Sunday, December 30, 2007

A scam in Boracay?!

Has anybody heard about “Diniwid Beach Resort” in Boracay? I bet nobody does, nor most people in Boracay. But try clicking their websites (here and here) and you will see a very enticing place supposedly just beside the beach. Well, it’s supposedly a “beach resort.” So my architect friend booked and paid here in Manila hoping she could bring joy and warm welcome to a sister who came from Canada. Upon landing in Boracay, they were surprised that nobody knows about the “beach resort” and were shocked to learn it’s not located beside the sea but an interior, almost like a squatter’s area. In her blog, my friend Louise recalls:

"Imagine to our surprise when we arrive yesterday at Diniwid Beach, looking for the Diniwid Beach Resort, and there was no Local who can point to us where's it located... After almost 30 minutes of asking around, she finally found where it was, only after she mentioned the owner's name.

And there we saw our place, after being led to an alley. A shack of a house [see picture], absolutely different from what was advertised on the web. Ano to, squatter's area?, my Ate was furious. The steps leading upstairs was only about 18" wide, too steep, my folks would sure slip any time, if they can even manage to climb it at the first place. The other cottage showed to us was more deplorable. Instantly, we decided to transfer to a better location…"

Refund! That’s the only solution when you are misled but the operator, a british national, wouldn’t return the money. Says Louise:

"Negotiating if we can get a refund for the deceit the Owner did to us, we were met by her rough British husband who flatly declared a NO REFUND policy. It seemed that he owns the place and uses only the local as his front."

The gall! Louise said she is going to file complaints at the local tourism office and I hope she gets her money back soon.

The local tourism office, nay the entire local government should act on scams like this before it destroys the image of Boracay

So let everybody be warned about this “resort” (kuno).

Saturday, December 29, 2007

Get the gun, it's Santa!

Get the gun, it’s Santa! That’s Eric’s good natured take on how Americans celebrate Christmas. Imagine yourself seeing a fat man getting into your house through the chimney. What will you do?

And yet this Australian actually tried getting through one’s chimney and got stuck for ten hours until rescuers did their job.

The man had been stuck inside the chimney for about 10 hours with his knees
jammed tightly into his chest, said local fire station officer Mark James. "He
was like a grub in a cocoon when we found him," James said. "He was really
wedged in there."

That guy, of course was a thief, but really I’m no fan of Santa, especially the ones they got in New Zealand.

WELLINGTON, New Zealand (AP) — A gang of about 50 apparently drunken Santas invaded a New Zealand cinema complex at the weekend — frightening customers, damaging property and swearing, the cinema's manager said Monday. Police believe the Santas were a group of university students dressed in Santa suits who ran amok for 20 seconds through Hoyts Cinema complex in the South Island city of Christchurch on Saturday, manager Derek Rive said.
Being a cop is probably one of the noblest professions (assuming one does her/his job seriously) putting order in society, enforcing the law, etc. And society respects them for that. But in America sometimes they are treated as nothing but a nose wipe, as what this woman did:

Cpl. S.E. Elliott said he had arrested the 36-year-old woman last week after
seeing her slap a man, bite him on the elbow and spit in his face. Elliott said
the woman wiped her nose on him as he led her into the police station for
booking on a charge of domestic battery.


If no one wants to give me any travel bag, a nice “Bush Out of Office Countdown 2008” Calendar will do. Happy New Year to all!

Friday, December 28, 2007

Complete domestication in 2008?

I won a flat iron from our Christmas e-raffle. Will I be “domesticated” in 2008?

Lest you think I’m superstitious, consider this. During our 2005 Christmas party, I got a travel bag. Our editor told me: “Maybe you are going to travel beyond the shores in 2006.” A few months after, while enjoying my life in Palawan after leaving Today Newspaper, I got a call from the US embassy.

“Dave, do you want to go to the US,” said a voice from the other line.

“Sure! But why should I go there?” I asked. “And how?”

“We have chosen you as a fellow for the International Visitors Program 2006,” she said. “It’s for leadership training in print journalism. Please come to the US embassy on Monday.”

And indeed I traveled to Washington DC, Virginia, New York, Florida, the mid-West (Nebraska and Colorado), and California (San Diego and Sta. Monica) to interact and learn from media organizations there.

In December 2006, someone gave me another huge travel bag. An officemate joked that I’ll be on a tour once again. True enough, I went to Australia courtesy of the Jaime Ongpin/Australian Ambassador’s Choice Awards. Then came the Jefferson Fellowship where I got to Hawaii, Silicon Valley, China and India.

Last week, I won a Hanabishi flat iron. Does it mean I’ll be completely domesticated in 2008?

Will somebody please give me a travel bag before the year ends?! Haha! Joke. Happy New Year to all!

Monday, December 24, 2007

Christmas sans carbon footprint

You will probably call me Grinch or kill joy, but I really feel there’s a need to reassess the way we celebrate Christmas. No, I’m not complaining about the “crass commercialism” that Christmas has gone down to. The flow of commerce is important if we are to create jobs and all that, but is there a way we could celebrate it in less environmentally harmful ways?

I’m no certified tree hugger (well, I did hug trees when I still enjoyed tree climbing as hobby and that was years ago), but I do think a paradigm shift is in order. But I won’t preach to you guys, but let me share here how I do Christmas with less carbon footprint.

I won’t shoot or light firecrackers, for obvious reasons.

I don’t have Christmas lights to help minimize the burning of fossil for electricity. I don’t have any Christmas tree, either. I find it so artificial.

I don’t wrap the gifts I give. Those wrappers always end up as tons of wastes in the dumps.

I minimize travel to minimize vehicular emissions.

I avoid excessive consumption for my health’s sake. Haha!

To celebrate Christmas, I only pray in silence, and read books to nourish my soul.

Would that make a difference? I don’t know, but if many of us adopt some of these measures, the world will be a better place and Al Gore wouldn’t think he is a failure.

Merry Christmas to all!

Friday, December 21, 2007

Is Mar Roxas really a reformist? I dont think so.

