Pilipino versus English: A continuing debate

The debate on the use of English and Pilipino as medium of instruction is a hot topic among the middle class in the Philippines. Lately, I found myself engaging in a nice discussions with learned persons online. Excerpts (unedited):

GERONIMO SY (Lawyer and columnist. Manila Times): It is equally true that speaking English cannot be the end all and be all of our education system, that not to churn out good English speakers condemns the entire learning apparatus to hell and hence the fate of our nation. If it were so, then how do we explain the ascendancy of Japan, the rise of China, the emergence of Korea and the fast coming Vietnam—all with kindergarten English?

Studies now point to the use of the vernacular as a medium of instruction in the early years to facilitate teaching and learning. Media has long embraced Filipino as our lingua franca that sends the message home. It is acceptable and downright fashionable to speak deep and high Tagalog in political circles. It is time we take English what it is - a tool to communicate. Stop the circular arguments on which language comes first.

TESSY ANG-SEE (famous civic leader): Master our own first languages first and we can master the second language better!! In our case, we mastered Tagalog first, then learned Hokkien (our local dialect, lingua franca of the Tsinoys here), then learned English and then learned Mandarin!! We are able to master the first three, mandarin is something else because there was no speech community to support it and it is more alien to us, being a language of the north while Hokkien and Tagalog belong to the austronesian linguistics group.... [i managed to pick up mandarin much later in life while doing research]

DAVE LLORITO (journalist, researcher): Would anybody hire a graduate for her/his "mastery" of Tagalog? (I dont call it "Filipino" because its really is Tagalog.) as English-Tagalog translator maybe, or a Tabloid reporter, but not much else. Should we master Tagalog so that in the real world, in the world of jobs, entrepreneurship and business we are going to use English as the medium of communication? But that's my dilemma. But maybe there is no conflict here. but how do we translate that to policy? Maybe we should learn the basic dialects/language from the first and third grade then shift to English later until college. so we will have Visayans or Tagalogs, or Ilocanos using their languages first in early elementary before they eventually shift to English as medium of instruction. Sounds good to me. But Tagalog should never be imposed. But hey, isn’t English also part of our Filipino heritage as a nation? I'm just sharing my random thoughts here, actually.

ADDIE SUZARA (Finance expert, technopreneur and computer geek): I was born in a large family where Tagalog, Bicolano, English and some Spanish were spoken. I then went to schools where English was the medium of instruction but where Pilipino was taught as a subject and I learned grammar and read literature. I also took up formal Spanish in college.
I can now speak and write English well, speak Tagalog well but write with a little difficulty only due to lack of practice, speak Bicolano with a little difficulty because of lack of practice, haven't tried writing in Bicolano, and can't do much oral and written Spanish. I think it worked out OK for me.

DAVE: Addie, You are a very good case study. The fact is you enrolled in schools using English as medium of instruction and where Pilipino is taught as a subject and it worked well for you. Pilipino only as one of the subjects, and not as medium of instruction! I like that. And I guess no one could question Addie's nationalism, identity and patriotism.

ADDIE: Thank you Dave but let me hasten to add that, until I went to Kindergarten at age 6, Tagalog with a Bicolano flavor was my primary spoken language.

TESSIE: [We are] missing the point entirely when we insist that to find jobs we should know English. We miss to consider the fundamental role of language in establishing identity and ethnicity…

DAVE: I was raising a practical, real world perspective. The job market, the world of entrepreneurship and business, are using English and in that world mastery of this language, plus skills in the math and science are what really matters. I know because I have lots of friends who are nationalistic but who actually enroll their kids in exclusive schools that are teaching purely English. Most of those who actually argue for Tagalog, ehe Filipino, are doing their finest points in English. And they use English extensively at home.

TESSIE: For people from educated families, lower middle class and above, there's no problem using English as a medium of instruction. These are people who have access to other media, books, newspapers, adult conversation etc. Being a nationalist Filipino or not has nothing to do with it. No one becomes less Filipino just because he learns English or another dialect first and not Filipino as a first language.

However we are speaking of 60 percent of our population who live below the poverty line who should have a good grasp of a national language before a second language is forced on them. If you go to Malaysia and Indonesia, what welcomes you at the airport are all Malay greetings and Malay music ..It is a language that binds the nation. Contrast that with what greets us and our kababayan at our airport!

ADDIE: While I do come from the 40% of the population who live above the poverty line, I would not say that those from the 60% did not have all the opportunities available to me in terms of learning other languages.Let us not forget that most of us grew up in at least a two language environment - the local dialect and Tagalog. I spoke Tagalog and Bicolano because my mother was from Taagalog soeaking Labo while my father came from Bicolano speaking Daet. Both these towns are in Camarines Norte. I agree with Dave that the gut issue is when to use English as a medium of instruction. I say "a" instead of "the" because I think we can have more than one medium of instruction. I think our kids wherever they may be can easily absorb a third language. The areas of improvement are in the school system.

