economy

Entrepreneurship in Relation to ASEAN 2015

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ONE more year and the member countries of the Association of Southeast Asian Nations (ASEAN) are gearing towards freer and wider market in its Economic Integration pushing for the realization of the ASEAN Economic Community (AEC). Such countries are Indonesia, Malaysia, Philippines, Singapore, Thailand, Brunei, Vietnam, Lao PDR, Myanmar and Cambodia;  with China, Japan, and South Korea in the ASEAN Plus.

To those who are not so familiar with the ASEAN Economic Integration, let me put it in simple terms – “free-flow”. With it, people would be allowed to purchase, sell products and services, work and invest in any of the member countries of the ASEAN with lesser restrictions unlike what we are used to – strict protectionism. Instead of having to spend so much in terms of tariffs and complying with bloody requirements, strict procedures and other trade burdens, trading would be a lot easier, because the aim of the ASEAN is to have zero or near zero trade barriers. This would be enjoyed by all ASEAN member countries.  In addition, Southeast Asians wanting to work overseas (in ASEAN countries) would experience easier processes. Free-flow of work-force would happen.  Investors could capitalize their resources freely as they expand from one nation to another nation in the ASEAN.

Entrepreneurs would directly benefit from the ASEAN Economic Integration. There is a lot to be excited about for them.

The Philippines would be able to compete in the global setting through the one market and production base of the ASEAN. In this sense, there would be unity and more productivity among the member countries. Ironically, as member countries compete in terms of the ability to offer lower prices to consumers brought by removing or lessening trade barriers, the whole of ASEAN could benefit as a group – bonded together in creating economic progress. The free-flow would give reason for entrepreneurs to be able to cut costs for their production materials, equipment and manpower, because they would be able to get it at significantly cheaper amounts. They could have the needed edge to compete with the other larger companies in the whole world.

At a regional scale, the lending and borrowing from banks would be easier as it would have to adjust with the changes and accompany the needs for capitalization of entrepreneurs. I believe that bank transactions between and among ASEAN countries would be a lot busier compared before and it would mean significant money coming in and out of the country.

The country’s local government units (LGUs) are being improved to become business-friendly and competitive. LGUs have programs that streamline Business Permits and Licensing System (BPLS) and develop the economy through the Local Economic Development (LED) programs. In this way, the country’s budding entrepreneurs who would like to take the opportunity to do business in the ASEAN would have better access to acquire the necessary documents they need to possess in order to establish legitimate enterprises.

Free-flow could not flourish if not for state-of-the-art infrastructure as well.  Entrepreneurs know the hassle of transporting precious goods from one point to another.  Even though we already have some notable infrastructure, there is still so much that need to be improved. With the ASEAN Economic Integration, lagging behind would not be an option. The budget and plans in developing infrastructure would have to be applied, so that the country would be able to connect with the member nations internally and externally – roads, bridges and ports would have to be made.   Entrepreneurs would be able to transport their products in the country more safely and accessibly, in all of its provinces and cities and of course out of the country to all other ASEAN countries. Consequently, entrepreneurs that focus on the tourism sector would benefit from the ease of travel. Good news for all businesses in our tourist spots.

The ASEAN Economic Integration would also mean more opportunities for the country to develop its communications and information technology facilities. In this age of high technology, entrepreneurs could benefit even more from the World Wide Web when they try to compete with the tigers and reach their customers in the global setting. We know of it as entrepreneurs have established their on-line stores which are gaining more and more attention from customers who would rather remain in the comforts of their homes and order the latest products at best deals!  Entrepreneurs who are home-based and who are mostly just starting up do business on-line. Why not?  Communications brought by the internet has proven to be very effective and efficient.

With free-flow, the market is even wider and tougher and we could expect even greater – tons of exportation and importation dealings happening from one corner of the world to another with the use of the internet. Imagine how else entrepreneurs could speed up the increase of their sales, but with the use of the continually developing communications and information technology! Almost everything could be just one click away from happening.  In order to “go with the flow”, the free-flow would have to be accompanied with improved communications and information technology.

Investors coming in the country for expansion would provide entrepreneurs that sub-contract for more opportunities to do business. Entrepreneurs who would like to invest in another ASEAN country would be encouraged and would enjoy none, if not fewer restrictions.

The Philippines would have to adjust and better its competitiveness as it would need to keep up with the requirements of the AEC and integrate with all member countries.                  There would be no other sensible way, but to improve. Sink or swim they say, but I am confident, our country’s entrepreneurs would have what it takes to take advantage of the free-flow and run with the tigers.

 

Reference:

“Rising as one: The Filipino Nation Towards The ASEAN Economic Integration” by Local Government Academy

Agricultural Surge

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WITH various controversies and anomalies, Philippines agricultural forecast seems to follow a bright rainbow in the sky.

No less than the government’s Department of Agriculture under its chief honcho –Secretary Proceso J. Alcala, has been in the limelight lately, due to several controversies hounding the country’s precious prime staple food –rice.

