Tuesday, April 25, 2006

From Blogger to Wordpress!

Friends, I have transferred this blog to Wordpress. Blogger.com has been good to me but i realized there are features in Wordpress that I badly need (eg categories, page, etc). I also have problems with my feeds and I've been asking Blogger.com about it but to no avail. It seems Blogger is just too successful to attend to my stupid, trivial queries. So, to friends and bloggers out there who like this blog, to those who have linked me up, I would appreciate if you update your links on me using this address: www.davellorito111.wordpress.com.

Thanks a lot and hope you continue reading my blog.


Malacañang flip-flops on EVAT

WE thought all along that Malacañang badly wanted the EVAT implemented to address the budget deficit and balance the budget by 2008. That is why, against widespread protests, the government raised the value added tax on many products including petroleum from 10 to 12 percent, and expanded its coverage to other products that were not previously covered.

When the Supreme Court finally the lifted temporary restraining order that delayed EVAT’s implementation, Malacañang rejoiced, telling the people that the country could now achieve fiscal consolidation, and that soon the sovereign rating agencies including Fitch and Moody’s are going to get nicer with us, thus enabling the country and its entrepreneurs access to cheaper money for economic expansion.

That is why we were surprised by the recent announcement by no less than presidential chief of staff Michael Defensor saying Malacañang might recommend to Congress the suspension of the coverage of the EVAT law on petroleum products, supposedly to help cushion the impact of rising crude prices on goods and services. Defensor even dared Congress to legislate the EVAT amendment on its own without any prodding from the Palace if it believes in the urgency of the measure.

“The Senate can see that the ones to be most affected by this issue are the people so they would surely cooperate,” said Defensor to Palace reporters. “This is not for the President but for the people.”

Why the sudden of heart? How come, all of a sudden it’s Palace officials who are so hell-bent on reversing hard fought reform measure? Why is Malacañang leading the way for policy backsliding?

Certainly, the proposal looks politically attractive but its definitely ridiculous when viewed from economic and governance perspectives. Suspending VAT coverage of petroleum products means we may have to kiss goodbye the objective of consolidating the country’s finances. The initial estimate says the country will forgo collection of at least P20 billion a year, translating in the continuing lack of investments in economic and social infrastructure that is needed for economic takeoff. Albay Rep. Joey Salceda said the government could compensate for the losses by selling more government assets, but we know that this process takes forever to yield money for the government.

The Philippines right now is not attractive to foreign investors for one major reason: policy instability. Leaders could not help but keep on changing policies midstream, thus scaring away investors. Now, Malacañang is going to hurt the country’s image in the international business community even more with another policy backsliding. The country’s credit rating would again suffer. No one will take us seriously anymore; we simply don’t have the guts to implement what it takes to be an economically progressive country. And for what?

The proposed suspension really doesn’t make sense because its impact will only be temporary. Movements of crude prices in the world market are determined by a host of factors beyond Malacañang’s control (e.g. rising demand from China and rest of the Asia-Pacific region; political troubles in the Middle East and Nigeria; the lack of refinery capacity) and its continuing volatility would make a mockery of Malacañang’s proposed tricks to deal with the problem. Supposing Malacañang got its way and suddenly crude prices radically moved again. Will Malacañang restore EVAT coverage or remove it depending on the movement of crude prices? Crazy.

Common sense dictates that the best measure to deal with volatile crude prices is to allow fuel prices to rise to market levels. This is painful but sensible, as real prices necessarily drive fuel consumption. When prices are high, the sensible thing to do is reduce consumption and this could be achieved through old-fashioned energy conservation measures, including the traffic demand management measures. In fact, allowing market forces alone to determine prices would force people to modify their behavior in order to conserve energy. Of course, this policy should be complemented by other means, including encouraging private investments in alternative energy sources (ethanol, biodiesel, natural gas, wind, among others).

It’s apparent that the proposal to suspend EVAT coverage of petroleum products is really all about making political scores—a fair assumption, seeing the recent spate of populist policy announcements. Palace officials were not bothered by one AFP area commander’s reported remarks about issuing shoot-to-kill orders for suspected military rebels. And yet, just a few days before, the President announced the commutation of death sentences of rapists, murderers, and terrorists. Sensing that it was a popular move, Malacañang announced it will work for repeal of the death penalty law.