DAVE: Again, the question here is translating this to policy. If you are in the Visayas, you certainly will feel that Tagalog or Pilipino is being "forced" on you. If "promotion" of the national language is the Tagalogization of the entire country, that will surely fail and it has failed since Marcos.

The promotion of the local Bahasa language was done under authoritarian regime. It was imposed on them. Example: During the days of Suharto, the Chinese were barred from learning the Chinese language/dialects; they were not allowed to open up Chinese schools in the name of national unity. It's only after the fall of Suharto that the Chinese started putting up Chinese schools. This is what my Indonesian friend told me. Well, it seemed to have worked well for them, given their historical circumstances.

Marcos actually tried the same approach through the imposition of Tagalog, and we called it Filipino, and that policy failed. Maybe Marcos was not ruthless enough? Not really. I think one reason is that English is also part of our national heritage. And it's no brainer why we cling to that language despite the Marcos policy: it has become a ticket out of poverty for many Filipinos. It has become a ticket for many to escape through the claws of the monopolists and the vampire elite of this country. That 15 billion dollars that buttress the economy, that prevents the economy from total disintegration, that has become a safety valve against a Marxist socialist revolution, is the offshoot of our capability to speak and use the English language.

Boracay, party island

Even at midnight, the green tea at Lonely Planet Cafe near the Regency Hotel in Boracay looked too green for comfort. A feet away, tourists—mostly girls from as far as Korea, China, US and Europe— in tight minimal summer clothing were grinding their hips against the frenetic urgent beat, their hands raised up high swaying like tree branches being battered by the monsoon winds. Lumen, Kathy and I were not daunted. After all, neither we were there for tea nor the humanly distraction, but a place to sit, chat, breathe fresher air, and feel the white powdery sands push up through our toes. We just had a long walk along the shorelines under the gaze of the distant stars. We needed the break to clear our senses overwhelmed by the discussions that never seem to end.
 

Surveying the scene, I realized how Boracay has become a place of Becoming, where souls regulated by social mores and expectations could be what they want to be. Then they return to their prim-and-proper selves once they get back into their natural abode.

 

“It has become a place to get laid,” says one inebriated soul whose identity I cannot recall. “It's more like a place where predators of all types converge—sexual, corporate, or commercial or the combination thereof,” says another intoxicated "social philosopher."

 

Harsh assessment, shall I say. Unfair.

 

Despite the overcrowding, there are still some nooks an crannies in the Island where one could enjoy solitude, a corner to write poems and contemplate the meaning of life and the universe. For the right price, of course.

Japan and the English language: a view from Washington DC

“Seeing my country Japan from the distance, from here in Washington DC, I could see it as someone who is aging and tired, less aggressive, insular.” That comment came from my friend Nobu Saito, business journalist par excellence, who is based here in Washington DC. That really surprised me because I always knew Japan as a technology advanced country and a leading producer of electronic gadgets, cars, machines, and high tech.

“That is just my opinion, anyway,” he said.

Nobu picked me up last week from my hotel, Windsor Inn, at 16^th Street Washington DC, so we could have some catching up. Nobu and I became friends during the Jefferson Fellowship where we traveled through the US, China and India together with a dozen other journalists from the Asia-Pacific. This guy has a great sense humor, quick wit, and deep intelligence that could easily reveal through the fog of beer, red wine, and the spirited laughter.

If there's one country to watch, he says, that should be South Korea. It's high tech industries is conquering global markets and the young Koreans are going out into the world, into the United States, Australia, Europe and the Philippines to learn the English language and other things that the globalized world can offer. It's so aggressive, dynamic and innovative, says Nobu. “The Japanese people should do the same, should go out into the world.”

“But the Japanese is still the leading producer of cars, photocopiers and leading edge technologies,” I countered.

“Yeah, but you should take note that companies like Toyota, Canon and other big firms from Japan are no longer “Japanese,” he said. “They are now global companies,” he said, apparently implying that the identity of these firms are no longer linked to the Japanese flag.

I don't understand why companies or corporations should have definite national flag to look up to. It's the brave new world of globalization and the borders have become meaningless. But certainly, Nobu's take on the need to master the English language is something that resonates with me. Despite all the obvious economic and probably social benefits of learning English, there are still in our midsts those who think that going native, or going “Filipino” for “nationalistic” reasons” at the expense of English is the way to go. That probably explains why we can't seem to muster enough political and public will to bring our knowledge and use of the English language up to a higher level.

Well, that's just my opinion anyway—to use Nobu's words.

Thanks for that meeting, Nobu. I really appreciate our exchange of ideas!

The DC as Obama country?