In fact, just before the ‘forced’ resignation of former Custom’s chief Biazon, rice smuggling was among those that hugged newspaper headlines from Aparri to Jolo, and whereby top accused rice smugglers rocked the confines of our anti-crime agencies via several high-point Senate-led inquiries.

The Philippine Agricultural Journalists Inc. (PAJ), one of the country’s pioneering news associations (now led by the dynamic Philippine Star business editor and my close friend –Roman ‘Sir Manong’ Floresca,) has been at the frontlines of the nation’s agricultural dimensions since the mid-seventies, dwelling on in-depth articles, research, plus innovations and insights on the latest developments of our society’s prime economic-mover in the 21st century.

And while we are dwelling on our favorite subject –rice, did you know that Ilocos Norte has just received its deserving award for being one of the top 12 rice-producing provinces of the country. No less than Ilocos Norte’s hard-working Governor –Imee Marcos received the “2013 National Rice Achievers”(NRA) trophy from DA Sec Alcala, and national rice production coordinator and the DA’s Undersecretary Dante S. Delima. As per media release which appeared in the PS: “other winning provinces includeNueva Ecija, North Cotobato, Nueva Viscaya, Isabela, Pangasinan, Bukidnon, Bulacan , Kalinga, Mindoro Occidental, Laguna and Lanao del Norte. A total of P117.42 million worth of project grants and cash prizes were given out to the awardees which consisted of 12 provinces, 48 municipalities, 10 irrigator associations (IA’s), three small water impounding system associations (SWISAs) and agricultural extension workers (AEWs).

The addendum report stated that “each province received P4-million worth of project grant, while municipalities received P1-million worth of project grants. The IA’s and SWISAs each received P1-million and P500,000 respectively, while AEWs were given P20,000 cash prize each.” Well folks, that says a lot about the ‘strength’ of our rice-producing provinces.

Just wondering how this ‘good news’ would affect the cash registers of some rice-supporting fast-food establishments like Inasal for example, which is by the way, now under the stewardship of globally-strong Filipino-owned firm –Jollibee Group.

And by the way, what have we here on the latest developments concerning the hotly-controversial National Food Authority (NFA) which was at the receiving end of countless accusations vis-a-vis “anomalies and corruption” that required Senate and  Congressional inquiry for that matter?  In fact, a number of people’s organizations have called for its abolition “citing billions of pesos in debt the government has incurred over the years.”

Latest media reports however has it that no less than the Palace “has stood pat on its position not to abolish the grains procurement agency, saying this will affect millions of Filipino farmers dependent on NFA support price for palay.”

Now we wonder why this present administration is still open to import rice from our neighboring ASEAN brothers, when it has been revealed (as per documented media reportage) that our beloved Philippines has enough rice production to feed our growing millions of Filipinos nationwide.  Let us remember, what the Word states: “…and the truth shall set you free.”

And to think that “to date, NFA’s debts are placed at around P150 billion.” Where do we go from here?

OFW Remittances Boost Economy’s Outlook

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Buoyed by surging remittances from Overseas Filipino Workers (OFWs), consumer sentiment improved moderately in this year’s first quarter, raising prospects of better times ahead.

Based on the Bangko Sentral ng Pilipinas (BSP survey, overall confidence index (CI) showed an upbeat trend because of some positive indicators spawned by a resilient economy.

These range from availability of more jobs to increase in the number of employed family members and the emergence of more investment prospects.

Consumer confidence is measured using three indicators–economic conditions of the country, family financial situation and family income.

By income group, consumer sentiment was mixed with respect to their views on family finances and income.

The low-income group showed a consistently more favorable outlook, but the middle-income group’s outlook weakened, but turned more bullish for the next quarter and the year ahead.

In the same BSP survey, the high-income group had a less upbeat outlook but anticipated financial conditions to improve in the next twelve months.  Across income groups, confidence on the economic condition of the country improved.

The survey results also showed that the number of households with savings continued to pick up at 28.9 percent in Q1 2014 compared to 26.2 percent in the previous quarter.

Consistent with the higher spending outlook on basic goods and services in Q1 2014, consumers anticipated higher inflation in the year ahead. They expected the inflation rate to settle at 8.4 percent compared to 7 percent in Q4 2013.  This indicates that inflationary expectations could be stronger in the next 12 months.

Respondents are also of the view that the peso would depreciate against the US dollar in the next 12 months. Their perception could have been influenced in part by the recent weakening of the peso against the dollar.

Of the 560 households included in the BSP survey that received OFW remittances in Q1 2014, 97 percent used the remittances that they received to purchase food.

More than two-thirds (68.9 percent) of the OFW households allocated part of their remittances for education, 62.9 percent for medical payments and 45.9 percent for debt payments.

 

Reawakening of Subic

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Stung by the erosion of its competitiveness as an investment haven, the state-run Subic Bay Metropolitan Authority (SBMA is stepping up its infrastructure spending in what could be a reawakening from years of complacency.

