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press briefing this morning March 28. President Ferdinand R. Marcos Jr. presided over the

sectoral meeting this morning. Tinalakay dito ang proposed merger of Land Bank of the Philippines

and the Development Bank of the Philippines. The proposed merger aims to have a more robust

and competitive bank that will provide better and more accessible financial services for Filipinos.

Aside from this, the updates on the proposed military and uniformed personnel pension reform

was also discussed. And to give us more details on this, kasama natin ngayon si Finance Secretary

Benjamin Diokno. Good morning Secretary Diokno. Thank you. As mentioned earlier, two topics

were taken up today, both what I consider game-changing. The first one is the merger

of the Development Bank of the Philippines and the Land Bank of the Philippines. By merging the two,

it will now become the number one bank in the Philippines, ahead of Banco de Oro in terms of

assets. Now, the President expressed the desire to merge the two, to make it the biggest bank in

the country because of the recent financial developments abroad. And that's really the

best practice. The biggest bank usually is owned by the state globally. Now, he expressed concern

in the process of merging that none of the services provided by either bank will be lost.

And we assured him that with the merger, because both the Land Bank and DBP are universal banks,

they do almost the same, except that one is focused on agri, the other one on industrial

projects. But they do practically the same. And that as a result of the merger, there will be

savings, and the merged bank will be stronger. And in fact, one likely outcome of this is that

maybe the interest rate that they will charge will be lower than either of the two at the moment.

Now, in terms of number of branches, right now,

let me

well, where is that? Okay, slide 14. Do you have that? No, no, I have it here, I'm sure.

Between the two of them, of course, as you know, the Land Bank is the bigger bank, right?

It has how many branches? Land Bank has 752 branches at the moment. And the Development

Bank of the Philippines has 147 branches. Now, we map them, and maybe as a result of the merger,

only 22 branches of DBP will be retained. And the plan is that Land Bank will have

a branch in all LGUs in the Philippines. It could be a combination of light branches or

big branches, ATMs, etc. Now, the advantage of this is that we will be able to save a lot of

money for the national government. We estimate that the savings will be in the neighborhood of

at least for the first year around, let me be more precise, 5 billion.

Let me see, okay.

For the projected operating cost savings due to the merger could reach at least 5.3 billion

per year. So for the next four years, at least 20 billion, okay? And this is even understated

because this does not include revenues that can be derived from the sale of redundant assets

of DBP's various properties, such as its head office in Makati, a property in BGC, various

branch properties, equipment, and licenses, and income that can be derived from the proceeds

of that sale, okay? So any question on the first topic?

None? No question? Let me go to the second topic, which is again, this is another game-changing

reform. I said this is more complicated than the first topic because I told the President,

your predecessors have decided to kick the can down the road. They don't want to address this.

I usually call this the elephant in the room. Nobody would like to touch it, and they simply

ignore it. And this is the military and uniform personnel pension reform, okay?

So we met with DILG Secretary Benhar Abalos and DND Secretary Galvez,

and let me describe to you the present pension system. The pension system covered

by this are those from the Armed Forces of the Philippines, the Bureau of Jail Management

and Penology, the Bureau of Fire Protection, the PNP, the Philippine Public Safety College,

the Philippine Coast Guard, and the Bureau of Corrections.

Now, the current pension system is like this. Now, it's fully funded by the national government.

In other words, it's appropriated annually in the budget, but there's no contribution

from the retirees, okay? That's a unique kind of pension system.

Right now, I think it's in the neighborhood of around 120 to 130 billion pesos

in the 2023 budget. The MUP pension is automatically indexed to the salary

of the personnel of the same rank. In other words, if you are a retiree, if you're a general

getting X amount of money, if the salary of the incumbent is doubled, you get your pension

doubled also, okay? Third, when MUPs or military uniformed personnels retire, they're given

one rank higher, okay? Granted one rank higher, and so a pension can be received after 20 years

of service with no minimum pensionable age. So some of them, they get recruited at the age of 20.

Still, they can already retire at the age of 40, okay? And you know how long their lives are, right?

Military people, they live longer than us, okay? Some at the age of 90, okay? So they retire at 40.

They get their pension up to age 90. Isn't that ridiculous, okay? So we want to reform them,

and right now, the situation is so bleak, for example, that if you compare

the current operating expenditures or maintenance and operating expenditures of the whole AAP

and the capital outlay, so the money they buy for airplanes, etc., etc., it is actually

much less than the amount of pension that we are allocating for the retirees.

So there will come a time when the current budget will only be about a third, one-third or one-fourth

of the money that we're paying for the pensioners, okay? So we have to really address

that issue. It's not sustainable, and I said if this goes on, there will be a fiscal collapse.

