets

Malate, Manila, Philippines

Tel:  (632) 536-6077

Fax: (632) 536-6072

E-mail:  cgonzalez@bsp.gov.ph

No further action planned.

Other Generic Requirements

Applied to Trade in Services

No improvements implemented.

In activities expressly reserved by law to citizens of the Philippines (i.e., foreign equity is limited to a minority share), the participation of foreign investors in the governing body of any corporation engaged in activities expressly reserved to citizens of the Philippines by law shall be limited to the proportionate share of foreign capital of such entities.

The contact point for further information is:

Trade, Industry and Utilities Staff

National Economic and Development Authority

12 Blessed Josemaria Escriva Drive

Pasig City, Philippines

Telefax: (632) 631-3734

E-mail: mrsongco@neda.gov.ph, brmendoza@neda.gov.ph

No further action planned.

General Policy

Position

As of  1996, the Philippines had already undertaken various measures to liberalize trade in such areas as telecommunications, transport, energy and financial services. The Philippines had made significant contributions to the WTO negotiations on trade in services.  Under the Uruguay Round of multilateral trade negotiations, commitments were made in the areas of tourism, transportation and value-added telecommunications.  The Philippines was also a signatory to the interim agreement on financial services and undertaking commitments in banking, insurance and securities services.

Undertook commitments in the WTO negotiations on basic telecommunications services concluded on 15 February 1997.  The Philippine Senate is in the process of possibly concurring with the ratification of the Fourth Protocol.

Upgraded commitments under the interim agreement on financial services concluded in December 1997. 

Provided legal framework for the conduct of commercial transactions over the Internet (RA 8792, Electronic Commerce Act of 2000) (2000).

Foreign Investment or Right of Establishment (including Joint Venture Requirements)

All lands of the public domain are owned by the State.  Only citizens of the Philippines or corporations or associations at least 60 percent of whose capital was owned by such citizens may own land other than public lands and acquire public lands through lease.  Foreign investors may lease only private-owned lands.

Telecommunications

As required under the Philippine Constitution, the provision of telecommunication services is limited to Filipino citizens or to corporations, associations or entities which were owned at least 60 percent by Filipino citizens.  The remaining 40 percent may be owned by foreigners.  Broadcast service was classified under mass media and its operation was limited to Filipino citizens.

Transport

No franchise, certificate, or any other form of authorization for the operation of a public utility was granted except to citizens of the Philippines or to corporations or associations organized under the laws of the Philippines at least 60 percent of whose capital was owned by such citizens.

The Philippines had established the domestic and international civil aviation liberalization policy with the aim of improving air service availability, quality and efficiency through exposure to foreign markets and competition.  Two international carriers had been designated as official carriers.  The Philippines had entered into an unlimited third and fourth freedom traffic at two points in member economies at the BIMP-EAGA.  Domestic routes had been opened for entry to a minimum of two operators in each route.

For maritime transport services, cabotage transport was limited to Filipinos.

The Philippines had liberalized the domestic shipping industry by providing for the entry of new operators and investors to enhance the level of competition and bring about reasonable rates and improved quality of service.

Energy

RA 8180 (An Act Deregulating the Downstream Oil Industry and for Other Purposes) provided for the liberalization of the entry of new players in the operation of refineries and other oil facilities.

EO 215, which made possible private sector participation in power generation, had been amended to further encourage private sector involvement in power generation.

Tourism

Foreigners can invest as much as 100% in almost all tourism activities pursuant to RA 7042 (Foreign Investments Act of 1991) as amended by RA 8179, except for restaurants and tourist transport which was limited to Philippine nationals pursuant to RA 1180 and the Philippine Constitution, respectively.

Distribution

RA 1180 (Retail Trade Nationalization Act) provided that only Filipino citizens may engage in retail trade.

Financial

RA 7721 (An Act Liberalizing the Entry and Scope of Operations of Foreign Banks in the Philippines) authorized foreign banks to operate in the Philippine banking system via any one of three modes.

Department of Finance Order Nos. 100-94 and 100-94A allowed the entry of foreign insurance or reinsurance companies to operate as a branch or where foreign equity in said company or intermediary was more than 40 percent within two years from the effectivity of the Orders.

For investment companies, membership in the Board of Directors was limited to Filipino citizens.

For investment houses, foreign equity participation was allowed up to 40 percent.  Majority of the members of the Board were required to be Filipino citizens.

For financing companies, foreign equity participation was limited to 40 percent.  Two-thirds of the members of the Board were required to be Filipino citizens.

Deregulated downstream activities such as importation, exportation, manufacturing, marketing and distribution (RA 8479, Downstream Oil Industry Deregulation Act of 1998) (1998).

Provided the framework for the restructuring  of the Philippine electric power industry and the pivatization of the state-owned National Power Corporation (NPC) (RA 9136, Electric Power Industry Reform Act of 2001) (2001).

See Retail Trade Liberalization Act of 2000

Allowed the entry of foreign investments in the retail trade sector, subject to certain categories and qualification requirements (RA 8762, Retail Trade Liberalization Act of 2000) (2000).

Increased foreign equity participation to 60 percent of the voting stock of an investment house and allowed foreign nationals to become members of the Board of Directors to the extent of their participation in the equity of the enterprise (RA 8366, Investment Houses Law) (1997).

Increased foreign equity participation to 60 percent of the voting stock of a financing company (RA 8556, Financing Company Act) (1998).

Increased foreign ownership of a local bank from 30 percent to 40 percent of the voting stock and under certain conditions, up to a maximum of 100 percent  (RA 8791, General Banking Law of 2000) (2000).

Encouraged the widest participation of ownership in enterprises and promoted the development of the capital market, among others (RA 8799, Securities Regulation Code)(2000).

