I was wondering how social media or the new media could help improve the debates in the 2010 Philippine presidential elections until I came across Factcheck.org. This site, being run by a non-partisan and non-profit group from the Annenberg Public Policy Center of the University of Pennsylvania, monitors the factual accuracy of the statements, ads, speeches, interviews, and news releases by major US political players. The g goal is “to apply the best practices of both journalism and scholarship, and to increase public knowledge and understanding.”
It's motto: "Holding politicians accountable."
Recent example: “Obama says his health care plan will garner large savings – $120 billion a year, or $2,500 per family – with more than half coming from the use of electronic health records. And he says he’ll make that happen in his first term.” The group says that statement is “overly optimistic, misleading and, to some extent, contradicted by one of his own advisers. And it masks the true cost of his plan to cover millions of Americans who now have no health insurance.” Then the group proceeds to explain and analyze why Obama is wrong.
There’s also a lot fact checking stuff on John McCain, and Hillary Clinton policy pronouncements.
We need something like this for the 2010 presidential election. In fact, we need it to enhance and advance democracy in this country. Who should do this? Suggestion: why not our universities like UP, Ateneo, LaSalle, UST and others form a consortium for this? They should gather a pool of experts, researchers and a secretariat for this effort as soon as possible. Local and multilateral institutions who care about “governance” may contribute money to finance its operations.
This way politicians and decision-makers would be forced to study and think through the issues before they could even think about opening their mouths.
What do you think?
Showing posts with label governance. Show all posts
Showing posts with label governance. Show all posts
Tuesday, June 17, 2008
Tuesday, May 06, 2008
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.
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.
Thursday, May 01, 2008
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!
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!
Tuesday, April 29, 2008
On the food crisis: Poor and hungry cannot afford to wait, World Bank President says
Friends, please allow me to publish this statement by World Bank president Robert B. Zoellick after a meeting in Berne, Switzerland of the United Nations System Chief Executives Board for Coordination (April 29 2008).
The next few weeks are critical for addressing the food crisis. For 2 billion people, high food prices are now a matter of daily struggle, sacrifice and for too many, even survival. We estimate that already some 100 million people may have been pushed into poverty as a result of high prices over the last 2 years. This is not a natural disaster. Make no mistake, there is nothing natural about this. But for millions of people it is a disaster.
Donors must act now to support the WFP’s call for some $755 million to meet emergency needs. Roughly $475 million has been pledged, but pledges won’t feed hungry mouths. Donors must put their money on the table, and give WFP maximum flexibility – with a minimum of earmarking – to target the most urgent needs.
This crisis isn’t over once emergency needs are addressed, as critical as those are. Though we have seen wheat prices fall over the last few days, rice and corn prices are likely to remain high, and wheat relatively so. The international community needs to commit to working together to respond with policy initiatives, so that this year’s crisis doesn’t become a generation’s fact of life. Already hunger and malnutrition, are the underlying causes of death of over 3.5 million children every year, robbing the future potential of many millions more.
Many donors, governments and international agencies have plans and policies. Over the last days we have seen pledges of financial support. The key now is to work together so that we can have an integrated international response.
So I thank the Secretary General for convening this session of UN Chief Executives to help organize the UN response.
Ministers from over 150 countries have endorsed a New Deal for Global Food Policy. We must turn these words into action.
As we discussed here in Berne, a New Deal must embrace a short, medium and long-term response: support for safety nets such as school feeding, food for work, and conditional cash transfer programs; increased agricultural production; a better understanding of the impact of biofuels and action on the trade front to reduce distorting subsidies, and trade barriers.
The World Bank Group will work with the UN agencies represented here to identify countries most in need so that, with others, we can provide concessional financing and other support. We are already working closely with the IMF and regional development banks, to integrate our work.
At the World Bank Group, we are exploring with our Board the creation of a rapid financing facility for grant support to especially fragile, poor countries and quicker, more flexible financing for others. To address supply issues, we are doubling our lending for agriculture in Africa over the next year to $800 million.
We are urging countries not to use export bans. These controls encourage hoarding, drive up prices and hurt the poorest people around the world who are struggling to feed themselves.
Ukraine set a good example last week by lifting restrictions on exports of grains. This had an immediate effect by lowering prices in the markets. Others can do the same.
As we co-ordinate action, we must bring in the private sector and agri-business.
These are all critical issues for international action that must be fleshed out in the coming weeks so that millions do not find themselves in this same position next year.
But first and foremost donors must act now to meet the emergency and raise the $750 million for the WFP. The world can afford this. The poor and hungry cannot.
The next few weeks are critical for addressing the food crisis. For 2 billion people, high food prices are now a matter of daily struggle, sacrifice and for too many, even survival. We estimate that already some 100 million people may have been pushed into poverty as a result of high prices over the last 2 years. This is not a natural disaster. Make no mistake, there is nothing natural about this. But for millions of people it is a disaster.
Donors must act now to support the WFP’s call for some $755 million to meet emergency needs. Roughly $475 million has been pledged, but pledges won’t feed hungry mouths. Donors must put their money on the table, and give WFP maximum flexibility – with a minimum of earmarking – to target the most urgent needs.
This crisis isn’t over once emergency needs are addressed, as critical as those are. Though we have seen wheat prices fall over the last few days, rice and corn prices are likely to remain high, and wheat relatively so. The international community needs to commit to working together to respond with policy initiatives, so that this year’s crisis doesn’t become a generation’s fact of life. Already hunger and malnutrition, are the underlying causes of death of over 3.5 million children every year, robbing the future potential of many millions more.
Many donors, governments and international agencies have plans and policies. Over the last days we have seen pledges of financial support. The key now is to work together so that we can have an integrated international response.
So I thank the Secretary General for convening this session of UN Chief Executives to help organize the UN response.
Ministers from over 150 countries have endorsed a New Deal for Global Food Policy. We must turn these words into action.
As we discussed here in Berne, a New Deal must embrace a short, medium and long-term response: support for safety nets such as school feeding, food for work, and conditional cash transfer programs; increased agricultural production; a better understanding of the impact of biofuels and action on the trade front to reduce distorting subsidies, and trade barriers.
The World Bank Group will work with the UN agencies represented here to identify countries most in need so that, with others, we can provide concessional financing and other support. We are already working closely with the IMF and regional development banks, to integrate our work.
At the World Bank Group, we are exploring with our Board the creation of a rapid financing facility for grant support to especially fragile, poor countries and quicker, more flexible financing for others. To address supply issues, we are doubling our lending for agriculture in Africa over the next year to $800 million.
We are urging countries not to use export bans. These controls encourage hoarding, drive up prices and hurt the poorest people around the world who are struggling to feed themselves.
Ukraine set a good example last week by lifting restrictions on exports of grains. This had an immediate effect by lowering prices in the markets. Others can do the same.
As we co-ordinate action, we must bring in the private sector and agri-business.
These are all critical issues for international action that must be fleshed out in the coming weeks so that millions do not find themselves in this same position next year.
But first and foremost donors must act now to meet the emergency and raise the $750 million for the WFP. The world can afford this. The poor and hungry cannot.
Wednesday, April 09, 2008
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.
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.
Tuesday, April 08, 2008
"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!
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!
Monday, April 07, 2008
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?
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?
Saturday, February 23, 2008
Let's tax the Church!
Should we tax the Church? Why not? It’s high time!
Church officials—bishops, ulamas, pastors, priests—based on their rhetorics, are always holier than thou, especially when it comes to failure of government to provide economic opportunities for the poor. But does the Church really do something about it besides prayers and few charities? If they want to help the country, the poor, the best thing they could do is pay taxes for the Church properties, lands, and universities to generate resources for economic and social development. Church-owned schools charge the highest tuitions fees in the land, thus accumulating so much money. Since they don’t pay taxes, they hardly give anything in return to society.
The premise about separation of Church and State, about religion and politics, has always been fiction. The Church—be it the Catholic Church, Iglesia ni Cristo, El Shaddai—has always been a very active political animal in the country. When told not to meddle in politics, the Church authorities would say, they can’t help it because the realm of politics has moral dimensions, which the Church has a lot to say. Well, every thing has moral dimension.
Church officials—bishops, ulamas, pastors, priests—based on their rhetorics, are always holier than thou, especially when it comes to failure of government to provide economic opportunities for the poor. But does the Church really do something about it besides prayers and few charities? If they want to help the country, the poor, the best thing they could do is pay taxes for the Church properties, lands, and universities to generate resources for economic and social development. Church-owned schools charge the highest tuitions fees in the land, thus accumulating so much money. Since they don’t pay taxes, they hardly give anything in return to society.
The premise about separation of Church and State, about religion and politics, has always been fiction. The Church—be it the Catholic Church, Iglesia ni Cristo, El Shaddai—has always been a very active political animal in the country. When told not to meddle in politics, the Church authorities would say, they can’t help it because the realm of politics has moral dimensions, which the Church has a lot to say. Well, every thing has moral dimension.
Thursday, February 14, 2008
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!
Wednesday, January 09, 2008
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.
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.
Wednesday, November 28, 2007
Knee-jerk reaction to rising oil prices (or why bringing back OPSF is counterproductive)
Here we go again! Every time crude prices in the world market moves up, some wise guys out there would call for the return of dreaded Oil Price Stabilization Fund (OPSF), or the institutionalization of its monster cousin, the so-called Oil Exchange. On Monday, it was Party List Representative (Bayan Muna) Teodoro Casiño’s turn to do so. Not only that, he wants the government to “nationalize” the country’s oil industry. He has bills filed in Congress to achieve his desires. The country has tried all these Marcosian measures in the past and it made us all miserable but it seems people simply don’t learn.
We share Casiño’s concern about the price of oil and its impact on the economy and Filipino people. For global crude prices to hover at a hundred dollars per barrel or higher would surely hurt the Philippine economy. But we don’t share his enthusiasm for “nationalization,” the return of the OPSF or its variant, and the Oil Exchange. These proposals are among the most misguided policies any policymaker could ever think of when dealing with prices of oil and oil products. There are better ways; we should avoid knee-jerk reaction that would do more harm than good.
Consider the OPSF established during the years of the Marcos dictatorship. We used to have a free and relatively competitive oil sector prior to the OPSF with wits 6 oil refining companies Shell, Caltex, Esso, Mobil, and Getty competing in the local market. Marcos set the OPSF as reaction to the rapid rise of global oil prices as a result of oil crisis in the 70s triggered by the Yom Kippur war. It worked this way: when prices are low, the government collects money from the industry for the fund (which is necessarily passed on the consumers as higher prices); when crude prices were rising oil companies drew money from the fund supposedly to prevent a surge in oil prices. The Central Bank also allocates dollars to oil companies at an exchange rate on the day the contracts for the shipment of oil were signed.