If it's only Washington DC that determines the fate of America, Barack Obama should be president this coming American presidential elections. I don't know but most people I've met here are all crazy about the audacity of Obama's presidential hope. Obama T-shirts are selling like hotcakes. Or so it seems.

Over brunch, Mara, a DC-based journalist friend asked me how I think an Obama presidency would impact on the Philippines. And how Filipinos perceive him.

"I really think most Filipinos do not really care who sits at the White House," I answered. "Of course, Americans don't care what Filipinos think either. Obama or McCain or Hillary--America will always pursue her own 'national interest' and it would be good it that interest would converge also with our interest, whatever that is. But one thing is certain: Most Filipinos would always be pro-American for historical and many other reasons."

I added: "But in general, many Filipinos seem to like Obama, maybe because he looks cute, talks smoothly, and appears different from the typical American politician. Just like in the Philippines, people who want "change," whatever that means, would always vote for a politician who looks and talks quite differently from the usual, typical politician."

Yeah, we want a duck that doesn't quack like a duck.

Personally, I'm concerned that an Obama presidency would drift towards protectionism. That's would be bad for the trade-oriented Southeast Asia, given his tendency to pander to local protectionist passions. But I could be wrong. His anti-free trade and anti-outsourcing tirades are probably just political marketing, and its something that he cannot enforce anyway given that American businesses are able to maintain global competitiveness because of outsourcing.

But his foreign trade policy statements suggest that an Obama presidency would never be expected to lead the push for a global free trade deal the way Bill Clinton did,or tried, when he was at the White House. That would be bad for developing countries. But then again, neither Hillary nor McCain are probably inclined towards a new and better global trade deal. So let's see.
Anyway...

Hey Mara! Thanks for that really nice chat and brunch. Really love that we were able to catch up. And oh, Busboys and Poets [the restaurant] is really great. I enjoyed being there a lot! See you next year, my friend.

Who's afraid of the "organization of rice exporters"?

Who’s afraid of Orec or the supposed “organization of rice exporting countries”? Well, importers including the Philippines seem to have been rattled by the news but the fact is that Orec is a dumb idea. We should better laugh it off. Why?

First, those countries on the Mekong like Thailand and Vietnam just cannot store rice forever. Unlike oil, rice deteriorates in just a few months of storage in the warehouse. And the Thais and the Vietnamese could eat only so much rice.

In fact, forming Orec is counterproductive for these rice exporters. When they hoard their own rice, local prices decline, thus hurting their own farmers. If they want to benefit from the current situation, it’s in their best interest to sell rice and not hoard it.

Besides their geographical advantage of having the Mekong River and extensive sources of irrigation water, the main incentive why farmers are producing more rice in these countries is the fact that they are able to sell in the global market place. There’s money in rice exports. Once their governments remove that incentive through export restraint, that incentive would be gone and farmers might just shift to other more profitable crops.

Forming that cartel would be tantamount to shooting themselves in the foot. The only real beneficiaries of Orec are the rats and bugs that will have an ample supply of rotting rice in Vietnamese and Thai warehouses.

Could we still achieve rice self-sufficiency?

“Now that the price of rice is increasing and our government is having a hard time securing enough imports, I think you should reconsider your position...” That’s one comment I recently got in reaction to my blog on rice self-sufficiency. My answer: my view hasn’t changed.

But first, allow me to highlight the good news. The news says rice prices are about to drop due the onset of the harvest season. This must be a dampener for those who are conjuring a Malthusian scenario lately. These guys just don’t understand the power of price signals!

Now back to the issue.

Could we really achieve “self-sufficiency” in rice? Could we really produce all the rice that we need? Some experts doubt it given geographical constraints and rapid population growth, but I say why not? If we could only have rapid adoption of high-yielding varieties, especially hybrids, we might yet lick the issue or address a critical part of it. About 60 percent of China’s rice fields are planted to hybrids (that’s according to SL Agritech); no wonder they are not losing sleep about the supposed “rice shortage.” Why can’t we do the same especially in irrigated areas?

But how do you promote hybrids or even just high-yielding open pollinated varieties? It’s not through government seeds subsidy that will only be dissipated in corruption. The money is better spent on irrigation and other rural infrastructure. If there’s one disincentive to agricultural productivity, it’s the lack of adequate farm infra.

The way government is subsidizing certified seeds is one sure way of destroying the seed industry that is crucial in agricultural growth. Why? It’s because when government dangles the money, some unscrupulous rice seeds suppliers who simply want a fast buck come in, many of them selling low quality seeds (low germination). The farmers naturally get burned and wouldn’t use certified or hybrids next cropping season. Result: the market for these high-yielding seeds shrinks. This is actually happening these days.

Solution? No subsidy; just allow the private seeds producers to come directly to the farmers and offer their wares. Surely, any seeds producer trying to develop the seed market for his business would make it a point to provide the best seeds so that he would have repeat orders. That way, farmers would also have a choice on what rice seeds and technology to employ. And there’s no place for fly by night seeds producers under this policy environment.

