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.
Tuesday, October 30, 2007
Monday, October 29, 2007
The vanishing middle class
The best political community is formed by citizens of the middle class. —Aristotle (384 BC-322 BC), Politics
Where justice is denied, where poverty is enforced, where ignorance prevails, and where any one class is made to feel that society is in an organized conspiracy to oppress, rob and degrade them, neither persons nor property will be safe. —Frederick Douglass (1817-1895), Speech, April 1886
‘UPPER classes are a nation’s past; the middle class is its future,” Ayn Rand (1905-1982), American novelist and philosopher, once said.
Sad to say, this dictum doesn’t seem to apply to the Philippines. The ranks of the middle class—according to the study by statisticians Romulo Virola, Mildred Addawe and Ma. Ivy Querubin—are in fact shrinking.
Mr. Virola, it should be noted, is secretary-general of the National Statistical Coordination Board (NSCB).
The trend doesn’t augur well for the stability of this country. It’s an irony that we need to worry about as we ponder the validity of the encouraging gross domestic product (GDP) figures that we have started to see in the last several years.
Entitled “Trends and Characteristics of the Middle-Income Class in the Philippines: Is it Expanding or Shrinking?”, this study was one of the papers presented during the recent National Statistical Conference. And the results are disturbing.
First, from 1997 until 2003, the ranks of the middle class were shrinking. In terms of absolute figures, the same study found out that while the number of middle-income families increased from 1997 to 2000, it decreased from 2000 to 2003.
That trend suggests the ranks of the poorer segment of society are expanding.
“As of 2003, less than one in 100 families belongs to the high-income class; about 20 are middle-income and 80 are low-income. And in a span of six years from 1997 to 2003, close to four families for every 100 middle-income families have been lost to the low income category,” said the study.
The study highlights what the authors say is the “increasing vulnerability” of the middle class that could translate into increased poverty incidence in the future. We could interpret the results to mean that we do have a shaky and insecure middle class that is prone to slide down the social scale.
The study, albeit limited, has identified certain predictors of incomes for Filipino households, like ownership of stereo, having air-conditioning units, and educational attainment and household size, for which government action could be anchored. The authors called for “timely intervention” from both the public and the private sector, specifically increased investments and reforms in the country’s education system.
These interventions are important because, according to the study, the mean income of the families with overseas workers is much higher by 75 percent in 2000 and 93 percent in 2003 than the mean income of all Filipino families. Out of the total number of families with one or two of their members working abroad, more than half are classified as middle-income families.
These statistics reveal to us just how difficult it is to rise up the Philippine social ladder. The study is telling us that the only way for someone who aspires to get a better life is through overseas labor migration. This is a serious indictment not only of the country’s political leaders but also of the behavior of its private business leaders, who resisted policy reforms intended to hasten economic growth.
And not to be ignored, of course, is a major factor: the worsening graft and corruption under the Arroyo administration, its complete lack of transparency, and its utter lack of moral direction.
And we are also talking here about entrenched monopolies and oligopolies in aviation, the shipping and port operations, and utilities, among others, which stranglehold on the Philippine economy have prevented us from attaining global competitiveness.
Recently, the country’s leaders from both the public and private sectors were heard lamenting the continuing drain in the country’s brains. Indeed, officials of the Philippine Overseas Employment Administration have been saying the Philippines has increasingly been deploying skilled professionals and technicians, thus making it hard for local industries to retain talent. But unless we do something that could raise the hopes and dreams of the middle class, from which most of the country’s talent comes, we could never solve the “brain-drain” problem.
For far too long, the country’s policymakers have largely been focusing their attention on the so-called poorest of the poor, through measures like minimum-wage setting and subsidies on prices of cereals through price supports, among others. They seem to assume that the middle class is doing just fine.
The NSCB study, however, indicates that we also need to attend to the needs of the middle class for the benefit of greater society. It’s from the middle class where we get the talent needed to run the bureaucracy, as well as manage businesses, offices and factories.
The middle class is usually well- educated, highly skilled and well- informed. It’s through an expanding middle class where we could attain political stability and real democracy.
But when a big chunk of the middle class is away, the country is left to two vastly different classes: the tiny elite who have a grip on most of the resources, and the overwhelming number of the poor and wretched and their increasingly angry voices. It’s an understatement to say that’s not a good environment for doing business. (Note: drafted as editorial for the BusinessMirror, 30 October 2007)
Where justice is denied, where poverty is enforced, where ignorance prevails, and where any one class is made to feel that society is in an organized conspiracy to oppress, rob and degrade them, neither persons nor property will be safe. —Frederick Douglass (1817-1895), Speech, April 1886
‘UPPER classes are a nation’s past; the middle class is its future,” Ayn Rand (1905-1982), American novelist and philosopher, once said.
Sad to say, this dictum doesn’t seem to apply to the Philippines. The ranks of the middle class—according to the study by statisticians Romulo Virola, Mildred Addawe and Ma. Ivy Querubin—are in fact shrinking.
Mr. Virola, it should be noted, is secretary-general of the National Statistical Coordination Board (NSCB).
The trend doesn’t augur well for the stability of this country. It’s an irony that we need to worry about as we ponder the validity of the encouraging gross domestic product (GDP) figures that we have started to see in the last several years.
Entitled “Trends and Characteristics of the Middle-Income Class in the Philippines: Is it Expanding or Shrinking?”, this study was one of the papers presented during the recent National Statistical Conference. And the results are disturbing.
First, from 1997 until 2003, the ranks of the middle class were shrinking. In terms of absolute figures, the same study found out that while the number of middle-income families increased from 1997 to 2000, it decreased from 2000 to 2003.
That trend suggests the ranks of the poorer segment of society are expanding.
“As of 2003, less than one in 100 families belongs to the high-income class; about 20 are middle-income and 80 are low-income. And in a span of six years from 1997 to 2003, close to four families for every 100 middle-income families have been lost to the low income category,” said the study.
The study highlights what the authors say is the “increasing vulnerability” of the middle class that could translate into increased poverty incidence in the future. We could interpret the results to mean that we do have a shaky and insecure middle class that is prone to slide down the social scale.
The study, albeit limited, has identified certain predictors of incomes for Filipino households, like ownership of stereo, having air-conditioning units, and educational attainment and household size, for which government action could be anchored. The authors called for “timely intervention” from both the public and the private sector, specifically increased investments and reforms in the country’s education system.
These interventions are important because, according to the study, the mean income of the families with overseas workers is much higher by 75 percent in 2000 and 93 percent in 2003 than the mean income of all Filipino families. Out of the total number of families with one or two of their members working abroad, more than half are classified as middle-income families.
These statistics reveal to us just how difficult it is to rise up the Philippine social ladder. The study is telling us that the only way for someone who aspires to get a better life is through overseas labor migration. This is a serious indictment not only of the country’s political leaders but also of the behavior of its private business leaders, who resisted policy reforms intended to hasten economic growth.
And not to be ignored, of course, is a major factor: the worsening graft and corruption under the Arroyo administration, its complete lack of transparency, and its utter lack of moral direction.
And we are also talking here about entrenched monopolies and oligopolies in aviation, the shipping and port operations, and utilities, among others, which stranglehold on the Philippine economy have prevented us from attaining global competitiveness.
Recently, the country’s leaders from both the public and private sectors were heard lamenting the continuing drain in the country’s brains. Indeed, officials of the Philippine Overseas Employment Administration have been saying the Philippines has increasingly been deploying skilled professionals and technicians, thus making it hard for local industries to retain talent. But unless we do something that could raise the hopes and dreams of the middle class, from which most of the country’s talent comes, we could never solve the “brain-drain” problem.
For far too long, the country’s policymakers have largely been focusing their attention on the so-called poorest of the poor, through measures like minimum-wage setting and subsidies on prices of cereals through price supports, among others. They seem to assume that the middle class is doing just fine.
The NSCB study, however, indicates that we also need to attend to the needs of the middle class for the benefit of greater society. It’s from the middle class where we get the talent needed to run the bureaucracy, as well as manage businesses, offices and factories.
The middle class is usually well- educated, highly skilled and well- informed. It’s through an expanding middle class where we could attain political stability and real democracy.
But when a big chunk of the middle class is away, the country is left to two vastly different classes: the tiny elite who have a grip on most of the resources, and the overwhelming number of the poor and wretched and their increasingly angry voices. It’s an understatement to say that’s not a good environment for doing business. (Note: drafted as editorial for the BusinessMirror, 30 October 2007)
Thursday, October 25, 2007
Good news from Philippine tourism sector
The camera makes everyone a tourist in other people’s reality, and eventually in one’s own.—Susan Sontag (1933-2004), New York Review of Books, April, 18, 1974
We support the call of the joint chambers of commerce in the country for the upgrading of the country’s international and domestic airports, especially the Ninoy Aquino International Airport (Naia) that straddles two Metro Manila cities and the Diosdado Macapagal International Airport (DMIA) in Clark, Pampanga.
If there’s one strategic investment that we should undertake to immediately kick-start the economy, this is it. And we should do it soon.
For all our rambunctious politics, the tales about corruption in high places, bombings, and skirmishes between rebels and government troops, the country’s tourism industry has actually been growing quite decently in the last several years. By the looks of it, it seems to be an emerging industry that only needs a little tweaking from the government for it to become a really huge growth driver like outsourcing.
It used to be that we hardly attracted a million visitors each year despite all the good beaches, the huge shopping malls and the historic places we got all over. In the last few years, we have proven we can actually attract more than two million a year. This year, both the private and the public sectors expect visitor arrivals to reach three million. By 2010 we are supposed to get more than five million visitors.