This year, the SBMA’s capital expenditure (capex budget amounts to P617 million, an unprecedented 6,740 percent increase over last year’s P9 million.

A big departure from past allocations, the SBMA plans to embark on more projects to improve infrastructure and facilities, as well as to further promote the Subic Bay Freeport view of rise of new rival Freeport zones in Vietnam, China and Myanmar.

Approved by the SBMA board of directors, this year’s outlay came on the strength of the agency’s record-breaking financial performance for 2013.

The SBMA booked last year an all-time net profit of P1.079 billion, its highest in its entire 21-year history. The SBMA’s 2013 gross revenue of P2.09 billion and earnings before interest, taxes,  depreciation and amortization (EBITDA) of P992 million likewise became the highest in the agency’s history. The money will bankroll the acquisition of new dump trucks, service vehicles, and beautification of the Freeport, roads, and repair of infrastructure, airport, and other projects to make the Freeport more attractive to foreign investors.

According to figures released by the SBMA Finance Group, of the agency’s budget, P2.6 million will be spent on buildings and structures; P90 million on land and land improvements; P391 million on equipment outlay; and P134 million on information technology equipment, which received a budget of only P13,000 in 2013.

SBMA Chairman Roberto Garcia appealed to SBMA officials and employees to continue looking for new sources of revenue to further improve the agency’s financial performance.

“We are already here at this level where we can provide for what we need. We are committed to spend not only for equipment and facilities, but for our people most especially,” Garcia assured. “But we must help each other to take SBMA up to an even  higher level,” he added.

The SBMA is also strengthening its law enforcement capacity to make the Subic Bay Freeport more attractive to investors and more conducive to trade and tourism.

“Let us all practice Kaizen. Let us not be contended with what we have achieved. Let us always aim to surpass our achievement,” Garcia said.

Kaizen, Garcia explained, is a Japanese word that means continuous improvement.

Garcia said that even as the SBMA posted an impressive performance in 2013, it should aspire for even greater accomplishments in order to remain competitive as a trade and tourism hub.

He pointed out that in 2013, the SBMA board of directors approved a total of P27 billion in terms of investment pledges, which was 800 percent more than the P3 billion recorded in the previous year.

Topping all other investment pledges in 2013 was the Korean firm Resom Resort, which committed P21.4 billion out of the total P27 billion pledges.

Garcia also said that the SBMA will be developing more areas for investment this year following the turnover by the municipal council of San Antonio, Zambales of the 10,000-hectare San Antonio Economic Development Area for conversion into an additional secured area of the Subic Bay Freeport Zone.

Aside from this, the SBMA has also worked out with the local government of Subic, Zambales for the free port expansion into a 650-hectare coastal land in the municipality that will be ideal for shipbuilding and ship repair.

Both territorial expansion projects will be utilized to accommodate the growing investment proposals being received by the agency, Garcia said in a statement.

Consumer Protection Group Hits Protector of Big Businesses

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By William Dipasupil

THE economy will fall not because President Aquino is a poor manager but because of some politicians who are protecting the interests of big businesses, according to a consumer protection group. The Movement Against Business Abuses (MBA), an alliance of  consumer protection advocates, was reacting to an earlier statement by Sen. Serge Osmeña blaming the President and Energy Secretary Jericho Petilla on the country’s power woes. “If there’s somebody that should be blamed for the country’s problem on electricity, it is Senator Serge Osmeña III, who obviously is protecting the rape of the economy by big businesses,” the group said. Osmeña, they said, has been remiss in his duty as a lawmaker in helping  address the country’s problem on thinning power reserves, much more as  chairman of the Senate energy committee. “He failed to recommend amendments to EPIRA which is the primary cause of our power problems,” MBA added. Republic Act No.9136 or the Electric Power Industry Reform Act of 2001squarely puts the burden of protecting the interest of consumers and ensuring competitiveness in a deregulated industry on the shoulders of the Energy Regulatory Commission (ERC). The ERC was created to promote and protect long-term consumer interest in terms of quality, reliability and reasonable pricing of a sustainable supply of electricity. The group pointed out that the recent order by the ERC to void spot market prices of electricity generated and sold to Meralco last December and January were clear indications that the government is aware of the real purpose of regulatory functions. The Movement said that it is about time that the real cost or electricity and how it is computed  should be made public, which could be done by amending certain provisions of the EPIRA law. As chair of the Senate energy committee, they said, Osmeña may introduce the amendments so that the power generators and distributors would be compelled to make public how they arrived at on the cost of electricity being charged to the consumers. “Investors in the energy sector had for decades held hostage the government and consequently the users of electricity by threats of brownouts every time their greed driven profits are threatened,” the MBA spokesman, lawyer Rey Cardeno, said. Cardeno pointed out that the consumers had always been on the losing end and ended up paying more every time Meralco pushed for another round of power rate increase before the ERC. “We were convinced, then, that the ERC was in the pockets of Meralco,” he said, adding that “unless this is a trick, and ERC and Meralco has perfected several tricks against consumers, we are looking forward to a new directions at the ERC and the Department of Energy.” But now, he said, that the ERC is being true to its functions by ordering a review and recalculate the cost power that Meralco wants to pass on to consumers, the national leadership, including Osmeña, should support the peoples’ demand for transparency on the actual cost of electricity.