But hey, we are funny! We want to be “self-sufficient” and yet we want our rice so cheap that farmers are not making money. So actually we want them to remain miserable while we urbanites enjoy the cheap rice they are producing. Crazy!

Rice supply crisis: another policy swindle?!

I thought all along the government has lifted the quantitative restrictions for rice, thus allowing the private sector to import the commodity whenever they want and at whatever quantity provided the appropriate tariffs are paid. Now, based on Business Mirror reports, its seems Malacanang is simply telling the private sector to import what is allowed under the minimum access volume (MAV). See http://www.abs-cbnnews.com/storyPage.aspx?storyId=114569. Crazy!

The fact is that the MAVs have been there all along and no one dared importing much lately simply because tariff is high (50%). Who would be encouraged to import rice that are already expensive in the world market and pay 50% on top of it, thus making the landed ones so expensive? If I’m the importer, I’ll wait for local prices to really move up the heavens before I even thought about availing of the MAVs. That’s what is happening now.

So the supposed policy pronouncement about “allowing the private sector to import rice” was a bogus one—a deception. Or probably it was real, only that government, as usual, simply backtracked, nay backslided. My goodness! Now, the private sector is saying they will only import rice at zero tariff, and given the government’s very slow decision making process, we might end up having those imported rice landing our shores when the farmers are already harvesting their palay. Some of them has actually started harvesting now. That will be tragedy.

But that’s the tragedy about maintaining the QR on rice. Unless, we remove it and replace it with tariffs, a low one if necessary, all these problems about supply shortages will always be there no matter how much rice stocks are available out there in the global marketplace. Timing is important and historically, government bureaucrats always act when its too late. Solution: we need to remove the QR, replace it with tariff, and if necessary a low one. And of course, we need to rev up our production capacity.

"Rice crisis": this palay seeds subsidy could be counterproductive!

Government is set to give a P1,500 subsidy per bag of hybrid rice during the wet season (May-Oct) this year supposedly to boost rice production. Hmmm, sounds good at the surface, but I have this feeling this subsidy might actually stunt the growth of the rice seed industry in the long run, an industry that you need to nurture if we want to have a vibrant rice industry. How?

One effect is corruption. Under the government’s rice subsidy program, farmers only pay about half the price or P1100 per bag per hectare for a hybrid seeds that’s supposedly would cost P2,600 since the government, through the Department of Agriculture, provides the subsidy amounting to P1500 per bag per hectare. So farmers get cheaper seeds, right?

Yes, but it doesn’t follow that the seeds will be there when he needs it. Why?

This is how the whole thing works: the seeds are distributed by the municipal agricultural officers (MAO). They also serve as conduit of the government subsidy amounting to P1500 per bag. Once the farmers give the “farmers equity” or his payment for the seeds that comes from his pocket to the MAO, he gets the seeds, and the seeds producers/suppliers then collects the payment—P1100 from the farmer and P1500 subsidy per bag from the government through the MAO/LGU—totaling P2600 per bag per hectare.

But in reality, many of these MAOs, once they got the cash both from the farmers or the money from government subsidy simply keep the money. That's why I heard anyway from lots of seeds producers all over the country. And sometimes, the subsidy money is not there so the seed producers ended up collecting nothing. Many of the seed producers these days still have collectibles worth millions of pesos from the MAO/LGUs from the last crop. Now, they are being requested to provide the seeds again for a government programs that has not been up to date in payments. Do you think they will deliver the seeds this time? Your guess is as good as mine.

This subsidy program is so complicated that it’s so prone to corruption!

Rice crisis: why are we not mobilizing Ding Panganiban or Dr Emil Javier?

So by the looks of it, it seems that President Arroyo has finally come to her senses. Based on reports from the Inquirer, the private sector can now import rice, although the government still maintains high tariffs for it. High tariff for rice means we are likely to continue having expensive rice, but that policy move is good enough to remove the discretion of bureaucrats in rice importation. In the past, only the NFA could import rice, giving only small volumes to the private sector to bring in grains through “minimum access” importation. If I’m not mistaken, the new policy changes all that, thus allowing everybody else to bring in rice. Traders would be discouraged to hoard, since any sign of “scarcity” (through hoarding or real scarcity) would immediately trigger others to import from global sources.

Having said that, there’s no substitute for an honest-to-goodness government program for rice increased production. We need to because global stocks are low; the Chinese, the Indians, and the Indonesians have been buying lots of grains in the world market. And why don’t we tap the experts in our midst? Ding Panganiban for instance is the best when it comes to expertise in rice production. So is Dr. Emil Javier, Asia’s foremost agriculturist. Why is the government not mobilizing their expertise?