These figures are probably achievable given the fact that from January to August alone, we already got more than two million. With the influx of more tourists and balikbayan in November and December, we could probably achieve the target this year. Given the rising trend in tourism arrivals in the last three years, the five-million target by 2010 is probably a conservative estimate.
Today, we can already feel the positive effects of this encouraging trend. Major hotels are now getting crowded, indicating that soon we are going to see increased investments in additional capacities. This year alone, the Tourism department said the country needs an additional 3,000 rooms. Meeting these requirements alone would mean that the Philippine economy is going to get at least $3 billion in fresh investments. This would certainly mean more jobs being created, not only in hotels but also in restaurants and the food industry.
And certainly, the money that the tourists are going to spend in the shopping malls, bars, restaurants, resorts and spas not only in Metro Manila but also in Tagaytay, Cebu, Bohol and Boracay would generate a lot of economic activities in these areas.
Right now, industry estimates indicate that the tourism industry probably employs more than three million workers, with about a million directly hired by hotels and restaurants. A five-million tourism-arrival figure therefore could easily translate to a total job creation of more than seven million by 2010.
What we are stressing here is that tourism is the best and the fastest way to address joblessness in the cities and the countryside. And it’s a kind of industry that really doesn’t require highly skilled labor.
But to achieve these targets, the government would need to make a major or strategic decision of giving time and resources to upgrading the country’s airports, particularly the Naia and, if possible, the DMIA. As stressed by the foreign chambers, the first and the last impression of the Philippines are created by the tourists’ experiences when they land and leave the country.
Today, most visitors enter the country through the Naia, and they are probably not pleased getting through the congested airport. The Naia Terminal 3 should have addressed that issue, but until now that terminal is still closed to traffic.
Right now, it would probably make sense if the government, in tandem with the private sector, could develop the DMIA as an alternative international gateway. But that would also mean investing in supporting infrastructure like ground-transportation links to Metro Manila.
Certainly, there’s an opportunity for the private sector to help the government in this effort, provided the public sector could ensure transparent bidding rules and procedures. It’s a sure bet that we need to make right away to propel the economy on a higher growth path. (Drafted as editorial for BusinessMirror October 23 2007)
We support the call of the joint chambers of commerce in the country for the upgrading of the country’s international and domestic airports, especially the Ninoy Aquino International Airport (Naia) that straddles two Metro Manila cities and the Diosdado Macapagal International Airport (DMIA) in Clark, Pampanga.
If there’s one strategic investment that we should undertake to immediately kick-start the economy, this is it. And we should do it soon.
For all our rambunctious politics, the tales about corruption in high places, bombings, and skirmishes between rebels and government troops, the country’s tourism industry has actually been growing quite decently in the last several years. By the looks of it, it seems to be an emerging industry that only needs a little tweaking from the government for it to become a really huge growth driver like outsourcing.
It used to be that we hardly attracted a million visitors each year despite all the good beaches, the huge shopping malls and the historic places we got all over. In the last few years, we have proven we can actually attract more than two million a year. This year, both the private and the public sectors expect visitor arrivals to reach three million. By 2010 we are supposed to get more than five million visitors.
These figures are probably achievable given the fact that from January to August alone, we already got more than two million. With the influx of more tourists and balikbayan in November and December, we could probably achieve the target this year. Given the rising trend in tourism arrivals in the last three years, the five-million target by 2010 is probably a conservative estimate.
Today, we can already feel the positive effects of this encouraging trend. Major hotels are now getting crowded, indicating that soon we are going to see increased investments in additional capacities. This year alone, the Tourism department said the country needs an additional 3,000 rooms. Meeting these requirements alone would mean that the Philippine economy is going to get at least $3 billion in fresh investments. This would certainly mean more jobs being created, not only in hotels but also in restaurants and the food industry.
And certainly, the money that the tourists are going to spend in the shopping malls, bars, restaurants, resorts and spas not only in Metro Manila but also in Tagaytay, Cebu, Bohol and Boracay would generate a lot of economic activities in these areas.
Right now, industry estimates indicate that the tourism industry probably employs more than three million workers, with about a million directly hired by hotels and restaurants. A five-million tourism-arrival figure therefore could easily translate to a total job creation of more than seven million by 2010.
What we are stressing here is that tourism is the best and the fastest way to address joblessness in the cities and the countryside. And it’s a kind of industry that really doesn’t require highly skilled labor.
But to achieve these targets, the government would need to make a major or strategic decision of giving time and resources to upgrading the country’s airports, particularly the Naia and, if possible, the DMIA. As stressed by the foreign chambers, the first and the last impression of the Philippines are created by the tourists’ experiences when they land and leave the country.
Today, most visitors enter the country through the Naia, and they are probably not pleased getting through the congested airport. The Naia Terminal 3 should have addressed that issue, but until now that terminal is still closed to traffic.
Right now, it would probably make sense if the government, in tandem with the private sector, could develop the DMIA as an alternative international gateway. But that would also mean investing in supporting infrastructure like ground-transportation links to Metro Manila.
Certainly, there’s an opportunity for the private sector to help the government in this effort, provided the public sector could ensure transparent bidding rules and procedures. It’s a sure bet that we need to make right away to propel the economy on a higher growth path. (Drafted as editorial for BusinessMirror October 23 2007)
Tuesday, October 23, 2007
Normalcy as weapon against terrorism
They’re funny things. Accidents. You never have them till you’re having them.—Eeyore, Pooh’s Little Instruction Book, inspired by A. A. Milne
To be feared is to fear: no one has been able to strike terror into others and at the same time enjoy peace of mind.—Seneca (5 BC-65 AD)
WAS it an accident or a bomb? Whatever the real cause behind the explosion, the best thing for us to do is get back to our normal lives while taking the usual precautions.
Tragedies like what happened on Friday tend to disrupt people’s routines, causing severe economic losses. They also distract us from pursuing the things that matter in our national life. The right thing to do, therefore, is to get on with our normal lives to minimize losses.
Entrepreneurs should go on making decisions that should create jobs. Business managers should pursue their business plans. Employees should continue reporting to their workplaces. Shopkeepers should open their shops for buyers.
Let the wheels of industry and commerce flow while the police and forensic experts do their jobs to make our country safer. If there’s one institution that could easily bring us to normalcy and regain losses, it’s the marketplace where people could mingle, share information, buy and sell goods and services.
As of this writing, investigators are increasingly thinking that the blast that caused the deaths of 11 people and injured more than a hundred may have been triggered by an accident.
It may have been due to the fumes that leaked from the huge diesel container or the methane gas from the septic tank that ignited at the basement. If that theory holds true, there’s more reason for us to get a good night’s sleep and move on—without forgetting to make accountable those whose laxity made the accident possible.
Investigators, of course, are still not ruling out the bomb-terrorism angle. It’s understandable. Jihadists have all the motivation to seek attention given the serious setbacks they have suffered in the last several years due to the arrests and deaths of many of their leaders, both in the Philippines as well as in Indonesia.
And for all our problems, the Philippines remains an open society, making us so vulnerable to violent and/or “terrorist” actions from all directions—jihadists, rogue military groups, communists or even state-sponsored elements. Anybody who wants to create mayhem and destruction can easily do so. We are not a police state—or at least we seem to think so—that puts soldiers and cops in all nooks and crannies of the land. But it’s the same openness that makes us so resilient against terrorist actions.
Why? It’s in the nature of terrorism. Terrorists may have different motives and psychological makeup, but they all want to see ordinary citizens immobilized by fear. Terrorists want us to be scared to death and shun shopping malls, coffee shops, public markets and open spaces. They want us to live in the shadows, just like them.
Why? It’s because terrorists often feel helpless and confused about the rapid economic and social changes in society, and it’s only through fear and intimidation that they can assert control and gain attention. And they want to inflict immediate damage on people and their properties, hoping the paralysis that will follow will have a long-term impact on the economy. Normalcy, therefore, and the continuing openness of our society could easily undermine the goals of terrorists.
Necessarily, open societies like ours should remain vigilant and assiduous in our pursuit of those malevolent actors. Our justice system should continuously pursue them and bring them to justice. And while we are doing this, let’s get on with our normal daily routines about living and loving.
The second theory on the cause of the explosion points to some rogue elements in the military—one group out to destabilize the government, especially in the wake of recent controversies about the national broadband network (NBN) and the supposed bribery of local officials and legislators by Malacañang to buy their loyalty.
And the third theory being peddled by critics of the government is that the Makati blast was probably a way to distract people’s attention from these political controversies. In short, it was an operation straight out of Malacañang; or worse, insanely loyal rogue elements carrying out “black operations” for an unaccountable force working outside the chain of command: in short, a madman’s dream.
If the third theory is true, normalcy should mean that the Senate will continue investigating the NBN mess. The senators should also investigate recent efforts by Malacañang to purchase the loyalty of legislators and local government executives in view of the ongoing controversies.
The church should continue calling for moral reforms in the highest levels of powers. The media should continue investigating the shenanigans that seem to be popping up left and right under the government of President Arroyo. And militants and activists should continue their business of demanding fairness, justice and morality in this benighted land.
To paraphrase the great poet Dylan Thomas: We should not go gentle into that good night. Old age should burn and rave at close of day. We should rage, and rage against the dying of the light. (Note: I wrote this as editorial piece for BusinessMirror Oct 23 2007)
To be feared is to fear: no one has been able to strike terror into others and at the same time enjoy peace of mind.—Seneca (5 BC-65 AD)
WAS it an accident or a bomb? Whatever the real cause behind the explosion, the best thing for us to do is get back to our normal lives while taking the usual precautions.
Tragedies like what happened on Friday tend to disrupt people’s routines, causing severe economic losses. They also distract us from pursuing the things that matter in our national life. The right thing to do, therefore, is to get on with our normal lives to minimize losses.
