DEPARTMENT OF TOURISM FY 2018) · Rizal and Paco Parks in Manila and the Pook ni Maria Makiling...

AGENCY BUDGET NOTES

DEPARTMENT OF TOURISM (FOR FY 2018)

PREPARED BY THE

CONGRESSIONAL POLICY AND BUDGET RESEARCH DEPARTMENT HOUSE OF REPRESENTATIVES

______________________________________________________________________

AUGUST 2017

TABLE OF CONTENTS

Page

I. Mandates and Organizational Outcomes 1

Mandate

DOT Budget Diagram and Organizational Outcomes

II. Annual Appropriations 2

Table 1 New Appropriations by Department/Agency, 2014-2018 2

Table 2 Summary of Programs, 2018 3

Table 2.1 New Appropriations by Cost Structure, 2014-2018 4

Table 2.1A Operations Budget by Organizational Outcome, Program and Expense Class:

Office of the Secretary, 2018 4

Table 3 Sources of Funds: Department of Tourism, 2012-2018 5

Table 3.1 Sources of Funds: Office of the Secretary, 2012-2018 6

III. Obligation Budget 6

Table 4 Obligation Budget by Agency, 2014-2018 7

Table 5 Obligation Budget by Expense Class, 2014-2018 8

IV. Performance Review 7

Table 6 Obligation-Appropriations Ratio, 2012-2016 8

Table 7 Unused Appropriations, 2012-2016 9

Table 8 Obligation-Allotment Ratio by Expense Class, 2013-2016 9

Table 9.1 Agency Performance Report, 2015-2016 10

Table 9.2 Outcome and Output Indicators of Major Programs, 2018 11

Table 9.3 Accomplishment Based on Organizational Outcomes, 2015-2017 12

VI. COA Findings and Recommendations 12

Table 10 Status of Implementation of COA Recommendations 12

Table 11 COA Auditor’s Opinions, 2012-2016 13

HIGHLIGHTS

The proposed new appropriations of the DOT for 2018 amounts to P3.3 billion, 31.9

percent higher or P807 million more than the 2017 budget. The share of the proposed

budget to the total NG budget will marginally increase to 0.09 percent from 0.08 percent in

2017.

The Office of the Secretary (OSEC) and its two attached agencies will all get higher

allocations for 2018 with the OSEC and Intramuros Administration growing by 32.2 percent

and 25.4 percent, respectively, after declining in 2017. The budget of the National Parks

Development Committee will further grow by 30.5 percent in 2018 from 2.3 percent in 2017.

Bulk of the programs for 2018 will be implemented by the OSEC. The Market and Product

Development Program will corner 67.6 percent of the total program budget amounting to P1.6

billion, of which P1 billion will be used for the Branding Campaign Program under locally-

funded projects. In the past, allocation for the Branding Campaign Program which was

previously lodged under budget for projects has been provided with substantial amount as

high as P1.15 billion in the 2016 GAA.

By cost structure, allocation for operations accounted for 71.2 percent of the total new

appropriations of the DOT in 2018, also growing by a hefty 78.7 percent compared to the

2017 budget. Such growth was on account of the P700 million increase in the budget for the

Branding Campaign Program from P300 million in 2017 to P1 billion in 2018.

By expense class, the allocation for maintenance and other operating expenses (MOOE)

amounting to nearly P2 billion will account for 92.8 percent of the total budget.

Four programs support the achievement of the OSEC’s organizational outcome of

increasing tourism revenues, employment and arrivals. The budget for Market and Product

Development Program in 2018 will amount to P1.6 billion or more than three fourth of the total

operations budget of the OSEC. The budget was allocated between market and product

development (P604.5 billion) and the Branding Campaign Program (P1 billion). Receiving

the second highest allocation is Tourism Policy Formulation and Planning Program with a budget of

P235.9 million.

Agencies have other sources of funds such as automatic and continuing appropriations and

budgetary adjustments apart from new appropriations. These additional sources of funds

have significantly contributed to the total available budget for the DOT and its attached

agencies over the years reaching as high as P2.55 billion in 2012 on account of budgetary

adjustments. For 2018, additional source of funds will come from automatic appropriations

amounting to P39.7 million.

The obligation budget of the DOT and its attached agencies will amount to P3.4 billion in

2018 which is 31.7 percent higher than the 2017 obligation budget of P2.6 billion. Almost 80

percent of the total obligations of DOT and its attached agencies will be allotted for MOOE

amounting to P2.7 billion, followed by personal services at 17.2 percent, and capital outlay at

3.5 percent.

The utilization rate (ratio of total obligations to total appropriations) of the OSEC steadily

declined until 2016 to 89.6 percent. The Intramuros Administration recorded the highest

average utilization rate at 97.8 percent, even reaching 100 percent in 2014.

In terms of the amount of unused appropriations, the OSEC recorded an average of P184.8

million for the period 2012-2016. The highest amount of unused appropriation recorded

was P333.5 million in 2016. The National Parks Development Committee and Intramuros

Administration posted an average of unused appropriations amounting to P19.5 million and

P1.0 million, respectively, during the period.