The government then set the prices and allows firms certain mark-ups based on landed costs, in effect guaranteeing their profits. There was also cross subsidies supposedly to help the poor. It looked fine on paper then but in reality the OPSF ended up draining the Treasury. As prices abruptly rose, the Fund easily got depleted, and the government was always forced to get money from the country’s coffers—from people’s taxes—to replenish it, thus causing massive fiscal deficits. These are not loose change: when the OPSF was depleted in 1990, the government infused P5 billion, and the cycle went on and on. So in reality, OPSF ended up as a massive state subsidy to oil companies, while domestic oil prices remained high despite lower international crude prices and remained even higher when global crude prices were rising. Do we want to get back to this messy policy environment?
The Oil Exchange seems to be an attractive option. The idea is for the government to determine the country’s monthly requirements and ask potential suppliers to bid for the right to supply the requirement. What Casiño has failed to see is that the he is trying to create a monopoly, a monster, this time however, to be controlled by government bureaucrats paid by people’s taxes. Doesn’t he realized that we suffered so much when Marcos had all those monopolies in various commodities (e.g. remember the sugar monopoly) around?
And we know monopolies, much worse a government one. It will surely be managed inefficiently by Malacañang cronies and its humongous cost passed on to consumers via higher prices. They are going to corrupt the bidding process and allocation of oil products. If the Oilex will try to earn money, as it may have to just to finance its operations and the huge layer of bureaucracy its going to create, it will have to charge prices on top of its inefficiency and corruption, thus making us all worse off. And there’s no guarantee that the Oilex officials will not collude with the bidders to rig the allocation of oil products.
An oil exchange either mean that the government will either have to commandeer the storage facilities of the private sector (especially for LPG) so it could bring oil products to every town without delay or it will have to borrow billions of money for the construction of its own depots and related facilities. It’s a prescription for deeper indebtedness.
Why oil prices are rising? It’s because China, India, and the rest of the Asia-Pacific region are growing fast. They need more oil and are buying more oil. Oil experts say the demand and supply of oil are fairly balanced but recently, speculators came into the picture with hedge funds, investment funds, traders, and ordinary investors going after oil futures and oil derivatives. Many of these characters are apparently using oil futures as a hedge against the weak dollar. All these dynamics suggests an OPSF, Oilex and nationalization of the downstream oil industry would simply create more disruptions and uncertainty that are going to manifest in high and unstable retail oil prices.
The solution lies neither in the dismantling the oil deregulation law nor returning to the dark days of Marcos. The solution lies in strengthening oil industry deregulation. These days, the big three oil companies (Shell, Petron and Caltex) still lord it over the industry especially in gasoline and diesel. But certainly some competitors have started to make inroads into their markets, with the new players getting about 15 percent of the market, based on 2005 data. In terms LPG, new players—based on government data—now account for 45 percent of the market. Overall, the downstream oil industry has more than 600 players engaged in different downstream activities from liquid bulk marketing, LPG bulk marketing, bunkering, to terminaling.
In effect, oil deregulation is imperfect but is working. The worry about the continuing dominance of the Big Three is valid but the solution is not another government monopoly but a different set of policy measures like an anti-trust law or a competition policy to promote efficiency and greater competition and discourage the formation of oligopolies and cartels. And we have to do that policy not only for the oil industry but for all other sectors like banking, shipping and port operations, aviation, insurance, among others.
We share Casiño’s concern about the price of oil and its impact on the economy and Filipino people. For global crude prices to hover at a hundred dollars per barrel or higher would surely hurt the Philippine economy. But we don’t share his enthusiasm for “nationalization,” the return of the OPSF or its variant, and the Oil Exchange. These proposals are among the most misguided policies any policymaker could ever think of when dealing with prices of oil and oil products. There are better ways; we should avoid knee-jerk reaction that would do more harm than good.
Consider the OPSF established during the years of the Marcos dictatorship. We used to have a free and relatively competitive oil sector prior to the OPSF with wits 6 oil refining companies Shell, Caltex, Esso, Mobil, and Getty competing in the local market. Marcos set the OPSF as reaction to the rapid rise of global oil prices as a result of oil crisis in the 70s triggered by the Yom Kippur war. It worked this way: when prices are low, the government collects money from the industry for the fund (which is necessarily passed on the consumers as higher prices); when crude prices were rising oil companies drew money from the fund supposedly to prevent a surge in oil prices. The Central Bank also allocates dollars to oil companies at an exchange rate on the day the contracts for the shipment of oil were signed.
The government then set the prices and allows firms certain mark-ups based on landed costs, in effect guaranteeing their profits. There was also cross subsidies supposedly to help the poor. It looked fine on paper then but in reality the OPSF ended up draining the Treasury. As prices abruptly rose, the Fund easily got depleted, and the government was always forced to get money from the country’s coffers—from people’s taxes—to replenish it, thus causing massive fiscal deficits. These are not loose change: when the OPSF was depleted in 1990, the government infused P5 billion, and the cycle went on and on. So in reality, OPSF ended up as a massive state subsidy to oil companies, while domestic oil prices remained high despite lower international crude prices and remained even higher when global crude prices were rising. Do we want to get back to this messy policy environment?
The Oil Exchange seems to be an attractive option. The idea is for the government to determine the country’s monthly requirements and ask potential suppliers to bid for the right to supply the requirement. What Casiño has failed to see is that the he is trying to create a monopoly, a monster, this time however, to be controlled by government bureaucrats paid by people’s taxes. Doesn’t he realized that we suffered so much when Marcos had all those monopolies in various commodities (e.g. remember the sugar monopoly) around?
And we know monopolies, much worse a government one. It will surely be managed inefficiently by Malacañang cronies and its humongous cost passed on to consumers via higher prices. They are going to corrupt the bidding process and allocation of oil products. If the Oilex will try to earn money, as it may have to just to finance its operations and the huge layer of bureaucracy its going to create, it will have to charge prices on top of its inefficiency and corruption, thus making us all worse off. And there’s no guarantee that the Oilex officials will not collude with the bidders to rig the allocation of oil products.
An oil exchange either mean that the government will either have to commandeer the storage facilities of the private sector (especially for LPG) so it could bring oil products to every town without delay or it will have to borrow billions of money for the construction of its own depots and related facilities. It’s a prescription for deeper indebtedness.
Why oil prices are rising? It’s because China, India, and the rest of the Asia-Pacific region are growing fast. They need more oil and are buying more oil. Oil experts say the demand and supply of oil are fairly balanced but recently, speculators came into the picture with hedge funds, investment funds, traders, and ordinary investors going after oil futures and oil derivatives. Many of these characters are apparently using oil futures as a hedge against the weak dollar. All these dynamics suggests an OPSF, Oilex and nationalization of the downstream oil industry would simply create more disruptions and uncertainty that are going to manifest in high and unstable retail oil prices.
The solution lies neither in the dismantling the oil deregulation law nor returning to the dark days of Marcos. The solution lies in strengthening oil industry deregulation. These days, the big three oil companies (Shell, Petron and Caltex) still lord it over the industry especially in gasoline and diesel. But certainly some competitors have started to make inroads into their markets, with the new players getting about 15 percent of the market, based on 2005 data. In terms LPG, new players—based on government data—now account for 45 percent of the market. Overall, the downstream oil industry has more than 600 players engaged in different downstream activities from liquid bulk marketing, LPG bulk marketing, bunkering, to terminaling.
In effect, oil deregulation is imperfect but is working. The worry about the continuing dominance of the Big Three is valid but the solution is not another government monopoly but a different set of policy measures like an anti-trust law or a competition policy to promote efficiency and greater competition and discourage the formation of oligopolies and cartels. And we have to do that policy not only for the oil industry but for all other sectors like banking, shipping and port operations, aviation, insurance, among others.
Wednesday, November 21, 2007
Another rotten deal? Let there be "sunshine laws"!
“The lust of gold succeeds the rage of conquest; the lust of gold, unfeeling and remorseless! The last corruption of degenerate man.” —Samuel Johnson, Irene (Act I, Section 1)
THE overpriced Diosdado Macapagal Highway, also called the “road to perdition.” The controversial Northrail project. The NBN-ZTE and the cyber-education project (CEP). What are the bottom-line issues in all these government projects? Corruption and lack of transparency. And, as usual, the people who are going to pay for all these projects with their taxes, their hard-earned money, are the last to know.
Just the other day, the World Bank (WB) “deferred” the implementation of a multimillion-dollar loan to the Philippines supposedly for “phase two” of the National Roads Improvement and Management Program (NRIMP) due to supposed corruption, specifically collusion and overpricing.
“Signs of procurement problems in the first phase of the program were identified. Between 2003 and 2006, the World Bank rejected two large road contracts in three successive rounds of bidding because of strong signs of collusion and excessive pricing,” said the World Bank, explaining its decision.
Here we go again! It seems the Philippine government can’t learn from its mistakes. It’s another national embarrassment that wouldn’t help our image as a nation—whatever is left of it—abroad. Do we wonder why Transparency International now considers us as among the most corrupt countries of the world?
In fairness, the Philippine government is saying the World Bank is the one to blame for insisting on its own “flawed public-procurement system” that is not tailored to the Philippine context. “That would not have happened had the World Bank not insisted on choosing its own system,” said Rolando Andaya, the Philippine budget secretary.
The problem, Mr. Andaya explained, lies with the fact that the World Bank supposedly allows bids higher than the indicated amount as against the Philippine approach, which only takes in bids lower than the indicated amount. “Now they are blaming us for something that they themselves insisted on adopting,” he said.
Andaya probably has a point there, but the truth is that the supposed collusion and overpricing happened within our borders. And given our recent experience with the NBN-CEP deals with the Chinese— where the government, specifically the National Economic and Development Authority, gave the go-ahead to projects that didn’t go through a bidding process—we are inclined to give more weight to the view from the WB.
Indeed, the World Bank actually expressed concern that the project could be vulnerable to corruption. In a project document prepared for the NRIMP, the bank, on “lessons learned” regarding the project, said: “The nature and political economy of corruption in the Philippines cuts through sectors and levels of bureaucracy, and bypasses preemption and law enforcement sanctions. National procurement has, at times, been affected by collusion and bid-rigging, with high payoff margins until bid ceilings were imposed.”
The WB document adds: “This has also affected foreign-assisted projects, where a bid ceiling is usually not permitted by international financing institutions, but corrective measures to date require further strengthening to be effective.”
Among the corrective measures suggested are the following:
1. Independent procurement assessment and technical audit that strengthens transparency of the bidding process;
2. Enhanced processes for procurement, financial management, internal controls and audits of the road-management agencies; and
3. Inclusion of a new and innovative coalition of citizen and road-user groups called Road Watch in the project-management setup. Road Watch will monitor project implementation and procurement and issue periodic report cards on the performance of the road sector.
Apparently, all these proposed measures have yet to materialize. That’s probably among the reasons we have another scandal in our midst.
Certainly, we need to speed up the implementation of these reforms, including the idea of including in the governance-procurement board the presence of the Catholic Bishops’ Conference of the Philippines and the Makati Business Club. And if these measures could be put right down to the provincial and municipal levels, they would surely make a difference.