Temporary Entry and Stay of Service Providers and Intra-Corporate Transferees

Non-resident aliens were allowed to be admitted to the Philippines for the supply of a service after a determination of the non-availability of a person in the Philippines who was competent, able and willing, at the time of application, to perform the services for which the alien was desired.

Only aliens qualified to hold technical positions were allowed to be employed within the first five years of operation of the enterprise, their stay not to exceed five years upon entry.

For specialized vessels, aliens may be employed as supernumeraries only for a period of six months.

As a general rule, only citizens of the Philippines were allowed to be employed in tourism-oriented establishments.  However, for hotels and resorts, aliens may be employed subject to the pertinent provision of the Tripartite Agreement among the Department of Tourism, Department of Labor and Employment, and the Bureau of Immigration.

Foreign Exchange Control/

Movement of Capital

Current Account Transactions

In general, there were no restrictions on foreign exchange requirements for current account transactions following the Philippine acceptance on 8 September 1995 of the obligations under Article VIII of the IMF Articles of Agreement.  Foreign exchange needs exceeding the $10,000 ceiling for over-the-counter (OTC) sales required merely a written notarized application and supporting documents from the purchaser (Bangko Sentral ng Pilipinas (BSP) Circular No. 162).

Capital Account Transactions

All public and private sector guaranteed obligations from foreign creditors, offshore banking units, and foreign currency deposit units were referred to the BSP for prior approval.  Other private sector loans from these creditors also required prior BSP approval and/or registration if such loans were to be serviced using foreign exchange to be purchased from the banking system (Article VII Section 20 of the Philippine Constitution; Section 22 BSP Circular No. 1389, Consolidated Foreign Exchange Rules and Regulations).

Arrangement for Repatriation of Profits

Foreign investments need not be registered with the BSP.  The registration of a foreign investment with the BSP was only required if the foreign exchange needed to service the repatriation of capital and the remittance of dividends, profits and earnings which accrue thereon was to be sourced from the banking system.  The foreign exchange needs of unregistered foreign investments may be sourced outside the banking system (Section 32 BSP Circular No. 1389, Consolidated Foreign Exchange Rules and Regulations).

Other Generic Requirements Applied to Trade in Services

In activities expressly reserved by law to citizens of the Philippines (i.e., foreign equity is limited to a minority share), the participation of foreign investors in the governing body of any corporation engaged in activities expressly reserved to citizens of the Philippines by law was limited to the proportionate share of foreign capital of such entities.

Operational Requirements

Issued the Implementing Rules and Regulations for specific guidelines for competitive wholesale charging for interconnect services (July 2002).

RA 8792 (Electronic Commerce Act of 2000) provides the legal framework for the conduct of commercial transactions over the Internet.

Telecommunications

The provision of telecommunication services in the Philippines has historically been dominated by the private sector.

Telecommunications is considered a public utility and in the Philippine Constitution, the ownership, operation and maintenance of telecommunication services is limited to Filipino citizens or to corporations, associations or entities which are owned at least 60 percent by Filipino citizens.  The rest of the 40 percent may be owned by foreign investors.

Companies, associations or entities organized or incorporated in accordance with Philippine laws interested in owning and operating telecommunication services are required to secure a legislative franchise from Congress and a certificate of public convenience and necessity (CPCN) from the National Telecommunications Commission (NTC).  Deregulated telecommunications services (those that do not put up their own network) which are exempt from securing legislative franchises are required to register with the NTC.

The grant of any authorization to operate telecommunications services is subject to availability of radio frequencies and for this purpose, operators are required to secure permits or licenses.

Basic laws which govern public telecommunications are found in the Philippine Constitution, Commonwealth Act 146, as amended, Executive Order 546, RA 7925, among others.

Broadcast Services

The Philippine Constitution provides that broadcast media shall be owned, operated and maintained by Filipino citizens.

CATV services have been placed under broadcast services and also require 100 percent Filipino entity.

The contact point for further information is:

The Director

Common Carrier Authorization Department

National Telecommunications Commission

BIR Road, East Triangle, Diliman

Quezon City, Philippines

Tel:  (632) 924-4026

Fax: (632) 921-7128

E-mail: ccad@ntc.gov.ph

The Philippines endeavors to further improve its policy and regulatory framework to make the sector globally competitive.

The Philippines will:

-    strengthen the National 

     Telecommunications 

     Commission, the     

     regulatory agency for

     telecommunications;

-    further develop the

      telecommunications  sector

     through a Convergence Bill

     and a bill on Network Fraud;  

-    pursue the creation of

      the Department of

      Information Technology and 

     Communications (DITC);

-    review the Implementing 

     Rules and Regulations  (IRR)

     on Interconnection to address

     gaps in implementation;

-    implement the Government

     Electronic Messaging System

     (GEMS) as part of the                   

    Government Information

     Infrastructure and the            

     Government Electronic

     Communications System

     (GECS), as provided for in

     RA  8792;

-    issue the IRR for retail pricing

     on telecommunication;

 -   develop and implement the

     Alternative Communications

     Program to promote universal

     access to information and

     telecommunications services

     and bridge the digital divide

     between urban and rural

     areas.

Licensing and Qualification Requirements of Service Providers

No improvements implemented.

Telecommunications

To qualify an applicant to be a public telecommunication service provider, the following must be complied with:

-           applicant must be a Filipino citizen or a 60 percent Filipino             corporation, association or entity duly incorporated in             accordance with Philippine laws;

-           applicant must be financially capable and the service             economically viable;

-           applicant must be technically capable and the service is             technically feasible;

-           applicant must have a legislative franchise; and

-           the service applied for shall be in the public interest and             serve public convenience and necessity.