Privatization: The Grinch Who Stole Christmas

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By Mentong Tiu-Laurel

ONE of my youngest (twins) who has been on his first job came home last week and said over the dinner table, “My officemates were shocked to see what the impact of the P 3/kWh Meralco increase is going to be. Many of my officemates, first time job holders, are now the ones paying for electricity at home. They complained that their presents for X’mas to parents and relatives would have to be cut down. But, (anticipating what I would be asking) they don’t think they can do anything about it.” A day later I asked my son to invite these officemates to the house for dinner so I could explain the history of the Grinch who stole their X’mas and what we can do about it.

The government privatization program started Corazon C. Aquino and continues to this day, that’s the Grinch stealing the Filipino people’s Christmases. The Grinch is a popular children’s story by Dr. Seuss that tells of“a bitter, grouchy, cave-dwelling creature with a heart ‘two sizes too small’” who decided to stop Christmas by stealing children’s presents, trees, and food for feasts. Disguised as Santa Claus with a sleigh, he steals and tries dump all the presents into an abyss. Foreign and Filipino oligarchs incarnates the Grinch who stole “our crown jewels” – publicly owned power plants, water systems, toll ways, telecommunications and profits greedily from them.

How to Get Back Our Presents

First, the people must be informed what presents they had under their X’mas coconut trees. When power plants, water systems, toll ways, telecoms were under public government control and strict regulation they all existed to serve the Public Welfare, never solely for profit. But a grand swindle before the very eyes of the people was conducted by Cory Aquino and her oligarchy cohorts behind mainstream media’s blinding éclat of the “democracy icon” Cory, like a political Santa Claus with the gift of sham democracy. Twenty-five years later the Philippines has among the highest if not the highest power, water, toll ways, telecom charges in Asia and the World.

Secondly, the people must be shown how to get those presents back – by taking action, informing others of the Grinch and how they stole our presents, by taking concrete action like signing petitions, going on “social media” to wage the information campaign, join pickets and rallies, and support political candidates that vow to fight the Grinch. This is not a Revolution, but it is these small things that begin revolutions. In April 2013 in Bulgaria, in protest against electricity price hikes Ventsislave Vasilev burned himself to death. We are not asking for such drastic sacrifice, just daily efforts in anti-privatization social media, reading “A Radical’s Nut”, joining protest pickets, etc.

The Facts on Oil, LPG, Power

World market prices of energy sources are going down due to the peace talks between the U.S. and Iran, take note of these global headlines: Agence France Press, Nov. 25, 2013 “Oil prices drop on Iran nuclear accord”; Star.com, U.S. Nov. 22, “Good news! Gas prices to drop ….until the end of the year continuing a trend begun in August.”; The Observer, U.S. Nov. 19, “Propane (LPG) prices down 14.3 percent”. With global oil and gas prices on the down trend, why are Philippine gasoline and diesel prices going up, Meralco’s electricity up by 30% and LPF up by 25%? One reason is manipulation by the oligarchs: Shell-Chevron shutting down Malampaya natural gas and Saudi-Aramco’s arbitrary hike.

Cory Aquino started the privatization madness in 1986 by turning over Meralco to the Lopezes without any payment but which government paid for in 1973, then signing IPPs (Independent Power Producer) contracts in 1992, followed by Ramos and the Gloria Arroyo’s EPIRA in June 2001 in exchange for World Bank bribery standby loan of $ 800-million. Oil company Petron was privatized during Ramos’s time, to Saudi Aramco. Water was privatized from 1997 on by fooling the people that rates would go down, but Marcos had started modernizing the water system with huge investment that Cory Aquino sabotage to provide the excuse for privatization.

In concrete, after returning public utilities to public control: government should increase buffer stocks of oil and LPG from one month to at least four months, buying low and releasing during world market price peaks or when global players are manipulating the commodities; in the power sector return to a fixed and low return-on-rate base of 12% or below allowable profit and depreciate assets according to regular accounting rules (now assets are always adjusted to latest valuations); likewise in water and telecommunications sectors. All the buy-back can be done with the surplus foreign reserves of $ 20-B and Special Deposit Account of $ 40-billion with the Bangko Sentral, and installment.

Aquino’s Boss: Oligarchs

“Gov’t can’t stop oil, power rate surge”, Dec. 4, 2013, BS Aquino’s spokesman sonny Coloma said. So what is government for if it can’t protect the people from the oligarchs’ manipulation, abuse and profiteering. We will tell BS Aquino what government can do: follow 1) the Constitution which command government to “promote the common good” and not profits of the oligarchs; 2) the EPIRA (Electric Power Industry Reform Act) that demanded “stable and reliable supply at a reasonable price” of power; 3) BS Aquino’s own words “Kayo ang boss ko” and not the oligarchs. The highest power cost in Asia is destroying industry and employment, living standards and the National Economy as a whole.