By expense class, personal services recorded the highest utilization rate of nearly 100 percent

for the DOT and its attached agencies. Excluding Financial Expenses, capital outlay generally

recorded the lowest utilization rate for the period 2013-2016 for the DOT and its attached

agencies.

The OSEC generally exceeded the targets for the performance indicators of all its major final

outputs (MFOs) for 2015 and 2016. In the proposed 2018 budget, the presentation of

performance is through outcome and output indicators by programs. For all the OSEC

programs, most of the 2018 targets are generally the same as the baseline figures. The release

year and the source of the baseline figures was not properly indicated in the NEP.

The 2018 NEP did not present 2018 targets for the OSEC performance indicators on

tourism direct gross value-added, employment and arrivals. The 2017 targets of 73.3 million

domestic tourist arrivals and 4.0 percent growth are currently being reviewed by the DOT to

reflect better-than-expected performance in 2016.

The 2016 COA report showed that the OSEC has fully implemented 48.1 percent or 39 out

of the 81 recommendations. The National Parks Development Committee fully implemented

12 out of 26 with a compliance rate of 46.2 percent while Intramuros Administration fully

implemented only 4 out of the 20 recommendations or 20 percent compliance rate. The

opinions of auditors on the audit of the financial statements of the DOT-OSEC has

improved in 2016 while its attached agencies have generally remained the same for the period

2012-2016.

Some of the significant observations of the 2016 audit of the OSEC include the following:

(i) Lapsing and reversion of cash allocations amounting to P1.5 billion; (ii) Unobligated

allotment of P330.8 million; and (iii) Unutilized Tourism Development Fund amounting to

P41.1 million.

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DEPARTMENT OF TOURISM

I. MANDATE AND ORGANIZATIONAL OUTCOMES

1.1 Mandate. The Tourism Act of 2009 (Republic Act No. 9593) mandates the Department of

Tourism (DOT) to be the primary planning, programming, coordinating, implementing and

regulatory government agency in the development and promotion of the tourism industry,

both domestic and international, in coordination with its attached agencies and other

government institutions. The DOT shall instill in the Filipino the industry’s fundamental

importance in the generation of employment, investment and foreign exchange.

1.2 Attached Agencies. The DOT has two attached agencies: the Intramuros Administration (IA)

which is responsible for the orderly restoration and development of Intramuros as a

monument to the Hispanic period of Philippine history, and the National Parks Development

Committee which is mandated to develop, preserve and manage parks in the country such as the

Rizal and Paco Parks in Manila and the Pook ni Maria Makiling Forest Park in Los Banos,

Laguna.

FIGURE

THE DOT BUDGET DIAGRAM AND ORGANIZATIONAL OUTCOMES, 2018

This document was prepared by Rosemarie R. Sawali as an input to the deliberations of the House Committee on Appropriations on the FY 2018 proposed National Budget. The report benefitted from the inputs of Director Elsie C. Gutierrez and Executive-Director

Manuel P. Aquino, and the overall guidance of Director-General Romulo E. M. Miral, Jr. The views, opinions, and interpretations in this document do not necessarily reflect the perspectives of the House of Representatives as an institution or its individual members. This Agency Budget Notes is available online at http://cpbrd.congress.gov.ph/.

DEPARTMENT OF TOURISM P3,336.7 M

Office of the Secretary (P3,007.4 M)

OO1 (P2,124.7 M): Tourism Revenue, Employment and Arrivals Increased Intramuros Administration (P50.3 M) OO1 (P17.4 M): Cultural Heritage Conserved OO2 (P12.3 M): Tourism Development Promoted and Visitor Experience Enriched

National Parks Development Committee (P279.1 M)

OO1 (P20.4 M): National Parks Preserved and Developed OO2 (P19.8 M): Visitor Experience Enriched

SUPPORT TO OPERATIONS P67.6 M (2.0%)

OSEC: P62.1 M

IA: P5.4 M

GENERAL ADMINISTRATION AND SUPPORT

P894.6 M (26.8%) OSEC: P820.5 M IA: P15.2 M

NPDC: P58.9 M

OPERATIONS P2,374.6 M (71.2%)

OSEC: P2,124.7 B IA: P29.7 M

NPDC: P220.2 M

http://cpbrd.congress.gov.ph/

2

II. ANNUAL APPROPRIATIONS

2.1 The proposed new appropriations of the DOT and its attached agencies for 2018 amounts to

P3.3 billion, 31.9 percent higher or P807 million more than the 2017 budget. The share of

the DOT and its attached agencies to the total National Government (NG) budget will

marginally increase to 0.09 percent from 0.08 percent in 2017.

2.2 The Office of the Secretary (OSEC) and its two attached agencies will get higher allocations

for 2018. After declining in 2017, the budget of the OSEC and Intramuros Administration

will grow by 32.2 percent and 25.4 percent, respectively.