What’s happening right now is another reflection of the utter lack of transparency in the country’s public-procurement system. And this is because despite all our pretensions to democracy and social openness, we have yet to enact “sunshine laws” like the Freedom of Information Act (FOIA) that would allow citizens and media access to all government documents and reports.
New democracies that emerged since the fall of the Berlin Wall immediately enacted sunshine laws to address corruption in their societies. We failed to do the same after the fall of the Marcos dictatorship, despite several attempts. This time we should have all these sunshine laws to stop these continuing tales of corruption in high places that have pervaded every fiber of our society.
The reason we can’t bring legislators to enact a FOIA is that there seems to be no widespread clamor for it. If we could muster the forces of academe, media, law groups, chambers of commerce, religious organizations and civil-society organizations, legislators and policy- makers would be forced to listen. (Originally prepared as editorial for BusinessMirror Nov 22 2007)
THE overpriced Diosdado Macapagal Highway, also called the “road to perdition.” The controversial Northrail project. The NBN-ZTE and the cyber-education project (CEP). What are the bottom-line issues in all these government projects? Corruption and lack of transparency. And, as usual, the people who are going to pay for all these projects with their taxes, their hard-earned money, are the last to know.
Just the other day, the World Bank (WB) “deferred” the implementation of a multimillion-dollar loan to the Philippines supposedly for “phase two” of the National Roads Improvement and Management Program (NRIMP) due to supposed corruption, specifically collusion and overpricing.
“Signs of procurement problems in the first phase of the program were identified. Between 2003 and 2006, the World Bank rejected two large road contracts in three successive rounds of bidding because of strong signs of collusion and excessive pricing,” said the World Bank, explaining its decision.
Here we go again! It seems the Philippine government can’t learn from its mistakes. It’s another national embarrassment that wouldn’t help our image as a nation—whatever is left of it—abroad. Do we wonder why Transparency International now considers us as among the most corrupt countries of the world?
In fairness, the Philippine government is saying the World Bank is the one to blame for insisting on its own “flawed public-procurement system” that is not tailored to the Philippine context. “That would not have happened had the World Bank not insisted on choosing its own system,” said Rolando Andaya, the Philippine budget secretary.
The problem, Mr. Andaya explained, lies with the fact that the World Bank supposedly allows bids higher than the indicated amount as against the Philippine approach, which only takes in bids lower than the indicated amount. “Now they are blaming us for something that they themselves insisted on adopting,” he said.
Andaya probably has a point there, but the truth is that the supposed collusion and overpricing happened within our borders. And given our recent experience with the NBN-CEP deals with the Chinese— where the government, specifically the National Economic and Development Authority, gave the go-ahead to projects that didn’t go through a bidding process—we are inclined to give more weight to the view from the WB.
Indeed, the World Bank actually expressed concern that the project could be vulnerable to corruption. In a project document prepared for the NRIMP, the bank, on “lessons learned” regarding the project, said: “The nature and political economy of corruption in the Philippines cuts through sectors and levels of bureaucracy, and bypasses preemption and law enforcement sanctions. National procurement has, at times, been affected by collusion and bid-rigging, with high payoff margins until bid ceilings were imposed.”
The WB document adds: “This has also affected foreign-assisted projects, where a bid ceiling is usually not permitted by international financing institutions, but corrective measures to date require further strengthening to be effective.”
Among the corrective measures suggested are the following:
1. Independent procurement assessment and technical audit that strengthens transparency of the bidding process;
2. Enhanced processes for procurement, financial management, internal controls and audits of the road-management agencies; and
3. Inclusion of a new and innovative coalition of citizen and road-user groups called Road Watch in the project-management setup. Road Watch will monitor project implementation and procurement and issue periodic report cards on the performance of the road sector.
Apparently, all these proposed measures have yet to materialize. That’s probably among the reasons we have another scandal in our midst.
Certainly, we need to speed up the implementation of these reforms, including the idea of including in the governance-procurement board the presence of the Catholic Bishops’ Conference of the Philippines and the Makati Business Club. And if these measures could be put right down to the provincial and municipal levels, they would surely make a difference.
What’s happening right now is another reflection of the utter lack of transparency in the country’s public-procurement system. And this is because despite all our pretensions to democracy and social openness, we have yet to enact “sunshine laws” like the Freedom of Information Act (FOIA) that would allow citizens and media access to all government documents and reports.
New democracies that emerged since the fall of the Berlin Wall immediately enacted sunshine laws to address corruption in their societies. We failed to do the same after the fall of the Marcos dictatorship, despite several attempts. This time we should have all these sunshine laws to stop these continuing tales of corruption in high places that have pervaded every fiber of our society.
The reason we can’t bring legislators to enact a FOIA is that there seems to be no widespread clamor for it. If we could muster the forces of academe, media, law groups, chambers of commerce, religious organizations and civil-society organizations, legislators and policy- makers would be forced to listen. (Originally prepared as editorial for BusinessMirror Nov 22 2007)
Thursday, November 15, 2007
Should we privatize PNOC-EDC?
SO, the government is thinking of selling 60 percent of the Philippine National Oil Co.-Energy Development Corp., or PNOC-EDC. For what? Because the government has failed to meet its tax-collection targets and, therefore, would sell some prized assets to compensate for its incompetence?
We had better be clear about our objectives because we might be losing track of our long-term interests in favor of some short-term gains. We should go easy on the privatization trigger on this one. Or, as Senate President Manny Villar Jr. counseled at Wednesday’s Quijano de Manila Symposium, the key word to privatization is “judiciousness.” In this case, you have to weigh both the financials and the energy-strategy considerations.
This is precisely the message of Sens. Joker Arroyo and Mar Roxas who are pushing Resolution 203 urging the government to “hold in abeyance” the bidding of the PNOC-EDC shares worth P35 billion. Indeed, why sell a prime state asset when it’s earning money for its own business and some for the government? If we lose control of the EDC, are we not abandoning our policy objective of developing indigenous sources of energy with the sale? Maybe, maybe not—but we first have to answer these questions before we can even think of selling those assets. And we do need lots of technical inputs in making that decision. A November 21 auction date, therefore, makes it impossible for the government and its experts—if it’s even tapping any—to find out whether or not we’d need to keep holding on to a strategic 60-percent stake in such a strategic company.
Privatization has its merits. If the company doesn’t have much money, the entry of private investments could translate to more cash for energy exploration and development. Yet, in truth, the company has been doing financially well and is projected to earn a net profit of more than P7 billion this year.
Supposedly, private companies, especially if they are those huge international oil companies (IOCs) like Royal Dutch Shell, possess new technologies and management expertise necessary to recover hard-to-reach and hard-to-find oil or gas, something that could rub off on our local oil and gas professionals, thus improving our own capabilities. The Norwegians privatized Statoil, their national oil company (NOC), and that policy decision seems to be working just fine for them.
But then again, privatizing NOCs has not always been the trend globally. It’s because NOCs perform certain social functions that are quite different from the IOCs’. While IOCs are driven purely by the profit motive, NOCs worldwide were often envisioned to ensure energy security and sustain local economies. In other words, NOCs, like our very own PNOC-EDC, are there to perform certain long-term strategic national objectives.
This role has even become more important during this “age of energy-supply anxiety” characterized by the rapid rise of energy demand from the Asia-Pacific region (especially China); the continuing political uncertainties brought about by terrorist threats to energy infrastructure; production disruption in oil-producing areas like Iraq; and declining access by IOCs to proven reserves controlled by states in the Middle East, Russia and Latin America.
There is, in fact, a paradigm shift in the way NOCs are behaving in response to this anxiety, said geologist Pete Stark, vice president for Denver-based IHS Inc., an energy and engineering think tank. It used to be that NOC businesses were simply all about managing the state’s energy resources for the country’s long-term benefit. Now, NOCs—according to Stark—are becoming international exploration companies, competing with IOCs in the home as well as global marketplace. The extreme manifestation of this paradigm shift is “energy nationalism” where countries like Libya, Russia, Venezuela and Angola moved to consolidate state control away from IOCs.
What’s the Philippines’ game plan, given these new global realities? How would the selling of the country’s crown jewels affect our chances of improving our indigenous energy sources? Will privatization work for us during this time of energy nationalism? It seems that the government is not looking at these issues quite well, as its mind is largely focused on getting the fresh billions that the sale would generate. Yet, meeting short-term fiscal balance this year will never be worth the potential loss of a long-term strategic resource.
We are concerned with the moral hazard that goes with this sale. Privatization per se, granting that it’s done properly and with great transparency, is a very good policy. This is clear enough with water privatization where, despite the problems with Maynilad, access to potable water has ceased to become a political issue in Metro Manila. But privatization could be a questionable policy decision when the primary purpose is to collect the cash to compensate for government failures elsewhere, and improving the economic-policy environment becomes secondary. The sale of PNOC-EDC seems to have these characteristics.
What’s to prevent the government from conducting a fire sale of an available public asset every time the Bureaus of Internal Revenue and Customs fail to collect the desired amount of taxes? Indeed, if revenue bureaucrats could sell anything every time they fail to do their mandate, there would no longer be any incentive for policy reforms. And when we run out of assets to sell, what happens?
We had better be clear about our objectives because we might be losing track of our long-term interests in favor of some short-term gains. We should go easy on the privatization trigger on this one. Or, as Senate President Manny Villar Jr. counseled at Wednesday’s Quijano de Manila Symposium, the key word to privatization is “judiciousness.” In this case, you have to weigh both the financials and the energy-strategy considerations.
This is precisely the message of Sens. Joker Arroyo and Mar Roxas who are pushing Resolution 203 urging the government to “hold in abeyance” the bidding of the PNOC-EDC shares worth P35 billion. Indeed, why sell a prime state asset when it’s earning money for its own business and some for the government? If we lose control of the EDC, are we not abandoning our policy objective of developing indigenous sources of energy with the sale? Maybe, maybe not—but we first have to answer these questions before we can even think of selling those assets. And we do need lots of technical inputs in making that decision. A November 21 auction date, therefore, makes it impossible for the government and its experts—if it’s even tapping any—to find out whether or not we’d need to keep holding on to a strategic 60-percent stake in such a strategic company.
Privatization has its merits. If the company doesn’t have much money, the entry of private investments could translate to more cash for energy exploration and development. Yet, in truth, the company has been doing financially well and is projected to earn a net profit of more than P7 billion this year.
Supposedly, private companies, especially if they are those huge international oil companies (IOCs) like Royal Dutch Shell, possess new technologies and management expertise necessary to recover hard-to-reach and hard-to-find oil or gas, something that could rub off on our local oil and gas professionals, thus improving our own capabilities. The Norwegians privatized Statoil, their national oil company (NOC), and that policy decision seems to be working just fine for them.