I’m puzzled by this story going around that cause-oriented types are now warming up to Mar Roxas hoping he will pursue “policy reforms” once he captures the presidency come 2010. As far as I know, Mar has never been associated with any progressive policy agenda. Mar doesn’t seem to have the knack for speaking for or against anything even when time demanded so. We never heard him talking about agrarian reform or agricultural modernization. He never knew him being passionate about human rights and political killings. He was never truly pro-Erap nor was he really anti-Gloria. He doesn’t seem to have clear stand on anything: environment, globalization, foreign debt, gender, deregulation, Doha round of talks, etc. He never spoke against monopolies and oligopolies. Maybe he behaves this way because he is just consistent being pro-Mar Roxas.

If there’s one thing he is associated with, it’s with Corina Sanchez, and the buzz about them simply faded after he won his Senate seat. Now, that he is angling for the Presidency are we going to see him with Corina again? And why does he have to do that? What is he trying to cover for?

Mar says he is Mr Palengke (markets). But he never had any legislative proposal for expanding or freeing Philippine markets. He is probably even anti-market.

Consider this: In 2001, Roxas caved in to the local cement lobby that was then complaining about “injuries” caused by rising cement imports and was forced to slap additional duties (about P20 per bag) on them, thus significantly raising cement prices in the local market and penalizing the local construction industry. In response, the Tariff Commission conducted an investigation and found out that Roxas’s decision was totally baseless, as local manufacturers maintained an 80-percent share of the domestic market. The report also stated that there was no injury to speak of, nor was there any worker losing his job because of the rise of cement imports. The industry, in fact, improved its productivity as a result of the rising foreign competition. But Mar Roxas simply brushed off the Tariff Commission study in order to shelter the cement industry from foreign competition.

Mar, who are you really? Show us the real stuff you are made of.

Wednesday, December 19, 2007

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

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

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

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

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

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

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

Sunday, December 16, 2007

The middle class and the rule of law

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

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

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

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

Hmmm, seems like I got an interesting job here.

Tuesday, December 11, 2007

Congestion in MRT: the pain of "success"?

Call it the pains of “success.” Or at least, the people’s pains for MRT’s success. It seems that these days, Metro Rail Transit is always congested. If one doesn’t start riding at either end of the line (either in Baclaran in the South or North Edsa in the opposite end), one would always have to suffer being packed and squeezed like sardines inside the coaches.

It’s not for love of the trains; it’s because a commuter could save lots of time. What takes one hour or two in the bus just takes about 25 minutes in MRT.

But there’s another reason. It’s so cheap: the 25 kilometer stretch just costs P14 pesos (0.32 US cents), probably about a hundred percent cheaper than the bus. And it’s cheap because its subsidized, meaning that people who live in the rural areas are also paying the maintenance and bank amortization of an infra that is being used solely by the dwellers of Metro Manila, a case of the rural folks subsidizing the “richer” urban dwellers.

Also, part of the value added tax that each one pays to the government whenever one eats in restaurants or pays for the grocery goes to the upkeep of the MRT. Isn’t that unfair? Of course, it is! And it’s not really improving the quality of life of the urban commuters because artificial cheapness suggests that it would be congested most of the time, thus lowering each weary commuter’s “ridership quality.”

Solution? Why not charge the true cost of the facility? That way, we free the rural dwellers, especially residents of Mindanao and Visayas, the burden of paying for such a facility that they don’t use. Those who use it should be the ones to pay for it. And of course, when ticket prices are a little bit expensive, more people would think about riding the buses again thus lessening the congestion inside the trains.

Or maybe, government should think about charging variable prices: charges are higher during the peak hours and lower during the non-peak hours so that people would have the incentive to schedule their travel time accordingly.

People do respond to economic incentives.

Thursday, December 06, 2007

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

Jenny: So how’s Manila now?

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

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

Dave: Bubbling as ever. Politically, I mean

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

Dave: And then we just had this Trillanes caper…

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

You mean you are actually following the trends here?

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

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

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

Dave: Sure, here’s the link:

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

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

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

Dave: Mixed, but some are incredulous.

Jenny: Or even hostile, haha!

Dave: How did you figure that out, hehe?

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

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

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

Really? Why?!

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

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

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

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

Jenny: Ha ha ha ha!

Wednesday, December 05, 2007

Why the Trillanes caper failed

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

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

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

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

Sunday, December 02, 2007

How to stage a coup like a jackass!

On the same day that Senator and His Most Incompetent Putchist Antonio Trilanes launched his ill-fated “coup” at a five-star hotel, the National Statistical Coordination Board (NSCB) announced that the Philippine economy grew by 6.6 percent. The incident seems to remind us just how the dynamics of the Philippine economy has decoupled from our rambunctious politics. Nice trend, shall I say.

The numbers says it’s actually a pretty broad-based growth, with agriculture, industry, and services contributing altogether. With a 7.3 percent growth in the first quarter, 7.5 percent in the second, and a possible surge in the fourth quarter, we may yet grow close to or higher than 7 percent.

We sneer at these growth numbers, of course. They have yet to translate into lower poverty numbers. True. But we have been at this growth rates quite recently, after hovering at 5-6 percent in the last three years. Experience by the Asian tigers showed they grew 5-7 percent consistently for ten or twenty years before they started licking poverty. This means we have to growth at this rate or higher in the next ten years before we can see substantial reduction in poverty. So it’s a start, and its better late than never.

GMA has nothing to do with this. These improving growth numbers are legacies of the first wave of reforms done following the Edsa Revolution. So the credit goes elsewhere, especially Cory and FVR, and of course, to OFWs, the farmers, business, and entrepreneurs. Had GMA proved to be a better president, we could have achieved higher growth rates, probably at par with Vietnam and India (7-8 percent).

Certainly, she should go, and go to jail (for scandals like NBN, fertilizer scams etc), but can’t we wait two years for the 2010 election? That’s a better option than “taking over” a hotel and making us the laughingstock of the world.

Now that Trillanes is in jail, the latest rumor says he is planning to write a book entitled How to Stage a Coup Like a Jackass!