TABLE 1

NEW APPROPRIATIONS BY AGENCY, 2014-2018

(AMOUNTS IN MILLION PESOS)

Particulars 2014 2015 2016 2017 2018

OSEC 1,713.2 2,286.3 2,966.3 2,275.5 3,007.4

Intramuros Administration 32.7 39.2 444.2 40.1 50.3

National Parks Development Committee

248.2 153.3 209.2 213.9 279.1

Total Department 1,994.1 2,478.7 3,619.7 2,529.5 3,336.7

Nominal Growth Rates 2013-2014 2014-2015 2015-2016 2016-2017 2017-2018

OSEC -29.9 33.5 29.7 -23.3 32.2

Intramuros Administration -11.2 19.8 1034.0 -91.0 25.4


-17.7 -38.3 36.5 2.3 30.5

Department -28.4 24.3 46.0 -30.1 31.9

Real Growth Rates 2013-2014 2014-2015 2015-2016 2016-2017 2017-2018

OSEC -32.2 31.6 27.1 -25.3 31.4

Intramuros Administration -14.0 18.1 1011.3 -91.2 28.8


-20.4 -39.1 33.8 -0.4 30.7

Department -30.7 22.6 43.1 -32.0 31.3

Sources of basic data: GAA 2014- 2017 and NEP 2018

2.3 In real terms which discounts the impact of inflation, the proposed new appropriation will

increase by 31.3 percent, reversing the 32.0 percent decline in 2017. Real growth rate for

2014 to 2016 was computed using the Implicit Price Index (IPIN) for Government Final

Consumption Expenditure (base year 2000). For 2017 and 2018, the IPIN was derived using

CPBRD projections.

2.4. Bulk of the programs for 2018 will be implemented by the OSEC. The Market and Product

Development Program will corner 67.6 percent of the total program budget amounting to P1.6

billion, of which P1 billion will be used for the Branding Campaign Program under locally-

funded projects. In the past, allocation for the Branding Campaign Program which was

previously lodged under budget for projects has been provided with substantial amount as

high as P1.15 billion in the 2016 General Appropriations Act (GAA).

3

2.5 Towards the end of 2016, the DOT was on the final stages of implementing the country’s

tourism campaign “It’s More Fun in the Philippines” but was also working on upscaling the

campaign program. The McCann Worldgroup Philippines won the bidding for the P650-

million project which includes media placements for P580 million, and production fees of

P70 million, inclusive of all applicable taxes, commissions and production of creative

materials for a year-long campaign. In a media statement released by the DOT, Secretary

Wanda Teo stated that funding for the project was sourced from the P1 billion earmarked by

the previous administration for the "It's More Fun" campaign. She also said that improving

the country branding will result in “optimal media exposure” and will create a stronger

brand-consumer relationship across geographical markets worldwide in the digital age. The

contract was, however, discontinued after the controversy on the ad where there is “glaring

similarities between McCann’s “sights” ad and South Africa’s ad released in 2014”.

TABLE 2

SUMMARY OF PROGRAMS FOR 2018

Program Amount

(In Million Pesos) Share to Total Program (%)

Implementing Agency

Market and Product Development Program

1,604.5 67.6 OSEC

Tourism Policy Formulation and Planning Program

235.9 9.9 OSEC

Parks Management Program

200.4 8.4 NPDC

Tourism Industry Training Program

160.2 6.7 OSEC

Standards Development and Enforcement Program

124.1 5.2 OSEC

Cultural and Events Program

19.9 0.8 NPDC

Intramuros Property Conservation & Devt Program

15.0 0.6 Intramuros Administration

Intramuros Regulatory Program


Intramuros Tourism Promotions Program


Intramuros Commercial Property Leasing Program


Total Programs 2,374.7 100.0

Source: NEP 2018

2.6 Other major programs are on Tourism Policy Formulation and Planning Program (P235.9

million), Parks Management Program (P200.4 million), and Tourism Industry Training

Program (P160.2 million).

2.7 By cost structure, allocation for operations accounted for 71.2 percent of the total new

appropriations of the DOT in 2018, also growing by a hefty 78.7 percent compared to 2017

budget. Such growth was on account of the P700 million increase in the budget for the

Branding Campaign Program from P300 million in 2017 to P1 billion in 2018. It must be

noted, however, that this already includes allocations for projects which were previously

presented as a separate item. Moreover, there is a realignment of one of the

programs/projects in the 2018 NEP, specifically the Maintenance of Foreign Offices amounting

to P335.8 million to General Administration and Support (GAS) from Support to

Operations (STO) in the 2017 GAA causing a substantial increase in the former and a sharp

decline in the latter.

4

TABLE 2.1

NEW APPROPRIATIONS BY COST STRUCTURE, 2014-2018

Particulars Levels (In Million Pesos)

2014 2015 2016 2017 2018

General Administration & Support 327.1 312.1 367.0 463.1 894.6

Support to Operations 267.7 313.0 347.6 387.8 67.6

Operations 829.2 1,253.6 1,755.2 1,328.6 2,374.6

Projects 570.0 600.0 1,150.0 350.0 -

Total New Appropriations 1,994.0 2,478.7 3,619.8 2,529.5 3,336.7

Note: Figures for Operations (2014-2017) include allocations for Projects

Source: GAA 2014- 2017 and NEP 2018

2.8 By expense class, the allocation for maintenance and other operating expenses (MOOE) will

account for 92.8 percent amounting to nearly P2 billion of the total budget for the

achievement of the OSEC’s organizational outcome which is to increase tourism revenues,

employment and arrivals. There are four identified programs supporting the organizational

outcome of the OSEC. The budget for Program 4 or Market and Product Development

Program will amount to P1.6 billion or more than three fourth of the total operations budget

of the OSEC. The budget was allocated between market and product development (P604.5

billion) and the Branding Campaign Program (P1 billion). The activity under Program 1:

Tourism Policy Formulation and Planning Program is tourism industry planning which will

receive a budget of P235.9 million in 2018.

