Philippines' Aquino seeks lawmakers' support on reforms

By Rosemarie Francisco and Manuel Mogato

MANILA (Reuters) - Philippine President Benigno Aquino asked Congress on Monday to back his efforts for economic and social services reform to secure more inclusive growth, as Asia's fastest-growing nation fights to keep up its momentum amid global uncertainties.

Aquino, fresh from a mid-term poll victory in May that won him unprecedented control over both houses of Congress, also asked lawmakers to pass by the end of 2014 a basic law to end conflict in the Muslim south and amend a civil service code.

"The message of the past election is clear - Yes, let us keep going," Aquino told a throng of lawmakers, officials, and diplomats in the Congress session hall.

He also asked a joint session of Congress to amend a law to rationalize transport costs for industrial and farm goods, pass a bill to streamline tax incentives and a land reform measure to improve government oversight of private and public landholdings.

The 2014 budget bill of 2.27 trillion pesos ($62 billion), which represents an increase of 13 percent from this year, and assumes annual growth of as much as 7.5 percent, will be sent to Congress on Tuesday.

Manila seeks to sustain rapid growth that hit 7.8 percent in the first quarter to outpace China, but analysts were not impressed.

"If you are growing 7.8 percent, then why is the unemployment still high? How will these new laws address that? That is not clear to me," said Luz Lorenzo, an economist at Maybank ATR Kim Eng.

The jobless rate hit 7.5 percent as of April, a 3-year high.

Manila wants to raise the budget for a conditional cash transfer by around 30 percent next year to increase coverage from more than 4 million households now.

It also wants to spend more for public infrastructure to create more jobs and reduce by half the poverty that afflicts more than a quarter of the country's nearly 97 million people.

Nearly a fifth of the government's spending plan next year will fund new roads, bridges, airports, sea ports and irrigation systems, as Manila seeks to spread the benefits of growth.

"What we call inclusive growth ... is the principle that drives every initiative, every action, and every decision of your government," Aquino said.

Aquino sought an overhaul of army and police pensions and an increase in private-sector pension contributions to ease the government burden and free up spending on other social services.

He warned officials of graft-ridden government agencies to shape up or risk being sacked, saying the government had lost 200 billion pesos from corruption.

Last October, the government signed a peace deal with the country's biggest Muslim rebel group, and has since reached an agreement on wealth sharing. The two sides are still negotiating to complete a power-sharing and normalization process.

A transition commission has been created to draft these deals into a Bangsamoro basic law, creating a new autonomous government for the Muslim minority in the mainly Catholic state.

(Additional reporting by Karen Lema; Editing by Clarence Fernandez)