"Rice crisis": government is doing everything except the right thing

Oh this rice crisis! It seems to me that the government is doing everything except the right thing: threatening economic saboteurs and hoarders, raising palay price buying subsidy, and more funds for the DA, I suppose. These are fine, except that they are not going to address the supposed “rice shortages.”

Rice shortages certainly has speculative element into it, especially in such a time when global food prices are rising. And speculations are necessarily rife in a policy environment where government restricts the global trade in such a political commodity either through quantitative restrictions or very high tariffs—which we do. Maintaining such protection system for rice makes us vulnerable to speculators who are inclined to hoard when buffer stocks are low or going down, and they will pounce on every opportunity, knowing that the government or bureaucracy would always act (say import) when its too late. That’s what is happening right now. For all we know, those guys from the NFA might even be collaborating with those hoarders to make a fast buck out of the situation. I’m speculating here, but that’s highly possible given the culture of corruption in the bureaucracy.

Solution: Why not open up the Philippines to global trade in rice? Why not reform the NFA? That’s the only way one could prevent hoarders from hoarding knowing that imports would always come at the right time when someone starts the nasty business of hoarding rice. An open trading regime should effectively deal with the speculative element that distorts prices.

You might say freer trade in rice might cause the collapse of the entire Philippine rice industry. That’s crap. The fact is that even right now, even under the current policy environment, lots of rice farmers especially in Mindanao are shifting to the more profitable crop like bananas and other high-value crops. Smart farmers, shall I say! There’s no sense planting something that won’t make you real money.

Under a freer rice trade environment, lots of farmers are going to adopt shift to high value crops. That’s good for them. But many are also going to stay in rice business but are going to innovate to lower their cost. Some might just focus on planting those fancy varieties that command high prices in the local market.

More on this next blog post.

Who says jobs are scarce?!

Indeed, jobs are not hard to find, if you have the skills. Writing skills, for instance. I mean, if you think you have the passion for writing, and some skills, and the right attitude for that kind of work, you may contact me. There's one lifestyle magazine for instance that is looking for one full time writer. I also need some part time writers for our magazine, Entrepreneur.

See? Life is not hopeless, ZTE or not! lol!

Middle class getting back to the protest business?

I just had an hour or two with finance guys this morning in Makati and know what—they are joining the anti-GMA rally in Makati. I thought all along these money guys hate joining such activities. But they are and, I guess, it all boils down to what I call “middle class values.” The core issue of course is corruption that reaches up the highest echelons of government, and corruption is certainly bad for business. Yeah, its high time the middle class should be part of this struggle for a better society. Mabuhay kayo!

Philippines "rejoins" the Asia-Pacific region

I was in Laguna Technopark last Thursday when the government announced the Philippine economy grew by 7.3 percent in 2007, boosted by the 7.4 percent fourth quarter surge, the highest rate since 1976. I say not bad! Finally, we have “rejoined” the Asian community of fast growing countries.

I say “rejoined” because analysts always thought the Philippines seems to have been behaving like a Latin American country, with our politics prone to coups attempts and instability and economy that tended to enjoy sudden boom and busts. Now, we have reached a new level, 7 percent, after starting at a 5-6 percent GDP growth band from 2003 until 2006.

As expected, some practitioners of the Dismal Science were quick to downplay the numbers, saying the country’s economic performance this year might not be sustainable given the continuing risks posed by rising crude prices and the looming economic recession, an economic slowdown, in the US.

There is this economist from the UP School of Economics who has been going around since 2004 that the country could never achieve beyond 4 percent. He has been proven wrong all the time, but this time after hearing that the country’s GDP reached 7.4 in the fourth quarter, he stressed the country would achieve just around 4 percent in 2008. Here we go again!

The matter about economic recession in America is certainly a serious question. Unfortunately, even economist in the US are at a loss whether or not there is indeed a recession, how serious is it going to be, and whether or not it’s going to bring the global economy down. “When America sneezes, the rest of the world catches cold,” says the old dictum. And it was true then because when Americans stopped buying shirts, food, cars, gadgets, or just about anything, the factories from the rest of the world stopped humming, thus rendering thousands, if not millions, of workers jobless.

That nugget of wisdom, however, may not be true today because the world is no longer the same place that it was two or three decades ago. Now, analysts worldwide talks about “decoupling” or the capability of other economies in the world, including emerging economies like China and India, to growth despite the weak American economy. These countries could take on the role of growth drivers in the same manner that China has been boosting the economy of Japan and Australia through her rising imports of machines and raw materials iron ore, petroleum products, coal and other commodities. China now has also become a major destination for Philippine exports, a market that has become almost as huge as the America.