All the above requirements shall be proven in quasi-judicial proceedings before the NTC after due notice and hearing to all affected parties.

As of 31 December  2000, the telecommunications sector may be summarized, as follows:

-   77 private telephone operators (+)

-   11 international gateway facility providers

-   5 nationwide mobile cellular operators (2 of which are not yet

    operational)

-   10 public repeater network operators

-   15 paging operators

-   5 domestic VSAT operators

-   3 international satellite operator

-   5 domestic  VSAT  operators

-   12 public coastal operators

-   156 value added service providers (+)

As an off-shoot of the implementation of a local service area provisioning scheme, the Philippines’ telephone density at the end of 2000 improved in 9 years time from 1.17 or approximately 700,000 lines in 1992  to 9.05 telephones for every 100 population or a total of nearly  7 million.

Broadcast Services

To qualify to be an applicant for a public broadcast station, the  following must be complied with:

-           applicant must be a Filipino citizen or a wholly owned Filipino             corporation, association or entity;

-           applicant must have a legislative franchise;

-           applicant must be technically qualified and the service             technically feasible;

-           applicant must be financially capable and the proposed             service is economically viable; and

-           the service must be in the public interest.

To qualify to be an applicant for a CATV service, the following must be complied with:

-           applicant must be a Filipino citizen or a wholly owned Filipino             corporation, association or entity;

-           applicant must be technically qualified and the service             technically feasible;

-           applicant must be financially capable and the proposed             service is economically viable;

-           the service must be in the public interest.

The application for broadcast and CATV services shall be proven in quasi-judicial proceedings after due notice and hearing to all parties concerned.

As of 31 December 2000, the sector may be summarized as follows:

194 TV stations (+)

355 AM broadcast stations (+)

537 FM broadcast stations (+)

1162 CATV operators (+)

4 Pay TV

2 DTU TV

5 LMDS

5 MMDS

58  translators

13 TV Relay

The contact point for further information is:

The Division Chief

Broadcast Services Department

National Telecommunications Commission

BIR Road, East Triangle, Diliman

Quezon City, Philippines

Tel:  (632) 924-3744

Fax: (632) 967-8213

E-mail: bsd@ntc.gov.ph

No further improvements planned.

Foreign Entry

No further improvements.

Telecommunications

Investment in a domestic Filipino Corporation, association or organization to engage in telecommunications services is limited to the 40 percent equity holdings.

Broadcast Services

Broadcast services are required to be 100% Filipino-owned.

The contact point s for further information are:

The Director

Common Carrier Authorization Department

National Telecommunications Commission

BIR Road, East Triangle, Diliman

Quezon City, Philippines

Tel:  (632) 924-4026

Fax: (632) 921-7128

E-mail: ccad@ntc.gov.ph

The Division Chief

Broadcast Services Department

National Telecommunications Commission

BIR Road, East Triangle, Diliman, Quezon City, Philippines

Tel:  (632) 924-3744

Fax: (632) 967-8213

E-mail: bsd@ntc.gov.ph

No further improvements planned.

Discriminatory Treatment/

MFN

No further improvements implemented.

All domestic service providers are governed under the same laws, rules and regulations provided for a particular service.

The regulatory framework seeks to provide a level playing field to all grantees of authority to operate a specific telecommunication service.

The contact point for further information is:

The Director

Common Carrier Authorization Department

National Telecommunications Commission

BIR Road, East Triangle, Diliman

Quezon City, Philippines

Tel:  (632) 924-4026

Fax: (632) 921-7128

E-mail:  ccad@ntc.gov.ph

No further improvements planned.

Operational Requirements

No improvements implemented.

RA 8762 (Retail Trade Liberalization Act of 2000) allows the entry of foreign investments in the retail trade sector subject to the following categories:

A - Enterprises with paid-up capital of less than US$2.5 million shall be reserved exclusively for Filipino citizens and corporations wholly owned by such;

B - Enterprises with a minimum paid-up capital of US$2.5 million but less than US$7.5 million may be wholly owned by foreigners except for the first two years after the effectivity of the law wherein foreign participation shall be limited to not more than 60%;

C - Enterprises with a paid-up capital of US$7.5 million or more may be wholly owned by foreigners, provided that in no case shall the investments for establishing a store in Categories B and C be less than US$830,000; and

D - Enterprises specializing in high-end or luxury products with a paid-up capital of US$250,000 per store may be wholly owned by foreigners.

Finally, the opening of branches/stores by the registered foreign retailer shall be allowed, provided that the investments for each branch/store established by registered foreign retailers falling under Categories B and C must be no less than US$830,000.

The contact point for further information is:

Legal Services Department

Board of Investments

385 Senator Gil J. Puyat Avenue

Makati City 1200 Philippines

Tel:  (632) 897-3084

Fax: (632) 890-2151

E-mail: BGFondevilla@boi.gov.ph

No further action planned.

Licensing and Qualification Requirements of Service Providers

No improvements implemented.

Under RA 8762, foreign retailers should also meet all of the following qualifications:

-           a minimum US$200 million net worth in its parent             corporation for Categories B and C, and US$50 million for             Category D;

-           five retailing branches or franchises in operation anywhere             around the world unless such retailer has at least one store             capitalized at a minimum of US$25 million;

-           five-year track record in retailing; and

-           only nationals from, or juridical entities formed or incorporated in countries which allow the entry of Filipino         retailers shall be allowed to engage in retail trade in the     Philippines.

The contact point for further information is:

Legal Services Department

Board of Investments

385 Senator Gil J. Puyat Avenue

Makati City 1200 Philippines

Tel:  (632) 897-3084

Fax: (632) 890-2151

E-mail: BGFondevilla@boi.gov.ph

No further action planned.