Thursday, November 29, 2007

Trillanes and his five-star hotel revolutionaries forgot to read Wikipedia on the basics of coup d'etat

He he he! It seems like our five-star hotel revolutionaries forgot to read the coup manual by Edward Luttwak before going on to launch their luxurious coup. Or if they are really so busy, they should have read Wikipedia on the basics of the coup:

Tactically, a coup usually involves control of some active portion of the military while neutralizing the remainder of a country's armed services. This active group captures or expels leaders, seizes physical control of important government offices, means of communication, and the physical infrastructure, such as streets and power plants. The coup succeeds if its opponents fail to dislodge the plotters, allowing them to consolidate their position, obtain the surrender or acquiescence of the populace and surviving armed forces, and claim legitimacy. Coups typically use the power of the existing government for its own takeover. As Edward Luttwak remarks in his Coup d'État: A Practical Handbook: "A coup consists of the infiltration of a small but critical segment of the state apparatus, which is then used to displace the government from its control of the remainder." In this sense, use of military or other organized force is not the defining feature of a coup d'État.
Since the French coup of 1851, the world has witnessed 99 coups, 17 of them failed. Eleven of these failed coups were in the 80s onwards. This information may indicate the growing difficulties of grabbing power through a coup, probably because of several factors, including the effectiveness of peaceful people-power revolutions as an alternative; and the continuing tide of democratization worldwide. Wikipedia says coups rarely solve the social economic problems of developing countries hence it has become less attractive to military leaders. Currently there are 13 serving leaders who came to power through coup.

One day, I'll buy this book (in the picture), have it xeroxed and give the photocopy to Trillanes and his luxurious five-star hotel commandoes for their own entertainment inside the cells.
Or should I send Harry Potter books instead?

Trillanes surrenders to avoid the "loss of blood"-- his blood

It’s 5:10 pm and Senator Trillanes and General Lim decided to walk out of the hotel and surrender to avoid the loss of lives—their own. With the APCs and the SWAT troops moving in, there’s really no other option for them but to surrender. It was so stupid of them to initiate a “coup” in the first place. You want a coup and you launch it in a hotel?! My goodness! Such incompetent fools!

First, you don’t launch a “revolution” on a rainy day. Edsa I and II were done on a clear sunny day. And you don’t launch it on a five star hotel.

You want a real revolution? Learn from the lessons of Mao Zedong, Fidel Castro, Joseph Broz Tito, Garibaldi, and Michael Collins. These guys launched it in the real battlefield; not in five star hotels. Mao said a revolution is no picnic and he succeeded.

But Trillanes and Lim would rather have their revolution in the comfort of a hotel. And when they started to feel the discomfort of a tear gas, they chickened out. Funny guys!

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.

Tuesday, November 27, 2007

Globalization makes cities feel familiar (or ogling at a priestess inside Cafe Havana)

She was dancing close to a pillar at the corner of Café Havana unmindful of the world around her. A few feet away, couples dressed in their Friday tryst best where thumping furiously to a Caribbean beat. The room was full of souls searching for thrills but she was practically alone in the crowd, her slim hands raised over her head swaying gracefully in tiny controlled motions, eyes closed like a praying supplicant, her broad hips shaking spasmodically as if she was responding to an inner, passionate rhythm that she alone could sense or hear.

She was wearing high stilettos, tight acid-washed jeans that accentuated her shapely bottom, her plunging necklines agonizing against the strain of her ample breasts. We could see clearly her through the glass that separated her world and ours. The denizens of the night getting in and out the transparent door occasionally threw furtive and curious glances at her, but they always go around gently so as not to disrupt her trance-like supplications. Let the worldly priestess have her dutiful worship, they must have thought, whatever or whoever her god was.

Vic S and I were not supposed to be there. We were on the way to the underground car park headed for home when we came upon a multitude in front of the joint after an eyeball with Loida (a Multiply friend from Davao City) at Figaro, third floor, Greenbelt 3. It was past eleven pm when we were approaching Café Havana. Strings of tiny electric lights coiled up the trunks of giant palm trees highlighted the adjacent greeneries and the beautiful fountains. The full moon, the cool temperature brought about by Siberian winds, and the clear skies provided an exhilarating ambience for intoxication, bonhomie, and flirtatious laughter.

“Wow, look what we got here!” I exclaimed as we were approaching the crowd.

“Maybe we should have one for the road and see what’s in here,” Vic said.

“Nice idea!”

So we found ourselves treading through the perfumed throng to get closer to the bar. And there we saw her inside the room through the transparent glass dancing against the pillar. I certainly could do better than that stupid post, I told myself as I trained my eyes on her bewitching silhouette, but I was not in the mood for mischief. We stayed in front of the bar for several minutes observing her until a bar tender, a girl dressed in a white Caribbean hat, dainty yellow blouse, and tight floral skirt with a slit racing up her thigh, showed up with two cans of ice-cold San Mig Lite.

“To health and prosperity,” I heard Vic—or so I thought—exclaiming as he raised his drink for a toast. “For that girl dancing against the pillar,” I responded. Vic laughed.

We commandeered a table at the nearby Starbucks as we surveyed the crowd while exchanging notes and laughing about ourselves for our past manly misadventures. We saw young Pinoy men with well—nay minimally—dressed girls, middle-aged Caucasian guys with pretty exotic things half their age, blondes and brunettes mixing up with boys and men. Americans, Europeans, Arabs, blacks, South Asians, East Asians—it seemed like everybody was there. The crowd reminded me of Shanghai’s Xintiandi sans the debauchery. Globalization somehow tends to make all cities around the globe look or feel similar.

“This is the why the expats just love it here,” Vic said, showing me the bill.

Each can costs a hundred pesos, almost a third of a plumber’s basic daily wage, but the amount translates to just over two American dollars, loose change for people who reckon incomes in dollars. I was in Silicon Valley early this year; a mug of beer in bars in downtown San Jose was almost seven dollars.

“At The Fort, a bottle of beer only costs just about 35 pesos at a place that is as chic as this one,” he noted. “Man, that’s just about a dollar and twenty cents!”

It was close to two AM when I reached home. I slept after a quick shower and dreamed that we were in a remote island, enjoying the hospitality of the local village. At the background was a multinational force of men wearing war paints and menacing masks, holding spears and wooden shields, chanting songs as they violently thumped their feet against the soft, silvery sand, creating ripples along the shorelines.