TABLE 2.1A

OPERATIONS BUDGET BY ORGANIZATIONAL OUTCOME,

PROGRAM AND EXPENSE CLASS, 2018

OFFICE OF THE SECRETARY

Particulars PS MOOE FinEx CO Total

Amt (M) % Amt (M) % Amt (M) % Amt (M) %

OO: Tourism Revenues, Employment and Arrivals Increased

118.8 5.6 1,972.3 92.8 2.6 0.1 31.0 1.5 2124.7

Program 1: Tourism Policy Formulation and Planning Program

62.6 26.5 142.3 60.3 0.1 0.0 31.0 13.1 235.9

Program 2: Tourism Industry Training Program

2.7 1.7 157.5 98.3 - - - - 160.2

Program 3: Standards Development and Enforcement Program

36.3 29.2 87.8 70.7 0.0 0.0 - - 124.1

Program 4: Market and Product Development Program

17.2 1.1 1,584.8 98.8 2.5 0.2 - - 1,604.5

Source: NEP 2018

2.9 Apart from new appropriations, agencies have other sources of funds which include

automatic and continuing appropriations and budgetary adjustments. These additional

sources of funds have significantly contributed to the total available budget for the DOT and

its attached agencies over the years. The amount provided by these sources reached as high

as P2.55 billion in 2012 on account of budgetary adjustments. In 2016, these additional

5

sources of funds increased the DOT budget by P267 million or 6.9 percent of the total

available appropriations. For 2017, an additional P371.8 million from automatic and

continuing appropriations augment the new appropriations amounting to P2.5 billion. For

2018, additional source of funds will come from automatic appropriations amounting to

P39.7 million.

TABLE 3

SOURCES OF FUNDS, 2012-2016

DEPARTMENT OF TOURISM

Particulars 2011 2012 2013 2014 2015 2016 2017 2018

Levels (In Million Pesos)

New Appropriations

1,431.6

1,631.8

2,783.5

1,994.1

2,478.7

3,619.7

2,529.5

3,336.7

Automatic Appropriations

40.1

24.7

25.4

25.4

27.5

30.7

35.1

39.7

Continuing Appropriations

179.2

131.8

217.1

49.9

107.3

157.6

336.7 -

Budgetary Adjustments

319.6

2,397.0

267.2

67.8

63.1

78.7 - -

Total Available Appropriations

1,970.4

4,185.2

3,293.2

2,137.2

2,676.6

3,886.8

2,901.3

3,376.5

Percent Share (%)

New Appropriations

72.7

39.0

84.5

93.3

92.6

93.1

87.2

98.8


2.0

0.6

0.8

1.2

1.0

0.8

1.2

1.2


9.1

3.2

6.6

2.3

4.0

4.1

11.6 -


16.2

57.3

8.1

3.2

2.4

2.0 - -


100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

Sources of basic data: NEP 2014-2018; BESF 2014 & 2015 (for RLIP Automatic Appropriations, 2012 & 2013)

2.10 Apart from new appropriations, there are other sources of funds of the OSEC which

generally come from continuing appropriations. The budget identified under continuing

appropriations in 2017 amounting to P279.8 million was the highest since 2011. For 2018,

automatic appropriations amounting to P32.4 million will supplement the new

appropriations. It must be noted, however, that there was a substantial increase in available

appropriations in 2012 and 2013 arising from transfers to overall savings amounting to P2,026.2

million and P250 million, respectively. (Table 3.1)

2.11 The DOT is further provided additional funds under the Special Provisions of the 2018

NEP. One is through the Tourism Development Fund amounting to P4.6 million which

shall be used for the development, promotion, and marketing of tourism in the country.

This fund is sourced from accreditation, identification card, sticker and code fees.

Another is Trust Receipts from Income from Merchandising Operations amounting to

P150 million to be used for tourism-related projects and activities. These funds come from

the net profits of the merchandising operations of the Duty Free Philippines.

6

TABLE 3.1

SOURCES OF FUNDS, 2012-2016

OFFICE OF THE SECRETARY

Particulars Levels (In Million Pesos)

2012 2013 2014 2015 2016 2017 2018

New General Appropriations

1,367.1

2,445.0

1,713.2

2,286.3

2,966.3

2,275.5

3,007.4


18.0

18.7

19.2

21.2

24.1

27.9

32.4

of which: RLIP*

17.9

18.7

19.2

21.2

21.8

23.3

27.8


129.5

216.9

49.6

89.4

154.5

279.8 -

Unreleased Appropriation for CO - - - - - - -

Unreleased Appropriation for MOOE - - - - - - -

Unobligated Releases for CO -

77.4

0.7

3.1

0.2

2.2 -

Unobligated Releases for MOOE

129.5

139.5

48.9

80.2

154.3

277.6 -

Unobligated Releases for FinEx - - -

6.2

0.0

0.0 -


2,338.8

263.2

62.5

51.7

59.4 - -

Transfers from:

