Farolan returns to Customs; Fonacier named to BIR

Back to his old job.

Malacañang sources said that former Customs Commissioner and ex-STAR editor-in-chief Ramon Farolan accepted President Estrada's offer for him to head the Customs bureau anew and help improve the government's tax collection efforts.

At the same time, Board of Investments chief Dakila Fonacier has also reportedly agreed to move over to the Bureau of Internal Revenue (BIR).

This developed as Finance Secretary-designate Jose Pardo hinted at a major revamp in the two main revenue collection agencies in a bid to strengthen tax collections and arrest a runaway budget deficit.

Pardo, who is set to vacate his seat at the Department of Trade and Industry in favor of the finance portfolio, also said he accepted President Estrada's offer as replacement for Edgardo Espiritu who resigned the other day amid reports of in-fighting in the Cabinet.

The 60-year-old Pardo also confirmed that he would be succeeded at the trade and industry department by House Majority Leader Mar Roxas III.

Farolan, also the former president of The STAR where he writes a twice-a-week column, was Customs chief from 1977 to 1986, after which he was named Air Force commanding general, a post he kept for some six months.

In 1987, he was appointed ambassador to Indonesia where he stayed until 1989, then later named administrator of the Export Processing Zone Authority with the rank of trade undersecretary.

Meanwhile, Pardo said among his priorities as incoming finance secretary is to improve the government's revenues, noting that the country's ballooning budget deficit remains a major concern.

The budget deficit has reached the P110.15-billion mark in the first 11 months of 1999, well over the full-year estimate of P85.3 billion. The shortfall was largely due to weak tax collection.

"I've looked at the revenue flows and it leaves a lot to be desired," he said. "Creative responses that have not been tried before should perhaps be looked at now," he said.

It was not immediately known if incumbent Customs Commissioner Nelson Tan and BIR Commissioner Beethoven Rualo were given new assignments.

Pardo, a former president of the Philippine Chamber of Commerce and Industry and an acknowledged business leader, has been trade secretary for the past 18 months and co-chairman of the Philippine's ASEAN Free Trade Agreement Advisory Council during the Ramos administration.

Pardo has also been immersed in the country's monetary and fiscal policies through his on-off membership in Monetary Board of the Bangko Sentral ng Pilipinas (BSP).

"Since I have been with the Central Bank, it will allow for better coordination between the fiscal management and the monetary management of the central bank governor," Pardo said.

Analysts noted that he and BSP Gov. Rafael Buenaventura appeared to have the same agenda, and agreed on the priorities set.

In his three-paragraph resignation letter, Espiritu said he hoped that his departure would lead to a more "unified, strengthened and cohesive Cabinet" that will push the President's pro-poor policies.

He denied rumors that his resignation was triggered by policy disagreements with Pardo and Buenaventura.

Observers noted, however, that Espiritu and Buenaventura have been at odds over the interest rate policy, with the BSP maintaining that an aggressive push for lower interest rates could threaten the peso's stability.

Espiritu also said graft and corruption in government remained serious, and expressed hopes that his successor will "carry on the fight."

He specifically cited the BIR and the Customs which are both under the umbrella of the finance department.

Meanwhile, the President said he would officially announce the changes in his Cabinet in his Ulat sa Bayan (Report to the Nation) tomorrow over his weekly radio program Jeep ni Erap.

Analysts welcomed Pardo's new appointment, saying better relations between the finance department and the BSP were essential.

At the stock market, the peso fell sharply at the open yesterday because of Espiritu's resignation, but dealers said the currency should recover once a replacement is announced.

Economist Joey Cuyegkeng has said the people would "react positively" if Pardo would accept the finance portfolio.

"He's market-friendly, he's pro-business," Cuyegkeng said.

Investment manager Robert Peñalosa said Pardo has to address the tax collection issue.

"The government can't fund the deficit by selling off assets, that's an inherent problem that I think they need to address," Peñalosa added.

Neel Sinha, head of research for SG Securities in Manila, said major funds would make asset allocations in January and any political uncertainty at this time could be calamitous.

"If there's no new driver (for Philippine markets) by the end of January, you are going to miss the first half (of the year) altogether," he said.

Meanwhile, pro-administration Bohol Rep. Ernesto Herrera and opposition Rep. Juan Miguel Zubiri of Bukidnon described as transitory the changes in the Estrada Cabinet.

Herrera said Roxas, along with former Manila Mayor Alfredo Lim who is being eyed as incoming secretary of the Department of the Interior and Local Government (DILG), were highly qualified. But he expressed hopes the two could stay in the Cabinet until the end of Mr. Estrada's term in 2004.

"But if they resign in a few months to run for elective posts in next year's elections, then this new team will only be a transition Cabinet. There would be no continuity and stability of policies, and that is band for governance," Herrera stressed.

Roxas is widely believed to be eyeing a slot in the ruling Lapian ng Masang Pilipino (LAMP) senatorial ticket in next year's polls, while Lim would likely square off with his successor, Mayor Lito Atienza, who is now his political opponent.

For his part, Zubiri said what is now unfolding "is an emergency Cabinet, transitory in nature, whose job is to help a fumble-prone administration get back on its feet."

"A revolving door Cabinet will hurt the President and the public who will both feel orphaned by the departure of good Cabinet men," Zubiri noted.

He added that what Mr. Estrada needs right now is not only a changing or rotating of the guards, but a change of vision.

On the other hand, opposition Sen. Raul Roco said the resignation of Espiritu indicated a break of the Laban ng Demokratikong Pilipino (LDP) from the Lapian ng Masang Pilipino (LAMP).

Roco explained that Espiritu has always been identified with the LDP since the time of Speaker Ramon Mitra. He added that the LDP faction had been meeting among themselves, minus their LAMP partners.

Roco argued that the problems of the country stem not from the performance of the Cabinet members whom he described as mostly competent, but from the performance of the President himself. -