But then again, privatizing NOCs has not always been the trend globally. It’s because NOCs perform certain social functions that are quite different from the IOCs’. While IOCs are driven purely by the profit motive, NOCs worldwide were often envisioned to ensure energy security and sustain local economies. In other words, NOCs, like our very own PNOC-EDC, are there to perform certain long-term strategic national objectives.
This role has even become more important during this “age of energy-supply anxiety” characterized by the rapid rise of energy demand from the Asia-Pacific region (especially China); the continuing political uncertainties brought about by terrorist threats to energy infrastructure; production disruption in oil-producing areas like Iraq; and declining access by IOCs to proven reserves controlled by states in the Middle East, Russia and Latin America.
There is, in fact, a paradigm shift in the way NOCs are behaving in response to this anxiety, said geologist Pete Stark, vice president for Denver-based IHS Inc., an energy and engineering think tank. It used to be that NOC businesses were simply all about managing the state’s energy resources for the country’s long-term benefit. Now, NOCs—according to Stark—are becoming international exploration companies, competing with IOCs in the home as well as global marketplace. The extreme manifestation of this paradigm shift is “energy nationalism” where countries like Libya, Russia, Venezuela and Angola moved to consolidate state control away from IOCs.
What’s the Philippines’ game plan, given these new global realities? How would the selling of the country’s crown jewels affect our chances of improving our indigenous energy sources? Will privatization work for us during this time of energy nationalism? It seems that the government is not looking at these issues quite well, as its mind is largely focused on getting the fresh billions that the sale would generate. Yet, meeting short-term fiscal balance this year will never be worth the potential loss of a long-term strategic resource.
We are concerned with the moral hazard that goes with this sale. Privatization per se, granting that it’s done properly and with great transparency, is a very good policy. This is clear enough with water privatization where, despite the problems with Maynilad, access to potable water has ceased to become a political issue in Metro Manila. But privatization could be a questionable policy decision when the primary purpose is to collect the cash to compensate for government failures elsewhere, and improving the economic-policy environment becomes secondary. The sale of PNOC-EDC seems to have these characteristics.
What’s to prevent the government from conducting a fire sale of an available public asset every time the Bureaus of Internal Revenue and Customs fail to collect the desired amount of taxes? Indeed, if revenue bureaucrats could sell anything every time they fail to do their mandate, there would no longer be any incentive for policy reforms. And when we run out of assets to sell, what happens?
Wednesday, November 07, 2007
Reforming the PPA, invigorating Mindanao
THE other day, the Mindanao Federation of Shippers Association called on the Philippine Ports Authority (PPA) to speed up the expansion and redevelopment of three major ports in the Mindanao, namely, the ports of Davao, General Santos and Zamboanga City. We support this call, given its tremendous positive impact not only on Mindanao but also on the entire Philippine economy.
There has been a continuing call for spreading the benefits of growth from all sectors. Even the government has been mounting similar objectives. But if our policymakers are serious about this, heeding the Mindanao shippers’ call is one of the surest bets, especially as it came following observations that the volume of cargo traffic in and out of Mindanao cities is on the upsurge. It means economic activities in the country’s second-biggest island are probably improving as well.
It’s probably a better investment than the so-called “national broadband network” which addresses nothing but the desires of lazy government bureaucrats for easy and faster access to Internet porn. Right now, Mindanao serves as the country’s food basket (producing rice, corn, sugar and livestock) as well as a major foreign-exchange generator through the production and export of agricultural and natural resource-based products, including bananas, rubber, pineapples, tuna, coconut products, mangoes, asparagus and other high-value crops. Given bigger and more efficient ports and related infrastructure, Mindanao has the potential of becoming a major growth driver for the country.
Mindanao shippers say since PPA funds are probably not enough to finance the development of these ports, the government might need to tap overseas development assistance, assuming of course that government could ensure transparency. For instance, government could tap funds from the Asian Development Bank, World Bank or the Japan Bank for International Cooperation. We cite these organizations because they seem to be sticklers for transparency and strict good governance rules, thus forcing local-government implementing agencies to behave properly.
Tapping overseas development assistance, of course, has it own limitations. If government couldn’t provide counterpart funding—not only because it doesn’t have money, but also because decision-makers in “Imperial Manila” have different priorities—nothing will happen. The best way to address the problem of funding for port infrastructure, therefore, is reforming the existing policy on port management and development to mobilize private-sector resources. If government can’t generate public money quick and fast, it can at least tweak policy and achieve the same end.
Right now, the country’s ports system—according to Gilbert Llanto, an economist from the Philippine Institute for Development Studies—is dominated by the PPA. A government agency, the PPA serves as the developer, operator, owner and regulator of ports, including those of the private sector. It also regulates cargo handling by awarding contracts to private cargo-handling services, and issues permits for the construction and operation of ports.
And how does the PPA finance its operations? From concession fees from the lease of the South Harbor; port charges such as wharfage, berthing and pilotage; and share of cargo-handling revenues from private cargo-handling operators and port charges of privately operated ports.
In other words, the PPA—according to Llanto—is suffering heavily from conflict of interest, being both owner and regulator. Since it earns money from its own ports, it has no incentive to grant permits for the construction and expansion of privately operated ports that may compete directly with PPA-owned ports. This is why there is practically no competition in the port-operations business. And since the PPA dominates the port business, it doesn’t also have the incentive to move quickly on requests for port upgrading. Mindanao shippers’ requests for upgrading the ports in Davao, General Santos and Zamboanga City have been there more than a decade ago, but the PPA and government in general has been slow to respond.
The PPA also regulates and approves tariff-rate increases in cargo handling and gets a 10-percent share from cargo-handling revenues. It, therefore, has the incentive to approve requests for tariff-rate increases since it’s going earn more money from such increases. No wonder, we have the highest shipping and port-handling costs in the Asia-Pacific region, making a lot of our exporters less competitive in world markets.
Solution? Llanto says there is a need to review and amend the PPA’s charter to separate its regulatory role from its ownership, development and operations functions. The government should consider the establishment of an independent port regulator. The ideal situation should be that the state serves as an enabler while the private sector owns and operates the ports under a competitive policy environment. The entry and exit of the private sector in this business should be wide open and transparent.
Under such an arrangement, the private sector could easily be relied upon to upgrade the ports and expand their operations once they sense there is a growing volume of cargo coming in and out. Their response to market demand would be fairly automatic. That way, shippers from Mindanao or other parts of the country don’t have to beg from PPA overlords once they suffer shipping bottlenecks. (Note: drafted as editorial for BusinessMirror, Nov 8 2007)
Related posts
1. Scandal in Philippine ports
2. Is PPA a fixer for port monopolists?
3. Reaping the whirlwind
4. Marshall Plan for Mindanao
5. Solving the Mindanao problem
6. “Disconnectedness defines danger”
7. Dysfunction in Philippine shipping policy
There has been a continuing call for spreading the benefits of growth from all sectors. Even the government has been mounting similar objectives. But if our policymakers are serious about this, heeding the Mindanao shippers’ call is one of the surest bets, especially as it came following observations that the volume of cargo traffic in and out of Mindanao cities is on the upsurge. It means economic activities in the country’s second-biggest island are probably improving as well.
It’s probably a better investment than the so-called “national broadband network” which addresses nothing but the desires of lazy government bureaucrats for easy and faster access to Internet porn. Right now, Mindanao serves as the country’s food basket (producing rice, corn, sugar and livestock) as well as a major foreign-exchange generator through the production and export of agricultural and natural resource-based products, including bananas, rubber, pineapples, tuna, coconut products, mangoes, asparagus and other high-value crops. Given bigger and more efficient ports and related infrastructure, Mindanao has the potential of becoming a major growth driver for the country.
Mindanao shippers say since PPA funds are probably not enough to finance the development of these ports, the government might need to tap overseas development assistance, assuming of course that government could ensure transparency. For instance, government could tap funds from the Asian Development Bank, World Bank or the Japan Bank for International Cooperation. We cite these organizations because they seem to be sticklers for transparency and strict good governance rules, thus forcing local-government implementing agencies to behave properly.
Tapping overseas development assistance, of course, has it own limitations. If government couldn’t provide counterpart funding—not only because it doesn’t have money, but also because decision-makers in “Imperial Manila” have different priorities—nothing will happen. The best way to address the problem of funding for port infrastructure, therefore, is reforming the existing policy on port management and development to mobilize private-sector resources. If government can’t generate public money quick and fast, it can at least tweak policy and achieve the same end.
Right now, the country’s ports system—according to Gilbert Llanto, an economist from the Philippine Institute for Development Studies—is dominated by the PPA. A government agency, the PPA serves as the developer, operator, owner and regulator of ports, including those of the private sector. It also regulates cargo handling by awarding contracts to private cargo-handling services, and issues permits for the construction and operation of ports.
And how does the PPA finance its operations? From concession fees from the lease of the South Harbor; port charges such as wharfage, berthing and pilotage; and share of cargo-handling revenues from private cargo-handling operators and port charges of privately operated ports.
In other words, the PPA—according to Llanto—is suffering heavily from conflict of interest, being both owner and regulator. Since it earns money from its own ports, it has no incentive to grant permits for the construction and expansion of privately operated ports that may compete directly with PPA-owned ports. This is why there is practically no competition in the port-operations business. And since the PPA dominates the port business, it doesn’t also have the incentive to move quickly on requests for port upgrading. Mindanao shippers’ requests for upgrading the ports in Davao, General Santos and Zamboanga City have been there more than a decade ago, but the PPA and government in general has been slow to respond.
The PPA also regulates and approves tariff-rate increases in cargo handling and gets a 10-percent share from cargo-handling revenues. It, therefore, has the incentive to approve requests for tariff-rate increases since it’s going earn more money from such increases. No wonder, we have the highest shipping and port-handling costs in the Asia-Pacific region, making a lot of our exporters less competitive in world markets.
Solution? Llanto says there is a need to review and amend the PPA’s charter to separate its regulatory role from its ownership, development and operations functions. The government should consider the establishment of an independent port regulator. The ideal situation should be that the state serves as an enabler while the private sector owns and operates the ports under a competitive policy environment. The entry and exit of the private sector in this business should be wide open and transparent.
Under such an arrangement, the private sector could easily be relied upon to upgrade the ports and expand their operations once they sense there is a growing volume of cargo coming in and out. Their response to market demand would be fairly automatic. That way, shippers from Mindanao or other parts of the country don’t have to beg from PPA overlords once they suffer shipping bottlenecks. (Note: drafted as editorial for BusinessMirror, Nov 8 2007)
Related posts
1. Scandal in Philippine ports
2. Is PPA a fixer for port monopolists?
3. Reaping the whirlwind
4. Marshall Plan for Mindanao
5. Solving the Mindanao problem
6. “Disconnectedness defines danger”
7. Dysfunction in Philippine shipping policy
Tuesday, October 23, 2007
Normalcy as weapon against terrorism
They’re funny things. Accidents. You never have them till you’re having them.—Eeyore, Pooh’s Little Instruction Book, inspired by A. A. Milne
To be feared is to fear: no one has been able to strike terror into others and at the same time enjoy peace of mind.—Seneca (5 BC-65 AD)
WAS it an accident or a bomb? Whatever the real cause behind the explosion, the best thing for us to do is get back to our normal lives while taking the usual precautions.