Early last year, Malacañang told the world the debate on the mining law was over after the Supreme Court ruled with finality that the Mining Act is constitutional. After that, the government and the private sector sent delegates on a roadshow abroad to tell foreign business the Philippines is now open for mining investments. Malacañang also hosted delegations of investors from China and Australia, boasting that soon the economy will be boosted, courtesy of mining money to be poured in by foreign investors. Yet, a few weeks ago, sensing a continuing critical attitude from the bishops about her administration, the President ordered a “review” of the Mining Act. And now, Malacañang is about to commit another policy flipflop with the backsliding on the EVAT law. Does it even matter what the consequences on the Philippine economy will be?

Policy flip-flops are sometimes seen as signs of either a sincere change of mind, a lack of political will, or plain cluelessness. Yet they could also indicate cynical politics at work.

Saturday, April 22, 2006

Charter change on a chartered train

THE D-day is to fall on July 2006. By this time, the Philippines would already have a parliamentary form of government. Will it be federal? Unicameral? Will it be patterned after the French model? Who will be the first prime minister? No one knows the answer. But one thing is certain, at least if we believe House Speaker Jose de Venecia, the deadline is cast in stone.

By the words of no less than President Arroyo, the train for charter Change has left the station and anyone who stands in the way runs the risk of being run over. Too bad because from the look of things, the first casualty by this well-oiled political locomotive will be the truth.

What are the potential benefits of Charter change? How does it affect people’s lives? Will Filipinos progress or suffer? How will the new Charter address joblessness? Why do we need Cha-cha in the first place? What’s the real motive behind the move to change the Constitution?

There are a thousand questions that need to be answered before a voter could decide intelligently whether or not we should change the basic law of the land. But these questions will not be answered because Malacañang, the Real Money that chartered the runaway Charter-change train, is not interested to educate. Well, it now says belatedly it wants to open the floor to nationwide discussions, citing surveys showing poor levels of public awareness on the Constitution and related issues. But given the strict time-bound agenda of its House allies, how sincerely can it allow for time to educate?

The train has left surreptitiously without informing the passengers, the people, where it is heading. The route itself is so short that people would simply have no time to debate its merits or the lack of it. By July, the train will stop and we will get up from our seats to a totally different sets of rules, like Rip Van Winkle waking up to a new crazy world after sleeping through a time warp.

It’s clear that the government is not really interested in an enlightened citizenry come plebiscite time. It’s just three months to the July deadline, yet the government has not produced a single leaflet discussing the virtues of Cha-cha. The Charter-change advocacy commission is there, but how quickly and effectively can it provide the environment for an impartial debate? The government controls a lot of media organizations yet, it has not scheduled single honest-to-goodness debate on the pros and cons of Chacha. Meanwhile, there is only the chartered train, a state-directed initiative to pressure an uninformed citizenry to ride on the train whose destination only the devil knows where.

To the question of why is the government rushing it without the much-needed debate and information dissemination, we turn to a veteran political analyst who spoke at the Ateneo last week.

Mario Taguiwalo from Pulse Asia says that traditionally radical changes such as rewriting the Constitution come from people who are outside the circle of power. This one, however, is coming from the ruling party which logically would want to retain its grip on power. Given the continuing challenge to the Arroyo administration and the prospects of another impeachment round in July, people naturally surmise it must be related to the President’s political survival. That explains the hush-hush and the mad rush. Therefore, the regrettable part of this cynical public view is that, whatever merit there may be in constitutional change, the motive will always be suspect. Even that could perhaps be surmounted by a genuine, extended public information and consultation series. Alas, that won’t have room with Joe de V’s train schedule.

Will Malacañang have its way in July? The proponents, it appears, are confident. It’s all about momentum, organization, and resources. Certainly, they have all that. The government is now operating on a reenacted budget. That implies that the government’s budget is one big greasy pork barrel that can be juggled to buy the loyalty of legislators and local government executives. That is why the Chacha train is running surreptitiously at the local level and not the national level. They all know that, since people could not vote with their brains given the lack of an honest-t- goodness information campaign, they may just opt to vote with their guts, or what their local leaders will say.

