Press Release
August 24, 2011

After DND budget hearing

The total budget for 2012 is P106.9 billion. However, this is a bit misleading because the operating budget of DND and AFP is only P71,686,477,000. The difference is accounted for by the pension to veterans which amounts to P34.347 billion. In other words, we have a situation where 32% of the DND and AFP budget is devoted to veterans' pensions. Only 45% is devoted to personal services. The first issue is the matter of the allocation for veterans. We have to take a serious look at this problem because by 2014, which is barely 3 years from now, we will be allocating more funds for the veterans and pensioners rather than those in the active service. The pension requirement would increase by P5 billion a year, and would increase substantially in 2013 because of the fact that many of those hired during Martial Law years will now retire. By 2014, the budget will carry more funds for pensions than salary. The Sec of National Defense is working on possible solutions. Moreover, it may interest you to know that part of the pensioners would be 23,580 WWII veterans, whose ages would range from 86 years old as the youngest and 101 years old as the oldest. The life expectancy of Filipino males is 68 years old and there are 23,580 who are older than the life expectancy of the average Filipinos.

Q: Do you doubt this figure sir?

I certainly doubt this figure that there are 23,580 Filipinos exclusively belonging to the WWII veterans who are aged 86-101. That must be looked into because of the requirement on the pension. Because of the difficulty in sourcing funds for government operations, you have only a capital outlay of P5.5 billion (5%) and this is the modernization of the AFP, MOOE of only P18.3 billion (17%), regular salary is P47.7 billion (45%), pension is P34.3 billion (32%). We can never modernize our Armed Forces at the rate we are going. We directed the DND to look at their unutilized assets as a source of modernization. Just as an example, they have 5 golf courses in Metro Manila maintained by the AFP--Air Force, Navy, Army, GHQ and Veterans. At a minimum of 30 hectares per golf course, that's 150 hectares right here in Manila. At an average of P30,000 per square meter, the 5 golf courses have a value of about P45 billion... at least P45 billion in assets of the AFP which are just being used as golf courses. I don't think that we need these golf courses. What we need is to modernize our Armed Forces. We are asking the DND to look at these assets for purposes of a source of revenue for the modernization of our Armed Forces. We are not saying that they should sell the assets, but certainly they should have a better income from these assets worth at least P45 billion. For example, VMMC with about 33 hectares of golf course with a value of P11.5 billion only earns P1.6 million a year. That is the kind of income that is being realized out of this asset. It is very clear that by better utilization of the assets of the AFP, we can modernize our Armed Forces. Our Armed Forces, in terms of equipment, manpower is in a very sorry state, is very inadequate. In Southeast Asia, we have the lowest ratio of active military staff to civilian population. For a population of about 95 million, we have 125,000 AFP personnel. This is a ratio of 1:750. In other countries like Thailand, for 63.5 million Thais, they have 305,000 members of the Armed Forces. For Indonesia with 245 million population, they have 438,000 in the Armed Forces. In Malaysia with 28 million population, they have 109,000 in the Armed Forces. Here, we see the inadequacy of our Armed Forces. In the view of the committee, there are enough assets that can respond to the needs of the AFP if these assets are properly utilized.

Q: Paano ma-utilize kung hindi ibebenta?

For example, they can enter into a long-term lease with developers and generate lease rentals which should be sufficient, on a yearly basis, added to the budget for capital outlay. At P45 billion, if you just say 10% return, that is P4.5 billion a year without selling.

Q: Can we say that for the past several years hindi na-manage nang mabuti yung assets?

For the past several years, there is simply no initiative taken to look for other sources of funds. They just rely on the GAA when in fact right there on their doorsteps are assets which can be utilized, which are totally underutilized. You cannot justify 150 hectares of prime land in Manila used only for golf courses.

Q: (inaudible)

There is a proposed legislation which will restructure the pension entitlements of future veterans. We still have to look into it. I cannot comment on that at this point but that's one of the plans of the AFP.

Q: I-cut ba ang P34 billion for pension?

I don't want to answer that because that is part of a study.

Q: Budget for WWII veterans iho-hold ba yon?

No it will not be held. There was some discrepancy in the requirements so the DBM required the PVAO to submit a master list of pensioners in order to have an accurate picture of the budget requirements. Right now there is a conflict... a difference in the requirements. The DBM asserts that there are unutilized amounts... the PVAO accounts have approximately P5 billion, PVAO is saying that this is a question of delayed bank statements and that is why there is a difference. This must be settled between the DBM and PVAO. We have given them until October 31 to be able to thresh out these differences in the amounts in the banks pertaining to the PVAO. Ultimately, since these veterans' pensions would be non-discretionary expenses, we should get this out of the budget of the AFP because it gives a distorted picture. While the DND budget appears to be P106.9 billion, in truth the operating budget is only P71.686 billion. It is distorted by the fact that included in the budget of the Armed Forces are pension payments.

Q: Aren't military personnel paying premiums for their retirement benefits?

I do not think that the military personnel are paying premiums because this is not an insurance under GSIS. These are allocations under the budget. This is the same situation as the PNP and Judiciary.

Q: Do you think they should pay premiums for their retirement?

The policy issue is the coverage by the GSIS and that must be resolved.

Q: Timeline ng long-term lease ng golf courses?

There is no timeline here. We just pointed out to AFP and DND that this is an asset which can be better utilized and they have agreed. So they will review all of these assets, particularly the real estate, and see how it can be better utilized and yield the funds necessary for the modernization of AFP.

Q: Estimate?

I do not want to come into conclusion at this point. The point is the concept of utilizing these real estate assets for purposes of modernization is a valid and accepted proposition, rather than relying on the budget. How it will be done whether by sale or by lease is something that has to be studied carefully.

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