Some have the mistaken belief that only local oligarchs are the culprits behind Aquino. No, they are together with the global oligarchs in imposing Philippine compliance to global privatization rules. Filipino water consumers were supposed to get 10% to 20% reduction in water rates in October due to MWSS ban on Manila Water and Maynilad from passing on income tax and other expenses to consumers. This reduction is on hold forever when the water companies raised the issue to the International Commercial Court where international business protection rules will be superior to the Philippine Constitution and all its laws designed to protect the people. We need to withdraw from these.

Million Man March vs. Price Hikes?

There were many anti-pork “leaders” who claim the credit for the Million Man March against pork. I wonder if they can organize such a march against the power, LPG, oil products price hikes, and still get the massive propaganda support of the oligarchs controlled mainstream media like ABS-CBN, ABC 5, GMA7, and the major dailies. The Catholic Church was also active in the anti-pork, why have we never heard anything from them on the P 850-billion annual scam that is the privatized power industry of the country which charges exorbitantly based on up to 500% overprice of power transformers and 1,00% overprice of power poles that go into the rate base computations.

Some crusaders should also be asked, why did they support the EPIRA and privatization when it started in 2001? This includes many in the middle class and professional sectors. They were used in 2001 by the Grinch. Are they really on the right opposition track now, to demand the end of privatization and return to public or socialized ownership of the public utilities to include not only power, but fuel, water and other industries essential to the “common good”. There are some congressmen who made token protests about EPIRA, like the former customs man Mindoro solon Rey Umali who said in Sept. 2013 the Epira flaws cost more than pork, but now he’s silent. He, a BS Aquino compadre, is likely a Grinch too.

Revolt, Prosecute and Reform.

Anti-EPIRA crusader Mr. Jojo Borja, in memory of the late Mang Naro Lualhati who helped with the P 30-billion refund from Meralco’s overcharging back in the 90s, is reviving a case drafted by Atty. Alan Paguia, to sue Energy Regulatory Commission chair Zenaida Ducut (of pork barrel fame too) and Meralco CEO Manny Pangilinan before the Ombudsman – someday putting them behind bars. The BMP led by Leody de Guzman initiated a picket in front of Meralco last week, and we will follow through with more mass actions in the next few weeks. In the past we had countless “light out” campaigns at night, which should be revived. At some point we should “occupy” Meralco and ERC, and then Malacañang, over these issues.

(Watch “The Power Grinch who stole X’mas” with Mr. Jojo Borja and Arnold Padilla: GNN Destiny Cable Channel 8, Skycable Channel 213, www.gnntv-asia.com Sat., 8 p.m. and replay Sun., 8 a.m.; tune to 1098AM, Tues. to Fri.5pm; ; visit http://newkatipunero.blogspot.com; and text reactions to 0923-4095739)

Inciting Upheaval

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opinyon-editorial

By Ray L. Junia

RAPID changes are occuring in the economic front, hence OpinYon’s focus on its dynamics and how it shapes the fate–and future–of ordinary Filipinos as they plod on with their daily lives.

Research-based and interpreted in a layman’s language,  the story aims to be a wake-up call for the decision makers, both in government and private sectors, to assess how and why policy measures failed miserably in stemming the surging tide of disparity in democratizing the wealth of the nation.

Our Asian neighbors like Thailand and Malaysia succeeded in scaling down the dominant control of their economy by a few families, and there’s no reason why we can’t do the same for the sake of millions of Filipinos who continue to languish in silence under the yoke of poverty and deprivation.

Certainly, the people are sick and tired of glowing and self-serving government statements that the economy is booming. To them, economic growth is an empty boast as it has failed to uplift the quality of their lives.

Our government takes pride in being democratic. But in reality, it’s a subtle form of dictatorship by proxy in disguise because it it allows the oligarchs to reign supreme in the economy.

Unless decisively addressed, the worsening rise of poverty incidence vis-a-vis the insatiable appetite of the rich to rake in more profits may be likened to a ticking time bomb.

If the economic system is flawed, then why the heck do we insist on it? The clamor for a drastic change is resounding and unless we heed it, we may find ourselves jolted again by an onslaught of an irreversible
political upheaval.

Bracing for Tougher Times Ahead

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By Al Labita

AFTER nearly a decade of a benign uptick, the country’s inflation rate – the cost of buying goods and services — is threatening to disrupt the economy’s growth trajectory. Currently pegged at a year-to-date 3.5 percent, the rate is poised to dangerously breach the central bank’s five percent band limit as prices of basic commodities showed signs of an upward trend. Blame the inflation’s looming downsides on the wave of disastrous events unleashing cost-push pressures on an economy susceptible to price distortions.