Entrepreneurs should go on making decisions that should create jobs. Business managers should pursue their business plans. Employees should continue reporting to their workplaces. Shopkeepers should open their shops for buyers.
Let the wheels of industry and commerce flow while the police and forensic experts do their jobs to make our country safer. If there’s one institution that could easily bring us to normalcy and regain losses, it’s the marketplace where people could mingle, share information, buy and sell goods and services.
As of this writing, investigators are increasingly thinking that the blast that caused the deaths of 11 people and injured more than a hundred may have been triggered by an accident.
It may have been due to the fumes that leaked from the huge diesel container or the methane gas from the septic tank that ignited at the basement. If that theory holds true, there’s more reason for us to get a good night’s sleep and move on—without forgetting to make accountable those whose laxity made the accident possible.
Investigators, of course, are still not ruling out the bomb-terrorism angle. It’s understandable. Jihadists have all the motivation to seek attention given the serious setbacks they have suffered in the last several years due to the arrests and deaths of many of their leaders, both in the Philippines as well as in Indonesia.
And for all our problems, the Philippines remains an open society, making us so vulnerable to violent and/or “terrorist” actions from all directions—jihadists, rogue military groups, communists or even state-sponsored elements. Anybody who wants to create mayhem and destruction can easily do so. We are not a police state—or at least we seem to think so—that puts soldiers and cops in all nooks and crannies of the land. But it’s the same openness that makes us so resilient against terrorist actions.
Why? It’s in the nature of terrorism. Terrorists may have different motives and psychological makeup, but they all want to see ordinary citizens immobilized by fear. Terrorists want us to be scared to death and shun shopping malls, coffee shops, public markets and open spaces. They want us to live in the shadows, just like them.
Why? It’s because terrorists often feel helpless and confused about the rapid economic and social changes in society, and it’s only through fear and intimidation that they can assert control and gain attention. And they want to inflict immediate damage on people and their properties, hoping the paralysis that will follow will have a long-term impact on the economy. Normalcy, therefore, and the continuing openness of our society could easily undermine the goals of terrorists.
Necessarily, open societies like ours should remain vigilant and assiduous in our pursuit of those malevolent actors. Our justice system should continuously pursue them and bring them to justice. And while we are doing this, let’s get on with our normal daily routines about living and loving.
The second theory on the cause of the explosion points to some rogue elements in the military—one group out to destabilize the government, especially in the wake of recent controversies about the national broadband network (NBN) and the supposed bribery of local officials and legislators by Malacañang to buy their loyalty.
And the third theory being peddled by critics of the government is that the Makati blast was probably a way to distract people’s attention from these political controversies. In short, it was an operation straight out of Malacañang; or worse, insanely loyal rogue elements carrying out “black operations” for an unaccountable force working outside the chain of command: in short, a madman’s dream.
If the third theory is true, normalcy should mean that the Senate will continue investigating the NBN mess. The senators should also investigate recent efforts by Malacañang to purchase the loyalty of legislators and local government executives in view of the ongoing controversies.
The church should continue calling for moral reforms in the highest levels of powers. The media should continue investigating the shenanigans that seem to be popping up left and right under the government of President Arroyo. And militants and activists should continue their business of demanding fairness, justice and morality in this benighted land.
To paraphrase the great poet Dylan Thomas: We should not go gentle into that good night. Old age should burn and rave at close of day. We should rage, and rage against the dying of the light. (Note: I wrote this as editorial piece for BusinessMirror Oct 23 2007)
Thursday, October 18, 2007
An explosion in glorietta 2
As I write this blog post here at the office, ANC channel is reporting about an explosion in Glorietta II at the heart of Makati that killed four and injured more than a dozen others. My oh my! I was supposed to be somewhere there that time for a meeting with Giselle K to discuss something. But we decided to meet at Figaro in Greenbelt instead. I wonder if there is such a thing as a guardian angel.
“Gas leak” is the initial theory but there are fresh reports, its probably a bomb.
“Gas leak” is the initial theory but there are fresh reports, its probably a bomb.
Abolish the SK!
“The deepest definition of youth is life as yet untouched by tragedy.” —Alfred North Whitehead (1861-1947)
AS the country prepares for the upcoming elections for the Sangguniang Kabataan (SK), it’s time to rethink the relevance of this “institution” in the country’s political system. At the outset, allow us to say let’s consider abolishing it. With the corrupt nature of the country’s politics today, such an early initiation into the arena would conceivably heighten the risk of corrupting our children, turning them into cynical political operators at an early age.
The SK was supposedly a mechanism to channel the energies of the youth in nation-building. It was a nice idea, really, whose parentage could be traced to our national hero Jose Rizal’s prophetic words about the youth as “the future of the motherland.” Indeed, it’s nice to think of the young people planning their own sports activities, helping in the cleanup and management of the local environment, or even doing small projects like antidrugs campaigns as well as values education.
The reality, however, strays far from such expectations. Even before the start of the election-campaign season, we have seen youngsters brazenly aping the deadly sins of traditional politicians. We have seen young candidates resorting to the hakot system, hiring trucks and vehicles for their “supporters” to make an impression of popular support, as they troop to the Comelec office to file their candidacies. In essence, they are violating the rule on premature campaigning, but these youngsters say they are not since they don’t have posters saying “vote for so and so.” It’s a clever trick that most politicians resort to all the time.
SK candidates are also not supposed to spend so much money for campaigning. And yet, we can already see lots of huge posters of SK candidates around. Where did these young people get the money? This question is important because it seems we are actually socializing these young people in money politics in so early an age. And it’s not far-fetched that some of these young people might eventually be tempted to buy votes and manipulate the entire electoral process.
We are not against active participation of the youth in community affairs per se. In fact, we would like to encourage them. But politicizing this process is not the way to go. These days, there’s a lot of anecdotal evidence indicating that many SKs have become extensions of local political dynasties. Many of them have drifted into the web of the sleazy and corrupt network of patronage politics. Some of these youngsters ended up not finishing their studies and became local wheeler-dealers.
“So young and yet so corrupt.”
Does that line ring a bell?
Instead, why not just hold a simple local assembly of young people for them to elect among themselves their representatives, the way school kids elect their class officers? And once they have their own set of officers in the communities, they still can suggest important legislation by simply approaching their local adult legislators, whose job really is to draft local ordinances and rules for local development.
We are suggesting these simple roles for them in community affairs because at such a tender age, these kids should really be spending their time in school. Parents and the community as a whole should give time for the kids to study, to play, and enjoy local educational and ennobling cultural opportunities.
Let’s give the business of governance to adults. Let’s allow our children to enjoy their youth. A few years from now these young people will also become adults. Then they will have their time to serve the community and the nation as a whole. (Originally drafted as editorial for BusinessMirror, 19 October 2007)
AS the country prepares for the upcoming elections for the Sangguniang Kabataan (SK), it’s time to rethink the relevance of this “institution” in the country’s political system. At the outset, allow us to say let’s consider abolishing it. With the corrupt nature of the country’s politics today, such an early initiation into the arena would conceivably heighten the risk of corrupting our children, turning them into cynical political operators at an early age.
The SK was supposedly a mechanism to channel the energies of the youth in nation-building. It was a nice idea, really, whose parentage could be traced to our national hero Jose Rizal’s prophetic words about the youth as “the future of the motherland.” Indeed, it’s nice to think of the young people planning their own sports activities, helping in the cleanup and management of the local environment, or even doing small projects like antidrugs campaigns as well as values education.
The reality, however, strays far from such expectations. Even before the start of the election-campaign season, we have seen youngsters brazenly aping the deadly sins of traditional politicians. We have seen young candidates resorting to the hakot system, hiring trucks and vehicles for their “supporters” to make an impression of popular support, as they troop to the Comelec office to file their candidacies. In essence, they are violating the rule on premature campaigning, but these youngsters say they are not since they don’t have posters saying “vote for so and so.” It’s a clever trick that most politicians resort to all the time.
SK candidates are also not supposed to spend so much money for campaigning. And yet, we can already see lots of huge posters of SK candidates around. Where did these young people get the money? This question is important because it seems we are actually socializing these young people in money politics in so early an age. And it’s not far-fetched that some of these young people might eventually be tempted to buy votes and manipulate the entire electoral process.
We are not against active participation of the youth in community affairs per se. In fact, we would like to encourage them. But politicizing this process is not the way to go. These days, there’s a lot of anecdotal evidence indicating that many SKs have become extensions of local political dynasties. Many of them have drifted into the web of the sleazy and corrupt network of patronage politics. Some of these youngsters ended up not finishing their studies and became local wheeler-dealers.
“So young and yet so corrupt.”
Does that line ring a bell?
Instead, why not just hold a simple local assembly of young people for them to elect among themselves their representatives, the way school kids elect their class officers? And once they have their own set of officers in the communities, they still can suggest important legislation by simply approaching their local adult legislators, whose job really is to draft local ordinances and rules for local development.
We are suggesting these simple roles for them in community affairs because at such a tender age, these kids should really be spending their time in school. Parents and the community as a whole should give time for the kids to study, to play, and enjoy local educational and ennobling cultural opportunities.
Let’s give the business of governance to adults. Let’s allow our children to enjoy their youth. A few years from now these young people will also become adults. Then they will have their time to serve the community and the nation as a whole. (Originally drafted as editorial for BusinessMirror, 19 October 2007)
A skunk by any other name
WHAT have Malacañang’s “gifts” to members of Congress and some local government executives got to do with an overvalued peso that’s hurting exporters and overseas workers and killing off jobs? Simple: that “gift,” Malacañang’s “politically correct” term for bribes, is the same reason why we remain one of the lousiest performers in terms of investment inflows.