At the center were girls in grass skirts dancing, singing, and running around a huge totem pole, a phallic symbol as tall as the coconut trees, their faces and topless bodies illuminated by the fury of burning driftwood and the moon in full bloom hanging up the cloudless sky. They were led by the priestess I saw dancing against the pillar in Café Havana, her supple hands raised over her head swaying gracefully in controlled motions, eyes closed like a praying devotee, her broad hips shaking spasmodically as she responded to the explosive rhythm of the tribal drums.

Monday, November 26, 2007

The way to progress passes through the farms

READING the World Bank’s latest report on East-Asia and the Pacific entitled “Will Resilience Overcome Risk?”, one can’t help but think that the future indeed belongs to the region.

The report says growth in emerging East Asia is expected to grow 8 percent in 2007 and about 8.2 percent in 2008, to be underpinned by continuing rapid industrial development and urbanization. China and Vietnam will lead the way with growth rates within 8 percent to more than 11 percent. The Philippines is hitching on to that bandwagon through exports to China, Japan, Malaysia, Singapore and Korea and is poised to grow more than 6 percent this year.

But wait a minute, says the World Bank (WB). If we want to spread the benefits of growth, we need to get back to the basics, to the farms. In the same report, the bank noted that “as growth outside of agriculture has taken off, the gap between rural and urban incomes has widened, leaving behind many people in the rural areas generating social and political tensions.”

“Today more than 90 percent of the $1-a-day poor in EAP [East-Asia and the Pacific] live in rural areas,” said the WB.

Solution? The WB says it’s not enough to leave poverty reduction to economic growth and urbanization; governments in the region should develop specific programs to improve the rural areas. Such a strategy, the bank says, should have two major components. First is facilitating absorption of rural labor in the urban economy through investments in urban infrastructure, human capital and labor-market policies such as vocational training, transport services and job matching.

Second is promoting faster rural-income growth through several measures, including the promotion of high-value agriculture demanded by local and global markets as well as rural nonfarm employment. These measures could be complemented by policies like the liberalization of domestic trade. In the case of the Philippines, the full liberalization of shipping and port operations to effectively link the rural island-economies of the Visayas and Mindanao to Manila as well as to global markets would be extremely necessary to enhance market access among rural producers.

One of the major strengths of the Philippines when compared with its neighbors in the region is that it has sizeable areas for expansion for agribusiness, especially for high-value crops like ornamentals, flowers, fruits and vegetables. After an initial surge in investments in high-value crops like pineapple, bananas, rubber trees and oil palm until the 80s, especially in Mindanao, not much money has flowed into this sector since the country embarked on a “comprehensive agrarian reform program” (CARP) under the Aquino administration following the Edsa Revolution.

The reason is simple: agrarian reform has introduced uncertainty into the policy environment for the rural sector. Landowners were not willing to upgrade their farms (e.g., planting better and productive crops, buying better farm machines and equipment, and establishing orchards) knowing DAR officials will someday come and distribute the lands to agrarian-reform beneficiaries. The DAR, in fact, was able to distribute close to 7 million hectares, a significant portion of which were public lands, to more than 4 million farmer-beneficiaries. However, the failure of the government to provide support services for the “new landowners” suggests that productivity has not improved significantly in the countryside.

The Philippines has been implementing agrarian reform for 34 years now since Marcos promulgated Presidential Decree 27. If we want to inject vigor into the countryside, we should remove the uncertainty by completing or winding up such a program as soon as possible. We should put a timetable for its completion; otherwise, we will be implementing such a program till kingdom come with no additional benefit to the country.

Currently, DAR is asking for another 10-year extension for the distribution of additional 1.2 million hectares at a cost of another P100 billion. We say, enough! In fact, the best option is allowing the program to die a natural death by 2008. And if the government really has the commitment to improve the countryside, it would be wiser to spend that P100-billion funds for rural infrastructure and support services to existing CARP beneficiaries.

We have already extended agrarian reform once. It wouldn’t do us good if we extend it once more. This program has gone too far and too long to the point that the DAR bureaucracy seems to have evolved in some parts into a rent-seeking organization whose interest lies in not completing its mandate so that it could prolong its existence. DAR right now has 15,000 officials and employees, and 60 percent of its money is spent on salaries and wages. In other words, DAR has become one huge public-employment agency with less and less marginal utility for every minute of its existence.

DAR has been justifying its inefficiency by citing “landowner resistance” to land distribution. But its own statistics says that voluntary offers of sale and voluntary land transfers accounted for 120 percent and 180 percent, respectively, of its targets. These figures suggest more of DAR resistance to land distribution.

Let’s put an end to this charade and move on to give the rural sector a fresh slate. (Drafted as editorial for BusinessMirror, Nov 27 2007)

Sunday, November 25, 2007

A new era for Australia?

Australia has a new prime minister in the person of Kevin Rudd, who promised to pull out Aussie troops in Iraq and ratify the Kyoto Protocol. Are we going to see a sea-change in how Australia will do its economic and foreign policy? Time Magazine’s observations are interesting:

The new P.M. is likely to go Howard's way on foreign policy, too. What he described as "fundamental differences" with Howard — his vows to ratify the Kyoto Protocol on climate change and pull troops from Iraq — are largely symbolic. Though Australia is outside the Kyoto regime, the country has met its emissions targets. And on the question of a successor treaty to Kyoto, Rudd in mid-campaign abruptly took the Howard position: a Labor government would not ratify Kyoto II unless it required China and India to limit their emissions. On Iraq, Rudd has moderated Labor's earlier "pull-out-now" policy. He says he will bring home the 1,400 Australian troops in Iraq and the Gulf gradually, in a "negotiated, staged withdrawal." He is prepared to send more troops to Afghanistan.

Australia under Labor will remain a "rock solid" friend of the U.S., Rudd has said, but reserve the right to act "independently." Rudd, who spent eight years as a diplomat in Beijing, has criticized China's human-rights record but appears more sympathetic to the People's Republic than Howard. Rudd rejected the Howard government support of a potential alliance between the U.S., Australia, Japan and India, saying China would feel encircled.
Reminds me of France’s president Nikolas Sarkozy. He marketed himself as critical of Anglo-Saxon capitalism during the campaign but immediately turned pro-American and instituted market-oriented policies after gaining power. He is now battling the unions and is apparently winning.