Foreign Entry

No improvements implemented.

See Operational Requirements.

No further action planned.

Discriminatory Treatment/

MFN

No improvements implemented.

See Licensing and Qualification Requirements of Service Providers.

No further action planned.

Operational Requirements

Banking

The passage into law of RA 7721 (An Act Liberalizing the Entry and Scope of Operations of Foreign Banks in the Philippines) on 18 May 1994 amended the General Banking Act (RA 337) which, since 1948, had closed the domestic banking system to foreign banks (except for the four already operating before the said law was enacted).  Under RA 7721, foreign banks are authorized to operate in the Philippine banking system through any one of the following modes:

-     by acquiring, purchasing or owning up to 60% of the voting stock

      of an existing bank;

-     by investing up to 60% of the voting stock of a new banking   

      subsidiary incorporated under Philippine law; or

-     by establishing branches with full banking authority.

Foreign bank entry under the first two modes is unrestricted in number.  Under the third mode, six new foreign banks may establish commercial presence upon approval by the Monetary Board of the Bangko Sentral ng Pilipinas (BSP) within five years from the law's effectivity while an additional four foreign banks may be allowed entry under the third mode on recommendation of the same to the President.

A foreign bank may avail itself of only one mode of entry, provided that this shall not preclude investment in the equity of a domestic bank of not more than 30% of voting stock or 40% upon approval of the President of the Philippines (Sec.3, para. 2, RA 7721).

At all times, the control of 70% of the resources or assets of the entire banking system shall be held by domestic banks more than 50% of the subscribed capital of which are owned by Filipinos (Sec.3, para. 3, RA 7721).

Current Account Transactions

In general, there are no restrictions on foreign exchange requirements for current account (trade and non-trade) transactions. Supporting documents have to be presented for commercial banks to sell foreign exchange to service payments for imports, regardless of amount, as well as for non-trade purposes  exceeding US $5,000 (effective 26 July 2001 from US $10,000 previously).

Capital Account Transactions

All public and publicly-guaranteed private sector obligations  to foreign creditors, including foreign shareholders and offshore banking units,  have to be referred to the BSP for prior approval.

Other private sector  borrowings as well as financing arrangements involving exchange payments require prior approval and/or registration by the BSP if it is to be serviced using foreign exchange purchased from the banking system.  Similarly, foreign investments have to be registered with the BSP only if the foreign exchange needed to service the repatriation of capital and the remittance of dividends, profits and earnings which accrue thereon is to be sourced from the banking system.   The  foreign exchange required for servicing of unregistered foreign currency obligations and foreign investments will have to be sourced outside the banking system.

Arrangement for Repatriation of Profits

Foreign investments need not be registered with the BSP.  The registration of a foreign investment with the BSP is only required if the foreign exchange needed to service the repatriation of capital and the remittance of dividends, profits and earnings which accrue thereon shall be sourced from the banking system.  The foreign exchange needs of unregistered foreign investments may be sourced outside the banking system (Section 32 BSP Circular No. 1389, Consolidated Foreign Exchange Rules and Regulations).

Control on Derivatives/Forward Instruments

Prior BSP approval is required.  Only banks and non-bank financial intermediaries performing quasibanking functions and their affiliates/ subsidiaries duly authorized by the BSP are allowed to deal in derivative transactions (BSP Circular No. 135; July 1997).

Securities

RA 8799 (Securities Regulation Code) aims to encourage the widest participation of ownership in enterprises and promote the development of the cpaital market. among others.

For details, please see http://www.bsp.gov.ph/

The contact points for further information are:

The Director

Department of Economic Research

Bangko Sentral ng Pilipinas

Vito Cruz cor. Mabini Streets

Manila, Philippines

Tel:  (632) 523-1241

Fax: (632) 523-1252

E-mail: camador@bsp.gov.ph

The Director

International Operations Department

Bangko Sentral ng Pilipinas

Vito Cruz cor. Mabini Streets

Manila, Philippines

Tel:  (632) 536-6077

Fax: (632) 536-6072

E-mail:  cgonzalez@bsp.gov.ph

Licensing and

Qualification Requirements of Service Providers

Guidelines for Selection (Banking)

The following factors are considered in selecting the foreign banks which will be allowed to invest in majority of the voting stock of an existing domestic bank or to establish a subsidiary or branch in the Philippines:

-     geographic representation and complementation;

-     strategic trade and investment relationships between the 

      Philippines and the country of incorporation of the foreign bank;

-     relationship between the applicant bank and the Philippines;

-     demonstrated capacity, global reputation for financial  

      innovations and stability in a competitive environment of the 

      applicant;

-     reciprocity rights enjoyed by Philippine banks in the    applicant's

      country; and

-     willingness to fully share technology.

Only those among the top 150 in the world or the top five banks in their country of origin shall be allowed entry under Modes 2 and 3 (Sec. 3, RA 7721).

Section 1 of BSP Cicular No. 256, Series of 2000, or the rules and regulations to implement Section 11 of the General Banking Law of 2000 stipulates  that  foreign individuals and non-bank corporations may own or control up to 40% of the voting stock of a domestic bank; Provided, that the aggregate foreign-owned  voting stocks  owned by foreign individuals and non-bank corporations in a domestic bank shall not exceed 40 percent of the outstanding voting stock of the bank.   The percentage of foreign-owned voting stocks in a bank shall be determined by the citizenship of the individual stockholders in that bank.