Contingent Funds

64.2 - - - - - -

International Commitment Fund - - - - - - -

Misc. and Personnel Benefit Funds

28.3

7.2

51.2

42.6

47.6 - -

Pension Gratuity Fund

13.1

6.0

11.4

9.1

11.8 - -

Transfers to Overall Savings

2,026.2

250.0 - - - - -

Unprogrammed Funds

207.0 - - - - - -


3,853.3

2,943.8

1,844.5

2,448.5

3,204.4

2,583.2

3,039.7

New Appro-Total Available Appro Ratio (%)

35.5

83.1

92.9

93.4

92.6

88.1

98.9

Unused Appropriations

(218.5)

(60.9)

(106.8)

(204.5)

(333.5)

(279.9) -

Unreleased Appropriation - - - -

(13.0) -

Unobligated Allotment

(218.5)

(60.9)

(106.8)

(204.5)

(320.4)

(279.9) -

Total Obligations

3,634.8

2,882.9

1,737.7

2,244.0

2,870.9

2,303.4

3,039.7

Obligations / Available Appropriations (%)

94.3

97.9

94.2

91.6

89.6

89.2

100.0

* RLIP - Retirement and Life Insurance Premiums Sources of basic data: NEP 2014-2018; BESF 2014 & 2015 (for RLIP Automatic Appropriations, 2012 & 2013)

II. OBLIGATION BUDGET

3.1. The obligation budget of the DOT and its attached agencies will amount to P3.4 billion in

2018 which is 31.7 percent higher than the 2017 obligation budget of P2.6 billion (Table 4).

In real value, the 2018 obligation budget is 29.5 percent higher than 2017. Obligation

budget is the programmed amount out of the total appropriations to enable the national

government to contract delivery of goods and services in a given fiscal period. Total

available appropriations consist of new, automatic, and continuing appropriations, and

budgetary adjustments.

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3.2 The OSEC and the two attached agencies will all get higher allocations in 2018 with both the

OSEC and the Intramuros Administration reversing decline in their budgets in 2017.

Meanwhile, the National Parks Development Committee proposed allocation for 2017 will

increase by 29.9 percent to P284.3 million from P218.8 million in 2017.

TABLE 4

OBLIGATION BUDGET BY AGENCY, 2014-2018

Particulars Nominal Amounts (In Million Pesos)

2014 2015 2016 2017 2018

OSEC 1,737.7 2,244.0 2,870.9 2,303.4 3,039.7

IA 36.2 42.1 449.1 42.4 52.5

NPDC 238.0 169.9 171.9 218.8 284.3

Total Department 2,011.9 2,456.0 3,491.9 2,564.5 3,376.5

Nominal Growth Rates

2013-2014 2014-2015 2015-2016 2016-2017 2016-2017

OSEC -39.7 29.1 27.9 -19.8 32.0

IA 0.9 16.3 966.4 -90.6 23.9

NPDC -23.2 -28.6 1.2 27.3 29.9

Department -37.7 22.1 42.2 -26.6 31.7

Real Growth Rates 2013-2014 2014-2015 2015-2016 2016-2017 2016-2017

OSEC -41.7 27.3 25.4 -21.9 29.8

IA -2.4 14.7 945.1 -90.8 21.8

NPDC -25.6 -29.6 -0.9 23.9 27.8

Department -39.7 20.4 39.3 -28.5 29.5

Sources of basic data: BESF 2016- 2018

3.3 Nearly 80 percent of the total obligations of DOT and its attached agencies will be allotted

for MOOE amounting to P2.7 billion, followed by personal services (PS) at 17.2 percent,

and capital outlay (CO) at 3.5 percent. The budget for financial expenses which is lodged

with the OSEC is expected to further increase in 2018 but accounts for only 0.1 percent of

the total budget. Financial expenses includes management supervision/trusteeship fees,

interest expenses, guarantee fees, bank charges, commitment fees and other financial charges

incurred in owning or borrowing an asset property. (Table 5)

IV. PERFORMANCE REVIEW

4.1 An average of 93.5 percent was obligated by the DOT OSEC out of its total available

appropriations for the period 2012-2016. After increasing from 94.3 percent in 2012 to

97.9 percent in 2013, the utilization rate of OSEC steadily declined until 2016 to 89.6

percent. The Intramuros Administration recorded the highest average utilization rate at 97.8

percent, even reaching 100 percent in 2014. The National Parks Development Committee

which recorded 73.8 percent utilization rate in 2016 has the lowest average utilization rate at

91.5 percent during the period.