Or will they? According to Pulse Asia, the pro-Charter change sentiment comes largely from an anti-GMA sentiment. Maybe because they thought it’s the best way to get rid of Mrs. Arroyo from the Palace. This sentiment—regrettable because it’s so cynical to equate changing the basic law of the land simply with a regime change— has been rising since last year. But since it’s GMA herself who is now pushing for Cha-cha, some of the pro-Charter change people who don’t like her might yet reverse their views.

The debate has just started; Chacha therefore may not yet be a walk in the park. Cha-cha drivers are well advised not to underestimate the people.

Wednesday, April 19, 2006

Where might public opinion go on charter change?

THE credibility and trustworthiness of advocates for or against Charter change will matter in the Filipino people’s decision should there be a plebiscite on the governments proposal to change the Constitution, a political analyst from Pulse Asia said Tuesday.

In a forum conducted by Pulse Asia at the Ateneo School of Government at Rockwell in Makati, Mario M. Taguiwalo, political consultant for the private poll agency said that given the complexity of the issues related to Charter change and the limited time for debates, people will likely vote based on what he calls “rationality under constraints.”

“People’s opinions are going to be influenced by advocates or champions whom they trust,” he said, stressing that the political motive of those who are pushing Charter change will be a major consideration. “Who stands and speaks on Cha-cha could matter to people seeking whom to believe.”

Charter change, Taguiwalo said, is very complex issue, made more difficult by the fact that it’s the first time the country is going to have a “people’s initiative.” This, coupled with people’s unfamiliarity with the parliamentary system, unclear connections between Charter change and people’s concerns, make an informed judgment even harder.

Taguiwalo noted that changes in the political process are usually being pushed by people outside the circle of power. But the current efforts to change the Constitution are spearheaded by the Arroyo government itself. “The key issue to the debate is ‘Why do those in power want this?” he said.

Citing the March 2006 results of the Pulse Asia survey, Taguiwalo said 68 percent of Filipinos have “little or no knowledge” of the Philippine Constitution, a figure that was practically unchanged since last year. However, he noted that there has been an “increase[ing] willingness to consider Charter change,” rising to 43 percent in March 2006 from 29 percent in March and 36 percent in October last year.

The survey, he explained, was conducted prior to the launching of a well-funded campaign by the Arroyo government for Charter change sometime in mid-March. On March 30, President Arroyo issued a statement saying the Cha-cha train “has already left the station” and those opposing it should stand aside or risk being run over.

Those who are against Charter change, the survey said, are from rural Visayas and rural Mindanao, age 55 years and older, with elementary or no education and college graduates, working in government, and farmers. Those strongly in favor of Cha-cha are in Balance Luzon, age 18-24 years old, with some college education.

“The debate has just begun,” Taguiwalo said stressing that the Pulse Asia survey results are useful only as “baseline information,” as people’s opinions are likely to change as more information goes into the debates.

Taguiwalo said that prior to the launching of the government’s Cha-cha train, the increasing willingness to consider Chacha is “weighed largely” by anti-Arroyo sentiment. “The pro-Arroyo camp is not necessarily pro-Chacha.”

To point out the possibilities, he raised rhetorical questions: “Will Charter change opinion turn negative with a PGMA-endorsed Charter change?” “Or will anti-PGMA opinion turn positive with her endorsement of Charter change?”

Taguiwalo concluded that the people might yet go for Charter if the proposed changes could offer “credible hopes.” The major hurdle for this scenario, however, is the endorsement by the Arroyo government. On the other hand, he stressed that the people might yet reject Cha-cha if it raises real fears that the proposed change could make the country worse off.

Tuesday, April 18, 2006

Jobless growth

THE Philippines should be happy to belong to the Asia Pacific region, a collection of fast-growing economies that are the envy of the rest of the world. In the last three years, the region—which includes the two powerhouses China and India—has been growing close to 7 percent, dragging the country along at its slower but still decent rate of 5.2 percent. Amid these glowing growth figures, however, is the continuing reality of worsening unemployment, joblessness, and inequality.

Yes, that’s what the latest report from the United Nations (Economic and Social Survey of Asia and the Pacific 2006) is telling us and policy makers in the country’s planning bodies had better take heed. The report acknowledged that the region has proved to be resilient in the face of global shocks, including rising prices and slowdown in global trade, and has been growing robustly in the last decade or two, yet it also noted that economic growth has not been able to soak up joblessness in the region. Inequality is also on the rise.