By and large, the Moro separatist attacks in Zamboanga city, the destructive 7.2 quake in Bohol and the mind-boggling storm surge in Eastern Visayas had conspired and dented the economy. Admittedly, the fortuitous incidents triggered waves of price elasticity with a seemingly upward bias. Most likely, inflation will soar to five percent by end this year as monetary authorities had earlier projected.

BSP Under Pressure

That forecast, however, was anchored on pre-crisis scenarios or at a time the economy was robust. But with the economy under siege by inflationary pressures, monetary authorities are likely to clamp down on money supply – technically referred to as M3 – to rein in any sudden gyration of inflation. This ensues once inflation rate breaks through the five percent threshold level which is very likely, taking into account the new challenges on the ground.

Intervention measures, which can be damaging to the economy in the long run, can range from a hike in interest rates to tightening of overnight lending and borrowing policies. For those in the corporate sector, an economy’s downward spiral could hurt profits and limit stock price appreciation. A regime of high Inflation rate also robs companies of market value since they are forced to raise prices of the goods they sell to recoup investment costs. While they can pass on the costs to the consumers, the goods they sell are in the final reckoning become worthless each day.

Poverty and Prosperity

Given the economy’s new twists and turns, Bangko Sentral is likely feeling the pressures to revise upward its inflation expectation to factor in a creeping surge in prices. A single percentage rise in inflation can spell a difference between poverty and prosperity.
Lately, inflation – the bane of any economy – was acting up anew as supply bottlenecks erupted in calamity-stricken areas, creating an artificial shortage of basic commodities.

What exacerbated the situation was the massive destruction of farm-to-market roads constricting the extent of the delivery system to where the commodities are critically needed. Based on Department of Agriculture (DA) data, food production areas bore  the brunt of super typhoon Yolanda with damages piling up to nearly P7 billion. Rice fields and fisheries stocks accounted for the biggest losses at P2.23 billion and P1.16 billion, respectively.

Toll on Aggie

Yolanda also took its toll on high-value crops such as coconut, mangoes, cassava, bananas and vegetables. Overall, the DA estimated that the calamity dislocated 214,522 metric tons of goods from 134,085 hectares of farmland. The figures exclude devastated agricultural infrastructure, facilities and equipment for irrigation systems in Eastern Visayas, a key food production basket. Leyte province alone chalked up P2.22 billion in losses, about half of which represents ruined palay.

Amid a grim picture in the agriculture sector, the government’s think tank, the National Economic Development Authority (Neda), is less upbeat about the economy’s growth prospects. In a statement, it predicted that growth of local output – or Gross Domestic Product (GDP) – in this year’s last quarter could be trimmed by 0.3 to 0.8 of a percentage point to 4.1 percent.

Hardly significant, the reduction would nonetheless bring down the government’s GDP target of attaining 6-7 percent GDP growth target by end this year, quite ambitious for an economy weakened by a string of disasters, both man-made and natural. Such bleak outlook, Neda says, could linger through 2014 because of the reduced production capacity in typhoon-affected areas.

Opportunity and Risk

What bears watching is the extent of the government’s fiscal spending to mount a multi-billion peso rehabilitation program which can be potentially inflationary. Officials boast that with improved tax revenues, the government has more than enough fiscal space to go on a splurge. Initial estimates placed the rehab cost at P10 billion to defray the costs of repair of infrastructure and other facilities.

In effect, the government has no choice but to part with its revenues which otherwise could have been wasted in the pockets of the notoriously corrupt and the inept. The choice is simple: reconstruct and resuscitate a disaster-ravaged economy or risk prevalence of abject poverty.

LIES AND DECEIT

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By Al Labita

NOTHING to crow about the Aquino government’s self-serving claim that under its watch, the economy has expanded at a rate faster than what its officials could imagine.

Reckoned with realities, however, the growth only perpetuated the perennial rich-poor gap, one of the world’s worst, despite Aquino’s much-ballyhooed reform agenda.

While statistics only tell half a story, they nonetheless betray the painful truths lurking behind a façade of lies and deceit.
The inclusive growth Aquino has been harping on has been largely inclusive only among the few moneyed elite to the exclusion of the vast majority – the poor.

As the economy grows, it also exponentially drives up the wealth of those in command and control of the lives of Filipinos.
The figures are grim — only 40 families such as the Ayalas, Sys and Tans account for nearly 80 percent of the economy as measured by gross domestic product (GDP), an OpinYon’s research shows.

In stark contrast, some Asian neighbors had managed to whittle down the rich-poor ratio as they gained headway in democratizing their economy over the past decades.

In Thailand, the same number of families account for only 33.7 per cent of the economy and in Malaysia, 5.6 per cent, indicating how the Philippines has lagged behind in addressing the urgency to spread out the nation’s wealth.

Ironically, the glaring disparity vis-à-vis sharing a nation’s wealth explains why the Philippines has more billionaires (in US dollar) than in more prosperous Thailand and Malaysia.

