THE Philippine Chamber of Commerce and Industry (PCCI) yesterday pushed for the creation of a P100 billion fund to shield the country in case the United States slips into recession, a plan supported by President Arroyo.

In her keynote speech at the conclusion of the 34th Philippine Business Conference at the Manila Hotel, Arroyo said she welcomes the proposal where government and private banks would contribute P50 billion each to finance projects for "human capital formation" that would address basic services to the poor including education, health, agriculture and infrastructure.

"We hope the private banking sector will join in this," she said.

PCCI president Edgardo Lacson, in an interview, said businessmen are confident that they will be able to overcome the financial difficulties. "Business is upbeat and it’s business as usual but with caution. What we are trying to prevent is to create an environment of fear and panic," Lacson said.

Arroyo, in her speech, said government’s contribution to the fund would come from the National Development Co., investment arm of the Department of Trade and Industry, and government financial institutions Development Bank of the Philippines and Social Security System.

PCCI chairman emeritus Donald Dee who brought up the idea of the fund with Arroyo later told reporters the three agencies would chip in P10 billion each.

Dee, a member of the SSS board, said a committee to be composed of representatives of the GFIs and NDC would select and prioritize projects.

Dee said he expects to get the fund going as early as the first quarter of 2009.

Lacson said that as the credit market gets frozen due to the financial crisis and liquidity becomes a problem, it is imperative that a fund is ready to jumpstart pump-priming activities.

"If we want to go back to basics, this is the answer to the financial crisis," Lacson said. But he said this fresh money would be used to start unfunded infrastructure projects via build-operate-transfer, finance high employment projects like in agriculture as well as health and education.

The President presented her key strategies to pump-prime growth which include support for agriculture; renewed emphasis to housing; market Philippine BPO as the cost-cutting solution for US firms; encouraging exporting firms to diversify; innovate and technologically upgrade; more lending support for the SMEs; expanding trade, investment and tourism with China; and attracting more investments from the Middle East.

Finance Secretary Margarito Teves said the economic managers would discuss the proposed fund Thursday.

Arroyo assured the private sector that the government is determined to proceed with the reduction of the corporate income tax from 35 percent to 30 percent in 2009 which would provide relief to private firms.

Teves said unless the reduction of corporate tax is provided for in a law and unless an amendment is made "they (private firms) should be happy that the corporate income tax will be reduced to from 35 to 30 percent."

He said it should be the government that should be concerned because it would mean a loss of some P15 billion in revenues, he said.

Teves also said that despite the crisis, the Philippines is still expected to end the year within the P75 billion deficit for 2008.

Teves, however, said it is still difficult to say that this would result in a lower deficit for the year, given the difficulties faced by the world.

The Philippine Deposit Insurance Corp. needs P45 billion to raise the deposit insurance coverage of at least 98.5 percent of the total depositors in the country from the current P250,000 to P1 million, PDIC president Jose Nograles said.

President Arroyo had supported congressional proposals to increase the deposit insurance to P500,000 but raised it to P1 million saying would a more "proportionate response" to the present global financial uncertainties. (Malaya)