For details, please see http://www.bsp.gov.ph/

The contact points for further information are:

The Director

Department of Economic Research

Bangko Sentral ng Pilipinas

Vito Cruz cor. Mabini Streets

Manila, Philippines

Tel:  (632) 523-1241

Fax: (632) 523-1252

E-mail: camador@bsp.gov.ph

The Director

International Operations Department

Bangko Sentral ng Pilipinas

Vito Cruz cor. A. Mabini Streets

Manila, Philippines

Tel:  (632) 536-6077

Fax: (632) 536-6072

E-mail:  cgonzalez@bsp.gov.ph

No further action planned.

Foreign Entry

Banking

The enactment into law of RA 8791, otherwise known as the General Banking Law of 2000, on 23 May 2000, allows increased access of foreign banks to the domestic market.  Under the law, foreign ownership of domestic financial institutions was liberalized further as follows:

-     ownership ceiling of foreign individuals and non-bank

      corporations in a domestic banks was raised to 40% of the voting

      stock from 30%; and

-     foreign banks may acquire up to 100% of the voting stock of    a

      domestic bank within seven years from the effectivity of the law.

Section 4 of BSP Circular No. 277, Series of 2001 provides that the three (3) year moratorium on the establishment of new commercial banks from 13 June 2000, which is the date of effectivity of the General Banking Law of 2000, until 12 June 2003, shall not be applicable to the acquisition or purchase by foreign banks of up to 100 percent of the voting stock of existing domestic commercial banks.

Investment Houses

RA 8366 (Investment Houses Law)  was approved on 21 October 1997 increasing foreign equity participation to 60 percent of the voting stock of an investment house.  It further allows foreign nationals to become members of the Board of Directors to the extent of their participation in the equity of the enterprise.

Financing Companies

RA 8556 (Financing Company Act) was approved on 26 February 1998 increasing foreign equity participation to 60 percent of the voting stock of a financing company.

Investment Companies (including Mutual Fund Companies)

Membership in the Board of Directors is limited to Filipino citizens.

Insurance

In 1994, maximum percentage of foreign ownership was increased to 100 percent with the issuance of Department of Finance Order 100-94 and 100-94A.  Entry is allowed under any of the following modes:

-     ownership of the voting stock of an existing domestic insurance

      or reinsurance company or intermediary;

-     investment in a new insurance or reinsurance company or 

      intermediary incorporated in the Philippines; or

-     establishment of a branch.  Entry under (c) is not available toan

      intermediary.  An applicant may avail itself of only one mode of

      entry.  Capital requirements vary depending on the line of

      business, degree of foreign ownership and mode of entry.

The contact points for further information are:

The Director

Department of Economic Research

Bangko Sentral ng Pilipinas

Vito Cruz cor. Mabini Streets

Manila, Philippines

Tel:  (632) 523-1241

Fax: (632) 523-1252

E-mail: camador@bsp.gov.ph

The Assistant Secretary

International Finance Group

Department of Finance

Roxas Boulevard. cor. Vito Cruz Streets

Manila, Philippines

Tel: (632) 523-9221

Fax: (632) 526-9990

E-mail:rbtan@dof.gov.ph

The Philippines will:

-     review existing restrictions

      on foreign membership in

      the Board of Directors of

      investment companies; and

-     review existing law on

      investment companies with

      the objective of including a

      provision allowing a

      maximum of 100 percent

      foreign equity participation.

Discriminatory Treatment/

MFN

No improvements implemented.

Under the law, one of the guidelines for foreign bank entry is to see to it that reciprocity rights are enjoyed by Philippine banks in the applicant bank's country (Sec. 3, RA 7721).

The contact point for further information is:

The Director

Department of Economic Research

Bangko Sentral ng Pilipinas

Vito Cruz cor. A. Mabini Streets

Malate, Manila, Philippines

Tel:  (632) 523-1241

Fax: (632) 523-1252

E-mail: camador@bsp.gov.ph

No further action planned.

Operational Requirements

No improvements implemented.

Incentives for foreign investors are provided under EO Nos. 63 and 226, which include Special Investor Resident Visa, Fiscal Incentives and Repatriation of Earnings, etc.

Employment of foreign nationals or aliens in hotels, resorts and restaurants is allowed subject to the provisions of the Tripartite Agreement between the Department of Tourism (DOT), Department of Labor and Employment and the Bureau of Immigration (BI), as follows:

-           Only hotels/resorts duly accredited by the DOT shall be             allowed to engage the services of aliens.

-           Aliens may occupy a maximum of four managerial positions             in a hotel or resort establishment.

-           For new hotels or resorts, aliens required during the pre-            operation stage and up to six months after the opening of the             hotel/resort to the public may be engaged.

-           The services of aliens may be engaged during special             occasions/ events such as food festivals, provided the             service contract shall be limited to a period of three months             renewable for a maximum period of another three months.

The contact points for further information are:

Office of Tourism Standards

Department of Tourism (DOT)

T. M. Kalaw Street, Ermita

Manila, Philippines

Tel: (632) 525-3257

Fax: (63-2) 521-1088

E-mail:  dotmvj@info.com.ph

Investment Promotion Unit/Office of Tourism Coordination

Department of Tourism

T. M. Kalaw Street, Ermita

Manila, Philippines

Tel: (632) 526-7653

Fax: (632) 524-2151

E-mail:dotlccd@info.com.ph

The Philippines will:

-     consider  the provision of

       incentives for the acquisition

       of capital equipment for

       tourism establishments; and

-     continue to review the DOT-

      DOLE-BI Tripartite

      Agreement on the

      Employment of Foreign

      Nationals in Tourism

      Establishments.

Licensing and Qualification Requirements of Service Providers

No improvements implemented.

Foreign and domestic tourism service providers should secure appropriate registration and licenses with the Securities and Exchange Commission and Local Government Unit where the project will be located.