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TABLE 5

OBLIGATION BUDGET BY EXPENSE CLASS, 2014-2018

(AMOUNTS IN MILLION PESOS)

Particulars 2014 % 2015 % 2016.0 % 2017 % 2018 %

PS 344.7 19.8 304.6 13.6 380.0 13.2 425.3 18.5 489.3 16.1

MOOE 1286.9 74.1 1933.9 86.2 2487.3 86.6 1842.7 80.0 2506.5 82.5

CO 104.3 6.0 2.8 0.1 2.1 0.1 33.9 1.5 40.4 1.3

Fin Ex 1.9 0.1 2.7 0.1 1.5 0.1 1.6 0.1 3.6 0.1

Total, OSEC 1737.7 100.0 2244.0 100.0 2870.9 100.0 2303.4 100.0 3039.7 100.0

PS 22.0 60.9 24.2 57.5 26.6 5.9 27.8 65.7 26.6 50.6

MOOE 14.2 39.1 17.9 42.5 12.5 2.8 14.6 34.3 20.4 38.9

CO - - - - 410.0 91.3 - - 5.5 -

Fin Ex - - - - - - - - - -

Total, IA 36.2 100.0 42.1 100.0 449.1 100.0 42.4 100.0 52.5 100.0

PS 57.8 24.3 63.9 37.6 73.9 43.0 71.3 32.6 65.9 23.2

MOOE 103.1 43.3 100.7 59.3 91.9 53.5 125.2 57.2 145.8 51.3

CO 77.1 32.4 5.3 3.1 6.1 3.5 22.3 10.2 72.5 25.5

Fin Ex - - - - - - - - -

Total, NPDC 238.0 100.0 169.9 100.0 171.9 100.0 218.8 100.0 284.2 100.0

PS 424.5 21.1 392.7 16.0 480.5 13.8 524.3 20.4 581.7 17.2

MOOE 1404.2 69.8 2052.6 83.6 2591.7 74.2 1982.4 77.3 2672.7 79.2

CO 181.4 9.0 8.1 0.3 418.2 12.0 56.2 2.2 118.4 3.5

Fin Ex 1.9 0.1 2.7 0.1 1.5 0.04 1.6 0.1 3.6 0.1

Total, Department 2011.9 100.0 2456.0 100.0 3491.9 100.0 2564.5 100.0 3376.5 100.0

Sources of basic data: BESF 2016- 2018

TABLE 6

OBLIGATION-APPROPRIATIONS RATIO (%), 2012-2016

Particulars 2012 2013 2014 2015 2016 Average

OSEC 94.3 97.9 94.2 91.6 89.6 93.5

Intramuros Administration 99.1 91.3 100.0 98.7 99.9 97.8

National Parks Development Committee 99.3 99.9 92.8 91.6 73.8 91.5

Sources of basic data: NEP 2014- 2018

4.2 In terms of the amount of unused appropriations, the OSEC recorded an average of P184.8

million for the period 2012-2016. The highest amount of unused appropriation it recorded

was P333.5 million in 2016. The National Parks Development Committee and Intramuros

Administration posted an average of unused appropriations amounting to P19.5 million and

P1.0 million, respectively, during the period.

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TABLE 7

UNUSED APPROPRIATIONS, 2012-2016

(IN MILLION PESOS)

Particulars 2012 2013 2014 2015 2016 Average

OSEC 218.5 60.9 106.8 204.5 333.5 184.8

Intramuros Administration 0.4 3.4 0.0 0.5 0.5 1.0

National Parks Development Committee 2.0 0.4 18.5 15.6 60.9 19.5

Source of basic data: NEP 2014- 2018

4.3 For the period 2013-2016, the utilization rate of the OSEC and the NPDC posted a

downward trend. The utilization rate of the OSEC slowed down from 97.9 percent in 2013

to 89.8 percent in 2016 arising mainly from the decline in CO. For NPDC, the decline in

utilization rate from 99.6 percent in 2013 to 74.6 percent in 2016 can also be attributed to the

sharp drop in CO from 99.9 percent to 12 percent during the same period. The utilization

rate of IA, on the other hand, remained relatively steady during the period.

4.4 By expense class, PS recorded the highest utilization rate of nearly 100 percent for the DOT

and its attached agencies. The PS utilization rate for the OSEC which was on the downward

trend from 99.5 percent in 2013 to 91.6 percent in 2015 bounced back to 99.1 percent in

2016. Excluding Financial Expenses, CO generally recorded the lowest utilization rate for

the period 2013-2016 for the DOT and its attached agencies.

TABLE 8

OBLIGATION-ALLOTMENT RATIO (%)

BY EXPENSE CLASS, 2013-2016

Particulars 2013 2014 2015 2016

PS 99.5 96.7 91.6 99.1

MOOE 97.4 93.7 91.9 88.6

CO 100.0 96.8 84.9 47.4

FinEx - 25.9 35.1 97.8

Total, OSEC 97.9 94.2 91.6 89.8

PS 86.1 100.0 97.8 99.9

MOOE 98.5 99.9 100.0 96.0

CO - - - 100.0

Total, IA 90.4 100.0 98.7 99.9

PS 98.6 99.7 101.6 98.1

MOOE 99.9 99.4 95.9 88.2

CO 99.9 81.3 30.3 12.0

Total, NPDC 99.6 92.8 91.6 74.6

Source of basic data: Statement of Allotment, Obligation, and Balances available at www.dbm.gov.ph

4.5 The OSEC generally exceeded the targets for the performance indicators of all its major final

outputs (MFOs) for 2015 and 2016. In its 2016 Annual Audit Report on the DOT, the

Commission on Audit (COA) noted that some of the performance indicators under

monitoring and enforcement of MFO 2 (Tourism Regulatory Services) showed zero

accomplishments since these were dependent on the complaints received by the DOT

Central Office. Accomplishments on the number of accreditation/revocation issued are

http://www.dbm.gov.ph/

10

based on the number of reports received. The COA also mentioned that the Standards and

Enforcement Division is only a newly created Office which started in January 2015.