So what are the major recommendations? Again, let me compare. You have three groups of people,

the military uniformed personnel, you have the private sector, the SSS, those who retired

under SSS, and those who retired under GSIS, government workers. The average monthly pension,

this is monthly, of a military personnel is 40,000 pesos. Compare that to what an SSS

retiree gets. It's 4,528, okay? And what a GSIS personnel gets, 13,600. So that the

pension that is received by a military pensioner is nine times higher than the average pension

of a pensioner under the social security system, and three times higher than the average pension

under the government service insurance system. So we have four proposals. Number one

is for the reform to apply to all active personnel and new entrants. So once the new system is

adapted, all those who are in active service and the new recruits will have to pay their way,

right? No longer free, okay? Number two, removal of automatic indexation of pension to the salary

of active personnel of similar ranks. So let me repeat that. Removal of automatic indexation of

pension to the salary of active personnel of similar rank. And third, the military uniform

personnels will receive their pension starting at 56 years old, or now it's now adjusted to 57,

okay? 57 years old. And number four, mandatory contributions will be required for active

personnel and new entrants similar to the GSIS pensioners, okay? So any questions?

Okay. Joe Manahan, ABS-CBN.

Good morning, sir. Sir, sa apat na option na binigay niyo, saan po daw masliming si Secretary Galvez?

No, there's unanimity that we talked with them, with Secretary Galvez. We talked to

Secretary Benhar-Avalos, and they are generally agreed with all the four. Siguro meron lang siyang

question dito sa number three. Kasi right now, I think ang optional retirement is after serving

for 20 years. Gusto niyo sana siguro, eh, gawin na daw na after 25 years, yung optional

retirement. But he will consult with the military personnel on this. But in general, the whole

cabinet or the whole, those who attended the meeting are in agreement with measures one, two,

three, and four, okay? Sir, pakabalang po, sir. Doon naman sa merger,

sino po yung clarification na po, sino yung surviving entity, land bank or DBP po?

Definitely land bank. Kasi land bank is, I think, at least four times bigger than the DBP,

and that the existing board of LB, land bank, will survive, okay?

Okay. Tona Yu, Inquirer Radio.

Sir, just a quick follow-up on Job's question. How about the President? Is he inclined to approve

your recommendations dun sa military retirement?

Yeah, he's part of the decision-making.

Lahat doon, okay sa kanya yun?

Okay sa kanya yun.

Okay. Eden Santos, Net25.

Secretary, good morning po. Regarding po dun sa magiging contribution, yung mga active

military personnel and yung mga new entry...

Recruits.

Recruits. Magkano po yung magiging monthly contribution nila, if in case?

Usually ang contribution will depend on your salary, okay? Siguro meron siya ditong number eh.

Magiging gradual yung hindi naman immediate na katulad ng government workers.

So for the first three years, magiging

ang contribution nila is 5% of the salary,

and then contribution ng national government will be 16%.

That's the... And then for the next three years, it will be increased to 7% from 5 to 7.

And then yung NG share naman will decline to 14.

Kasi ang under it is 21 eh. I think that's the contribution of government workers.

And then years thereafter, the MUP share will be increased to 9.

And then NG share to 12. Okay, so gradual yung...

Secretary, alam naman po natin na maraming daring mga ganyang recommendations before.

Pero ito po bang magandang reforms? Kailangan pang dumaan sa Kongreso?

Kailangan. Kailangan dumaan sa Kongreso. So in-approve ni Presidente ito,

and we will push this in to Congress.

And we are already talking to some people in Congress who will push this.

Yan po kasi nagiging problema before kaya hindi po natutuloy yung...

Minsan nga hindi na nakakarating sa Kongreso.

Na-install pa lang sa administration pa lang.

But the President is recognizing the need for this.

Talagang ipo-push niya.

Hindi po kaya natin... Hindi po kaya maging reason para yung mga military personnel natin,

yung mga sundalo ay mag-demoralize, mag-kumalma, mag-a-class.

Hindi naman. Kasi as you know, recently, 2018, dinobli yung swelda nila eh.

And kaya gradual yung contribution nila from 5 to 7 to 9.

And so I think naintindihan din nila that they have to, again, mag-cooperate with the rest of society.

Otherwise, mag-blow up talaga, mag-babaloon talaga yung deficit natin.

Definitely may mawawalan.

Kasi there's redundancy, and then mag-reduce yung number of branches.

But there's usually a package naman, voluntary.

And then they can choose to retire on their...

Since they are government official, they can retire under GSIS, or we will offer an unattractive package for those who will be separated.

Wala pa tayong estimate at the moment.

Kaya yung parang full effectivity ng merger.

And there are anxieties raised over this merger.