Tragedies like what happened on Friday tend to disrupt people’s routines, causing severe economic losses. They also distract us from pursuing the things that matter in our national life. The right thing to do, therefore, is to get on with our normal lives to minimize losses.
Entrepreneurs should go on making decisions that should create jobs. Business managers should pursue their business plans. Employees should continue reporting to their workplaces. Shopkeepers should open their shops for buyers.
Let the wheels of industry and commerce flow while the police and forensic experts do their jobs to make our country safer. If there’s one institution that could easily bring us to normalcy and regain losses, it’s the marketplace where people could mingle, share information, buy and sell goods and services.
As of this writing, investigators are increasingly thinking that the blast that caused the deaths of 11 people and injured more than a hundred may have been triggered by an accident.
It may have been due to the fumes that leaked from the huge diesel container or the methane gas from the septic tank that ignited at the basement. If that theory holds true, there’s more reason for us to get a good night’s sleep and move on—without forgetting to make accountable those whose laxity made the accident possible.
Investigators, of course, are still not ruling out the bomb-terrorism angle. It’s understandable. Jihadists have all the motivation to seek attention given the serious setbacks they have suffered in the last several years due to the arrests and deaths of many of their leaders, both in the Philippines as well as in Indonesia.
And for all our problems, the Philippines remains an open society, making us so vulnerable to violent and/or “terrorist” actions from all directions—jihadists, rogue military groups, communists or even state-sponsored elements. Anybody who wants to create mayhem and destruction can easily do so. We are not a police state—or at least we seem to think so—that puts soldiers and cops in all nooks and crannies of the land. But it’s the same openness that makes us so resilient against terrorist actions.
Why? It’s in the nature of terrorism. Terrorists may have different motives and psychological makeup, but they all want to see ordinary citizens immobilized by fear. Terrorists want us to be scared to death and shun shopping malls, coffee shops, public markets and open spaces. They want us to live in the shadows, just like them.
Why? It’s because terrorists often feel helpless and confused about the rapid economic and social changes in society, and it’s only through fear and intimidation that they can assert control and gain attention. And they want to inflict immediate damage on people and their properties, hoping the paralysis that will follow will have a long-term impact on the economy. Normalcy, therefore, and the continuing openness of our society could easily undermine the goals of terrorists.
Necessarily, open societies like ours should remain vigilant and assiduous in our pursuit of those malevolent actors. Our justice system should continuously pursue them and bring them to justice. And while we are doing this, let’s get on with our normal daily routines about living and loving.
The second theory on the cause of the explosion points to some rogue elements in the military—one group out to destabilize the government, especially in the wake of recent controversies about the national broadband network (NBN) and the supposed bribery of local officials and legislators by Malacañang to buy their loyalty.
And the third theory being peddled by critics of the government is that the Makati blast was probably a way to distract people’s attention from these political controversies. In short, it was an operation straight out of Malacañang; or worse, insanely loyal rogue elements carrying out “black operations” for an unaccountable force working outside the chain of command: in short, a madman’s dream.
If the third theory is true, normalcy should mean that the Senate will continue investigating the NBN mess. The senators should also investigate recent efforts by Malacañang to purchase the loyalty of legislators and local government executives in view of the ongoing controversies.
The church should continue calling for moral reforms in the highest levels of powers. The media should continue investigating the shenanigans that seem to be popping up left and right under the government of President Arroyo. And militants and activists should continue their business of demanding fairness, justice and morality in this benighted land.
To paraphrase the great poet Dylan Thomas: We should not go gentle into that good night. Old age should burn and rave at close of day. We should rage, and rage against the dying of the light. (Note: I wrote this as editorial piece for BusinessMirror Oct 23 2007)
To be feared is to fear: no one has been able to strike terror into others and at the same time enjoy peace of mind.—Seneca (5 BC-65 AD)
WAS it an accident or a bomb? Whatever the real cause behind the explosion, the best thing for us to do is get back to our normal lives while taking the usual precautions.
Tragedies like what happened on Friday tend to disrupt people’s routines, causing severe economic losses. They also distract us from pursuing the things that matter in our national life. The right thing to do, therefore, is to get on with our normal lives to minimize losses.
Entrepreneurs should go on making decisions that should create jobs. Business managers should pursue their business plans. Employees should continue reporting to their workplaces. Shopkeepers should open their shops for buyers.
Let the wheels of industry and commerce flow while the police and forensic experts do their jobs to make our country safer. If there’s one institution that could easily bring us to normalcy and regain losses, it’s the marketplace where people could mingle, share information, buy and sell goods and services.
As of this writing, investigators are increasingly thinking that the blast that caused the deaths of 11 people and injured more than a hundred may have been triggered by an accident.
It may have been due to the fumes that leaked from the huge diesel container or the methane gas from the septic tank that ignited at the basement. If that theory holds true, there’s more reason for us to get a good night’s sleep and move on—without forgetting to make accountable those whose laxity made the accident possible.
Investigators, of course, are still not ruling out the bomb-terrorism angle. It’s understandable. Jihadists have all the motivation to seek attention given the serious setbacks they have suffered in the last several years due to the arrests and deaths of many of their leaders, both in the Philippines as well as in Indonesia.
And for all our problems, the Philippines remains an open society, making us so vulnerable to violent and/or “terrorist” actions from all directions—jihadists, rogue military groups, communists or even state-sponsored elements. Anybody who wants to create mayhem and destruction can easily do so. We are not a police state—or at least we seem to think so—that puts soldiers and cops in all nooks and crannies of the land. But it’s the same openness that makes us so resilient against terrorist actions.
Why? It’s in the nature of terrorism. Terrorists may have different motives and psychological makeup, but they all want to see ordinary citizens immobilized by fear. Terrorists want us to be scared to death and shun shopping malls, coffee shops, public markets and open spaces. They want us to live in the shadows, just like them.
Why? It’s because terrorists often feel helpless and confused about the rapid economic and social changes in society, and it’s only through fear and intimidation that they can assert control and gain attention. And they want to inflict immediate damage on people and their properties, hoping the paralysis that will follow will have a long-term impact on the economy. Normalcy, therefore, and the continuing openness of our society could easily undermine the goals of terrorists.
Necessarily, open societies like ours should remain vigilant and assiduous in our pursuit of those malevolent actors. Our justice system should continuously pursue them and bring them to justice. And while we are doing this, let’s get on with our normal daily routines about living and loving.
The second theory on the cause of the explosion points to some rogue elements in the military—one group out to destabilize the government, especially in the wake of recent controversies about the national broadband network (NBN) and the supposed bribery of local officials and legislators by Malacañang to buy their loyalty.
And the third theory being peddled by critics of the government is that the Makati blast was probably a way to distract people’s attention from these political controversies. In short, it was an operation straight out of Malacañang; or worse, insanely loyal rogue elements carrying out “black operations” for an unaccountable force working outside the chain of command: in short, a madman’s dream.
If the third theory is true, normalcy should mean that the Senate will continue investigating the NBN mess. The senators should also investigate recent efforts by Malacañang to purchase the loyalty of legislators and local government executives in view of the ongoing controversies.
The church should continue calling for moral reforms in the highest levels of powers. The media should continue investigating the shenanigans that seem to be popping up left and right under the government of President Arroyo. And militants and activists should continue their business of demanding fairness, justice and morality in this benighted land.
To paraphrase the great poet Dylan Thomas: We should not go gentle into that good night. Old age should burn and rave at close of day. We should rage, and rage against the dying of the light. (Note: I wrote this as editorial piece for BusinessMirror Oct 23 2007)
Thursday, October 18, 2007
Abolish the SK!
“The deepest definition of youth is life as yet untouched by tragedy.” —Alfred North Whitehead (1861-1947)
AS the country prepares for the upcoming elections for the Sangguniang Kabataan (SK), it’s time to rethink the relevance of this “institution” in the country’s political system. At the outset, allow us to say let’s consider abolishing it. With the corrupt nature of the country’s politics today, such an early initiation into the arena would conceivably heighten the risk of corrupting our children, turning them into cynical political operators at an early age.
The SK was supposedly a mechanism to channel the energies of the youth in nation-building. It was a nice idea, really, whose parentage could be traced to our national hero Jose Rizal’s prophetic words about the youth as “the future of the motherland.” Indeed, it’s nice to think of the young people planning their own sports activities, helping in the cleanup and management of the local environment, or even doing small projects like antidrugs campaigns as well as values education.
The reality, however, strays far from such expectations. Even before the start of the election-campaign season, we have seen youngsters brazenly aping the deadly sins of traditional politicians. We have seen young candidates resorting to the hakot system, hiring trucks and vehicles for their “supporters” to make an impression of popular support, as they troop to the Comelec office to file their candidacies. In essence, they are violating the rule on premature campaigning, but these youngsters say they are not since they don’t have posters saying “vote for so and so.” It’s a clever trick that most politicians resort to all the time.
SK candidates are also not supposed to spend so much money for campaigning. And yet, we can already see lots of huge posters of SK candidates around. Where did these young people get the money? This question is important because it seems we are actually socializing these young people in money politics in so early an age. And it’s not far-fetched that some of these young people might eventually be tempted to buy votes and manipulate the entire electoral process.
We are not against active participation of the youth in community affairs per se. In fact, we would like to encourage them. But politicizing this process is not the way to go. These days, there’s a lot of anecdotal evidence indicating that many SKs have become extensions of local political dynasties. Many of them have drifted into the web of the sleazy and corrupt network of patronage politics. Some of these youngsters ended up not finishing their studies and became local wheeler-dealers.
“So young and yet so corrupt.”
Does that line ring a bell?
Instead, why not just hold a simple local assembly of young people for them to elect among themselves their representatives, the way school kids elect their class officers? And once they have their own set of officers in the communities, they still can suggest important legislation by simply approaching their local adult legislators, whose job really is to draft local ordinances and rules for local development.
We are suggesting these simple roles for them in community affairs because at such a tender age, these kids should really be spending their time in school. Parents and the community as a whole should give time for the kids to study, to play, and enjoy local educational and ennobling cultural opportunities.
Let’s give the business of governance to adults. Let’s allow our children to enjoy their youth. A few years from now these young people will also become adults. Then they will have their time to serve the community and the nation as a whole. (Originally drafted as editorial for BusinessMirror, 19 October 2007)
AS the country prepares for the upcoming elections for the Sangguniang Kabataan (SK), it’s time to rethink the relevance of this “institution” in the country’s political system. At the outset, allow us to say let’s consider abolishing it. With the corrupt nature of the country’s politics today, such an early initiation into the arena would conceivably heighten the risk of corrupting our children, turning them into cynical political operators at an early age.