And more importantly, while emerging economies are riding on the wave of global trade expansion, many of them, including the Philippines, has been growing largely on the strength of domestic demand. It’s even true for China and India as much as it is for the Philippines. So the conclusion here is that, the recession in the US may or may not cause colds in the Philippines, and if it does, it might not be so severe co cause serious complications.

Realistically though, the number crunchers at the National Economic and Development Authority (Neda) believe that a full-blown recession could indeed affect us significantly. Augusto Santos, acting director general of Neda, says should America suffers a one-percentage point contraction from its current growth rate, the Philippines gross national product will shrink by 1.764 percentage points. That is huge.

But that’s assuming that neither America will do anything to lick the recession nor the Philippines address to boost the local economy and cushion the impact. But who knows, US President George Bush’s $150 billion stimulus package, wherein government will mail checks to Americans for them to spend it and prop up the American economy, might just work? And if we do our homework here, say continue spending for badly economic infrastructure, as we should, as we are doing right now, the Philippine economy might just get out of this in a decent shape.

One interesting thing about recessions is that statisticians, and therefore policy makers and the general public, know about it only when it’s long underway. It’s because of the time lag in the collection of statistics. So if there’s a recession in America, the Philippines should already feel it.

The GDP figures seem to show that with the 3.7 percent contraction in exports from a growth of 2.2 percent last year. “Net factor income from abroad” that measures remittances of Filipino expatriates working abroad also has declined. And yet the Philippine economy managed to surge to a 7.4 percent growth rate in the fourth quarter, on the strength of other sources of growth (eg., domestic demand, mining, construction, agriculture and fishery, outsourcing, among others). There are even signs of recovery in investments from the private sector as shown by the rise in fixed capital formation—an indication that business are constructing buildings, buying machines for the factories, and upgrading their equipment.

So let’s see!

America sneezes—are we supposed to get flu?

Are we going to get hurt badly because of US recession? It’s so easy to worry about that especially that we sell lots of stuff to the US market. But time has changed.

Ten years ago, electronics and semiconductors accounted for only 42 percent of the country’s exports with farm-based products like coconuts, pineapples, bananas, tuna, seaweeds, and baskets having significant percentages. Today, manufactures account for 86 percent of the country’s exports, the bulk of which are electronics and semiconductors. Farm-based products now account for only 4 percent.

Ten years ago, 36 percent of our exports were purchased by the Americans, such that we would always a catch cold, nay influenza, when America sneezed. When combined with our exports to Japan, Netherlands, Hong Kong, Great Britain and Germany, more than 70 percent of our exports were purchased only by seven countries. China and India were not even listed among our markets.

Today, America only accounts for 18 percent of the country’s exports. China is now our third largest market next to Japan. Suddenly we can see our friends in the Asean buying about 17 percent of our products. The rest are accounted for by Europe and the rest of the world.

What we see here is a diversifying export market for Philippine products, a trend that should lessen our vulnerability to external shocks. And yes, the World Bank, it seems, has taken an optimistic note on the Asia Pacific Region, including the Philippines.

I’m trying to be optimistic here, of course. China ultimately sells to the US. Once the American orders for Chinese goods are down, so the Chinese orders from us will probably be. This is still an interconnected world.

But let us see, because even in the US experts don’t agree on the extent of the recession. And here in the local front, the National Statistical Coordination Board has yet to report to us the whole 2007 performance. The numbers would surely be good, considering we had good numbers from the farm sector. But the enthusiasm will surely be dampened by the sobering thoughts about the recession. So let’s wait on January 31, the official announcement of the 2007 growth rate, what the experts will say.

Meantime, you may read the take of Finance Secretary Margarito Teves by clicking here.

Will the US recession hurt the Philippine economy?

America is definitely in recession. Lately, US president George Bush has lately called on the US Congress to give tax relief to consumers and business to boost the American economy. Many of us are probably wondering how it will impact the Philippine economy.

When America sneezes, the Philippines catches cold. We used to say that to highlight the Philippine economy’s dependence on the America economy. It’s a relief therefore to learn from experts from the World Bank that emerging economies including that of the Philippines could actually deal with this recession in America quite well. The reason? The continuing rapid growth in the Asia-Pacific region, particularly China, is going to cushion impact of the US recession. Says the World Bank lately:

“Resilience in developing economies is cushioning the current slowdown in the United States, with real GDP growth for developing countries expected to ease to 7.1 percent in 2008, while high-income countries are predicted to grow by a modest 2.2 percent."

The World Bank adds:

"GDP in East Asia and the Pacific is expected to grow about 10 % in 2007, with China expected to grow by more than 11%. Growth for the region should ease to 9.7 % in 2008 and to 9.6 % by 2009. The effects from the turmoil in the world’s financial centers may be small in most economies in the Region. Except for China, direct exposures of financial institutions in the region to mortgage-based securities (or sub-prime crisis) are limited.”