Nowhere is this observation more true than in the Philippines. We hear the hype every day: that the country’s services sector has been saving the day for the Philippine economy in the last several years, that call centers and business process outsourcing companies are giving job options to fresh graduates, particularly those who can speak good English, and that the country’s export sector has been selling mostly microchips, a far cry from the day when Filipinos were largely drawers of water and hewers of wood. The country is indeed undergoing an economic transformation that most “analysts” had failed to foresee about a decade ago. The country’s unemployment figures, however, remain at double-digit rates (using the old definition), with the jobless people numbering close to 4 million people.

The old economic theory says that economic growth necessarily addresses poverty, as higher volumes of economic activity require the hiring of more workers. This wisdom still holds, but the reports also says that the relationship between growth and job creation has been weakening lately, owing to a host of factors—including high birth rates and technological change (e.g. computerization, downsizing, among others).

The study also points to the pervasive of fiscal incentives that cheapened capital, thus providing more incentives among factory managers to substitute machines where they could have hired more workers.

But the most important reason is the lack of the appropriate policy environment for small and medium enterprises, thus raising the cost of entrepreneurship. This problem is especially true in the Philippines where an entrepreneur needs several months of hopping from one government agency to another just to get the papers signed by bureaucrats. Barriers to entry in business are forcing small entrepreneurs to go underground, thus depriving them of the opportunities to establish partnerships with other bigger business organizations.

The government’s failure to provide adequate economic infrastructure linking the countryside to the economic centers has constrained the spread of economic activities, thus limiting the capability of the economy to generate more jobs. In the last several decades, the bulk of the government infrastructure spending has been concentrated on urban areas, thus deepening the rural-urban divide. The urban bias of the government infrastructure policy, therefore, may have contributed to the growth of urban-based outsourcing industry; but this emerging industry itself is not capable of generating broad-based economic growth.

Overall, what the report tells us is that high economic growth alone, as in the experience of China and India, is not sufficient to address poverty and joblessness. In the Philippines where economic growth is not as robust, the growth of the services sector should be complimented by reforms, including the removal of unnecessary barriers to entrepreneurial activity, higher expenditure on higher rural infrastructure, and higher expenditure on education, and skills upgrading. In Malaysia, efforts to attract foreign direct investments have been accompanied by greater efforts to develop the country’s human resources. This is the reason why, high economic growth in this country is bringing in a lot of jobs and reducing poverty. Why couldn’t the Philippines do the same?

Sunday, April 16, 2006

UN says job scarce countries should emulate the Philippines

The United Nations has recently urged countries in the Asia Pacific Region plagued with high underemployment rates and limited opportunities for formal sector jobs to emulate the example set by the Philippines by promoting exports of workers “as part of a national development and poverty-reducing strategy.”

In a recent report entitled “Economic and Social Survey of Asia and the Pacific 2006,” the Economic and Social Commission for Asia and the Pacific (Escap) of the United Nations said remittances sent my migrants and temporary workers on contract abroad to their families have greatly helped to raise the standard of living of some of the poorest sections of society in South Asia, South-East Asia, and the Pacific region.

, China, and the Philippines are the top recipients of overseas workers remittances in the Asia-Pacific region in 2005, receiving US$21.7 billion, US$21.3 billion, and US$11.6 billion, respectively. As a share of gross domestic product, however, the Philippines tops the rest of the region, as OFW remittances accounts for 13.7 percent of the country’s economy. About one for every ten Filipinos are working abroad either as temporary or permanent migrant workers.

“Liberalization of financial markets has made it easier to remit money from one country to another,” said the UN report. “A surge in the number of bank branches seeking remittance-related business in host countries and providing increased range of financial services has also played an important role. Changes in the skill composition of workers going abroad has further contributed to the higher remittance flows [in] the last two to three years."

In the last few years, critics in the Philippines have been saying that remittances have high social costs in terms of the lack of parental guidance in the OFW family leading to juvenile delinquency, drug dependency among children of OFWs, broken families, among others. The report, however, seems to ignore these issues, focusing instead on remittances’ positive macroeconomic impacts.

“Remittances increase a country’s international credit worthiness and lead to lower borrowing costs,” said the UN report. “Furthermore, remittances tend to be stable and countercyclical, thus smoothing out household consumption and investment patterns during episodes of unemployment and high inflation in home countries.”