The SK was supposedly a mechanism to channel the energies of the youth in nation-building. It was a nice idea, really, whose parentage could be traced to our national hero Jose Rizal’s prophetic words about the youth as “the future of the motherland.” Indeed, it’s nice to think of the young people planning their own sports activities, helping in the cleanup and management of the local environment, or even doing small projects like antidrugs campaigns as well as values education.
The reality, however, strays far from such expectations. Even before the start of the election-campaign season, we have seen youngsters brazenly aping the deadly sins of traditional politicians. We have seen young candidates resorting to the hakot system, hiring trucks and vehicles for their “supporters” to make an impression of popular support, as they troop to the Comelec office to file their candidacies. In essence, they are violating the rule on premature campaigning, but these youngsters say they are not since they don’t have posters saying “vote for so and so.” It’s a clever trick that most politicians resort to all the time.
SK candidates are also not supposed to spend so much money for campaigning. And yet, we can already see lots of huge posters of SK candidates around. Where did these young people get the money? This question is important because it seems we are actually socializing these young people in money politics in so early an age. And it’s not far-fetched that some of these young people might eventually be tempted to buy votes and manipulate the entire electoral process.
We are not against active participation of the youth in community affairs per se. In fact, we would like to encourage them. But politicizing this process is not the way to go. These days, there’s a lot of anecdotal evidence indicating that many SKs have become extensions of local political dynasties. Many of them have drifted into the web of the sleazy and corrupt network of patronage politics. Some of these youngsters ended up not finishing their studies and became local wheeler-dealers.
“So young and yet so corrupt.”
Does that line ring a bell?
Instead, why not just hold a simple local assembly of young people for them to elect among themselves their representatives, the way school kids elect their class officers? And once they have their own set of officers in the communities, they still can suggest important legislation by simply approaching their local adult legislators, whose job really is to draft local ordinances and rules for local development.
We are suggesting these simple roles for them in community affairs because at such a tender age, these kids should really be spending their time in school. Parents and the community as a whole should give time for the kids to study, to play, and enjoy local educational and ennobling cultural opportunities.
Let’s give the business of governance to adults. Let’s allow our children to enjoy their youth. A few years from now these young people will also become adults. Then they will have their time to serve the community and the nation as a whole. (Originally drafted as editorial for BusinessMirror, 19 October 2007)
A skunk by any other name
WHAT have Malacañang’s “gifts” to members of Congress and some local government executives got to do with an overvalued peso that’s hurting exporters and overseas workers and killing off jobs? Simple: that “gift,” Malacañang’s “politically correct” term for bribes, is the same reason why we remain one of the lousiest performers in terms of investment inflows.
The other day, the United Nations Conference on Trade and Development (Unctad) released its report on global trends in investment flows, saying that the Philippines is not attracting investments, specifically foreign direct investments (FDIs), compared with its neighbors despite its huge potentials. Unctad, in effect, is saying that those publicly funded investment-promotion agencies—and there are four of them—are pulling our legs every time they release those dazzling figures on investment commitments.
Apparently, many of those investment pledges never materialize after Board of Investments (BOI) and Philippine Economic Zone Authority (Peza) gave them fiscal perks, including tax holidays and duty-free importation of machines, among many others.
We say this because despite the exuberant numbers from both the BOI and Peza, the country’s figures on capital formation hardly improved in the last several years. Imports, likewise, have not been rising, an indication that business managers and factory owners are not investing in new machines. Nor are they upgrading their office equipment or buying new ones.
That’s the same reason why we have an overvalued peso that is hurting the country’s bread and butter: the exporters and the families of OFWs. The OFWs have been sending dollars in increasing amounts. The problem is the business sector, the factories and importers are not using much of those dollars due to political uncertainties. Thus, the accumulation of those dollars within the borders is causing the peso’s overvaluation.
In fairness, FDI figures released by the Bangko Sentral ng Pilipinas have also been posting encouraging trends. But it’s likely that those figures simply reflect intercompany transfers that don’t translate to the building of factories. Proof: the jobs picture has not been improving despite the tremendous hype about a 7-plus-percent growth rate in the last two quarters.
Why? It’s because of lack of investor confidence. Despite some good economic statistics, investors are holding back. They are waiting for 2010 when the Philippines has a new president, and they are hoping that we could have a morally viable presidency then than we have today.
Some growth areas like business process outsourcing, mining, banking, wholesale and retail trade, and construction—of course—are growing quite well, but that’s because investors would rather put their bets in areas where they have really great chances of succeeding. Determinants of these new growth drivers are quite predictable owing to factors like the availability of cheap, skilled and English-speaking white-collar workers; the rising dollar remittances that props demand for consumer items; and housing.
But they are not plunking their money into job-creating factories and infrastructure development because of so many unpredictable variables. It’s so difficult to win a bid for infrastructure projects here because of the administration’s tendency to favor suppliers that are also willing to offer bribes to local officials just to get the contract. Traditionally, most of our investments here are from American and European companies. But under the current dispensation, they are wary about committing resources because—as publicly listed companies governed by strict disclosure rules back home—they could never justify the extra cost (“politically correct” term for bribes) that they would need to put here just to win business contracts. Thus, when compared with Chinese firms, many of them state-owned—with so much money to splurge but with too little public-accountability requirements to be bothered with—American, European and Japanese companies are always at a “competitive disadvantage.”
It is through this lens that we need to look at the ongoing controversy regarding the national broadband network and the cyber-education project. The Senate is currently investigating these deals and we still cannot figure out where it will lead us to. But it seems some officials in the Executive have internalized the ethos of corruption and wholesale bribery so well as to come up with bribes—nay, gifts—just to secure the loyalty of the members of the House of Representatives and some governors.
It’s a “gift,” said Malacañang spin masters. No, it’s an “allowance” for legislative work, they said days after. No, those are funds intended to help finance development projects, they said another day. But we know it’s a bribe, pure and simple. There are no receipts, and the Department of Budget and management denied it released money from government coffers.
A skunk by any other name stinks just as bad.
So where did the money come from? One can only assume they came from illegal sources. There’s no other way to explain that.
Malacañang has practically institutionalized bribery right at the top. It’s so brazen that any person with a sense of decency would be nauseated just hearing about it.
It’s this endless tale of massive corruption in high places that’s causing all our problems, and preventing us from moving forward.
The other day, the United Nations Conference on Trade and Development (Unctad) released its report on global trends in investment flows, saying that the Philippines is not attracting investments, specifically foreign direct investments (FDIs), compared with its neighbors despite its huge potentials. Unctad, in effect, is saying that those publicly funded investment-promotion agencies—and there are four of them—are pulling our legs every time they release those dazzling figures on investment commitments.
Apparently, many of those investment pledges never materialize after Board of Investments (BOI) and Philippine Economic Zone Authority (Peza) gave them fiscal perks, including tax holidays and duty-free importation of machines, among many others.
We say this because despite the exuberant numbers from both the BOI and Peza, the country’s figures on capital formation hardly improved in the last several years. Imports, likewise, have not been rising, an indication that business managers and factory owners are not investing in new machines. Nor are they upgrading their office equipment or buying new ones.
That’s the same reason why we have an overvalued peso that is hurting the country’s bread and butter: the exporters and the families of OFWs. The OFWs have been sending dollars in increasing amounts. The problem is the business sector, the factories and importers are not using much of those dollars due to political uncertainties. Thus, the accumulation of those dollars within the borders is causing the peso’s overvaluation.
In fairness, FDI figures released by the Bangko Sentral ng Pilipinas have also been posting encouraging trends. But it’s likely that those figures simply reflect intercompany transfers that don’t translate to the building of factories. Proof: the jobs picture has not been improving despite the tremendous hype about a 7-plus-percent growth rate in the last two quarters.
Why? It’s because of lack of investor confidence. Despite some good economic statistics, investors are holding back. They are waiting for 2010 when the Philippines has a new president, and they are hoping that we could have a morally viable presidency then than we have today.
Some growth areas like business process outsourcing, mining, banking, wholesale and retail trade, and construction—of course—are growing quite well, but that’s because investors would rather put their bets in areas where they have really great chances of succeeding. Determinants of these new growth drivers are quite predictable owing to factors like the availability of cheap, skilled and English-speaking white-collar workers; the rising dollar remittances that props demand for consumer items; and housing.
But they are not plunking their money into job-creating factories and infrastructure development because of so many unpredictable variables. It’s so difficult to win a bid for infrastructure projects here because of the administration’s tendency to favor suppliers that are also willing to offer bribes to local officials just to get the contract. Traditionally, most of our investments here are from American and European companies. But under the current dispensation, they are wary about committing resources because—as publicly listed companies governed by strict disclosure rules back home—they could never justify the extra cost (“politically correct” term for bribes) that they would need to put here just to win business contracts. Thus, when compared with Chinese firms, many of them state-owned—with so much money to splurge but with too little public-accountability requirements to be bothered with—American, European and Japanese companies are always at a “competitive disadvantage.”
It is through this lens that we need to look at the ongoing controversy regarding the national broadband network and the cyber-education project. The Senate is currently investigating these deals and we still cannot figure out where it will lead us to. But it seems some officials in the Executive have internalized the ethos of corruption and wholesale bribery so well as to come up with bribes—nay, gifts—just to secure the loyalty of the members of the House of Representatives and some governors.
It’s a “gift,” said Malacañang spin masters. No, it’s an “allowance” for legislative work, they said days after. No, those are funds intended to help finance development projects, they said another day. But we know it’s a bribe, pure and simple. There are no receipts, and the Department of Budget and management denied it released money from government coffers.
A skunk by any other name stinks just as bad.
So where did the money come from? One can only assume they came from illegal sources. There’s no other way to explain that.
Malacañang has practically institutionalized bribery right at the top. It’s so brazen that any person with a sense of decency would be nauseated just hearing about it.
It’s this endless tale of massive corruption in high places that’s causing all our problems, and preventing us from moving forward.
Monday, October 15, 2007
Indeed, only the truth is Neda’s redemption
THE refusal of the National Economic and Development Authority (Neda) to hand over to the Senate certain documents related to the national broadband network (NBN) controversy seems to confirm the view that Neda is part of the problem. It signals how Neda as an institution seem to have lost its way and drifted into the web of a corrupt bureaucracy that is hampering our efforts as a country to achieve progress.
Is Neda trying to hide something fishy as regards the national broadband network deal? Is it part of the huge sleazy transaction? Thus far there isn’t anything that gives reason to believe any one in Neda, from its top brass to the hardworking technical staff below, has made money from this or any other project—the integrity, or at least belief in the integrity, of its individual staffers represents the institution’s one noteworthy quality—but at the rate things have been going, many people understandably start to suspect that someone or some people in the agency is covering up for something stinky.
We used to call Neda the National Economic Council (NEC), a public agency funded by people’s taxes to coordinate government plans, policies and programs. Since its inception, the Filipino people always looked at Neda as an institution free of the taint of corruption and sleazy compromises that characterized Philippine politics—until the NBN came.