The contact points for further information are:

Office of Tourism Standards

Department of Tourism

T. M. Kalaw Street, Ermita

Manila, Philippines

Tel: (632) 525-3257

Fax: (632) 521-1088

E-mail: dotmvj@info.com.ph

Investment Promotion Unit/Office of Tourism Coordination

Department of Tourism

T. M. Kalaw Street, Ermita

Manila, Philippines

Tel: (632) 526-7653

Fax: (632) 524-2151

E-mail:dotlccd@info.com.ph

No further action planned.

Foreign Entry

No improvements implemented.

Foreigners can invest as much as 100% in almost all tourism activities pursuant to RA No. 7042 (Foreign Investments Act of 1991) as amended by RA No. 8179, and RA No. 8762 (Retail Trade Liberalization Act of 2000), except for tourist transport which is limited to Philippine nationals pursuant to the Philippine Constitution.  However, there are certain restrictions governing the industry, as follows:

-           only citizens of the Philippines or corporations or associations at least 60% of whose capital is owned by such   citizens may own land other than public lands and acquire   public lands through lease; and

-           foreign investors may lease only private-owned lands.

See Operational Requirements

The contact points for further information are:

Office of Tourism Standards

Department of Tourism

T. M. Kalaw Street, Ermita

Manila, Philippines

Tel: (632) 525-3257

Fax: (632) 521-1088

E-mail: dotmvj@info.com.ph

Investment Promotion Unit/Office of Tourism Coordination

Department of Tourism

T. M. Kalaw Street, Ermita

Manila, Philippines

Tel: (632) 526-7653

Fax: (632) 524-2151

E-mail:dotlccd@info.com.ph

No further action planned.

Discriminatory Treatment/

MFN

No improvements implemented.

RA 8762 requires that only nationals from, or juridical entities formed or incorporated in countries which allow the entry of Filipino retailers shall be allowed to engage in retail trade in the Philippines.

The contact points for further information are:

Office of Tourism Standards

Department of Tourism

T. M. Kalaw Street, Ermita

Manila, Philippines

Tel: (632) 525-3257

Fax: (632) 521-1088

E-mail: dotmvj@info.com.ph

Investment Promotion Unit/Office of Tourism Coordination

Department of Tourism

T. M. Kalaw Street, Ermita

Manila, Philippines

Tel: (632) 526-7653

Fax: (632) 524-2151

E-mail:dotlccd@info.com.ph

No further action planned.

Operational Requirements

No improvements implemented.

Pursuant to PD 474, otherwise known as the Maritime Industry Decree of 1974, the  Maritime Industry Authority (MARINA) was mandated to exercise regulatory/supervisory and promotional/developmental functions over the four major sectors of the country's maritime industry, namely,  domestic shipping, overseas shipping, shipbuilding/shiprepair and maritime manpower.

The Philippine Constitution of 1987, and national legislations passed by the Congress of the Philippines (Public Service Act, Commonwealth Act No. 146 of 1936, as amended)  provide  that:  “No franchise, certificate, or any other form of authorization for the operation of a public utility shall be granted except to citizens of the Philippines or to corporations or associations organized under the laws of the Philippines at least 60% of whose capital is owned by such citizens nor such franchise certificate or authorization be exclusive in character or for a longer period than 50 years”.

Generally, the International Conventions of the International Maritime Organization (IMO) governing maritime safety and the protection of marine environment and other international standards, like ISM Code would apply to Philippine-flagged vessels.

EO 185 provides that all routes/links shall have a minimum of two operators.

Detailed operational requirements can be viewed at http://www.marina.ph/policy

The contact points for further information are:

The Assistant Secretary for Planning

Department of Transportation and Communications

The Columbia Towers, Ortigas Avenue

Mandaluyong City, Philippines

Telefax:  (632) 727-7948

E-mail: assecgde@dotcmain.gov.ph

The Deputy Administrator for Operations

Maritime Industry Authority

1000 U.N. Avenue, Malate Manila

Philippines

Telefax: (632) 526-0971

E-mail: lvp@marina.gov.ph

The Philippines  will  continuously review various maritime-related policies and legislations consistent with international shipping laws and practices.

Licensing and Qualification Requirements of Service Providers

No improvements implemented.

New entrants must be evaluated according to established guidelines consistent with existing legislations, policies, goals and objectives of the  economy for the maritime industry.

Overseas Shipping

The general requirements for registration and accreditation of shipping companies which  shall operate ships in international trade, are as follows:

-     only Philippine shipping companies, firms and entities   

       authorized to engage principally in overseas shipping may  apply

       for registration and accreditation with MARINA;

-     the company’s minimum paid-up capital shall be P7.0            

      million; and

-     the Chief Executive and Chief Operating Officers (or if they      are

      one and the same person, the next ranking Operating Officer

     also) shall be citizens and permanent residents of the Philippines

     and at least two (2) of the principal officers (e.g., President, Vice

     President for Operations, General Manager, or their equivalents)

     shall have at least 5 years experience in ship management, 

     shipping operations and/or chartering; and any change of these

     principal officers shall be approved by MARINA.

All Philippine-registered ships must be manned by Filipino national crew.

Applicants must be Philippine nationals or a partnership or association wholly owned by and composed of citizens of the Philippines; or a corporation organized under the laws of the Philippines of which at least 60% of the capital stock is owned by Philippine nationals.

Applicants must be financially capable to substantiate their financial requirements.

Applicants must have the necessary qualifications to engage in shipping business, viz., effective management, competency and capability.

With regard to technical requirements, they should comply with 1997 Philippine Merchant Marine Rules and Regulations (PMMRR 1997), as amended, and internationally accepted rules and regulations, relevant IMO safety standards embodied in the SOLAS 74/78 and MARPOL 73/78.