The report suggests that remittances at current levels, while rising, tends to be underestimated due to continuing high transactions costs that serves as disincentives to sending money home.

“Fees charged by remittance service providers are very high in comparison to the actual costs incurred in transferring the funds,” said the UN report. “For small transfers, fees can reach as high as 10 to 15 percent of the money sent home. For poor migrant workers, who generally send small sums of money, this has encouraged the growth of informal channels for remittances.”

The report urged governments in the Asia-Pacific region that remittances are “private flows of money” that should not be taxed as these incomes were already taxed from the point of origin. Taxes, the report said, would only discourage the transfer of funds through the formal channels.

“Over the medium-term, investments by sending countries in training to produce workers could create a larger pool of workers who could respond to changing market conditions in the worker-receiving countries,” the UN report said. “Once workers can move beyond unskilled jobs and secure higher paying semi-skilled and skilled jobs, their earnings should rise, enabling them to send more money home.”

Tuesday, April 11, 2006

Political dividends from the expanded value added tax

PORK is pork is pork and is unhealthy to the Philippine economy. Why should it be otherwise?

If we take it from Press Secretary Ignacio Bunye, it’s perfectly alright to pad the proposed 2006 with pork barrel, a product of what he called “EVAT dividend.” He said the government collections from the “reformed” VAT must return to the people in terms of transparent, focused, and optimum spending… As far as I’m concerned, for as long as the process is transparent, and for as long as the benefits [accrue] to the people, then we don’t have any objections."

When has the pork barrel system in this country ever been “transparent” and “optimum”? Try looking at the budget and you will not see any item there explicitly tagged pork barrel, but every member of Congress will tell you without batting an eyelash that the bad political cholesterol is there, buried like needles in a giant haystack and only people like them know where to look. How could it be “optimum” when the basis for allocating those monies is necessarily political and therefore not in accordance with the country’s development plans?

What is alarming is that Bunye is presenting what is essentially a sleazy transaction between Malacañang and the Congress people as an “EVAT dividend.” This is a deception because, in the discussions about the EVAT law, they have been hammering on the people that the law was necessary for “fiscal consolidation.” Now they are using people’s money for their own political expediencies.

“The people’s interest is clearly being prejudiced by the dilly-dallying in the passage of the budget, which may continue to delay the benefits rightfully accruing to the community,” said Bunye. Thus, Malacañang seems to be saying that the additional P4.7 billion pork barrel is necessary to bribe legislators into approving the proposed and much-delayed 2006 budget. Is this the way members of Congress now behave? That they could do legislative work only if their mouths are greased?

But who dilly-dallied for months on end about the proposed budget? It’s Speaker Jose De Venecia, Malacañang’s hatchet man in the House of the Representatives. The government should have submitted the proposed 2006 budget in August, but Speaker de Venecia, apparently at the behest of Malacañang, sat on it for nearly eight months. The House only submitted that heavily-padded or pork-laden budget on the same day the Senate was to hold its last session before adjourning for a 5-week break.

It’s apparent, however, that Malacañang’s efforts to grease the proposed budget through the wheels of Congress is just a smokescreen for the grand design related to Charter change and the political survival of President Arroyo. In an interview with BusinessMirror, Sen. Manuel Villar, the Senate finance committee chief, noted that Malacañang never intended the budget to pass—the design being, so that they would automatically reenact the 2005 budget that would give them the maximum flexibility to use the money as “incentives” to members of Congress and local government executives to dance the Cha-cha. The reenacted budget therefore is one big sleazy pork barrel where every politician could dip his or her hands into, in order to ensure that they would all toe the line. By July, it’s expected that the Opposition will launch another impeachment initiative arising out of the “Hello Garci” controversy, among others, and the one big pork, the reenacted budget, will take care of them.

Meanwhile, as Malacañang and its minions squander the people’s money on Charter change, expect Bunye’s spin machine to continually hit the Senate about “dilly-dallying” on the budget. Given the questionable circumstances by which the budget was crafted, we could expect senators to look carefully into the details, thus forcing a stalemate. That will even trigger Bunye’s spin machine into high gear, blaming the senators for their intransigence. Worse, as Villar himself feared, some proadministration congressmen actually have the cheek to now say that Charter-change opponents should blame the Senate for causing a budget reenactment with their “delays,” thus providing the Executive elbow room to source funds for a Cha-cha plebiscite from the reenacted budget. If the senators would only approve the House-endorsed budget without thinking, goes the congressmen’s logic, then the 2005 budget won’t be reenacted and funds for the plebiscite cannot be easily sourced.