TABLE 9.1

AGENCY PERFORMANCE REPORT, 2015-2016

Particulars 2015 2016

Target Actual % Target Actual %

MFO 1 - TOURISM ADVISORY SERVICES

No. of technical assistance provided to stakeholders

5,233 5,196 99.3 5,847 6,097 104

No. of persons trained in the tourism industry and LGUs

18,504 26,111 141.1 20,554 29,498 144

No. of training days delivered 1,392 1,671 120.0 1,330 1,451 109

% of entities assisted who rated the technical services as satisfactory or better

92% 100% 108.7 92% 98% 107

% of entities requests for assistance responded to within one week

92% 99% 107.6 92% 98% 107

MFO 2 - TOURISM REGULATORY SERVICES

Accreditation

No. of accreditation applications and renewals acted upon

3661 6927 189.2 5425 7009 129

% of accredited entities with detected violations of accreditation

5% 0.2% 196.0 5% 1% 180

% of applications for accreditation acted upon w/in 15 days of application

90% 94% 104.4 92% 96% 104

Monitoring

% of submitted reports that resulted in the issuance of notice of violations and penalties imposed

5% 1% 180% 5% 0% -

No. of accredited tourism enterprises monitored or surveyed with reports issued

1377 4512 327.7 249 977 392

% of accredited tourism enterprises inspected twice over the past two years

80% N/A 80% N/A -

Enforcement

No. of enforcement actions undertaken 83 23 172.0 107 21 180

No. of accredited tourism enterprise operators with two or more recorded violations over the last two years as a % of total no. of accredited operators with recorded violation over the last two years.

- - - 59 N/A -

% of reports that resulted in the issuance of notice of violations or cancellation of accreditation

5% 0% 200.0 5% 0% -

% of notification issued within 72 hours from receipt of monitoring report

90% 100% 111.1 90% 98% 109

Source: DOT Transparency Seal, NEP 2018

4.6 Most of the 2018 targets for the outcome and output indicators of all OSEC programs are

generally the same as the baseline figures. Except for the indicator number of training days

delivered under the Tourism Industry Training Program, the release year and the source of the

baseline figures were not properly indicated in the 2018 NEP. It is interesting to note that

the 2018 targets for all the indicators under Program 4 – Market and Product Development

Program – are higher compared to the baseline figures. These include the percentage increase

in the number of travel partners selling the Philippines in the identified Opportunity

Markets, and in the number of Philippine properties considering to venture into the new

markets and/or willing to offer the new activities.

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TABLE 9.2

OUTCOME AND OUTPUT INDICATORS OF MAJOR PROGRAMS, 2018

OOs / PIs Baseline 2018 Targets

OO: Tourism Revenue, Employment and Arrivals Increased

Program 1: Tourism Policy Formulation and Planning Program

Outcome Indicator(s)

1. Number of tourism strategies, policies and action plans implemented 6 7

Output Indicator(s)

1. Number of technical assistance provided to tourism stakeholders 3353 3353

2. Number of technical assistance provided to LGUs 2744 2744

3. Percentage of entities assisted who rated the technical assistance as satisfactory 92% 92%

Program 2: Tourism Industry Training Program


1. Percentage of target industry personnel trained that rated the services as satisfactory 90% 90%

Output Indicator(s)

1. Number of training days delivered 1451 3995

2. Percentage of attendees/trainees that completed the training 90% 90%

3. Number of LGUs trained 2438 2543

Program 3: Standards Development and Enforcement Program


1. Percentage of accredited tourism enterprises that maintained the tourism standards and regulation 90% 90%

Output Indicator(s)

1. Number of tourism standards reviewed 2 2

2. Number of inspections of tourism enterprises conducted 6076 6169

3. Percentage of accreditation applications acted upon within the prescribed period. 90% 90%

Program 4: Market and Product Development Program


1. Percentage increase in the number of travel partners selling the Philippines in the identified Opportunity Markets. 9% 10%

2. Percentage increase in the number of Philippine properties considering to venture into the new markets and/or willing to offer the new activities. 9% 10%

Output Indicator(s)

1. Number of trade development/trade support activities conducted facilitated-invitational/familiarization tours/missions product presentations facilitated. 95 102

2. Number of consumer activations conducted - joint consumer promotions, production of collaterals, tactical ads places/initiated, PR and publicity activities. 95 100

3. Numbers of products developed and product partners engaged. 120 128

Source: NEP 2018

4.7 The 2018 NEP presented 2016 actual and 2017 targets for performance indicators of the

DOT OSEC. These targets were not included for 2018.

4.8 The 2016 actual performance for all indicators such as tourism direct gross value-added,

employment and arrivals. Tourism direct gross value-added, which measures the value-added

of different industries in relation to tourism activities of both inbound and domestic visitors

in the country, is expected to reach P1.3 billion or 4.4 percent higher than the P1.2 billion in

2016. Tourism employment is targeted to generate 5.3 million jobs this year, 2.0 percent

higher than the 5.2 million in 2016.