The other day, the United Nations Conference on Trade and Development (Unctad) released its report on global trends in investment flows, saying that the Philippines is not attracting investments, specifically foreign direct investments (FDIs), compared with its neighbors despite its huge potentials. Unctad, in effect, is saying that those publicly funded investment-promotion agencies—and there are four of them—are pulling our legs every time they release those dazzling figures on investment commitments.
Apparently, many of those investment pledges never materialize after Board of Investments (BOI) and Philippine Economic Zone Authority (Peza) gave them fiscal perks, including tax holidays and duty-free importation of machines, among many others.
We say this because despite the exuberant numbers from both the BOI and Peza, the country’s figures on capital formation hardly improved in the last several years. Imports, likewise, have not been rising, an indication that business managers and factory owners are not investing in new machines. Nor are they upgrading their office equipment or buying new ones.
That’s the same reason why we have an overvalued peso that is hurting the country’s bread and butter: the exporters and the families of OFWs. The OFWs have been sending dollars in increasing amounts. The problem is the business sector, the factories and importers are not using much of those dollars due to political uncertainties. Thus, the accumulation of those dollars within the borders is causing the peso’s overvaluation.
In fairness, FDI figures released by the Bangko Sentral ng Pilipinas have also been posting encouraging trends. But it’s likely that those figures simply reflect intercompany transfers that don’t translate to the building of factories. Proof: the jobs picture has not been improving despite the tremendous hype about a 7-plus-percent growth rate in the last two quarters.
Why? It’s because of lack of investor confidence. Despite some good economic statistics, investors are holding back. They are waiting for 2010 when the Philippines has a new president, and they are hoping that we could have a morally viable presidency then than we have today.
Some growth areas like business process outsourcing, mining, banking, wholesale and retail trade, and construction—of course—are growing quite well, but that’s because investors would rather put their bets in areas where they have really great chances of succeeding. Determinants of these new growth drivers are quite predictable owing to factors like the availability of cheap, skilled and English-speaking white-collar workers; the rising dollar remittances that props demand for consumer items; and housing.
But they are not plunking their money into job-creating factories and infrastructure development because of so many unpredictable variables. It’s so difficult to win a bid for infrastructure projects here because of the administration’s tendency to favor suppliers that are also willing to offer bribes to local officials just to get the contract. Traditionally, most of our investments here are from American and European companies. But under the current dispensation, they are wary about committing resources because—as publicly listed companies governed by strict disclosure rules back home—they could never justify the extra cost (“politically correct” term for bribes) that they would need to put here just to win business contracts. Thus, when compared with Chinese firms, many of them state-owned—with so much money to splurge but with too little public-accountability requirements to be bothered with—American, European and Japanese companies are always at a “competitive disadvantage.”
It is through this lens that we need to look at the ongoing controversy regarding the national broadband network and the cyber-education project. The Senate is currently investigating these deals and we still cannot figure out where it will lead us to. But it seems some officials in the Executive have internalized the ethos of corruption and wholesale bribery so well as to come up with bribes—nay, gifts—just to secure the loyalty of the members of the House of Representatives and some governors.
It’s a “gift,” said Malacañang spin masters. No, it’s an “allowance” for legislative work, they said days after. No, those are funds intended to help finance development projects, they said another day. But we know it’s a bribe, pure and simple. There are no receipts, and the Department of Budget and management denied it released money from government coffers.
A skunk by any other name stinks just as bad.
So where did the money come from? One can only assume they came from illegal sources. There’s no other way to explain that.
Malacañang has practically institutionalized bribery right at the top. It’s so brazen that any person with a sense of decency would be nauseated just hearing about it.
It’s this endless tale of massive corruption in high places that’s causing all our problems, and preventing us from moving forward.
The other day, the United Nations Conference on Trade and Development (Unctad) released its report on global trends in investment flows, saying that the Philippines is not attracting investments, specifically foreign direct investments (FDIs), compared with its neighbors despite its huge potentials. Unctad, in effect, is saying that those publicly funded investment-promotion agencies—and there are four of them—are pulling our legs every time they release those dazzling figures on investment commitments.
Apparently, many of those investment pledges never materialize after Board of Investments (BOI) and Philippine Economic Zone Authority (Peza) gave them fiscal perks, including tax holidays and duty-free importation of machines, among many others.
We say this because despite the exuberant numbers from both the BOI and Peza, the country’s figures on capital formation hardly improved in the last several years. Imports, likewise, have not been rising, an indication that business managers and factory owners are not investing in new machines. Nor are they upgrading their office equipment or buying new ones.
That’s the same reason why we have an overvalued peso that is hurting the country’s bread and butter: the exporters and the families of OFWs. The OFWs have been sending dollars in increasing amounts. The problem is the business sector, the factories and importers are not using much of those dollars due to political uncertainties. Thus, the accumulation of those dollars within the borders is causing the peso’s overvaluation.
In fairness, FDI figures released by the Bangko Sentral ng Pilipinas have also been posting encouraging trends. But it’s likely that those figures simply reflect intercompany transfers that don’t translate to the building of factories. Proof: the jobs picture has not been improving despite the tremendous hype about a 7-plus-percent growth rate in the last two quarters.
Why? It’s because of lack of investor confidence. Despite some good economic statistics, investors are holding back. They are waiting for 2010 when the Philippines has a new president, and they are hoping that we could have a morally viable presidency then than we have today.
Some growth areas like business process outsourcing, mining, banking, wholesale and retail trade, and construction—of course—are growing quite well, but that’s because investors would rather put their bets in areas where they have really great chances of succeeding. Determinants of these new growth drivers are quite predictable owing to factors like the availability of cheap, skilled and English-speaking white-collar workers; the rising dollar remittances that props demand for consumer items; and housing.
But they are not plunking their money into job-creating factories and infrastructure development because of so many unpredictable variables. It’s so difficult to win a bid for infrastructure projects here because of the administration’s tendency to favor suppliers that are also willing to offer bribes to local officials just to get the contract. Traditionally, most of our investments here are from American and European companies. But under the current dispensation, they are wary about committing resources because—as publicly listed companies governed by strict disclosure rules back home—they could never justify the extra cost (“politically correct” term for bribes) that they would need to put here just to win business contracts. Thus, when compared with Chinese firms, many of them state-owned—with so much money to splurge but with too little public-accountability requirements to be bothered with—American, European and Japanese companies are always at a “competitive disadvantage.”
It is through this lens that we need to look at the ongoing controversy regarding the national broadband network and the cyber-education project. The Senate is currently investigating these deals and we still cannot figure out where it will lead us to. But it seems some officials in the Executive have internalized the ethos of corruption and wholesale bribery so well as to come up with bribes—nay, gifts—just to secure the loyalty of the members of the House of Representatives and some governors.
It’s a “gift,” said Malacañang spin masters. No, it’s an “allowance” for legislative work, they said days after. No, those are funds intended to help finance development projects, they said another day. But we know it’s a bribe, pure and simple. There are no receipts, and the Department of Budget and management denied it released money from government coffers.
A skunk by any other name stinks just as bad.
So where did the money come from? One can only assume they came from illegal sources. There’s no other way to explain that.
Malacañang has practically institutionalized bribery right at the top. It’s so brazen that any person with a sense of decency would be nauseated just hearing about it.
It’s this endless tale of massive corruption in high places that’s causing all our problems, and preventing us from moving forward.
Monday, October 15, 2007
Indeed, only the truth is Neda’s redemption
THE refusal of the National Economic and Development Authority (Neda) to hand over to the Senate certain documents related to the national broadband network (NBN) controversy seems to confirm the view that Neda is part of the problem. It signals how Neda as an institution seem to have lost its way and drifted into the web of a corrupt bureaucracy that is hampering our efforts as a country to achieve progress.
Is Neda trying to hide something fishy as regards the national broadband network deal? Is it part of the huge sleazy transaction? Thus far there isn’t anything that gives reason to believe any one in Neda, from its top brass to the hardworking technical staff below, has made money from this or any other project—the integrity, or at least belief in the integrity, of its individual staffers represents the institution’s one noteworthy quality—but at the rate things have been going, many people understandably start to suspect that someone or some people in the agency is covering up for something stinky.
We used to call Neda the National Economic Council (NEC), a public agency funded by people’s taxes to coordinate government plans, policies and programs. Since its inception, the Filipino people always looked at Neda as an institution free of the taint of corruption and sleazy compromises that characterized Philippine politics—until the NBN came.
It’s unfortunate because prior to the NBN controversy, Neda has always been looked up to by the general public as a public agency that is above partisan and rent-seeking politics. Since the time of Marcos, Neda has never been linked to corrupt deals.
The common perception then seems to be that Neda is staffed by nonpolitical and geeky types whose judgments vis-à-vis programs and projects brought to their attention for evaluation and approval are guided by objective and sound technical and financial assessments and not by political considerations or instincts.
Neda’s recent actions therefore seemed to indicate that, as an institution, it has been dragged to the gutter of survival politics of this administration. The claim of “executive privilege” that its officers now keep invoking has been a classic Malacañang ploy to prevent Congress and the general public from unearthing the truth about controversial deals recently entered into, with questionable characters playing dubious roles.
Do Neda officials really think they can fend off Congress from seeking the truth? We think, however, that this question is secondary. The primary issue is, to what extent would Neda sacrifice its reputation and credibility to save a very unpopular leader or a cause that has been questioned and deserves a just closure?