But all this is a virtual smoke-and-mirrors exercise for the real drama which is the Cha-cha and this administration’s political survival.

The greatest tragedy, besides having a politicized budget and having the appropriations process ruined, as Villar complained, is to hold hostage all that scarce resource for the most cynical of purposes. To think that the BIR is being flogged and threatened with lateral attrition to collect every additional peso from the expanded VAT.

It would take a genius of a taxman to explain well why more taxes must be collected so they can be given back as “EVAT dividends”—and why poor blokes like us must believe we can substantially get this back if they pass through our congressmen.

Monday, April 10, 2006

Leftists should leave call centers alone!

Recently, KMU, a leftist “labor” organization criticized call centers as a hub of exploitation, stressing that local labor is just a small fraction of what local call center agents get in the US. Precisely. We have those call centers here because we pay lower wages. That’s our comparative advantage. But it doesn’t mean call center agents here are “exploited.” The purchasing power parity between Americans and Filipinos are different.

Besides, call center agents are not forced to work in those offices. No one is violating their free will. One would be surprised to find out that many call center agents are former teachers, nurses, computer programmers, and office clerks. That means they came to call centers because they get something more. Their pay is significantly higher than what KMU organizers receive from their organization. Their pay is even higher than what the typical private sector business offers. Call center working environment is definitely a lot better than the typical factory we have here in the Philippines.

If there are people who should complain about “call center exploitation” it should be the call center agents themselves, and not the KMU. These people are smart and tech-savvy; they have all the avenues for their grievances. They could always post their complaints in web fora and web logs but try surfing about “call center exploitation” and you can’t find one entry. Well there are the usual rantings about call center life but these people know they could always leave and find life elsewhere. If they don’t like their work environment, they could always get another outsourcing job and they don’t need labor unions to represent them. Yes, workers in call centers are empowered. Call centers in fact pay them before they start working or even during their training stage, and they get more benefits including night differentials, rice allowances, and performances bonuses. Yes, the call centers actually do all they can to retain staff knowing that agents could always find another job somewhere.

KMU also belittles the call centers for not contributing directly to “industrial development.” What do they expect? It’s a service industry, stupid! But it doesn’t mean that they don’t contribute much to the economy. In fact they do. India for instance has been growing at 7-9 percent on the strength of its outsourcing industry, including call centers and software engineering. Our own rough estimate is that total payroll of call centers (assuming 70,000 seats and 200,000 call center agents) in the Philippines alone could run up to P3.6 billion a month. That kind of money translates to a huge purchasing power that powers up the factories [where KMU does its organizing], and other service industries (from sari-sari stories to banks, sidewalk vendors, taxis, and everything else in between). It’s nice that we have all these outsourcing services because it means many of us would no longer have to go abroad to get this kind work.

Of course, call centers could be boring, but it’s a real job that pays real money for people’s real needs. Call center jobs, KMU say, are “dead end jobs” but so are the jobs of janitors, security guards, nurses, drivers, clerks, journalists, labor organizers, librarians, soldiers, toll both operators, communist cadres, among many others. Why is KMU so condescending on these perfectly honest professions?

Given its socialist, nay communist, ideology, KMU necessarily longs for a socialist smokestack utopia that no longer exists (not even in North Korea and Cuba). But for call center agents who just want to have something to pay for their family’s needs, a job is a job is a job. But why should KMU begrudge them? Couldn’t the KMU be a little bit sensitive to these call center workers? After all, majority—we say 70 percent of these call center workers—comes from poor families. The children of the middle class could not just bear the pressures of such kind of work.

Apparently, the Leftists are denigrating the call centers because the industry has rendered them irrelevant. They are criticizing industry because they could not do their usual agitation within the sector. Yes, they couldn’t collect union dues from them because workers there do not have a need for their presence. But it’s nice, however, that other labor organizations like the TUCP are not doing the same. Maybe these organizations are a bit more broad-minded to appreciate the sector’s contribution to society.