The Left's strike against the people!

The Left is going to launch a transport strike tomorrow morning. Stupid! What are they trying to prove? First, let’s face it guys, you followers of Joema who is enjoying a nice life in Euriope, there’s really nothing you can do. It’s a global trend and government couldn’t do anything about it, except do certain policies to cushion it. And indeed, the strong peso has so far been cushioning the rise in local prices.

And second, if you are protesting against the rise in prices, why is it that you guys, admirers of Joema, are trying to hurt us ordinary people? The rich in this country are going to their work in style in their SUVs while more than 70 percent of us ordinary guys are going to use public transport. And you guys are going to make life difficult for us! Why are you trying to hurt us?

If you communists out there want to hurt “the ruling class” in this country, go and picket the oil companies! Go block those SUVs and you will see. Simpleng tao lang ang kaya niyo!

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)

Tuesday, November 20, 2007

Loyalty is passé; engagement is now name of the game

“O, where is loyalty? If it be banished from the frosty head, where shall it find a harbor in the earth?”—William Shakespeare, in King Henry the Sixth, Part II

IN these days of brain drain everywhere, there’s no longer any sense for companies to expect eternal “loyalty” from their employees. The game now—according to Russell Huntington, human-resource firm Watson Wyatt’s Asia-Pacific human capital director—is all about “engagement.” It means that if companies would like to hold on to their skilled or talented employees, both parties should be on the same page on where the company is heading for, and management should give workers more room to contribute to the achievement of company goals.

“Engagement is when employees help the company succeed,” said Huntington. “Loyalty is history.”

If loyalty is indeed passé, it’s not because workers have gone bad. It’s more because since in the 1980s, employers thought workers were disposable items in their pursuit of global competitiveness. Well, that’s the unionist’s perspective, anyway, although it seems to contain some grain of truth. The bigger reason really lies in the emergence of the “new economy” and the Information Revolution that accelerates the pace of globalization.

Manolo Abella, a Bangkok-based labor-migration expert formerly connected with the International Labor Organization, says the raging war for talent results from the growth of global-supply chains, as liberalization of trade policies has made it possible for transnational companies to move production to cheaper locations.

As an aside, globalization has diluted the notion of loyalty both ways: workers don’t have much qualms about leaving their companies because the “hooks” of those fishing for talent are numerous and varied, and there are so many choices and material attractions for anyone who’s skilled and determined and hardworking enough. But on the other hand, companies also tend to lose the kind of “loyalty” to employees as the past two generations know it—where they’d do everything to keep the workers who were there “at the creation” of the enterprise, so to speak. Indeed, what loyalty can one expect from a company based halfway around the world, and perennially looking to cut costs and stay competitive in a globalized industrial setting?

“The emergence of global production structures have been everywhere, accompanied by greater movements or transfers of technical and managerial personnel,” says Abella in a paper on labor migration. “Another important development has been the growth of informal as well as flexible forms of employment, opening markets for foreign workers willing to enter occupations or sectors abandoned by natives.”

And currently, it’s a lot easier for people to leave their companies or for companies to fire workers because of a paradigm shift in labor-management relations.

In the 1980s, “corporate downsizing” became the trend as companies moved heaven and earth to become “lean and mean.” There was a global economic slowdown and exports from the newly industrializing economies of East Asia were giving everybody hell in the global marketplace. It was easy to make the downsizing decision because powerful computers as well as new, better software enabled firms to use just-in-time production that didn’t require high inventory levels. Suddenly, the old labor-management ethos of “lifetime employment” and “company loyalty” vanished as hundreds and thousands of workers lost and found jobs across the globe.

What we are stressing here is that the old ways of doing things in human- resources management no longer apply. Workers, especially “knowledge workers,” can no longer be treated as inputs or disposable cogs in the production machine.

Company managers should take pains in explaining the future of the company and how each one fits into the overall picture. Companies should develop clear career paths for each. It should explain the goals, vision and mission and devise clear mechanisms by which each employee could contribute to the attainment of those goals. This way, employees can share in the company’s dream, giving them strong incentives to stay.

And employers shouldn’t forget about “base pay”—or that which employees get through payroll every 15 days! Huntington of Watson Wyatt said Filipinos, compared with their counterparts in the Asia-Pacific region (especially Hong Kong, Indonesia, Malaysia, Singapore and Taiwan), are not necessarily lured by money when they start seeking jobs fresh from university. Their main criteria for joining are the reputation of the company and career-development opportunities. In other words, they want to learn and grow with the company. That’s at the start, when they’re young and keener on learning from the best in the field. But inevitably, as they grow older and more settled in their careers, the base pay starts to matter more, if the experts are to be believed.

This information may imply that as these employees mature with the firm, they may start thinking about settling down, owning pieces of property like a house, lots or condominiums for their future families. That’s when base pay becomes a very important issue. Along this line, Huntington clarified that base pay has remained a very important reason why talented employees in the Philippines leave. Consider that that’s also the time when these employees, having gained significant experience and skills, become so attractive to headhunters here and abroad. The “pull” is very strong, and a company must be painfully aware at all times of such “lures” and do everything to “engage” or help them find greater sense in staying even if base pay can’t be substantially increased.

Without company “engagement,” they are likely to leave for greener pastures either here or abroad. That explains why increasingly we are sending skilled professionals, including IT engineers, construction engineers, nurses, doctors who became nurses, physical therapists, architects, managers, advertising experts, journalists and even soldiers.

The bottom line for a country like the Philippines is rather tough. That should mean local companies have a lot of “engagement” to do. And they should do it before it’s too late. (Drafted as editorial for BusinessMirror editorial, Nov 20 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?

Tuesday, November 13, 2007

Retirement villages: Pinoy's superb people's skills find a niche

ON Tuesday, BusinessMirror ran a report that Angeles City Mayor Francisco Nepomuceno is eyeing the establishment of retirement villages in his hometown to boost development in the area. Wise move, we say.