So what made you finally make the President approve this?

And what are the reasons exactly to be able to...

Or what are your responses to the anxieties that are being raised over this merger?

As you know, this merger has been approved during the time of Pinoy.

President Aquino.

President Aquino through the government of GCG.

It was not implemented.

It was taken up during the 30s term.

It was also not implemented.

But given what's happening now globally,

you have banks which are now being closed, right?

For example, Credit Suisse.

Who would have thought that Credit Suisse will go under?

So there's really a strong need for solidifying the government bank.

We're not saying that DBP or land bank have problems.

Yun sa nasabing anong argument ng DBP.

Why fix if there's no problem?

Hindi naman broken.

We're not saying that the current system is broken.

But as policy makers, we have to constantly seek better ways of doing things.

Especially if we want to improve the performance of a particular government agency.

Yun lang naman.

And this is also consistent with our right-sizing.

That's the focus also of the President.

Right-sizing the bureaucracy.

Because if we are able to do that successfully,

then we'll have more money for really essential projects.

Like healthcare, education for our people, and infrastructure.

So yan.

Sir, one last.

Regarding naman the issue on the pension.

Because you mentioned that it still has to go through the Congress.

And in the past, talagang hindi rin umaabot halos sa Kongreso.

So meron po ba tayong ibang plano kung sakaling hindi na naman ito ma-approve?

Because you mentioned a while ago na talagang malaking ikakalugi na kung hindi ito maipatupad pa.

I think President Marcos Jr. is in a best position to push through with this reform.

As I mentioned, his predecessors simply kicked the can forward without success.

Why did I say that?

Because remember that he's, I think, the first President who was elected by a significant majority.

60%.

Yung ibang presidente, they were only elected by 25% because of the number of candidates.

So he really has very strong support.

And he's willing to spend his political capital for this.

Because nakikita niyo na, pag hindi niya ginawa ito, there will be fiscal collapse in the future.

Secondly, Mr. Marcos also has very strong control of both houses of Congress.

So it's going to be less problematic for him to push forward such a major reform.

Harley Valbuena, DZME.

Hi, good morning.

Sir, the Congress already ratified the bill amending the fixed term of military officers.

So if this bill becomes a law, do you believe, sir, that this will become a hindrance or a factor

for the implementation of the military pension reform if this pushes through, sir?

Absolutely not.

That's separate.

That's a separate issue.

Okay, thank you.

Alvin Baltazar, PBS.

Secretary, magandang umaga po.

Secretary, dun sa mga mawawalan ng trabaho, dun sa merging,

paano ba yung magiging proseso dun sa notification para dun sa mga hindi pa palarin?

At will you go over the records kung sino yung mga malapit na mag-retire?

Para at least medyo mag-aang sa loob nila yung...

As in any merger, etc., there are some who will be affected.

For example, in any reorganization, there are people who will be affected.

And that's why we provide a very liberal separation package.

So they can use that, they can invest it in new business if they want to, or they can live on it.

But we are doing this for the greater good.

Kasi ayaw mo naman na to employ people who are not doing anything, right?

And there are benefits for...

For example, if there are branches that you need to collapse, why not collapse them, right?

So there are efficiency gains to be made.

So this will benefit the whole country.

Secretary, follow-up lang po.

Sabi niyo po, i-implement yun before the end of the year.

So kailan po tayo magsisimulang magbigay ng notification?

I'd say that the merger will take effect before the end of the year.

So may meron naman transition period yan.

So I don't know when, kung kailan sila magbigay ng notification.

Siguro mga X number of days after the merger is formalized, then you'll be notified.

Okay. I believe that's the last question.

Do you still have time for more?

Okay, one more. Chona Yu, Inquirer Radio.

Sir, in 2016, the President opposed the merger of DBP and Land Bank.

2016?

Who's that? Who's the President at that time?

President Marcos. He said na oposed sya dito kasi it will deprive farmers sa access sa Agricultural Bank.

Why the sudden change?

I don't... Personally, I don't...

Sa Senate po.

2016?

2016.

When he's running for Vice President.

Nag-change talaga yung... sabi ko nga yung international developments. Big banks are folding, etc.

Plus, no, he hasn't changed his mind since he was elected President. I know that he was for this proposal.

Okay. Thank you.

One more question, sir. Sa water crisis, sir. Ano ko ba ang ginagawa? Anong magkano ang budget alated for El Nino preparations ng government?

Siguro si Secretary Pangtanganon ang kausapin natin.

Thank you so much, Secretary Giocno, for briefing us on the proposed merger of Land Bank of the Philippines

and Development Bank of the Philippines, as well as the proposed military and uniformed personnel pension reform program.

Thank you very much. Have a good afternoon, everyone.