Domestic Shipping

The general requirements for regisration and accreditation of shipping companies which shall operate ships in domestic trade are as follows:

-     The applicant must be a citizen and permanent resident of the

       Philipines, or a corporation or co-partnership, association or

       joint-stock company constituted and organized under the laws

       of the Philippines, with at least 60 percent of the subscribed

       capital belonging entirely to citizens of the Philippines.

-     For corporations and partnerships, the primary purpose of the

      entity, as refected in the Articles of Incorporation or Articles of

       Partnership, shall be to engage primarily in domestic shipping 

       business/operation.   For single proprietorships, it shall have

       domestic shipping business/operations as a major activity or

       concern and duly  registered with the Bureau of Domestic

       Trade/ Department of  Trade and Industry.

-     On management competence,  for corporations and

       partnerships, at least two of the company's principal officers

       (e.g., President, Vice-President for Operations or General

       Manager, or their equivalents) shall have a minimum of two

       years experience in ship management, shipping operations and/

       or chartering.  In  the case of corporations,  the Chief Executive

       Officer (CEO) and the Chief Operating Officer (COO) or their

       equivalents, shall be citizens and permanent residents of the

       Philippines.   For single proprietorships, the owner/operator or a

       principal officer shall have a minimum of two years experience in

       ship management, shipping operations and/or chartering.

-     On capitalization, in the case of corporations,  the required

       minimum paid-up capital shall be dependent on the total GRT of

       its owned/operated vessels ranging from P0.5 tp P6 million.  

       For companies still without any vessel owned/operated at the

       time of filing of application, a minimum paid-up capital of P0.5

       million shall be required.  In case of partnerships, it shall have a

       minimum capitalization dependent on the total GRT or its

      owned/operated vessels ranging from P50,000 to P500,000 as

      reflected in the Articles of Partnership or a certification issued by

      the Securities and Exchange Commission (SEC) for new and

      existing companies, respectively.  In the case of single

      proprietorship, the proprietor/owner shall have a minimum

      capitalization ranging from P15,000 to P200,000.

Detailed licensing and qualification requirements can be viewed at http://www.marina.gov.ph/polic
y

The contact points for further information are:

The Assistant Secretary for Planning

Department of Transportation and Communications

The Columbia Towers, Ortigas Avenue

Mandaluyong City, Philippines

Telefax:  (632) 727-7948

E-mail:assecgde@dotcmain.gov.ph

The Deputy Administrator for Operations

Maritime Industry Authority

1000 U.N. Avenue, Malate,Manila

Philippines

Telefax: (632) 526-0971

E-mail: lvp@marina.gov.ph

No further action planned.

Foreign Entry

No improvements implemented.

The operation of maritime transport shall be granted to citizens of the Philippines or to corporations or associations organized under the laws of the Philippines at least 60% of whose capital is owned by such citizens.

Any repairs, improvement, alteration, reconditioning,conversion or drydocking of Philippine-owned or registered ships are required to be done at domestic ship repair yards registered with the MARINA.  Exemptions from this requirement may be granted by MARINA in any of the following cases:

a)    When as a result of collision, grounding, heavy weather, breakdowns and other perils of the sea occuring abroad, the vessel suffers damages necessitating emergency and/or extraordinary repairs, and it is impracticable that such vessel be brought to the Philipines for the needed repairs;

b)    When on account of existing prior commitments or due to inadequacy or lack of service facilities or MARINA-registered ship repair yards, as determined by the MARINA; and

c)    When the Philippines is not one of  the vessels'  ports of call, in which case a waiver from the said requirement must be obtained from the MARINA.

Foreign-owned/registered vessels and Philippine-registered overseas vessels are allowed to be temporarily  utilized in the domestic trade  subject to the issuance of a Special Permit by the MARINA.

Foreign entry is allowed under bilateral agreements, regional and other arrangements, e.g., BIMP-EAGA.

All Philippine-registered ships must be manned by Filipinos.

A foreigner holding a Certificate of Competency issued by his national administration in accordance with the requirements of STCW "78 Convention, as amended, shall be issued special dispensation to serve  on board a Philippine-registered vessel engaged in the international trade, provided that the Philippine Certificate of Competency issued and endorsed by the Board shall be reciprocally recognized by the said foreign national administration to allow the Filipino merchant marine to practice his profession on board the foreigner's flag vessel.

The contact points for further information are:

The Assistant Secretary for Planning

Department of Transportation and Communications

The Columbia Towers, Ortigas Avenue

Mandaluyong City, Philippines

Telefax:  (632) 727-7948

E-mail: assecdge@dotcmain.gov.ph

The Deputy Administrator for Operations

Maritime Industry Authority

1000 U.N. Avenue, Malate, Manila

Philippines

Telefax:  (632) 526-0971

E-mail:  lvp@marina.gov.ph

No further action planned.

Discriminatory Treatment/

MFN

No improvements implemented.

See Foreign Entry.

Under the BIMP-EAGA arangement, liberalization is limited within the growth area.

The contact points for further information are:

The Assistant Secretary for Planning

Department of Transportation and Communications

The Columbia Towers, Ortigas Avenue

Mandaluyong City, Philippines

Telefax:  (632) 727-7948

E-mail:  assecgde@dotcmain.gov.ph

The Deputy Administrator for Operations

Maritime Industry Authority

1000 U.N. Avenue, Malate, Manila

Philippines

Telefax:  (632) 526-0971

E-mail: lvp@marina.gov.ph

No further action planned.

Operational Requirements

Approved the Implementing Rules and Regulations of EO 219 (October 2001).

Regulatory and Supervisory Functions involving the processing of applications and grant of approval of various aspects of airline operations, as embodied under RA 776 and other laws, are vested in the Civil Aeronautics Board (CAB) and the Air Transportation Office (ATO).