Projects like these are among the most feasible for local governments, as these require less capital while easily generating tangible economic benefits down at the grassroots. It’s a good thing that the Philippine Retirement Authority (PRA) has recently included Angeles City in its list of “destination havens.”

Establishing retirement villages is like hitting several targets with one stone. The construction sector and its affiliated industries would surely perk up. Retirees usually favor places that are essentially less urbanized; hence, the jobs to be created by retirement villages would benefit local rural residents in terms of increased requirements for labor—not just skilled caregivers and health and wellness workers, but also construction workers, plumbers, food caterers, restaurant workers, masseuses, janitors and golf caddies, among others.

Currently, many of our medical professionals (nurses, physical therapists, doctors, medical technologists) leaving for jobs abroad cite the limited economic opportunities in the country. Retirement villages would necessarily need more medical professionals (especially doctors and nurses), hence, there would be incentives for them to stay.

Why do we have to send them abroad if we could just bring in the retirees from the United States, Japan and Europe for our nurses to care for? It’s probably one of the best ways to boost tourism as the retirees here would likely attract visits from their relatives from their countries of origin.

What’s good about retirement villages is that they are environmentally benign. Retirees would necessarily desire a very good environment, thus there is an incentive for the host communities to maintain clean and safe surroundings. There would be more economic motivations for communities to preserve and conserve watersheds, clean rivers and plant more trees.

But it bears stressing here that developing retirement villages is not as simple as it seems. Retirement villages should be planned carefully, taking into consideration the special needs of retirees. These places, while many of them should probably be close to the sea and sun, should have easy access to health facilities, good urban and cultural centers, sports facilities and other amenities. They should also be communications-ready, meaning foreign retirees used to computers and e-mailing or cyber-chatting would be looking for telco services.

Retirees should also have good opportunities to mingle with the local community while ensuring their safety. Many retirees, being well-educated and having retired from challenging jobs, would be interested to interact with other people and, possibly, even do pet projects with them.

All these factors suggest that the local governments and the private sector should delineate their roles well. The LGUs should assume enabling roles while allowing the private sector to plan, construct and develop these retirement villages, based on certain global standards. An enabling role for the LGUs and the government, in general, means that local legislators would have to pass supporting policies (especially on proper land use, waste management, conservation, improved town management, traffic, etc.) to ensure the success of these villages. (Note: drafted as editorial for BusinessMirror, 14 Nov 2007)

Monday, November 12, 2007

Holding up half the sky from the depths of hell?

“People are more violently opposed to fur than leather because it’s safer to harass rich women than motorcycle gangs.”—Unknown

Congratulations, therefore, are in order for all the women: our mothers, daughters and sisters! And certainly, the entire society deserves credit as well. The Philippines’ 2007 Gender Gap Index ranking indicates that culturally, the Philippines has come a long way from a feudal past when parents thought society should not invest in women’s education and personal advancement because they were going to be married off anyway and will stay in the homes of their husbands. These days we are increasingly seeing the influential roles being played by women in Philippine society, be it in civil-society organizations, business or politics.

Indeed, it’s a fitting tribute to women in a society that is increasingly relying on its women to move the economy forward. If we look deeper into the numbers, it’s obvious that our new growth drivers—outsourcing, electronics and overseas labor migration—are mostly “manned” by women. Increasingly, we are sending more skilled professionals going abroad. They are mostly medical professionals, caregivers and artists who are predominantly women. We are increasingly sending abroad information-technology professionals, many of whom are women.

But on hindsight, some of these trends are not necessarily favorable to women and society as a whole. For one, it means we are increasingly sending abroad women who are sorely needed to give motherly care for our own children. The fathers and relatives could probably supplant the mothers, but reality—or at least the common anecdotal evidence in our immediate community—seems to indicate that households with single parents are not always the best environment within which children should grow up in. Horror stories about teenage pregnancy, alcoholism and drug abuse, even incest, among OFW families are too common to ignore.

That many of the women have to go beyond the borders to become breadwinners indicate that, increasingly, women are disproportionately bearing the burden imposed by a flawed economic strategy that traces its roots to the 1970s. Nothing is wrong with labor migration per se, but if it’s the only thing that keeps the economy afloat, as is the case of the Philippines lately, something must be wrong somewhere.

It means women are being forced to take roles and so much risk they probably wouldn’t want to take if only there were more options within the country. We are specifically referring to caregivers and domestic help, mostly women, who are prone to abuse in alien cultures. Isn’t that another form of oppression?

A recent episode in the multiawarded TV documentary Probe Team dwelt on human trafficking, and the stats were appalling, bearing out what we just had a hunch about all this time, i.e., that the Philippines ranks also among the top five countries from where originate victims of human trafficking, especially young women. This shouldn’t be surprising. For many decades, it had been quite easy for unscrupulous recruiters and the network of traffickers to ship out young, unsuspecting, unsophisticated poor women from the countryside, promising them jobs in the Middle East or some Southeast Asian destination (usually Malaysia or Indonesia), only for them to find themselves stranded in some brothel, broke and broken, their documents all tampered with or forged, and thus no good for any decent job.

Until recently, it wasn’t surprising to find queuing up at the Naia an illiterate woman bound for Kuwait or some similar destination, there to work as a domestic.

The government early this year bucked massive protests by setting a floor wage of $400 for domestics, at the risk of losing a big chunk of the overseas market to nationalities that will bite at cheaper rates. Policymakers justified this by saying it was one way of discouraging a surge of OFWs in such low-end positions, which attract the more vulnerable types, anyway, and encouraging deployment of better skilled—hence, more educated and less risky to abuse—workers. Last time we checked, the controversial policy seems to be working in this wise, although the recruiters are complaining because the deployment is declining.

To be fair, the government may be right after all on this score, but until then, it should keep pursuing the line that one can’t build an economy on the backs of its women, especially those prone to all forms of abuse, while tearing, because of their absence, the social fabric back home. Let’s hope next year’s gender index will show even better results.

Sunday, November 11, 2007

Closing the gender gap (how the Pinoy machos are becoming domesticated!)