It’s unfortunate because prior to the NBN controversy, Neda has always been looked up to by the general public as a public agency that is above partisan and rent-seeking politics. Since the time of Marcos, Neda has never been linked to corrupt deals.
The common perception then seems to be that Neda is staffed by nonpolitical and geeky types whose judgments vis-à-vis programs and projects brought to their attention for evaluation and approval are guided by objective and sound technical and financial assessments and not by political considerations or instincts.
Neda’s recent actions therefore seemed to indicate that, as an institution, it has been dragged to the gutter of survival politics of this administration. The claim of “executive privilege” that its officers now keep invoking has been a classic Malacañang ploy to prevent Congress and the general public from unearthing the truth about controversial deals recently entered into, with questionable characters playing dubious roles.
Do Neda officials really think they can fend off Congress from seeking the truth? We think, however, that this question is secondary. The primary issue is, to what extent would Neda sacrifice its reputation and credibility to save a very unpopular leader or a cause that has been questioned and deserves a just closure?
For giving its approval to a project that was tainted by bribery and corruption (the offer having been exposed by Neda’s former head no less), for its failure to perform due diligence, it has destroyed its credibility as an organization. The only way it can regain this credibility is by coming clean and giving complete access to all the pertinent documents to Congress and the Filipino people. It could choose to tough it out with Congress, but it can only do so at the risk of completely losing the trust and confidence of the general public.
Do Neda officials really think they could ignore Congress’ subpoena powers forever? The doctrine of “executive privilege” by itself is a tenuous ground to stand on. There is no specific constitutional provision on that. The lawyers simply assume that executive privilege is embedded in the separation of powers between and among the Executive, Legislative and the Judiciary. And given the gravity of the issue—a multibillion-peso loan allegedly marred by bribery and wholesale corruption—it’s only a matter of time before they have to cave in to the clamor, not only from Congress, but the citizenry.
Section 5 of Executive Order 230, which reorganized the Neda, says: “In the formulation of basic policies, plans, programs and projects, there shall be maximum participation by and consultation with concerned private-sector groups, community organizations and beneficiaries and local government units in order to ensure that priority needs are incorporated into such policies, plans, programs and projects…”
The provision mandate Neda to ensure “maximum participation” by the private sector and civil society in development planning. Transparency and openness is assumed in the said mandate.
As of this writing, the news came in that Neda officials had declared that only a court order will compel them to open the NBN documents to the public. How they will then, given the premise such a court order indeed comes, make those fine distinctions between “official papers” and “official deliberations” is another thing worth watching. This is one game that won’t end that easily. The teasing out for truth is a long, difficult struggle in this country, as recent events have shown. The last thing that exercise needs is a respected central planning agency seen as having allowed professionalism to become subservient to politics. Indeed, complete transparency will be Neda’s atonement and redemption. There is no other way. (Note: written as editorial for BusinessMirror, Oct 16 2007)
Is Neda trying to hide something fishy as regards the national broadband network deal? Is it part of the huge sleazy transaction? Thus far there isn’t anything that gives reason to believe any one in Neda, from its top brass to the hardworking technical staff below, has made money from this or any other project—the integrity, or at least belief in the integrity, of its individual staffers represents the institution’s one noteworthy quality—but at the rate things have been going, many people understandably start to suspect that someone or some people in the agency is covering up for something stinky.
We used to call Neda the National Economic Council (NEC), a public agency funded by people’s taxes to coordinate government plans, policies and programs. Since its inception, the Filipino people always looked at Neda as an institution free of the taint of corruption and sleazy compromises that characterized Philippine politics—until the NBN came.
It’s unfortunate because prior to the NBN controversy, Neda has always been looked up to by the general public as a public agency that is above partisan and rent-seeking politics. Since the time of Marcos, Neda has never been linked to corrupt deals.
The common perception then seems to be that Neda is staffed by nonpolitical and geeky types whose judgments vis-à-vis programs and projects brought to their attention for evaluation and approval are guided by objective and sound technical and financial assessments and not by political considerations or instincts.
Neda’s recent actions therefore seemed to indicate that, as an institution, it has been dragged to the gutter of survival politics of this administration. The claim of “executive privilege” that its officers now keep invoking has been a classic Malacañang ploy to prevent Congress and the general public from unearthing the truth about controversial deals recently entered into, with questionable characters playing dubious roles.
Do Neda officials really think they can fend off Congress from seeking the truth? We think, however, that this question is secondary. The primary issue is, to what extent would Neda sacrifice its reputation and credibility to save a very unpopular leader or a cause that has been questioned and deserves a just closure?
For giving its approval to a project that was tainted by bribery and corruption (the offer having been exposed by Neda’s former head no less), for its failure to perform due diligence, it has destroyed its credibility as an organization. The only way it can regain this credibility is by coming clean and giving complete access to all the pertinent documents to Congress and the Filipino people. It could choose to tough it out with Congress, but it can only do so at the risk of completely losing the trust and confidence of the general public.
Do Neda officials really think they could ignore Congress’ subpoena powers forever? The doctrine of “executive privilege” by itself is a tenuous ground to stand on. There is no specific constitutional provision on that. The lawyers simply assume that executive privilege is embedded in the separation of powers between and among the Executive, Legislative and the Judiciary. And given the gravity of the issue—a multibillion-peso loan allegedly marred by bribery and wholesale corruption—it’s only a matter of time before they have to cave in to the clamor, not only from Congress, but the citizenry.
Section 5 of Executive Order 230, which reorganized the Neda, says: “In the formulation of basic policies, plans, programs and projects, there shall be maximum participation by and consultation with concerned private-sector groups, community organizations and beneficiaries and local government units in order to ensure that priority needs are incorporated into such policies, plans, programs and projects…”
The provision mandate Neda to ensure “maximum participation” by the private sector and civil society in development planning. Transparency and openness is assumed in the said mandate.
As of this writing, the news came in that Neda officials had declared that only a court order will compel them to open the NBN documents to the public. How they will then, given the premise such a court order indeed comes, make those fine distinctions between “official papers” and “official deliberations” is another thing worth watching. This is one game that won’t end that easily. The teasing out for truth is a long, difficult struggle in this country, as recent events have shown. The last thing that exercise needs is a respected central planning agency seen as having allowed professionalism to become subservient to politics. Indeed, complete transparency will be Neda’s atonement and redemption. There is no other way. (Note: written as editorial for BusinessMirror, Oct 16 2007)
Wednesday, October 10, 2007
Solving the "strong peso" puzzle
The borrowing mix is important. We should keep reminding the government that we have lots of dollars. Why are we still borrowing from the outside, like the NBN? Just borrow dollars domestically and then prepay our debt. Then you will see the exchange rate will begin to rise to the benefit of OFWs. —Dr. Raul Fabella, professor, UP School of Economics
IT looks bizarre but it seems we are the only country in the world where the gross domestic product (GDP) is registering good numbers while some factories are shedding off thousands of jobs. In the latest labor-force survey, it appears the industry sector lost more than a hundred thousand jobs, the experts say.
That figure, of course, is probably inaccurate since the labor-force survey doesn’t really count jobs created and lost, but simply registers the difference between the number of employed persons per industry at present and in last year’s labor-force survey.
So what analysts do is simply get the difference between the present and previous employment figures to get the supposed number of jobs lost or created—a meaningless statistic, actually, when one is tracking the employment impact of GDP figures.
Nevertheless, the difference of about a hundred thousand jobs in the current survey suggests that we are not getting strong in job creation.
Yesterday our banner story dwelt on the condition of exporters downscaling their operations after being hit by the impact of the steadily appreciating peso. We are not talking about some “corporate downsizing” here to achieve efficiency. What we are witnessing is probably the hollowing out of the Philippine economy caused by the very reason we have those great GDP numbers in the first place: dollar remittances.
Exporters downscaling their business could only mean they are sending off workers into the streets. When businesses are getting less pesos for their dollars earned from selling goods and services abroad, there are only two options: either close shop, or minimize losses by scaling down operations, hoping that things will improve someday.
And yet, it’s not likely that things will get worse for exporters as well as for OFWs, unless the government does something. For long, government officials have been saying that the appreciation of the peso has been “market-driven” and therefore nothing can be done about it.
This is a lame excuse for inaction. The industries—those companies producing tangible products and providing jobs to those who are not “skilled enough” to work in outsourcing—are losing competitiveness. If the government doesn’t do anything, the economy will continue to hollow out as factory managers and business owners are likely to sell or close their factories and concentrate on buying and selling products produced by the Chinese, Vietnamese and the Thais.
In fact, this has been a continuing trend so far, as manifested by the continuing decline in the value of production index in the monthly integrated survey of selected industries. And it’s hurting us in terms of thousands of jobs lost.
And it’s going to polarize the economy even further. More than 60 percent of the country’s exports are accounted for by electronics. But these big exporters are not hurt by the strong peso because their raw materials and intermediate inputs are delivered on consignment basis.
Besides, these companies enjoy a battery of fiscal incentives like income-tax holidays, duty-free importation of machines, and duty-free importation of raw and intermediate inputs. Most of these firms operate in special economic zones; hence, they enjoy the added benefits of subsidized energy rates.
Those who are hurting are the small exporters who don’t have these perks. But since they are mostly labor-intensive operations, the closure of these small firms are likely to render so many poor people jobless, thus accentuating inequality.
But could the government really do anything about the peso-dollar parity given that the peso value of dollars is influenced by the local supply and demand as well as certain global dynamics? We say yes.
Certainly, the Bangko Sentral ng Pilipinas (BSP) has all the powers, like raising the country’s international reserve from, say, four months’ worth of imports to about a year as what our neighbors did. That would surely raise demand for dollars that will check the continuing overvaluation of the peso. The central bank is supposedly independent and Malacañang, therefore, is not supposed to influence the institution.
Still, that’s no excuse because Malacañang has other instruments in its tool kit. Take it from University of the Philippines economist Raul Fabella, who favors an “aggressive” foreign exchange-rate policy to ensure the competitiveness of the country’s export-oriented industries.
There are several ways the government could change the dollar-supply and -demand picture, he said lately, and one of them is for the government to stop borrowing dollars from abroad. For important projects, the government, instead, should source dollars from within the Philippine borders by borrowing greenbacks from the BSP. That’s shooting two birds with one stone: not only could it help exporters, it will also curb corruption à la the controversial national broadband network deal and the cyber education project now being investigated in the Senate. (Written as editorial for BusinessMirror, 11 Oct 2007)
IT looks bizarre but it seems we are the only country in the world where the gross domestic product (GDP) is registering good numbers while some factories are shedding off thousands of jobs. In the latest labor-force survey, it appears the industry sector lost more than a hundred thousand jobs, the experts say.
That figure, of course, is probably inaccurate since the labor-force survey doesn’t really count jobs created and lost, but simply registers the difference between the number of employed persons per industry at present and in last year’s labor-force survey.