The Bank has a favorable prognosis for the Philippine economy in 2007 and expects it to grow by a decent 6.2 percent in 2008. What explains this trend? Simple: these trends are a part of the economic and social transformation obtaining in the Philippines, a trend I call the “Revolution from Beyond.”

Reducing oil tariff: just another misguided policy

The other day, the government announced that it has reduced tariffs for oil products by one percentage point supposedly to cushion the impact of rising crude prices. Sounds good except this policy might end up becoming a subsidy to oil companies without achieving the social objective of “cushioning” the rise of oil products like gasoline, diesel and LPG.

The fact is that the industry is deregulated and movement of prices is determined more by global trends and the nature of local competition than government actions. Lower tariff for oil products simply means that importers are going to enjoy lower import costs or charges. Whether or not they are going to pass the lower import costs to consumers in terms lower prices is another matter. They probably won’t as they always did in the past. Market competition should theoretically force oil companies to go easy on raising prices but that’s only possible in a competitive environment. Right now, the local market is still dominated by the big three (Shell, Caltex, and Petron) and it seems the newcomers, the so-called independent oil producers, are simply taking the cue from actions of the Big Three.

The new policy therefore is another populist measure that may end up achieving nothing. The best thing the government could have done therefore is to maintain the current tariff levels and continue collecting the money to improve government finances. If policy makers suspect that oil companies are colluding, they might as well look for effective ways at bringing greater competition in the oil and energy sector.

Seems like the 7 percent growth rate has started to trickle down

The recent numbers on jobs based on the October 2007 Labor Force Survey seem to tell us so. The NSO report says the jobless rate has declined a full percentage point from 7.3 percent last year to 6.3 percent this year. Underemployment has declined from 20.4 to 18.1 percent. That’s a two full percentage point down, meaning that a significant number of dissatisfied employees has gone down as well.

The details are quite interesting. The percent share of farm jobs has declined but those of the industry sector has gone up, mainly because of a growing job uptake in construction. There’s also a growing share of jobs in the services sector particularly in the transportation, storage and communications; real estate and renting; education; health and social work; and private households. It means more people are hiring maids and drivers? That says something.

And there’s a significant increase in own account workers, an indication perhaps of greater entrepreneurship activities. Figures on those who get wages and salaries are also encouraging as more private establishments are hiring.

In terms of occupation, the percentage shares of professionals are rising. So are those of trade and related workers; clerks; and laborers and unskilled workers. This trend is not surprising because of robust construction sector. Hey, it quite broad-based.

Is this the trickle down effect of the 7 percent growth rate we have been registering? Seems like it. But expect the doubters to dismiss these numbers. I’m a doubter myself but I don’t denigrate these numbers:I feel these are real gains by real people. And it’s not because of Malacanang but despite Malacanang.

I'll look at the numbers again when I have the time.

The middle class and the rule of law

I was expecting to see retirees and middle aged guys when the boss told me I should show up for the Entrepreneurs’ “networking night” in Greenhills. That was last Tuesday, the second day in my new job. But I was surprised to see young boys and girls in 20s and 30s, many of them barely out of college. And my goodness, they were all talking about “doing business’ and making money! In my time, we were all about “social engineering,” “social change,” and revolutions as if we knew what we were talking about.

Is a new ethos taking over? I hope so. It’s about time. If we want the country to move faster into the lane of progress (whatever that means), we should have more entrepreneurs in our midst. And its not only because of its positive economic impact, its also because the growth of the middle class is the surest path to political stability. Fareed Zakaria in “The Future of Freedom” said so. Francis Fukuyama (in his “The End of History”) said so. And of course, they are not the original guys to have said so. It was Aristotle who theorized about this long time ago. And I guess, the reason is simple: the middle class, especially the entrepreneurs have a stake in stability and order.

Why? Consider this: if you are really rich, filthy rich, if you are an oligarch, you don’t really need “the rule of law.” In fact, you want the law (or rules) to be opaque so that you could buy it anytime when it suits your end. And the really poor, those who have nothing, don’t care much about the law, the rules, either because they don’t have a stake in the system. Sometimes they have to bend the rules to maintain their existence. Or at least, that’s what some of them think.

But when you are a budding entrepreneur with a little money, you have a stake in the system. Yet you can’t afford to buy the bureaucracy, so you desire for proper societal rules to work for you. You want to be protected from predatory actions of the super rich and the protection from those who will rob your of your wallet. You desire order, stability, transparency, predictability, and fairness. And these are foundations, the values, of a functional liberal democracy that we crave for.

Hmmm, seems like I got an interesting job here.

Til snow falls on Manila: a chat on globalization and labor migration

Jenny: So how’s Manila now?