For giving its approval to a project that was tainted by bribery and corruption (the offer having been exposed by Neda’s former head no less), for its failure to perform due diligence, it has destroyed its credibility as an organization. The only way it can regain this credibility is by coming clean and giving complete access to all the pertinent documents to Congress and the Filipino people. It could choose to tough it out with Congress, but it can only do so at the risk of completely losing the trust and confidence of the general public.
Do Neda officials really think they could ignore Congress’ subpoena powers forever? The doctrine of “executive privilege” by itself is a tenuous ground to stand on. There is no specific constitutional provision on that. The lawyers simply assume that executive privilege is embedded in the separation of powers between and among the Executive, Legislative and the Judiciary. And given the gravity of the issue—a multibillion-peso loan allegedly marred by bribery and wholesale corruption—it’s only a matter of time before they have to cave in to the clamor, not only from Congress, but the citizenry.
Section 5 of Executive Order 230, which reorganized the Neda, says: “In the formulation of basic policies, plans, programs and projects, there shall be maximum participation by and consultation with concerned private-sector groups, community organizations and beneficiaries and local government units in order to ensure that priority needs are incorporated into such policies, plans, programs and projects…”
The provision mandate Neda to ensure “maximum participation” by the private sector and civil society in development planning. Transparency and openness is assumed in the said mandate.
As of this writing, the news came in that Neda officials had declared that only a court order will compel them to open the NBN documents to the public. How they will then, given the premise such a court order indeed comes, make those fine distinctions between “official papers” and “official deliberations” is another thing worth watching. This is one game that won’t end that easily. The teasing out for truth is a long, difficult struggle in this country, as recent events have shown. The last thing that exercise needs is a respected central planning agency seen as having allowed professionalism to become subservient to politics. Indeed, complete transparency will be Neda’s atonement and redemption. There is no other way. (Note: written as editorial for BusinessMirror, Oct 16 2007)
Is Neda trying to hide something fishy as regards the national broadband network deal? Is it part of the huge sleazy transaction? Thus far there isn’t anything that gives reason to believe any one in Neda, from its top brass to the hardworking technical staff below, has made money from this or any other project—the integrity, or at least belief in the integrity, of its individual staffers represents the institution’s one noteworthy quality—but at the rate things have been going, many people understandably start to suspect that someone or some people in the agency is covering up for something stinky.
We used to call Neda the National Economic Council (NEC), a public agency funded by people’s taxes to coordinate government plans, policies and programs. Since its inception, the Filipino people always looked at Neda as an institution free of the taint of corruption and sleazy compromises that characterized Philippine politics—until the NBN came.
It’s unfortunate because prior to the NBN controversy, Neda has always been looked up to by the general public as a public agency that is above partisan and rent-seeking politics. Since the time of Marcos, Neda has never been linked to corrupt deals.
The common perception then seems to be that Neda is staffed by nonpolitical and geeky types whose judgments vis-à-vis programs and projects brought to their attention for evaluation and approval are guided by objective and sound technical and financial assessments and not by political considerations or instincts.
Neda’s recent actions therefore seemed to indicate that, as an institution, it has been dragged to the gutter of survival politics of this administration. The claim of “executive privilege” that its officers now keep invoking has been a classic Malacañang ploy to prevent Congress and the general public from unearthing the truth about controversial deals recently entered into, with questionable characters playing dubious roles.
Do Neda officials really think they can fend off Congress from seeking the truth? We think, however, that this question is secondary. The primary issue is, to what extent would Neda sacrifice its reputation and credibility to save a very unpopular leader or a cause that has been questioned and deserves a just closure?
For giving its approval to a project that was tainted by bribery and corruption (the offer having been exposed by Neda’s former head no less), for its failure to perform due diligence, it has destroyed its credibility as an organization. The only way it can regain this credibility is by coming clean and giving complete access to all the pertinent documents to Congress and the Filipino people. It could choose to tough it out with Congress, but it can only do so at the risk of completely losing the trust and confidence of the general public.
Do Neda officials really think they could ignore Congress’ subpoena powers forever? The doctrine of “executive privilege” by itself is a tenuous ground to stand on. There is no specific constitutional provision on that. The lawyers simply assume that executive privilege is embedded in the separation of powers between and among the Executive, Legislative and the Judiciary. And given the gravity of the issue—a multibillion-peso loan allegedly marred by bribery and wholesale corruption—it’s only a matter of time before they have to cave in to the clamor, not only from Congress, but the citizenry.
Section 5 of Executive Order 230, which reorganized the Neda, says: “In the formulation of basic policies, plans, programs and projects, there shall be maximum participation by and consultation with concerned private-sector groups, community organizations and beneficiaries and local government units in order to ensure that priority needs are incorporated into such policies, plans, programs and projects…”
The provision mandate Neda to ensure “maximum participation” by the private sector and civil society in development planning. Transparency and openness is assumed in the said mandate.
As of this writing, the news came in that Neda officials had declared that only a court order will compel them to open the NBN documents to the public. How they will then, given the premise such a court order indeed comes, make those fine distinctions between “official papers” and “official deliberations” is another thing worth watching. This is one game that won’t end that easily. The teasing out for truth is a long, difficult struggle in this country, as recent events have shown. The last thing that exercise needs is a respected central planning agency seen as having allowed professionalism to become subservient to politics. Indeed, complete transparency will be Neda’s atonement and redemption. There is no other way. (Note: written as editorial for BusinessMirror, Oct 16 2007)
Wednesday, October 10, 2007
Solving the "strong peso" puzzle
The borrowing mix is important. We should keep reminding the government that we have lots of dollars. Why are we still borrowing from the outside, like the NBN? Just borrow dollars domestically and then prepay our debt. Then you will see the exchange rate will begin to rise to the benefit of OFWs. —Dr. Raul Fabella, professor, UP School of Economics
IT looks bizarre but it seems we are the only country in the world where the gross domestic product (GDP) is registering good numbers while some factories are shedding off thousands of jobs. In the latest labor-force survey, it appears the industry sector lost more than a hundred thousand jobs, the experts say.
That figure, of course, is probably inaccurate since the labor-force survey doesn’t really count jobs created and lost, but simply registers the difference between the number of employed persons per industry at present and in last year’s labor-force survey.
So what analysts do is simply get the difference between the present and previous employment figures to get the supposed number of jobs lost or created—a meaningless statistic, actually, when one is tracking the employment impact of GDP figures.
Nevertheless, the difference of about a hundred thousand jobs in the current survey suggests that we are not getting strong in job creation.
Yesterday our banner story dwelt on the condition of exporters downscaling their operations after being hit by the impact of the steadily appreciating peso. We are not talking about some “corporate downsizing” here to achieve efficiency. What we are witnessing is probably the hollowing out of the Philippine economy caused by the very reason we have those great GDP numbers in the first place: dollar remittances.
Exporters downscaling their business could only mean they are sending off workers into the streets. When businesses are getting less pesos for their dollars earned from selling goods and services abroad, there are only two options: either close shop, or minimize losses by scaling down operations, hoping that things will improve someday.
And yet, it’s not likely that things will get worse for exporters as well as for OFWs, unless the government does something. For long, government officials have been saying that the appreciation of the peso has been “market-driven” and therefore nothing can be done about it.
This is a lame excuse for inaction. The industries—those companies producing tangible products and providing jobs to those who are not “skilled enough” to work in outsourcing—are losing competitiveness. If the government doesn’t do anything, the economy will continue to hollow out as factory managers and business owners are likely to sell or close their factories and concentrate on buying and selling products produced by the Chinese, Vietnamese and the Thais.
In fact, this has been a continuing trend so far, as manifested by the continuing decline in the value of production index in the monthly integrated survey of selected industries. And it’s hurting us in terms of thousands of jobs lost.
And it’s going to polarize the economy even further. More than 60 percent of the country’s exports are accounted for by electronics. But these big exporters are not hurt by the strong peso because their raw materials and intermediate inputs are delivered on consignment basis.
Besides, these companies enjoy a battery of fiscal incentives like income-tax holidays, duty-free importation of machines, and duty-free importation of raw and intermediate inputs. Most of these firms operate in special economic zones; hence, they enjoy the added benefits of subsidized energy rates.
Those who are hurting are the small exporters who don’t have these perks. But since they are mostly labor-intensive operations, the closure of these small firms are likely to render so many poor people jobless, thus accentuating inequality.
But could the government really do anything about the peso-dollar parity given that the peso value of dollars is influenced by the local supply and demand as well as certain global dynamics? We say yes.
Certainly, the Bangko Sentral ng Pilipinas (BSP) has all the powers, like raising the country’s international reserve from, say, four months’ worth of imports to about a year as what our neighbors did. That would surely raise demand for dollars that will check the continuing overvaluation of the peso. The central bank is supposedly independent and Malacañang, therefore, is not supposed to influence the institution.
Still, that’s no excuse because Malacañang has other instruments in its tool kit. Take it from University of the Philippines economist Raul Fabella, who favors an “aggressive” foreign exchange-rate policy to ensure the competitiveness of the country’s export-oriented industries.
There are several ways the government could change the dollar-supply and -demand picture, he said lately, and one of them is for the government to stop borrowing dollars from abroad. For important projects, the government, instead, should source dollars from within the Philippine borders by borrowing greenbacks from the BSP. That’s shooting two birds with one stone: not only could it help exporters, it will also curb corruption à la the controversial national broadband network deal and the cyber education project now being investigated in the Senate. (Written as editorial for BusinessMirror, 11 Oct 2007)
IT looks bizarre but it seems we are the only country in the world where the gross domestic product (GDP) is registering good numbers while some factories are shedding off thousands of jobs. In the latest labor-force survey, it appears the industry sector lost more than a hundred thousand jobs, the experts say.
That figure, of course, is probably inaccurate since the labor-force survey doesn’t really count jobs created and lost, but simply registers the difference between the number of employed persons per industry at present and in last year’s labor-force survey.