So what analysts do is simply get the difference between the present and previous employment figures to get the supposed number of jobs lost or created—a meaningless statistic, actually, when one is tracking the employment impact of GDP figures.
Nevertheless, the difference of about a hundred thousand jobs in the current survey suggests that we are not getting strong in job creation.
Yesterday our banner story dwelt on the condition of exporters downscaling their operations after being hit by the impact of the steadily appreciating peso. We are not talking about some “corporate downsizing” here to achieve efficiency. What we are witnessing is probably the hollowing out of the Philippine economy caused by the very reason we have those great GDP numbers in the first place: dollar remittances.
Exporters downscaling their business could only mean they are sending off workers into the streets. When businesses are getting less pesos for their dollars earned from selling goods and services abroad, there are only two options: either close shop, or minimize losses by scaling down operations, hoping that things will improve someday.
And yet, it’s not likely that things will get worse for exporters as well as for OFWs, unless the government does something. For long, government officials have been saying that the appreciation of the peso has been “market-driven” and therefore nothing can be done about it.
This is a lame excuse for inaction. The industries—those companies producing tangible products and providing jobs to those who are not “skilled enough” to work in outsourcing—are losing competitiveness. If the government doesn’t do anything, the economy will continue to hollow out as factory managers and business owners are likely to sell or close their factories and concentrate on buying and selling products produced by the Chinese, Vietnamese and the Thais.
In fact, this has been a continuing trend so far, as manifested by the continuing decline in the value of production index in the monthly integrated survey of selected industries. And it’s hurting us in terms of thousands of jobs lost.
And it’s going to polarize the economy even further. More than 60 percent of the country’s exports are accounted for by electronics. But these big exporters are not hurt by the strong peso because their raw materials and intermediate inputs are delivered on consignment basis.
Besides, these companies enjoy a battery of fiscal incentives like income-tax holidays, duty-free importation of machines, and duty-free importation of raw and intermediate inputs. Most of these firms operate in special economic zones; hence, they enjoy the added benefits of subsidized energy rates.
Those who are hurting are the small exporters who don’t have these perks. But since they are mostly labor-intensive operations, the closure of these small firms are likely to render so many poor people jobless, thus accentuating inequality.
But could the government really do anything about the peso-dollar parity given that the peso value of dollars is influenced by the local supply and demand as well as certain global dynamics? We say yes.
Certainly, the Bangko Sentral ng Pilipinas (BSP) has all the powers, like raising the country’s international reserve from, say, four months’ worth of imports to about a year as what our neighbors did. That would surely raise demand for dollars that will check the continuing overvaluation of the peso. The central bank is supposedly independent and Malacañang, therefore, is not supposed to influence the institution.
Still, that’s no excuse because Malacañang has other instruments in its tool kit. Take it from University of the Philippines economist Raul Fabella, who favors an “aggressive” foreign exchange-rate policy to ensure the competitiveness of the country’s export-oriented industries.
There are several ways the government could change the dollar-supply and -demand picture, he said lately, and one of them is for the government to stop borrowing dollars from abroad. For important projects, the government, instead, should source dollars from within the Philippine borders by borrowing greenbacks from the BSP. That’s shooting two birds with one stone: not only could it help exporters, it will also curb corruption à la the controversial national broadband network deal and the cyber education project now being investigated in the Senate. (Written as editorial for BusinessMirror, 11 Oct 2007)
Monday, October 08, 2007
It's the farm, stupid!
LAST week Sen. Edgardo Angara called for the extension of the Agriculture Competitiveness Enhancement Fund (Acef), which is due to expire next year. We support that call.
The Acef comes from the proceeds of the importation of minimum access volumes (MAV) that we promised our trade partners under the Uruguay Round of Trade Agreements that eventually ushered in the World Trade Organization.
In that agreement, countries committed to convert quantitative restrictions (QRs) on imports into high or equivalent tariff, but allowed small volumes of minimum access imports to facilitate trade. That was not the best way to encourage trade, but it was the most convenient way to incrementally reform policies that, for a long time, have been hampering import and export of farm products.
Local farmers’ group naturally opposed the “tariffication” of QRs. They eventually budged when the government promised greater funding for “safety nets” which the Department of Agriculture (DA) called “competitiveness enhancement funds.” Part of the money was to come from the proceeds of the MAV, an amount that DA spin masters later called the Acef.
Simply put, the Acef is part of the promise to the farmers and fishers who, during that time, were thought to be among those at risk from a liberal trading order. That promise for safety nets was never really sustained as the DA budget waned a few years after the GATT-Uruguay Round Agreement was ratified.
Nevertheless, the Acef has provided some money for important farm and fishery projects like irrigation, farm-to-market roads, postharvest equipment and facilities, research and development, and marketing infrastructure, among others.
Four years after the fund was made available to farmers, the Acef, according to Angara, financed 93 sugar projects and 56 other projects in livestock, poultry, fruits and vegetables.
“As of 2006, Acef still had a balance of P5.81 billion and funded 173 projects worth P2.76 billion that year,” he said. “An additional 55 projects worth P1.14 billion was approved by the Acef committee this year.”
The Acef money, amounting to P1.9 billion this year, has also been also used to finance small farmers’ credit needs.
With the expiration of the Acef fund this year, however, this kind of money will revert to the national treasury, thus depriving farmers the much-needed resources for countryside development.
Of course, we don’t really know how effective the DA has used those billions of Acef money. It’s about to expire, and yet we never saw any effort to tell the public whether or not the money was really mobilized effectively and equitably.
Like most public monies being handled by the machineries of the state, there are temptations that some bureaucrats would dispense of the money for political and personal reasons. The fertilizer fund of Joc-joc Bolante, former undersecretary of the DA, easily comes to mind.
It’s also possible that some of this money may have been used to finance projects by rich and politically connected “farmers,” and not those who really need them. In this case it would be necessary for the DA or some civil-society groups to scrutinize them and show the results to the public.
Given this consideration, however, nothing yet beats the idea that the farm sector needs the Acef to enhance its competitiveness. In fact, this is just the best time to put more attention to the farm sector now that the economy has shown greater resiliency.
In the last several years, Philippine GDP has been growing quite decently and government planners have been wondering how to spread the growth to the less fortunate. The solution, really, is simple: pour more resources into the countryside, assuming enough safeguards are put in place to prevent a similar Bolante caper.
There’s no other way: close to 35 percent of the country’s labor force is employed in agriculture and fisheries.
Meanwhile, one truly beleaguered sector is asking the DA’s help for accessing the Acef, and its situation might be worth reviewing. The main story in this paper’s Monday issue focused on the plight of food exporters who have been reeling from the impact of a steadily appreciating peso.
Roberto Amores, the chairman of the Philippine Food Processors and Exporters Organization Inc. (Philfoodex), told the BusinessMirror in an interview that the government, specifically the DA, “should step up Acef releases so that it can be used for productivity enhancement.”
According to Amores, small and medium enterprises in their subsector have complained of a difficult time in availing themselves of the Acef because of the “tedious” process. Clearly, these are people who have been among the hardest hit by the impact of a strong peso; and in fact, nearly a third have scaled down operations, if we’re to believe Amores.
Carefully reviewing their situation might be a good start for officials looking at what to do to make the Acef more relevant. (Written as editorial for BusinessMirror, 9 Oct 2007)
The Acef comes from the proceeds of the importation of minimum access volumes (MAV) that we promised our trade partners under the Uruguay Round of Trade Agreements that eventually ushered in the World Trade Organization.
In that agreement, countries committed to convert quantitative restrictions (QRs) on imports into high or equivalent tariff, but allowed small volumes of minimum access imports to facilitate trade. That was not the best way to encourage trade, but it was the most convenient way to incrementally reform policies that, for a long time, have been hampering import and export of farm products.
Local farmers’ group naturally opposed the “tariffication” of QRs. They eventually budged when the government promised greater funding for “safety nets” which the Department of Agriculture (DA) called “competitiveness enhancement funds.” Part of the money was to come from the proceeds of the MAV, an amount that DA spin masters later called the Acef.
Simply put, the Acef is part of the promise to the farmers and fishers who, during that time, were thought to be among those at risk from a liberal trading order. That promise for safety nets was never really sustained as the DA budget waned a few years after the GATT-Uruguay Round Agreement was ratified.
Nevertheless, the Acef has provided some money for important farm and fishery projects like irrigation, farm-to-market roads, postharvest equipment and facilities, research and development, and marketing infrastructure, among others.
Four years after the fund was made available to farmers, the Acef, according to Angara, financed 93 sugar projects and 56 other projects in livestock, poultry, fruits and vegetables.
“As of 2006, Acef still had a balance of P5.81 billion and funded 173 projects worth P2.76 billion that year,” he said. “An additional 55 projects worth P1.14 billion was approved by the Acef committee this year.”
The Acef money, amounting to P1.9 billion this year, has also been also used to finance small farmers’ credit needs.
With the expiration of the Acef fund this year, however, this kind of money will revert to the national treasury, thus depriving farmers the much-needed resources for countryside development.
Of course, we don’t really know how effective the DA has used those billions of Acef money. It’s about to expire, and yet we never saw any effort to tell the public whether or not the money was really mobilized effectively and equitably.
Like most public monies being handled by the machineries of the state, there are temptations that some bureaucrats would dispense of the money for political and personal reasons. The fertilizer fund of Joc-joc Bolante, former undersecretary of the DA, easily comes to mind.
It’s also possible that some of this money may have been used to finance projects by rich and politically connected “farmers,” and not those who really need them. In this case it would be necessary for the DA or some civil-society groups to scrutinize them and show the results to the public.
Given this consideration, however, nothing yet beats the idea that the farm sector needs the Acef to enhance its competitiveness. In fact, this is just the best time to put more attention to the farm sector now that the economy has shown greater resiliency.
In the last several years, Philippine GDP has been growing quite decently and government planners have been wondering how to spread the growth to the less fortunate. The solution, really, is simple: pour more resources into the countryside, assuming enough safeguards are put in place to prevent a similar Bolante caper.
There’s no other way: close to 35 percent of the country’s labor force is employed in agriculture and fisheries.
Meanwhile, one truly beleaguered sector is asking the DA’s help for accessing the Acef, and its situation might be worth reviewing. The main story in this paper’s Monday issue focused on the plight of food exporters who have been reeling from the impact of a steadily appreciating peso.
Roberto Amores, the chairman of the Philippine Food Processors and Exporters Organization Inc. (Philfoodex), told the BusinessMirror in an interview that the government, specifically the DA, “should step up Acef releases so that it can be used for productivity enhancement.”
According to Amores, small and medium enterprises in their subsector have complained of a difficult time in availing themselves of the Acef because of the “tedious” process. Clearly, these are people who have been among the hardest hit by the impact of a strong peso; and in fact, nearly a third have scaled down operations, if we’re to believe Amores.
Carefully reviewing their situation might be a good start for officials looking at what to do to make the Acef more relevant. (Written as editorial for BusinessMirror, 9 Oct 2007)
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