GDP and PPP

They are the same people who take advantage of lucrative contracts, including profit guarantees and tariff increases, under the government’s Public-Private Partnership program (PPP), Aquino’s centerpiece in pushing infrastructure projects.
“The regime has consistently favored the few billionaires while further marginalizing the poor. Aquino now wants to enrich them even more by giving them various perks for the PPP projects,” says the militant Bayan Muna in a statement.
Based on the account of US-based magazine Forbes, the combined net worth of the Philippines’ 50 richest totaled US$65.8 billion in 2012, more than a quarter of the nation’s GDP.

Mostly of Chinese origin, these families own companies which have grown—aided largely by generous government incentives—to become conglomerates with shares traded on the Philippine Stock Exchange and in some cases offshore, notably in cash-rich Hong Kong and Singapore.

Millionaires to Billionaires

Their vast and diverse corporate tentacles extend far and wide, catering to the lives of Filipinos, literally from womb to tomb, leaving them with no choice but to enslave themselves under the weight of an oppressive western-style economic system.
As shown in the list of Singapore-based UBS Billionaires Census 2013, the Philippines ranked 9th in Asia, with 13 billionaires with a combined net worth of US$35 billion.

In 10th place was Malaysia with 10 billionaires worth a combined US$37 billion, while Thailand ranked 11th with 10 billionaires worth US$25 billion.

As usual, ethnic Chinese taipans Henry Sy and Lucio Tan topped the list of the Philippines’ mega rich whose ranks had swelled as more of their kind continued to amass wealth at the expense of those marginalized by the government’s pro-rich, anti-poor economic policies.

Sy, who operates shopping malls, saw his assets surge 44 percent to US$7.2 billion in 2012 alone and remains the Philippines’ richest man.

Doubtful Data

According to the Forbes 2012 annual rich list, Sy and Tan whose businesses range from retail to property and other related ventures were worth a combined US$13.6 billion, equivalent to six per cent of the Philippine economy.
While GDP has undoubtedly risen over the past years, every Filipino’s share of it is unfortunately the lowest among Asean countries.

Based on the latest data of the National Statistical Coordination Board (NSCB), the Philippines’ per capita GDP) stood at only US$4,339 in 2012 compared with Singapore, $61,461; – Malaysia, $16,976; Thailand, $9,609; and – Indonesia. $4,971.
GDP is the amount of goods and services produced, while per capita is derived from dividing the population in relation to GDP.
While seemingly doubtful, the NSCB data hardly reconcile with Aquino government’s oft-repeated claims that GDP last year expanded by 6.8 percent and even bragged that it outpaced Singapore’s 1.3 percent, Malaysia’s 5.6 percent, Thailand’s 6.5 percent and Indonesia’s 6.2 percent.

Yet, the Philippines’ per capital GDP has been the lowest–and slowest—among its peer group since 2005 despite official claims that it is Asia’s fastest-growing economy.

Poverty Level

In what could be an indicator of the country’s ever-widening rich-poor gap, NSCB data also showed that high-income households accounted for more than half, or 60 percent, of the GDP.

The balance of 40 percent of the economy’s income was shared by the bulk, or about 84 percent, of the country’s population.
To be poor meant earning less than 16,800 pesos a year or P1, 400 a month or P47 pesos a day which covers 26.5 per cent of the nearly 100 million Filipinos.

As gleaned from the official poverty data of NSCB, the proportion of poor Filipinos to the total population has been surging from 24.9 per cent in 2003 to 26.4 per cent in 2006, and 26.5 per cent in 2009, an issue Aquino promised to address under his “Daang Matuwid” program of government.

Inclusive Growth?

The Philippines has one of the highest poverty rates among emerging Asian economies. The poverty incidence stood at 27.9 percent as of the first semester of 2012, almost unchanged from the 28.6 percent in 2009.

Aware of the magnitude of the problem, the government wants to bring down poverty incidence to 16.6 percent by 2015, an ambitious target difficult to achieve as the rich get richer and the poor poorer, given the economy’s bias for the affluent and the powerful.

In more ways than one, the economy is basically lopsided in structure allowing the oligarchs to gain too much control of the country’s resources and creating one of the worst income inequalities in Asia.

One wonders whatever happened to Aquino’s oft-repeated term “inclusive growth” which seeks to create jobs and reduce poverty by spreading the economy’s gains to trickle down to lower-income segments of society.

More importantly, the rich-poor disparity also draws attention to Aquino’s anti-poverty conditional cash transfer program which has a budget of more than P40 billion this year.

Capitalist vs. Socialist System

The program seeks to see 15 million of the nation’s poorest people receive money directly in exchange for their kids going to school and mothers and children getting proper healthcare.

In releasing its data, NSCB risked incurring anew the ire of Aquino who once bawled out the agency’s officials for portraying the economy in bad light contrary to his government’s rosy picture.