I met Jenny in California early this year through a Japanese girl, an accountant working for one of the big global accounting firms operating in Silicon Valley. Over dinner she told me she has several colleagues from the Philippines. She called several numbers and voila and I had an appointment the following day at Starbucks near our hotel in downtown San Jose. Jenny came in a runners’ outfit, clutching a book “The World Is Flat.” We walked around town for hours discussing Philippine politics, economy and globalization. We checked some bars and other things that the Valley of Hearts Desire could offer during the night and promised to keep in touch but we failed to reconnect after the Jefferson Fellowship. Her message through Yahoo Messenger the other day therefore was a pleasant surprise.

Jenny landed in Silicon Valley three years ago after a stint at one of the leading accounting firms in Manila. Her ticket was her accounting expertise and her mastery of the computer, SAP and other enterprise management software. Her parents moved to San Francisco fifteen years earlier but she didn’t follow because she was finishing a post-grad in economics at the University of the Philippines. And she loved the beaches. Until the big offer came.

Dave: Bubbling as ever. Politically, I mean

Jenny: As usual. That’s my frustration there really. I thought GMA was better than Erap so I supported Edsa Dos. It turned out we simply replaced him with someone as corrupt. But oh, I miss the beaches, I love Boracay!

Dave: And then we just had this Trillanes caper…

Jenny: But hey, the Philippines, or at least the GDP figures, have been doing quite good lately!

Dave: You mean you are actually following the trends here?

Jenny: Yup! I’m a frustrated economist, remember? Haha!

Dave: There are new growth drivers: outsourcing, mining, food and beverage, electronics, telecommunications, and financial services. Past reforms seem to have started bearing fruits. Globalization seems to have become a stabilizing force.

Jenny: Been reading about these. And ah, I remember you mentioning about a paper on that at the University of Hawaii. Could you send me an electronic copy?

Dave: Sure, here’s the link:http://davidllorito.blogspot.com/2007/06/globalization-as-stabilizing-force-in.html

Jenny: Thanks. Interesting analysis. Amazes me because our politics there has never been that conducive. I also heard about this “economics delinking from politics theory” from [Congressman] Salceda. Do you think he’s accurate?”

Dave: Honestly, I’m not sure. I’m trying to look at it myself. But the guy has some points.

Jenny: How did those people at the University of Hawaii reacted to your paper?

Dave: Mixed, but some are incredulous.

Jenny: Or even hostile, haha!

Dave: How did you figure that out, hehe?

Jenny: “Haay, Dave!, I’ve met lots of migrant Pinoys here who think that way.

Dave: When I presented that paper, I thought they’d be happy to hear some positive news besides the usual negative ones that they get from media. Many of them were disappointed that I didn’t tell them the usual horror stories. Weird!

Jenny: Probably a psychological thing. Many of those, not all, who left the country decided on the conviction that the country is hopeless, so when they hear that things are improving a bit, it unnerves them, irritates them.

Dave: Really? Why?!

Jenny: They are used to hearing about all the negatives, and there are lots of them in media, and they are happy because those stories tend to support the reasons why they abandoned ship. Now here comes some positive news that to them seems to question the basis of their decision to leave. But yeah, it’s weird.

Dave: In fairness, they are well-meaning people. They do sincerely believe the only way out for the Philippines is for every one to migrate. So they use every opportunity to petition relatives and convince friends to migrate. A friend in New York once told me to take up nursing or become a mortician. Or I could be a plumber in Australia. Be practical, he said. Ha ha ha!

Jenny: Ay totoo yan! [That’s so true!] Ha ha ha!

Dave: After that talk, someone asked if I was telling them to return to the Philippines. ‘Of course not,' I answered. 'Why should you; the Philippines doesn’t have snow yet,’ and all the participants burst into laughter.

Jenny: Ha ha ha ha!

Why the Trillanes caper failed

Why the Trillanes caper failed? Simple: the success factors are not there.

First, Trillanes and company failed to consider the 2010 factor. Politicians these days are now looking at the 2010 election as the reference point for their short-term political decisions. Hence, they would look with discomfort any action or event that deviates from that, especially something that’s being pushed by the likes of Trillanes. A junta that would emerge from a military rebellion is anathema to the presidential ambitions of bigwigs like Senator Villar, Senator Ping Lacson, Mar Roxas, Loren Legarda, to cite a few.

Second is the economic growth factor. The Philippine economy grew by 7.1 percent in the first nine months of the year. Big business engaged in real estate and construction, mining, outsourcing, electronics, finance, telecommunications, etc are now raking in money. So are the technical, professional, and managerial classes supporting these fast-growing sectors. With the increasing globalization of labor markets, even the lower middle classes have options other than becoming pawns in political games. So these people—crucial to the success of previous “people power” cum military revolts—now have a stake in the relative “stability” of the system.

Third, we Filipinos have probably learned some lessons from our previous “people power revolutions.” We probably have realized that we need to develop constitutional liberalism in this country if we want to mature as a nation.