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4.9 International tourist arrivals in 2016 which reached 5.9 million is targeted to increase to 6.5

million in 2017. For the period January - May 2017, international tourist arrivals have

reached 2.9 million or 44.6 percent of the target. Domestic tourist arrivals reached 79.3

million in 2016, surpassing the 70.5 million target. The 2017 targets of 73.3 million domestic

tourist arrivals and 4.0 percent growth are currently being reviewed by the DOT to reflect

better-than-expected performance in 2016.

TABLE 9.3

ACCOMPLISHMENT BASED ON ORGANIZATIONAL OUTCOMES

` 2015 2016 2017

Actual Target Actual Targets

Tourism direct GVA (P Bn) 1,093.0 1,186.0 1,243.5 1,298.2

% Increase 13.8 9.0

Tourism Employment (Mn) 5.0 5.2 5.2 5.3

% Increase 4.8 4.0 2.0

Tourist Arrivals (Mn)

International 5.4 5.9 5.9 6.5

% Increase 10.9 9.0 10.0

Domestic 67.8 70.5 79.3 73.3

% Increase 24.2 17.0 4.0

Source: NEP 2017 & 2018

V. COA FINDINGS AND RECOMMENDATIONS

5.1 Based on the 2016 report of the Commission on Audit (COA), the OSEC has fully

implemented 48.1 percent or 39 out of the 81 recommendations. The National Parks

Development Committee fully implemented 12 out of 26 with a compliance rate of 46.2

percent while Intramuros Administration fully implemented only 4 out of the 20

recommendations or 20 percent compliance rate. There were seven and six unimplemented

COA recommendations by the National Parks Development Committee and the

Intramuros Administration, respectively.

TABLE 10

STATUS OF IMPLEMENTATION OF COA RECOMMENDATIONS

AS OF JANUARY 1, 2016

Particulars

Total Fully

Implemented Partially

Implemented Not

Implemented % of Compliance

(a) (b) (c) (d) Full Full + Partial

(b+c)/a (b/a)

OSEC 81 39 42 - 48.1 100.0

IA 20 4 10 6 20.0 70.0

NPDC 26 12 7 7 46.2 73.1

Source: 2016 Annual Audit Reports (www.coa.gov.ph)

http://www.coa.gov.ph/

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5.2 The opinions of auditors on the audit of the financial statements of the DOT-OSEC has

improved in 2016 while its attached agencies have generally remained the same for the period

2012-2016.

TABLE 11

COA AUDITOR’S OPINIONS

Particulars 2012 2013 2014 2015 2016 Remarks

OSEC A A Q A Q Improved

IA Q Q Q Q Q Unchanged

NPDC Q A Q Q Q Unchanged

Source of basic data: COA Annual Audit Reports (www.coa.gov.ph)

5.3 Some of the significant observations of the 2016 audit of the OSEC include the following:

Lapsing and reversion of cash allocations amounting to P1.5 billion. Various

branding campaign and programs and projects under MFOs 1 and 2 were obligated but

remained unimplemented as of December 31, 2016. These were not considered in the

forecasting of the cash requirements reflected in the Monthly Disbursement Program

(MDP) which contributed to the lapsing and reversion of P1.5 billion accounting for 41.6

percent of the total 2016 cash allocations to the Bureau of the Treasury. The COA

noted that reversion of lapsed/unutilized NCAs reflects failure of management to

maximize authorized funds and, consequently, its inability to provide optimum services

to the public.

Unobligated allotment of P330.8 million. Maximum utilization of the authorized

appropriation of the OSEC was not achieved. About 10.3 percent or P330.8 million was

not obligated out of the total allotment of P3.2 billion in 2016. Out of the unobligated

amount, 84.6 percent was extended while the remaining 15.4 percent or P50.9 million

was reverted.

Unutilized Tourism Development Fund amounting to P41.1 million. The fund

which is maintained under the Special Account with the National Treasury amounted to

P41.1 million as of December 31, 2016 was not utilized due to late formulation of

specific guidelines for utilization, delayed preparation of the Special Budget and late

submission of required documents to the DBM. The Tourism Development Fund is

intended for the development, promotion and marketing of tourism and other projects

of the DOT.

Reference: Budget of Expenditures and Sources of Financing, 2015-2018 COA Annual Audit Reports, 2013-2016 Department of Budget and Management website for the Release/Status of Disbursements and the Statement of Allotment,

Obligation, Disbursement and Balances Department of Tourism. Office of Media Affairs and Public Advocacy. DOT vows improved branding campaign. 25

November 2016. http://www.tourism.gov.ph/Pages/20161125DOTvowsimprovedbrandingcampaign.aspx _____________. Official Statement of the Department of Tourism. http://web.tourism.gov.ph/official_statement.aspx DOT Transparency Seal from the DOT website General Appropriations Act, 2014-2017 National Expenditure Program, 2014-2018

http://www.tourism.gov.ph/Pages/20161125DOTvowsimprovedbrandingcampaign.aspx

http://web.tourism.gov.ph/official_statement.aspx

DEPARTMENT OF TOURISM FY 2018) · Rizal and Paco Parks in Manila and the Pook ni Maria Makiling...

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