So what analysts do is simply get the difference between the present and previous employment figures to get the supposed number of jobs lost or created—a meaningless statistic, actually, when one is tracking the employment impact of GDP figures.
Nevertheless, the difference of about a hundred thousand jobs in the current survey suggests that we are not getting strong in job creation.
Yesterday our banner story dwelt on the condition of exporters downscaling their operations after being hit by the impact of the steadily appreciating peso. We are not talking about some “corporate downsizing” here to achieve efficiency. What we are witnessing is probably the hollowing out of the Philippine economy caused by the very reason we have those great GDP numbers in the first place: dollar remittances.
Exporters downscaling their business could only mean they are sending off workers into the streets. When businesses are getting less pesos for their dollars earned from selling goods and services abroad, there are only two options: either close shop, or minimize losses by scaling down operations, hoping that things will improve someday.
And yet, it’s not likely that things will get worse for exporters as well as for OFWs, unless the government does something. For long, government officials have been saying that the appreciation of the peso has been “market-driven” and therefore nothing can be done about it.
This is a lame excuse for inaction. The industries—those companies producing tangible products and providing jobs to those who are not “skilled enough” to work in outsourcing—are losing competitiveness. If the government doesn’t do anything, the economy will continue to hollow out as factory managers and business owners are likely to sell or close their factories and concentrate on buying and selling products produced by the Chinese, Vietnamese and the Thais.
In fact, this has been a continuing trend so far, as manifested by the continuing decline in the value of production index in the monthly integrated survey of selected industries. And it’s hurting us in terms of thousands of jobs lost.
And it’s going to polarize the economy even further. More than 60 percent of the country’s exports are accounted for by electronics. But these big exporters are not hurt by the strong peso because their raw materials and intermediate inputs are delivered on consignment basis.
Besides, these companies enjoy a battery of fiscal incentives like income-tax holidays, duty-free importation of machines, and duty-free importation of raw and intermediate inputs. Most of these firms operate in special economic zones; hence, they enjoy the added benefits of subsidized energy rates.
Those who are hurting are the small exporters who don’t have these perks. But since they are mostly labor-intensive operations, the closure of these small firms are likely to render so many poor people jobless, thus accentuating inequality.
But could the government really do anything about the peso-dollar parity given that the peso value of dollars is influenced by the local supply and demand as well as certain global dynamics? We say yes.
Certainly, the Bangko Sentral ng Pilipinas (BSP) has all the powers, like raising the country’s international reserve from, say, four months’ worth of imports to about a year as what our neighbors did. That would surely raise demand for dollars that will check the continuing overvaluation of the peso. The central bank is supposedly independent and Malacañang, therefore, is not supposed to influence the institution.
Still, that’s no excuse because Malacañang has other instruments in its tool kit. Take it from University of the Philippines economist Raul Fabella, who favors an “aggressive” foreign exchange-rate policy to ensure the competitiveness of the country’s export-oriented industries.
There are several ways the government could change the dollar-supply and -demand picture, he said lately, and one of them is for the government to stop borrowing dollars from abroad. For important projects, the government, instead, should source dollars from within the Philippine borders by borrowing greenbacks from the BSP. That’s shooting two birds with one stone: not only could it help exporters, it will also curb corruption à la the controversial national broadband network deal and the cyber education project now being investigated in the Senate. (Written as editorial for BusinessMirror, 11 Oct 2007)
Monday, October 08, 2007
It's the farm, stupid!
LAST week Sen. Edgardo Angara called for the extension of the Agriculture Competitiveness Enhancement Fund (Acef), which is due to expire next year. We support that call.
The Acef comes from the proceeds of the importation of minimum access volumes (MAV) that we promised our trade partners under the Uruguay Round of Trade Agreements that eventually ushered in the World Trade Organization.
In that agreement, countries committed to convert quantitative restrictions (QRs) on imports into high or equivalent tariff, but allowed small volumes of minimum access imports to facilitate trade. That was not the best way to encourage trade, but it was the most convenient way to incrementally reform policies that, for a long time, have been hampering import and export of farm products.
Local farmers’ group naturally opposed the “tariffication” of QRs. They eventually budged when the government promised greater funding for “safety nets” which the Department of Agriculture (DA) called “competitiveness enhancement funds.” Part of the money was to come from the proceeds of the MAV, an amount that DA spin masters later called the Acef.
Simply put, the Acef is part of the promise to the farmers and fishers who, during that time, were thought to be among those at risk from a liberal trading order. That promise for safety nets was never really sustained as the DA budget waned a few years after the GATT-Uruguay Round Agreement was ratified.
Nevertheless, the Acef has provided some money for important farm and fishery projects like irrigation, farm-to-market roads, postharvest equipment and facilities, research and development, and marketing infrastructure, among others.
Four years after the fund was made available to farmers, the Acef, according to Angara, financed 93 sugar projects and 56 other projects in livestock, poultry, fruits and vegetables.
“As of 2006, Acef still had a balance of P5.81 billion and funded 173 projects worth P2.76 billion that year,” he said. “An additional 55 projects worth P1.14 billion was approved by the Acef committee this year.”
The Acef money, amounting to P1.9 billion this year, has also been also used to finance small farmers’ credit needs.
With the expiration of the Acef fund this year, however, this kind of money will revert to the national treasury, thus depriving farmers the much-needed resources for countryside development.
Of course, we don’t really know how effective the DA has used those billions of Acef money. It’s about to expire, and yet we never saw any effort to tell the public whether or not the money was really mobilized effectively and equitably.
Like most public monies being handled by the machineries of the state, there are temptations that some bureaucrats would dispense of the money for political and personal reasons. The fertilizer fund of Joc-joc Bolante, former undersecretary of the DA, easily comes to mind.
It’s also possible that some of this money may have been used to finance projects by rich and politically connected “farmers,” and not those who really need them. In this case it would be necessary for the DA or some civil-society groups to scrutinize them and show the results to the public.
Given this consideration, however, nothing yet beats the idea that the farm sector needs the Acef to enhance its competitiveness. In fact, this is just the best time to put more attention to the farm sector now that the economy has shown greater resiliency.
In the last several years, Philippine GDP has been growing quite decently and government planners have been wondering how to spread the growth to the less fortunate. The solution, really, is simple: pour more resources into the countryside, assuming enough safeguards are put in place to prevent a similar Bolante caper.
There’s no other way: close to 35 percent of the country’s labor force is employed in agriculture and fisheries.
Meanwhile, one truly beleaguered sector is asking the DA’s help for accessing the Acef, and its situation might be worth reviewing. The main story in this paper’s Monday issue focused on the plight of food exporters who have been reeling from the impact of a steadily appreciating peso.
Roberto Amores, the chairman of the Philippine Food Processors and Exporters Organization Inc. (Philfoodex), told the BusinessMirror in an interview that the government, specifically the DA, “should step up Acef releases so that it can be used for productivity enhancement.”
According to Amores, small and medium enterprises in their subsector have complained of a difficult time in availing themselves of the Acef because of the “tedious” process. Clearly, these are people who have been among the hardest hit by the impact of a strong peso; and in fact, nearly a third have scaled down operations, if we’re to believe Amores.
Carefully reviewing their situation might be a good start for officials looking at what to do to make the Acef more relevant. (Written as editorial for BusinessMirror, 9 Oct 2007)
The Acef comes from the proceeds of the importation of minimum access volumes (MAV) that we promised our trade partners under the Uruguay Round of Trade Agreements that eventually ushered in the World Trade Organization.
In that agreement, countries committed to convert quantitative restrictions (QRs) on imports into high or equivalent tariff, but allowed small volumes of minimum access imports to facilitate trade. That was not the best way to encourage trade, but it was the most convenient way to incrementally reform policies that, for a long time, have been hampering import and export of farm products.
Local farmers’ group naturally opposed the “tariffication” of QRs. They eventually budged when the government promised greater funding for “safety nets” which the Department of Agriculture (DA) called “competitiveness enhancement funds.” Part of the money was to come from the proceeds of the MAV, an amount that DA spin masters later called the Acef.
Simply put, the Acef is part of the promise to the farmers and fishers who, during that time, were thought to be among those at risk from a liberal trading order. That promise for safety nets was never really sustained as the DA budget waned a few years after the GATT-Uruguay Round Agreement was ratified.
Nevertheless, the Acef has provided some money for important farm and fishery projects like irrigation, farm-to-market roads, postharvest equipment and facilities, research and development, and marketing infrastructure, among others.
Four years after the fund was made available to farmers, the Acef, according to Angara, financed 93 sugar projects and 56 other projects in livestock, poultry, fruits and vegetables.
“As of 2006, Acef still had a balance of P5.81 billion and funded 173 projects worth P2.76 billion that year,” he said. “An additional 55 projects worth P1.14 billion was approved by the Acef committee this year.”
The Acef money, amounting to P1.9 billion this year, has also been also used to finance small farmers’ credit needs.
With the expiration of the Acef fund this year, however, this kind of money will revert to the national treasury, thus depriving farmers the much-needed resources for countryside development.
Of course, we don’t really know how effective the DA has used those billions of Acef money. It’s about to expire, and yet we never saw any effort to tell the public whether or not the money was really mobilized effectively and equitably.
Like most public monies being handled by the machineries of the state, there are temptations that some bureaucrats would dispense of the money for political and personal reasons. The fertilizer fund of Joc-joc Bolante, former undersecretary of the DA, easily comes to mind.
It’s also possible that some of this money may have been used to finance projects by rich and politically connected “farmers,” and not those who really need them. In this case it would be necessary for the DA or some civil-society groups to scrutinize them and show the results to the public.