Sign of compassion for the disadvantaged sector of society may be gleaned from how the tycoons responded to the clamor for aid of the hapless typhoon victims in the Eastern Visayas region.

While some, particularly Sy and Tan, handed out P100 million each, others were hardly in the news, apparently opting to work behind the scene with less fanfare.

Billionaire port king Enrique Razon  deployed heavy equipment to repair the damaged piers in Tacloban city and Leyte, while the Ayalas and banker George Ty chipped in P10 million and P50 million, respectively, worth of relief supplies.

The cost of putting the typhoon-ravaged Eastern Visayas region back on its feet amounts to a whopping P250 billion, a window of opportunity for the tycoons to share their wealth with those they derived their profits from.

Overall, while there is evidence of progress in addressing the yawning rich-poor gap, it is too slow. One study says it would take dozens of decade for the bottom millions of the nation’s population to achieve 10 per cent of the national income under the current rate of change.

Similarly, it raises questions about the Philippines’ pro-capitalist economic model vis-à-vis the egalitarian-oriented socialist type.

Localizing Development Measures

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by Ike Señeres

THE Human Development Index (HDI) is a composite statistic to rank countries into four tiers of human development, namely low, medium, high and very high. The countries are ranked based on three measures, namely the life expectancy index, the education index and the income index. The life expectancy is measured from birth. The education index is measured by the adult literacy rate and the combined primary, secondary and tertiary gross enrolment ratio. The income index is measured through the standard of living, as indicated by the natural logarithm of gross domestic product (GDP) per capita at purchasing power parity.

Simply put the HDI measures life expectancy in relation to the mortality rate. It measures the literacy rate in relation to the illiteracy rate. In a manner of speaking, it measures the prosperity rate in relation to the poverty rate. In usual practice, the illiteracy rate is usually not measured, being just the opposite of the literacy rate. In the same manner, the prosperity rate is also not usually measured, being just the opposite of the poverty rate. It stands to reason however that the prosperity rate actually reflects the statistic of all those who are above the poverty line.

As I understand it, the Philippine government is not ranking the provinces in terms of their human development indices, either using the HDI method or any other measure. As I also understand it, there is no such thing as a Gross Provincial Product (GPP) in relation to the Gross National Product (GNP). But since the HDI method measures only the GDP, perhaps it would also be a good idea to also measure the Gross Provincial Domestic Product (GPDP). On a similar note, it may also be a good idea to measure the Provincial Per Capita Income (PPCI).

In my previous columns, I wrote about JEWEL, short for a development framework that would organize and coordinate the delivery of five basic services at the local level, namely Justice, Education, Wellness, Employment and Livelihood. Among these five basic services, only the last four are directly relevant to the HDI method. However, it could be said that justice is actually indirectly relevant to the HDI method, because the lack of it could be a way to deny access to the last four.

Although it is really not that simple as it seems, employment and livelihood are the obvious means to increase the incomes of our people, thus also elevating their standards of living. I am using “employment” here in a loose sense, because it could also mean “self-employment”, a concept that could also mean having a small business. I am also using “livelihood” here in a loose sense, because it could also mean having a small business or perhaps it could also mean practicing one’s craft or profession.

Very recently, several police directors got into hot water when it was discovered that they were tampering with local crime rate statistics, obviously to make it appear that the crime rate is low in their jurisdictions, meaning to say that they are doing their job well. I wrote about this problem many years back, and I argued that the Philippine National Police (PNP) should not be the source of crime rate reports, because that would put them in a conflict of interest situation. Naturally, they would tend to make it appear that everything is good; otherwise it would make them look bad. Having said that, who could possibly report the provincial HDI data without a possible conflict of interest?

In the case of the PNP anomaly, it would seem that the problem is in the consolidation of the data, and not in the gathering of the data. Since there was apparently no problem in the crime rate reports of the other police directors, it would be fair to say that the honest ones did not tamper with the data that was submitted by the lower levels that could also be presumed to be honest. For lack of any other practical choice, could we possibly rely on the local mayors to be honest in reporting their local HDI data?

On the upside, I would say that the statistical methods that are used in computing the HDI data are purely transparent and technical, meaning that these could not possibly be corrupted by political interventions. Moreover, the resulting computations could be subjected to the review of local accountants and auditors, who could all be presumed to be politically neutral. The key to this however is the accuracy of the input data, because otherwise, it would just be a “Garbage In, Garbage Out” situation.

I believe that once the controversies over the recent scams are over, the focus will shift to genuine local development projects that will be implemented by the local government units (LGUs) on their own, or in cooperation with Non-Government Units (NGOs). I could only hope that the LGUs would give priority to projects that would increase their HDI performance. I am also hoping that they would plan and implement their projects in line with the JEWEL framework.

On my part, I am now working on a project that would provide an alternative information superhighway for national development and emergency response purposes, as a way of helping LGUs and NGOs alike. I have no doubt in my mind that one way or the other, information and communications technology (ICT) holds the key to the attainment of national development, but first, the LGUs must do their part in local development.
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