Executive Order 219 (Establishing the Domestic and International Civil Aviation Policy) mandates the designation of at least two international carriers to encourage competition and allows for the designation of additional flag carriers if the total frequency entitlements of the Philippines are not serviced by existing carriers.  The implementing rules and regulations of EO 219 was approved in 2001.

Domestic routes have been opened for entry to a minimum of two operators in each route.

Free transfer, in any freely convertible currency at the official rate of exchange at the time of the transfer or remittance, of the excess of receipts over expenditure and levies achieved on Philippine territory in connection with the carriage of passengers, baggage, mail shipments and freight.

The contact point for further information is:

The Executive Director

Civil Aeronautics Board

Old MIA Road

Pasay City, Philippines

Tel:  (632) 853-6761 

Fax: (632) 833-6911

E-mail:  cabplanning@edsamail.com.ph

The Philippines will:

-    consider streamlining the civil

     aviation organizations and

     accelerate the liberalization

     of the sector;

-    pursue liberalization of air

     services through bilateral and

     multilateral negotiations, e.g.,

     ASEAN MOU on Air Freight

     Services and a MOU on Air

     Services for BIMP-EAGA;

     and

-    review CAB Economic

     Regulations.

Licensing and Qualification Requirements of Service Providers

No improvements implemented.

Issuance of a permit for foreign air carriers requires compliance with CAB Economic Regulation No. 1.

Part I, Chapter A, Section 121.3 (ATO Administrative Order No. 121):

No person may engage in scheduled and non-scheduled international and domestic passenger or cargo, on both operations in air commerce without or in violation of the air carrier operating certificate issued under this Administrative Order.

The contact point for further information is:

The Executive Director

Civil Aeronautics Board

Old MIA Road

Pasay City, Philippines

Tel:  (632) 853-6761

Fax: (632) 833-6911

E-mail:  cabplanning@edsamail.com.ph

The Philippines will review CAB Economic Regulations.

Foreign Entry

No improvements implemented.

Foreign entry is allowed under Bilateral Agreements (Air Services Agreements), regional and other arrangements, e.g., BIMP-EAGA.

No franchise, certificate, or any other form of authorization for the operation of a public utility shall be granted except to citizens of the Philippines or to corporations or associations organized under the laws of the Philippines at least 60% of whose capital is owned by such citizens.

Only aliens qualified to hold technical positions may be employed within the first five years of operation of the enterprise, their stay not to exceed five years upon entry.  Each employed alien should have at least two Filipino understudies.

In activities expressly reserved by law to citizens of the Philippines (i.e., foreign equity is limited to a minority share), the participation of foreign investors in the governing body of any corporation engaged in activities expressly reserved to citizens of the Philippines by law shall be limited to the proportionate share of foreign capital of such entities.  All executive and managing officers must be citizens of the Philippines.

The contact point for further information is:

The Executive Director

Civil Aeronautics Board

Old MIA Road

Pasay City, Philippines

Tel:  (632) 853-6761

Fax: (632) 833-6911

E-mail:  cabplanning@edsamail.com.ph

The Philippines will review CAB Economic Regulations.

Discriminatory Treatment/

MFN

No improvements implemented.

Separate bilateral agreement (Air Services Agreement) for each nation.

Under the BIMP-EAGA arrangement, liberalization is limited within the growth area.

The contact point  for further information is:

The Executive Director

Civil Aeronautics Board

Old MIA Road

Pasay City, Philippines

Tel:  (632) 853-6761

Fax: (632) 833-6911

E-mail:  cabplanning@edsamail.com.ph

No further action planned.

Operational Requirements

Approved the Implementing Rules and Regulations of RA 9136 (Electric Power Industry Reform Act) (February 2002)

Power Sector Restructuring

RA 9136 provides the framework for the restructuring of the Philippine electric power industry and the privatization of the state-owned National Power Corporation (NPC).  The intent of the law is focused  on creating a competitive environment that will encourage efficiency and reliability  in the production and delivery of electricity, without sacrificing the quality and price of the product and services to end-users.

The contact point  for  further information is:

The Assistant Director

Energy Planning and Monitoring Bureau

Department of Energy

Merrit Road, Fort Bonifacio, Taguig

Metro Manila, Philippines

Telefax: (632) 840-2173

E-mail:  cheruela@doe.gov.ph

Deregulation of the Downstream Oil Industry

The downstream oil industry operates under an environment provided for by RA 8479 (Downstream Oil Industry Law).   The Philippine government's role in the industry centers on ensuring fair competition, security of domestic oil supply, public health and safety, product quality and facility standards, and quality and environmental protection.

The government is now open to projects that are geared towards infrastructure expansion and refining facilities.   These are needed to increase and improve the local crude processing and product distribution capabilities to meet projected increase in demand for petroleum products.

In ensuring fair trade competition  and consumer protection, the government continues to monitor and nvestigate any report on prohibited acts such as cartelization and predatory pricing.

Towards the improvement of high quality petroleum products, the DOE, in cooperation with the Bureau of Product Standards (BPS), cautiously monitors adulteration and other forms of product misrepresentation to discourage the sale of products below  existing national standards.

The contact point for further information is:

The Director

Energy Industry Administration Bureau

Department of Energy

Merrit Road, Fort Bonifacio, Taguig

Metro Manila, Philippines

Telefax:  (632) 840-2095

E-mail: zmonsada@doe.gov.ph

The Government will continue to implement major structural reforms to provide a level playing market environment and a higher level of private sector participation in all energy activities. These include the effective implementation of RA 9136.

Licensing and Qualification Requirements of Service Providers

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