Given this consideration, however, nothing yet beats the idea that the farm sector needs the Acef to enhance its competitiveness. In fact, this is just the best time to put more attention to the farm sector now that the economy has shown greater resiliency.
In the last several years, Philippine GDP has been growing quite decently and government planners have been wondering how to spread the growth to the less fortunate. The solution, really, is simple: pour more resources into the countryside, assuming enough safeguards are put in place to prevent a similar Bolante caper.
There’s no other way: close to 35 percent of the country’s labor force is employed in agriculture and fisheries.
Meanwhile, one truly beleaguered sector is asking the DA’s help for accessing the Acef, and its situation might be worth reviewing. The main story in this paper’s Monday issue focused on the plight of food exporters who have been reeling from the impact of a steadily appreciating peso.
Roberto Amores, the chairman of the Philippine Food Processors and Exporters Organization Inc. (Philfoodex), told the BusinessMirror in an interview that the government, specifically the DA, “should step up Acef releases so that it can be used for productivity enhancement.”
According to Amores, small and medium enterprises in their subsector have complained of a difficult time in availing themselves of the Acef because of the “tedious” process. Clearly, these are people who have been among the hardest hit by the impact of a strong peso; and in fact, nearly a third have scaled down operations, if we’re to believe Amores.
Carefully reviewing their situation might be a good start for officials looking at what to do to make the Acef more relevant. (Written as editorial for BusinessMirror, 9 Oct 2007)
Coffee, poetry and equanity
I wrote this poem after writing an editorial piece on corruption. I felt sick of political events. I felt I needed to write something to purge my soul of negative vibes. So here, be my guest. I dedicate this one to all coffee lovers (especially MT), with due apologies to William Butler Yeats and Robert Frost.
Raise your cup, my friend.
Then let it touch your lips
Let’s honor those who pick the beans.
Let its scent stir your soul
As we pay tribute to those who toil
And make the mountains green.
Let’s drink the brew, my dear
Sip it slowly as if we’ll live forever.
The night is cold and tender;
Let its warmth flow like a beautiful dream
As we explore the heights of fervor
And its spiritual realm.
My dear, for every sip
We could challenge the whims of fate.
Or frolic in the court of William Yeats.
What will he beg of us, my friend?
That we should tread softly
For we are treading on his dreams
Oh dear, are you confused?
Let’s see Robert Frost.
I wonder if he’ll say it's treason
To yield with a grace to reason,
And bow and accept the end
Of a love or a season.
Raise your cup, my friend.
Then let it touch your lips
Let’s honor those who pick the beans.
Let its scent stir your soul
As we pay tribute to those who toil
And make the mountains green.
Let’s drink the brew, my dear
Sip it slowly as if we’ll live forever.
The night is cold and tender;
Let its warmth flow like a beautiful dream
As we explore the heights of fervor
And its spiritual realm.
My dear, for every sip
We could challenge the whims of fate.
Or frolic in the court of William Yeats.
What will he beg of us, my friend?
That we should tread softly
For we are treading on his dreams
Oh dear, are you confused?
Let’s see Robert Frost.
I wonder if he’ll say it's treason
To yield with a grace to reason,
And bow and accept the end
Of a love or a season.
Wednesday, October 03, 2007
Reaping the whirlwind
“For they have sown the wind, and they shall reap the whirlwind: it hath no stalk; the bud shall yield no meal. . . .” —The Book of Hosea, Chapter 8, verse 7
THE other day (October 2), the European Chamber of Commerce expressed concern that the Philippines is wasting a lot of time and opportunities by allowing some companies to corner the best sites for wind power, and yet have done anything to develop them.
“I do not understand why these sites have been cornered by some companies that are not developing anything,” said Hubert d’ Aboville from the European Chamber and president of the Paris-Manila Technology Corp. (Pamatec). “So to me, it’s a terrible waste of time,” he said.
Indeed, we share d’Aboville’s frustration. That the companies were able to corner those choice places and letting them stay idle suggests several things.
First, the firms probably didn’t have the expertise and resources to undertake such a capital-intensive undertaking. Second, the firms were probably out there simply for speculative purposes. This situation is not good, as it tends to raise the cost of entry into wind farming, an unfortunate condition given the huge opportunity costs involved and the urgency of the need to address global warming.
We are concerned because this kind of behavior seems to fit well into the classic rent-seeking type of wealth creation that is plaguing the country. It’s the same kind of practice that we see in the distribution of timber license agreements in the past, of mining tenements and other concessions dispensed by the State. We wonder if the government has been transparent in the allocation of these places for wind energy.
In the ’70s and the ’80s, the Marcos government parceled out large tracts of “public lands” in Mindanao to his cronies for agribusiness plantations, mining concessions and logging. It was a phenomenon that contributed to the displacement and poverty among indigenous peoples, and the continuing inequality and underdevelopment in the area.
Being among the first to get allocation for the choice sites certainly is not bad per se. It’s a “rational” behavior for any businessman in search of profit. But when such behavior goes against public interest, then the government should intervene. For instance, the government should reserve the right to cancel those allocations and give them to someone else if they stays idle for sometime.
Why not bid out the allocation of those sites? That way, the process of prequalification would ensure that only those who are really interested to develop wind power and have the financial and technical resources to do so would be interested to bid.
Ultimately, the problem lies in the existing policy of restricting foreign-equity ownership in energy projects. Wind farms belong to the energy and utility sector, where foreigners are allowed maximum ownership of only 40 percent. These types of projects are usually capital-intensive. Local businessmen would need the money, experience and expertise of foreign investors if they want to engage in such projects.
However, foreigners are probably not inclined to sink in huge amounts of money in a local firm, knowing that they are not going to call the shots. This is one reason why we end up having speculators cornering choice slots without seeing them put up Earth-friendly energy projects that we sorely need to reduce oil dependence and contribute to the healing of our very own planet.
In the ’60s and the ’70s, it was fashionable to have policies that were supposedly intended to restrict “foreign control of the commanding heights of the economy.” It’s an unfortunate conspiracy theory that has become counterproductive in the present context. It may be worth revisiting this kind of policy, especially when it comes to Earth-saving types of investments. (Written as editorial for BusinessMirror, 4 Oct 2007)
THE other day (October 2), the European Chamber of Commerce expressed concern that the Philippines is wasting a lot of time and opportunities by allowing some companies to corner the best sites for wind power, and yet have done anything to develop them.
“I do not understand why these sites have been cornered by some companies that are not developing anything,” said Hubert d’ Aboville from the European Chamber and president of the Paris-Manila Technology Corp. (Pamatec). “So to me, it’s a terrible waste of time,” he said.
Indeed, we share d’Aboville’s frustration. That the companies were able to corner those choice places and letting them stay idle suggests several things.
First, the firms probably didn’t have the expertise and resources to undertake such a capital-intensive undertaking. Second, the firms were probably out there simply for speculative purposes. This situation is not good, as it tends to raise the cost of entry into wind farming, an unfortunate condition given the huge opportunity costs involved and the urgency of the need to address global warming.
We are concerned because this kind of behavior seems to fit well into the classic rent-seeking type of wealth creation that is plaguing the country. It’s the same kind of practice that we see in the distribution of timber license agreements in the past, of mining tenements and other concessions dispensed by the State. We wonder if the government has been transparent in the allocation of these places for wind energy.
In the ’70s and the ’80s, the Marcos government parceled out large tracts of “public lands” in Mindanao to his cronies for agribusiness plantations, mining concessions and logging. It was a phenomenon that contributed to the displacement and poverty among indigenous peoples, and the continuing inequality and underdevelopment in the area.
Being among the first to get allocation for the choice sites certainly is not bad per se. It’s a “rational” behavior for any businessman in search of profit. But when such behavior goes against public interest, then the government should intervene. For instance, the government should reserve the right to cancel those allocations and give them to someone else if they stays idle for sometime.
Why not bid out the allocation of those sites? That way, the process of prequalification would ensure that only those who are really interested to develop wind power and have the financial and technical resources to do so would be interested to bid.
Ultimately, the problem lies in the existing policy of restricting foreign-equity ownership in energy projects. Wind farms belong to the energy and utility sector, where foreigners are allowed maximum ownership of only 40 percent. These types of projects are usually capital-intensive. Local businessmen would need the money, experience and expertise of foreign investors if they want to engage in such projects.
However, foreigners are probably not inclined to sink in huge amounts of money in a local firm, knowing that they are not going to call the shots. This is one reason why we end up having speculators cornering choice slots without seeing them put up Earth-friendly energy projects that we sorely need to reduce oil dependence and contribute to the healing of our very own planet.
In the ’60s and the ’70s, it was fashionable to have policies that were supposedly intended to restrict “foreign control of the commanding heights of the economy.” It’s an unfortunate conspiracy theory that has become counterproductive in the present context. It may be worth revisiting this kind of policy, especially when it comes to Earth-saving types of investments. (Written as editorial for BusinessMirror, 4 Oct 2007)
GMA cancels NBN deal, CEP next?
The news says GMA cancelled the controversial NBN deal with the ZTE. Ah, the triumph of popular pressure. The Senators should look into the cyber education project (CEP) next. This is even a bigger problem. If the NBN is a shark, the CEP is the US$500 million great white shark!