KMU’s statement against call centers show just how KMU has become a reactionary entity. Outsourcing has become a new international division of labor that has bestowed a lot of economic benefits to India, the Philippines, former communist countries like Hungary, Poland, and Russia. Now, Communists governments like China and Vietnam have embraced this industry as a way to strengthen their economies. And why should KMU be against this industry? I guess the KMU, supposedly a labor front, should be a bit less judgmental of workers in the service sector.

I’m raising this concern because KMU’s armed underground counterparts may yet harass or destabilize the industry after the gods in KMU and the Left has given their thumb of disapproval. We really pray they won’t do that, for the sake—not of the government—but of the ordinary people who are making a living out of this emerging industry.

To all the KMU and the Left movement, please leave the call centers and their workers alone.

Sunday, April 09, 2006

The devil's budgeting system in the Philippines

Don’t you wonder why Philippines doesn’t have an operational budget now? The answer is simple: President Gloria Arroyo and her minions at the House of Representatives have totally messed up and politicized the country’s budgeting system. They don’t want the country to have a fresh 2006 budget because Arroyo and her political operators want to have a full flexibility to juggle funds for their political gambits including charter change, the 2007 mid-term elections.

Normally, the President submits the budget to the House of Representatives immediately after her State of the Nation Address during the opening session of Congress in the last Monday of July. The House has to approve the budget from August to October for immediate submission to the Senate. The Senate in turn will deliberate on it to be followed by the deliberations within the bicameral committee to reconcile the Senate and the House versions. The Senate and the bicameral committee have two months (November and December) to finalize the budget so that the President could sign it by the end of December.

What happened is that the House, led by Arroyo’s reliable ally, Speaker de Venecia sat on the proposed budget for eight months and passed it only on the same day the Senate was to adjourn for a five-week break during the Lenten season. This pattern only suggests that the President and her allies were not really interested in having a fresh budget at all. This is because the only way the Senate could pass the budget when the senators resume session in May 15 is when they pass the House version wholesale without even touching it. But this is also dangerous because that would mean the Senate is going to pass a budget that is full of pork to bribe local government executives so they would dance to the tunes of Malacañang: Cha-cha, evading the second impeachment attempt, and the 2007 mid-term elections.

The senators, of course, will have to examine the budget for several weeks and this scenario is also crazy because if they are to go through the motion of deliberating it, we might just end up having a fresh 2006 budget only somewhere in September! And while the Senators are cracking their brains out, the reenacted budget prevails, thus giving Malacañang all the money for its political machinations. The Senators could deliberate the budget the death but Malacañang doesn’t really care because it already has the cash and the flexibility to spend on whatever “project” it fancies sans the accountability that is usually attached to having a fresh budget.

Of course, Malacañang is not really interested in a budget to be signed in September because the real game plan, it appears, is Cha-cha and Arroyo’s political survival which, according to the time-table of Speaker Jose de Venecia, will commence by July. How would Malacañang do that against people’s opposition and possible thumbs down from the Supreme Court, boggles the mind (unless they already got enough numbers among the Supreme Court judges). But that danger is even secondary. The immediate danger here is the rise of the Devil’s budgeting system, one that is completely politicized and brazen and could completely sidetrack the country from addressing important socioeconomic problems.

Once the government politicizes the budgeting process, every planning exercise being done by the country’s planning bodies completely vanishes in the wind. No one will respect the country’s planning process anymore knowing that government decisions are always subject to the whims and caprices of the occupants in Malacañang and all their sycophants in Congress, the bureaucracy, the local government units. The immediate casualties in this politicized budgeting process are the Filipino people outside the circle of power because government expenditures will be driven by the imperatives of political quid pro quos. For one, the 2005 reenacted budget doesn’t contain much for capital expenditure. It doesn’t bother Malacañang of course because that’s not the primary reason for deliberately delaying the passage of the 2006 budget.

Arroyo and her apologists have been stressing that the country’s economy should strengthen its firewalls against the noise of politics. This is plain hypocrisy. By tampering with the country’s budgeting system, it’s no less than the President and her minions themselves who are actually tearing down the firewalls of the economy. And she has to do it simply because she needed to ensure her own political survival even at the expense of the economy and the people’s well-being.