For the second time, the World Economic Forum has ranked the Philippines number 6 in its 2007 Gender Gap Index, an indication that the country is one the most “women-friendly” countries in the world. Other countries in the top ten are Sweden, Norway, Finland, Iceland, New Zealand, Germany, Denmark, Ireland, and Spain.

In a related development, Dr. Romulo Virola says the Pinoy machos are getting domesticated.

The Global Gender Gap Report 2007 measures the size of the gender gap in four critical areas of inequality between men and women:

Economic participation and opportunity – outcomes on salaries,
participation levels and access to high-skilled employment;

Educational attainment – outcomes on access to basic and higher level

Political empowerment – outcomes on representation in decision-making

Health and survival – outcomes on life expectancy and sex ratio.

According to the Report, the Philippines ranked second in the subindex on economic participation and opportunity for women and 14th in political empowerment. The country also ranked first in educational attainment along with Australia, Belgium, Belize, Denmark, the Dominican Republic, France, the Honduras, Ireland, Jamaica, Lesotho, Luxembourg, the Maldives, Poland and the United Kingdom.

The Philippines also shares first place in health and survival with Angola, Argentina, Austria, Belize, Brazil, Cambodia, Chile, Colombia, Costa Rica, the Dominican Republic, Ecuador, El Salvador, Finland, France, the Gambia, Guatemala, the Honduras, the Kyrgyz Republic, Latvia, Lesotho, Madagascar, Mauritania, Mauritius, Mexico, Mongolia, Panama, Paraguay, the Slovakia, Sri Lanka, Thailand, Trinidad and Tobago, Uruguay, Venezuela and Yemen.

In Asia, the WEF said the Philippines and Sri Lanka, which is at 15th place, remain the only countries included in the top 20.

“The Philippines is, once again, the only country in Asia to have closed the gender gap on both education and health and is one of only six in the world to have done so,” said the WEF. “The Philippines’s scores on political empowerment improved further, as did some of its economic indicators, such as estimated income, labor-force participation and income equality for similar work.”

I'll reflect on this tomorrow.

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

Tuesday, November 06, 2007

Is the world getting unequal?

Is the world getting unfair? It’s so easy to form that impression these days especially if you live in the Philippines. In a study, NSCB director general Romulo Virola and company said the ranks of the middle class have been shrinking. The study however only covers from 1997 until 2003 and surely the rapid growth of outsourcing may have some positive effect on the fresh numbers. I really hope Dr. Virola updates us on this thing one of these days.

But in the US, Americans are also complaining about the same trend. Take if from political economist Robert Kuttner who recently said that:

For three decades, the [American] economy has increasingly become more unequal and more precarious for ordinary people. During the same period, risks that used to be absorbed by large, stable employers or social programs have been transferred back to individuals and families.

Meanwhile, the financial economy has become steadily more speculative and corrupt, as insiders, often with severe conflicts of interest, extract wealth from the real economy. The dot-com bust of 2000-2001 was the result of those conflicts -- accountants who were supposedly guardians of honest books colluded with management to pump up stock values and deceive investors; stock "analysts" compensated on the basis of their success in duping the dumb money.
Sounds familiar?

In the case of the Philippines, the supposed rising inequality could be due to the emergence of new growth drivers that are essentially urban-based: outsourcing, electronics, construction, real estate. Inequality however could also be “good” especially if its temporary. Let’s face it, any surge in economic growth usually starts from certain sectors of the economy (say certain sectors in manufacturing and services) before others catch up through demand linkages. We have yet to see whether or not this pattern will eventually manifest in the Philippine context, now that we started to have decent economic growth rates (5-7 percent).

I’m crossing my fingers.

Monday, November 05, 2007

From the farms to the slums

"From the farms to the slums “Migration can be a climb up the income ladder for well-prepared, skilled workers, or it can be a simple displacement of poverty to the urban environment for others.”—World Development Report 2008, the World Bank

MIGRATION to the city, or even to other countries for work, says the latest report from the World Bank, is no way out for the rural poor. Not all the time, anyway, and still the best way to solve rural poverty is directly addressing rural folks’ problems right where they are.

We couldn’t agree more with the World Bank, especially in the context of the Philippines where the government seems to have abandoned the rural sector right after legislators passed the Agricultural and Fisheries Modernization Act (Afma) in 1998, supposedly to boost the competitiveness of the farm sector following the country’s joining the World Trade Organization.

The idea that urbanization could solve everything stems from the stylized view that countries with higher rates of urbanization are usually richer and, therefore, with lower poverty ratios, either rural or urban. This is correct, especially as regards the experience of most developed countries like Western Europe, the United States and Japan, where industrialization came as a flipside to urbanization.

In theory, investors usually set up factories close to the city, especially port cities, where they could hire workers to operate the machines, bring in raw materials either through the ports or rail systems, send the finished products through the same transport networks, and where overall costs are lower due to the availability of other support or ancillary industries and services like banks, insurance firms and accounting services, among others. That process, in turn, attracts workers from the countryside, extra hands that were made redundant by the increasing mechanization of farming and other technological innovations. The end result is a competitive industry and services sectors growing fast side-by-side an equally vibrant farm sector, a wonderfully dynamic process that soaks up joblessness and ultimately addresses poverty.

The presumption here, certainly, is that government has invested massively in infrastructure development, thus facilitating an economic interaction between the farms and industry, as well as the rural areas to the urban areas. This is one variable that has always been lacking in development strategies of most developing economies, leading to what development economies call “premature urbanization.”

Premature urbanization suggests that desperate rural folks—lacking the means to make a decent living in the farms due to lack of good infrastructure, health services, land tenure, credit, and market information, among other things—migrate in mass to the cities, hoping against hope to get a better deal for them and their families. In most cases, however, most of them end up in the slums doing all sorts of odd jobs and putting pressure on limited social services. There are simply not enough factories to work in. And if there are, rural folks are the last ones to get hired for lack of skills and urbane social graces.

Despite these drawbacks of premature urbanization, policymakers continue to stick with urban-oriented growth strategies, apparently for political reasons. Urban areas are where the influential economic elite and noisy middle class live, and it’s convenient for the state to forego public investments in rural areas when funds are limited due to failure to collect taxes from these elites. This was clearly manifested at the height of the fiscal crisis in the early 2000s, when the government practically stopped investments in health, education and rural infrastructure in the hope of achieving “fiscal consolidation” and getting into the good graces of the International Monetary Fund.