For some background info on the controversial NBN-ZTE deal, you may read the following:
The NBN-CEP mess: Neda is part of the problem
Technical questions on DepEd’s cyber education project
Senate inquiry demolishes DOTC’s justification for NBN
Let’s junk the NBN-CEP deals
For some background info on the controversial NBN-ZTE deal, you may read the following:
The NBN-CEP mess: Neda is part of the problem
Technical questions on DepEd’s cyber education project
Senate inquiry demolishes DOTC’s justification for NBN
Let’s junk the NBN-CEP deals
Monday, October 01, 2007
Amando Tetangco and our ‘fundamental’ problems
What is called resignation is confirmed desperation. —Henry David Thoreau (1817-1862), in Walden, “Economy”
FINALLY, the power of public opinion has forced Benjamin Abalos to resign from the Commission on Elections (Comelec). His lawyer said it was an “agonizing decision” for Abalos.
But certainly, there was no other way for Abalos but to go. He is just too controversial to remain effective at the Comelec and too hot a potato for his friends in Malacañang. In fact, his resignation serves his friends in Malacañang well, in light of the belief that a full-blown impeachment trial at the House of Representatives could reverberate right up to the pillars across Pasig River.
Abalos’s departure from the Comelec is probably good for all of us. His tenure at the Comelec had been a stormy period; controversy marred his important election-related responsibilities as chairman of the Comelec—election computerization (read: the controversial Mega-Pacific deal), the 2004 fraud-ridden presidential election, and the loss of election returns in Maguindanao in the recent midterm election, among many others.
The ongoing investigation at the Senate shows that Abalos has really spent a great deal of quality time with ZTE. That seems to prove that his skills may lie elsewhere, outside the Comelec—including brokering for private and foreign interests.
He was so “good” at it that he got the national broadband network (NBN) onto the signing table in China despite all the technical, financial and economic issues against the deal. He was so good at it that the Senate is currently wondering how we could undo the close to a billion-dollar deal that people must pay with tax money in the next 20 years.
Now that he is free of his “public service” duties, the chairman could now devote himself to, besides defending himself against accusations of wrongdoing, the private deals that friends ask him to have a hand in. And certainly, he needs all the time and energy to defend himself in the courts of law.
For one, the ongoing investigation at the Senate may earn him lawsuits for possible malfeasance. For all the complaints about grandstanding and idiotic grilling by some lawmakers, the fact is that there have been inquiries in the past when the panel reports led to the filing of formal charges in the proper courts. There’s no reason why this cannot be done with this one—and the accused to include not just Abalos, but possibly, the executives of the implementing agency, the Transportation department, who actively pushed the NBN despite the questions surrounding it.
The Abalos resignation and the ongoing investigation by the Senate on the NBN deal is part of that process we need to purge our political system of undesirable characters, policies and processes. We need this purging to improve our standing in the international community.
A few days ago, Transparency International released its survey saying the Philippines ranked among the most corrupt places in terra firma. Unless we start posting good results in surveys like this, the outside world, especially foreign investors, are not going to take us seriously—not even after Amando Tetangco Jr., Bangko Sentral governor, announced the other day we have the best “fundamentals” in the last 10 years.
In the second quarter, the Philippine economy grew by 7.5 percent but the labor-force survey says we have not been producing enough jobs. This is why we are hardly making a dent on poverty.
Why? It’s because we are not attracting investments, be it local or foreign.
Investments promotions agencies like the Philippine Economic Zone Authority and the Board of Investments have been producing good numbers in the last three years. But when reckoned in real terms, based on the country’s national income accounts, those investment numbers hardly mattered as most of those “investments” were probably intercompany transfers that don’t build job-creating factories.
This is the backdrop of Tetangco’s analysis about our supposedly fantastic “fundamentals.” We believe we have good economic statistics, but then that is accounted for by the continuing diaspora of Filipino workers and expatriates.
It means we have those numbers for some bizarre reason: people leave for overseas placements either because they are sick and tired of local politics or for lack of economic opportunities, or both. And when they send their money back home, they produce “good fundamentals” that make government economic bureaucrats happy.
Well, the mall owners, of course, are happy as well. More remittances mean a very strong peso that cheapens imports and, therefore, raises profitability for retailers even if they don’t have to raise price tags so much. But it hurts factories, especially those that are producing for exports. That’s why the industry sector, when stripped of the contributions from construction and mining, has not been doing great.
In fact, the Philippine economy is probably “hollowing out.” Just like Tetangco, we believe the economy is undergoing an economic transformation, albeit it’s a transformation we are not going to be happy with. This is about business people shifting their operations toward nontradables, toward services, and shifting their factories elsewhere, like Vietnam, Cambodia, China and Laos.
They have to shift because the government is not doing anything to address the “strong peso.” They have to go elsewhere because the government doesn’t have the courage to do away with policies that hurt entrepreneurs and the economy, the latest being the tax amnesty and the law allowing nondisclosure of union members to companies where such unions are operating—both laws were “sneaked in” practically into the statutes books, because Malacañang merely allowed them to lapse into law, a classic copout by the government if there ever was one.
And entrepreneurs have to go elsewhere either because politicians are always squeezing them for bribes or because they can only get contracts if they offer the highest bribe.
Yes, Tetangco’s fundamentals are indeed good, but we need to address a lot of more fundamental problems, especially corruption that the NBN deal typifies, if we ever desire to get out of the current economic rut. (Written as editorial for BusinessMirror, 2 Oct 2007)
FINALLY, the power of public opinion has forced Benjamin Abalos to resign from the Commission on Elections (Comelec). His lawyer said it was an “agonizing decision” for Abalos.
But certainly, there was no other way for Abalos but to go. He is just too controversial to remain effective at the Comelec and too hot a potato for his friends in Malacañang. In fact, his resignation serves his friends in Malacañang well, in light of the belief that a full-blown impeachment trial at the House of Representatives could reverberate right up to the pillars across Pasig River.
Abalos’s departure from the Comelec is probably good for all of us. His tenure at the Comelec had been a stormy period; controversy marred his important election-related responsibilities as chairman of the Comelec—election computerization (read: the controversial Mega-Pacific deal), the 2004 fraud-ridden presidential election, and the loss of election returns in Maguindanao in the recent midterm election, among many others.
The ongoing investigation at the Senate shows that Abalos has really spent a great deal of quality time with ZTE. That seems to prove that his skills may lie elsewhere, outside the Comelec—including brokering for private and foreign interests.
He was so “good” at it that he got the national broadband network (NBN) onto the signing table in China despite all the technical, financial and economic issues against the deal. He was so good at it that the Senate is currently wondering how we could undo the close to a billion-dollar deal that people must pay with tax money in the next 20 years.
Now that he is free of his “public service” duties, the chairman could now devote himself to, besides defending himself against accusations of wrongdoing, the private deals that friends ask him to have a hand in. And certainly, he needs all the time and energy to defend himself in the courts of law.
For one, the ongoing investigation at the Senate may earn him lawsuits for possible malfeasance. For all the complaints about grandstanding and idiotic grilling by some lawmakers, the fact is that there have been inquiries in the past when the panel reports led to the filing of formal charges in the proper courts. There’s no reason why this cannot be done with this one—and the accused to include not just Abalos, but possibly, the executives of the implementing agency, the Transportation department, who actively pushed the NBN despite the questions surrounding it.
The Abalos resignation and the ongoing investigation by the Senate on the NBN deal is part of that process we need to purge our political system of undesirable characters, policies and processes. We need this purging to improve our standing in the international community.
A few days ago, Transparency International released its survey saying the Philippines ranked among the most corrupt places in terra firma. Unless we start posting good results in surveys like this, the outside world, especially foreign investors, are not going to take us seriously—not even after Amando Tetangco Jr., Bangko Sentral governor, announced the other day we have the best “fundamentals” in the last 10 years.
In the second quarter, the Philippine economy grew by 7.5 percent but the labor-force survey says we have not been producing enough jobs. This is why we are hardly making a dent on poverty.
Why? It’s because we are not attracting investments, be it local or foreign.
Investments promotions agencies like the Philippine Economic Zone Authority and the Board of Investments have been producing good numbers in the last three years. But when reckoned in real terms, based on the country’s national income accounts, those investment numbers hardly mattered as most of those “investments” were probably intercompany transfers that don’t build job-creating factories.
This is the backdrop of Tetangco’s analysis about our supposedly fantastic “fundamentals.” We believe we have good economic statistics, but then that is accounted for by the continuing diaspora of Filipino workers and expatriates.
It means we have those numbers for some bizarre reason: people leave for overseas placements either because they are sick and tired of local politics or for lack of economic opportunities, or both. And when they send their money back home, they produce “good fundamentals” that make government economic bureaucrats happy.
Well, the mall owners, of course, are happy as well. More remittances mean a very strong peso that cheapens imports and, therefore, raises profitability for retailers even if they don’t have to raise price tags so much. But it hurts factories, especially those that are producing for exports. That’s why the industry sector, when stripped of the contributions from construction and mining, has not been doing great.
In fact, the Philippine economy is probably “hollowing out.” Just like Tetangco, we believe the economy is undergoing an economic transformation, albeit it’s a transformation we are not going to be happy with. This is about business people shifting their operations toward nontradables, toward services, and shifting their factories elsewhere, like Vietnam, Cambodia, China and Laos.
They have to shift because the government is not doing anything to address the “strong peso.” They have to go elsewhere because the government doesn’t have the courage to do away with policies that hurt entrepreneurs and the economy, the latest being the tax amnesty and the law allowing nondisclosure of union members to companies where such unions are operating—both laws were “sneaked in” practically into the statutes books, because Malacañang merely allowed them to lapse into law, a classic copout by the government if there ever was one.
And entrepreneurs have to go elsewhere either because politicians are always squeezing them for bribes or because they can only get contracts if they offer the highest bribe.
Yes, Tetangco’s fundamentals are indeed good, but we need to address a lot of more fundamental problems, especially corruption that the NBN deal typifies, if we ever desire to get out of the current economic rut. (Written as editorial for BusinessMirror, 2 Oct 2007)
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