Tuesday, April 04, 2006

Getting intoxicated with call centers?

THE graduation season is here again and fresh graduates—400,000 of them—are probably now wondering whether or not there’s a place for them in the country’s job market. If one is reading the newspapers, especially the weekend editions, it would appear that there are indeed fresh opportunities for them: call centers and outsourcing companies. Of course, there are always overseas jobs for skills that are in demand abroad (e.g. teachers, caregivers, pilots, mechanics, geologists, among others).

On the part of policy makers the big question should be: Would call centers and related industries that are “globalized,” overseas employment, actually solve the problem of joblessness in the country? It’s high time that policy makers ponder this because it appears that the hype created by this emerging industry and its supposed benefits to the economy seems to have lulled the government into complacency. Since the passage of the reformed VAT for instance, the government seemed to have totally lost the appetite for real reforms.

Several examples come to mind. The budget for 2006 has not been approved because, two weeks after passing it on second reading, the House has not yet passed it on third reading and transmitted it to the Senate. A lot of investors are awaiting the passage of the “rationalized” fiscal incentives law so they would have a predictable investment policy regime for their investments, yet the same measure is languishing in Congress. Also, private-sector locators in Camp John Hay and Clark are still waiting the passage of a new law providing them the fiscal incentives that were promised them when they signed up with these special economic zones—but were virtually rendered nonexistent by a Supreme Court ruling. Given the continued volatility of international crude prices, the Philippines has the chance to play catch-up on biofuels as earth-friendly and renewable alternatives to fossil fuel, yet the President’s allies in the Senate are sitting on the two-year old biofuels bill mandating the preblending of ethanol and biodiesel.

Outsourcing and overseas work, indeed, are fast transforming the Philippine economy. A decade ago, one couldn’t hear of any company or industry that pays great money before the recruit has started working. Since the last two years, customer care companies have been doing just that. Consider the recent job market announcement for call centers: P2,000 signing bonus; P15-18,000 ($353.00) basic monthly pay; training at P15,000 ($294.00) ; 20-percent night differential; P3,000 ($59.00) signing bonus; and performance bonus. (That pay levels will not make you rich in the Philippines but its attractive enough for new hires).

That means that if you are one of this year’s graduates and can speak English well, there are jobs that could actually pay real money. In fact, some call centers are so desperate for skilled workers that they institutionalized the pirating of workers as part of their human-resource strategy. One call center in Ortigas, for instance, has a “referral system” that rewards each staff with P3,000 for every call center agent that the staffer could bring to the office, and P5,000 for a recruit with supervisory experience.

Remittances of course have also been rising at double- digit rates in the last three years. And this means two things: first, job creation through overseas placement. About 3,000 persons are leaving the country each day as caregivers, nurses, doctors, pilots, mechanics, managers, household maids, engineers, technical people. And second, remittances are assumed to create jobs indirectly. High domestic demand theoretically translates to more business activities among the country’s farms, factories and offices. Supposedly, greater economic activities also sustain and even create more jobs.

Despite these gains, however, employment has remained as a problem—and this is why critics of the government continue to harp on the failure of the economy to touch the lives of ordinary people. Government officials, including Finance Secretary Margarito Teves, have been saying that ordinary citizens can only start feeling the benefits of higher economic growth if the country attains a sustained 7- percent rise in the country’s gross domestic product. So people will just have to be patient until the economy hits 7 percent for them to start feeling any improvement in their lives.

The truth is that government economic planners are entirely missing the entire point: that we are not undertaking real reforms the country needs in order to fuel an economic takeoff, contrary to the press releases of Malacañang. The continuing growth in the services sector as well as the continuing inflows of remittance money have been an important pillar of the economy yet survey after survey shows that they are not making a dent on the country’s unemployment problem. What this trend suggests is that getting back to the basic stuff of boosting the country’s “real economy”—its farms and factories—through real reforms like greater expenditure for economic and social infrastructure, more competition in port operations and shipping to enhance efficiency and cut costs, reducing the cost of power, providing a consistent and uniform investment incentive system, among many others, are still very, very important. Sad to say, it’s something that the government is actually not doing.

Maybe it’s too intoxicated reading those dozens and dozens of “wanted” ads pages, and has deluded itself into thinking everything is alright and someone else is taking care of the economy anyway.