With higher charges collected from the people through the expanded value-added tax, the government now has supposedly some resources for rural development. And yet, we could hardly see any definite thrust toward this end. Whatever initiative the government had was just a pretext for a scam (the Joc-joc Bolante caper). It was convenient to ignore the countryside because the economy has been growing courtesy of outsourcing, electronics and the recovery of construction, which are urban-oriented. The idea now seems to be that eventually, economic growth will outgrow problems like joblessness and, later down the road, rural poverty.

This is a misplaced assumption, essentially because the way we are growing right now, economic growth might not be sustainable. An urban-oriented growth is inherently inequitable and is prone to accentuate not only the urban-rural divide but also the gulf between the haves and the have-nots. The latest study by Dr. Romulo Virola and his team from the National Statistical Coordination Board, saying the ranks of the middle class have been shrinking, seems to prove this point.

It will never be sustainable because such type of growth would produce a revolution of rising expectations that may, in its bizarre forms, manifestrising criminality (a form of income redistribution), and the continuing lack of political stability. The continuing threats from terrorism being seeded in a perennially undeveloped south, the persistent menace of communist ambushes and “revolutionary taxation,” and the disillusionment of the country’s professional classes that are driving them to leave for foreign shores, are just among the bad signs. (Note: drafted as editorial for BusinessMirror, 6 Nov 2007)

Saturday, November 03, 2007

Revolt of the skilled and the middle class?

Louise’s call woke me up from my afternoon sleep yesterday.

“Hey brother, I’m here at the Fort, having an eyeball with Multiply friends including Sally. I’m leaving for Singapore,” she told me. “This will be my third stint as ‘OFW,’ ha ha!

She’s going to work, she said, as architectural designer and estimator for a Singaporean firm, apparently with a very good pay.

Knowing Louise, I know it’s not really about the money. Or maybe it is, but it’s probably less of that and more about the new experience, professional advancement, and perspectives that she would gain from working in a new environment.

I’m happy when I hear friends with great skills leaving for some overseas stints. Those gigs surely make them happier, richer, better persons, more skilled, and innovative. And when they decide to return home someday after making a pile, they would surely contribute a lot to society. That’s what travel and global experience does to a person.

I am not comfortable with views that say skilled people need to remain within the borders to “help in nation-building.” Sometimes, such a collectivist view is a deception as it tends to subordinate the Individual to the State or some commercial interests bent on maintaining dominance in an inequitable social order. I’m talking about the Philippines, specifically.

Overseas employment could be a form of protest. It’s a protest against the local institutions and structures that couldn’t seem to appreciate talent. It’s a protest against the wickedness of local politics. It’s a heroic struggle by people who don’t want their choices limited by short-sighted policies.

But it’s a constructive kind of protest because instead of mounting a revolution or lining the bastards and shooting them against the wall, they channel their energies elsewhere, thus helping in the transformation of societies where their talents are appreciated while sending money back home for kin to build better homes, and pay for education. Why do you think countries like Australia, Canada, New Zealand, and Singapore are moving heaven and earth to attract talent from all over the globe?

Tuesday, October 30, 2007

Southern push: europeans look at Cebu as investment destination

IT’S a good thing that European businessmen, specifically the members of the French Chamber of Commerce, are starting to see Cebu as an investment destination, not just as an exotic place to visit. That’s an important development that our leaders in both the public and private sectors should nurture because it’s the best way to address income inequality in the country.

Inequality in terms of income and wealth has always been a major problem in the Philippines. Inequality usually manifests itself in terms of “polarization,” a situation where economic activities are concentrated in the urban areas in few regional centers.

These days, for instance, economic activities are largely concentrated in Metro Manila and its immediate surroundings like Calabarzon, Clark and Subic. Naturally, these areas enjoy low poverty incidence (7 percent to 18 percent) in stark contrast to provinces in the Autonomous Region in Muslim Mindanao and Caraga, where poverty incidence is over 50 percent.

Geography plays a great part. The strategic location of Manila, being the national capital, and its expanding conurbation would naturally attract a lot of economic activities. Experts have been saying, however, that a significant explanation could be traced to misguided policies that favored “imperial Manila” as well and its immediate environments.

If we want to get serious about addressing inequality, therefore, we should put in measures addressing economic polarization.

In fairness, legislators have actually tried to address this problem since the ’90s through measures like devolution and decentralization. Local government executives now have more powers and resources to plan their own communities.

Reforms in aviation, interisland shipping and telecommunications have also started to bring the far-flung regions closer to the mainstream of development. Nevertheless, statistics continue to indicate that polarization persists, apparently due to the momentum of history and the continuing failure of the government to invest in strategic infrastructure that should link the regions with urban centers.

The idea, therefore, that Europeans are looking at Cebu as an alternative investment destination is a positive sign. Cebu, of course, has always been a major recipient of foreign direct investments, specifically Japanese companies that established factories for the assemblies of electronics and semiconductors since the early ’90s.

For long, it has been serving as the gateway to Southern Philippines, economically linking up the Mindanao regions and Metro Manila through its superb seaports and airports. With greater investments from European companies, Cebu’s economic transformation could produce positive ripple effects toward its neighbors, especially Bohol, and some urban centers in Mindanao, including Butuan City and Cagayan de Oro City, thus generating more economic activities and opportunities in the said areas.

What’s happening in Cebu right now is essentially market-driven, assisted only by forward-looking local political leadership. The task right now, therefore, is developing more regional centers in the Visayas and Mindanao that could complement Cebu as an economic center.

The national government, as well as the private sector, could catalyze this process by putting in more policies that encourage greater economic decentralization. Certainly, a well-designed infrastructure network providing economic linkages among production centers in the Visayas and Mindanao should be a priority. Also, programs that channel tourism flows from Manila to the Visayas via Cebu would help a lot. The country’s telecom industry could help by accelerating the rollout of broadband facilities in the Visayas and Mindanao.