1. The thing I find most funny about a lot of these Philippine faux-militants is all they really want is to be taken care of and to be held by their government. They want more government interventions, more state subsidies, more coddling.

    It’s not that they want a different form of government, or different economic policies vis-a-vis foreign ownership, direct/captured investments, inclusive growth, or a different fundamental basis from which government policies are formed and enacted.

    Nuh uh.

    They just want Noynoy (or whoever is in office) to be their patriarch and take care of them. Hell in practically the same breath they’ll go from insulting PNoy and the government for not increasing subsidies, or removing VAT, or intervening with regards to oil prices, to bitching about the vast powers politicians have, and how politicos use their positions and influence to leverage votes.

    Come on, be coherent. Subsidized programs need funding, else we get into massive deficit spending, which will in turn require increased borrowing on the side of the Philippine government, and in turn require a greater portion of the government’s budget shifting towards debt servicing, which will result in less funding available for social services.

    And of course there is the ever present issue of corruption, which only further cuts into the already shrinking pie of government revenues available for social services and infrastructure development. Yet, PNoy is doing nothing for the country by going after corruption in the government. Although, somehow the administration is able to reduce government borrowing and debt servicing, increasing revenues, and expanding government social services and infrastructure development (seriously, has anyone actually seen the infrastructure projects programmed for this year?). All the while, the government (via the BSP) is maintaining steady low inflation and an increasingly positive investor sentiment.

    Yes, but by all means, let’s focus on the short term issues, ignore the medium to long term concerns, and bitch and moan about that. Funnily enough other countries are even studying our oil subsidy programs that target those in need. And don’t give me this shit about targeted oil subsidies are anti-equality. The well-heeled can buck up. I thought we lived in a society that favored massive wealth distribution (CCT, agrarian reform, PhilHealth, free healthcare, RH, free primary/secondary education, with overly subsidized tertiary education etc). Don’t back off wealth distribution now.

    Most of the arguments I’ve seen against PNoy are basically because he isn’t doing exactly what certain elements of society demand of him. No RH yet? Lazy president. VAT on oil? Lazy president. 

    Laziest dictator ever, don’t you know.

    They ignore most of the other missteps he’s making in favor of cutesy little soundbites. Guess that stuff sells.


  2. "

    At face value, the drop in government spending appears to be a downside to the Aquino government’s performance. Data from the Department of Budget and Management (DBM) indicate that disbursements in the first four months of the year were P60.5 billion or 11.6 percent lower than in the same period last year. Some observers now fault the new administration for “underspending,” for indeed, not only has it spent less than it did last year, it has also spent even farther less than what had been programmed to be spent by this time. But before casting this government as inept and lacking absorptive capacity, one must remember that this year’s budget was still drawn up by the previous administration. And if the current government has been more prudent about spending the money, it could well be because they have found that they don’t have to spend as much as the former government would have, to accomplish as much.

    And it seems they have. The Department of Public Works and Highways is one of the biggest “culprits” in the underspending. It turns out that the agency has made dramatic changes in the way public works projects are costed out, leading to substantial savings. For one thing, Public Works Secretary Rogelio Singson has significantly reduced allowable “indirect costs,” including contractors’ profit margins (and quite likely the so-called “bukol”), in public works projects. Coupled with a strict policy on transparent public bidding, the agency boasts of more than P2 billion in savings from 2,797 projects over the past year.

    Another reason for the underspending is that much of the large lump sums allocated by the previous government to various departments remain unspent. These are substantial amounts that the previous leadership gave department secretaries the discretion to allocate and spend—and it’s not hard to imagine how much of it must have gone to less than responsible uses. If the current department secretaries are slow in spending such sums, it could be because their predecessors had over-provided them in the first place. The new administration intends to cut these “lump sums” to a bare minimum in the 2012 budget, the first budget they truly own.

    — 'Aquinomics': What difference has it made? - Cielito Habito. Inquirer

  3. "

    What better indication of this subordination of the broader national interest to the demands of our labor export strategy than President Aquino’s not going to the Nobel Prize ceremonies in Oslo in December in what turned out to be a futile effort to save three OFWs from being executed on drug charges by China? Or Secretary of Foreign Affairs Ramon del Rosario’s personally escorting 400 workers out of Tripoli in early February when he should have been in Manila drawing up a regional contingency evacuation plan for the whole Middle East? Or Vice President Jojo Binay’s scurrying off to Saudi Arabia to convince the Saudis not to ban the deployment of domestic workers to Saudi households?

    For all intents and purposes, the Department of Foreign Affairs has become an extension of the Department of Labor and Employment.


  4. On PPPs

    In theory I support the PPPs. Public-private-partnerships can be a relatively easy way, with reason, to redevelop a country’s faltering infrastructure. However, as with previous moves on the side of the Philippine government to partner with private entities, there are serious areas of concern developing.

    On a national level there is no doubt that the Philippines is seriously deficient when it comes to infrastructure development; Manila and other major urban areas are by far the most developed. Yet, there seems to be a sort of Manila-esque and Luzon bias brewing when it comes to the early projects: LRT 1, MRT-3, North Luzon Expressway, South Luzon Expressway and NAIA. More than likely this is a by-product of the lack of focus on development projects in other parts of the country for years. These are the five projects most ready for bidding. However, for a presidency that continually pledges that development and governance are their focus, you would have hoped they would have thrown in one or two projects outside of Luzon, for appearances sake of course.

    Beyond the type of projects initially being offered, the Aquino administrations penchant for picking up where the GMA administration left on in terms of ties with the business community is far more disconcerting. On his first mission to the United States the roll call of businessmen who traveled with Aquino was far from diverse: Cojuangco, del Rosario, Zobel de Ayala, Pangilinan, Antonio, Cuisia, Chua, Go, Aboitiz and Razon (those good old oligarchs from the GMA admin) and so on.

    This is a list of names that is far from diverse and has stayed fairly static since the fall of Marcos.

    I am not adverse to playing ball with the big companies in the Philippines, what I do find very worrisome is that these are the companies again being given preferential treatment when it comes public-private-partnership projects. One of the major obstacles for growing the Philippines economy is the inability for start-ups to expand beyond a certain level. Infrastructure and utilities are the playing ground of the conglomerates (witness what Danding and San Miguel just pulled off and Pangilinan continues to do); meaning that our economic structure is very top heavy, further making it difficult for actual reforms in corporate governance and oversight to be pushed through.

    On an additional level, one of the major structural inefficiencies in the Philippines is the wide gap in asset allocations. Massive amounts of assets, in the form of land and corporations, are controlled by a select few in the Philippines. By failing to open up bidding to alternate groups and PPP solutions (such as publicly owned but privately managed) and almost exclusively focusing on developing partnerships with a select few businesses will only further widen the asset gap and embed inequalities.

    As I said, I agree with the concept of PPPs. But I am wary of the execution and the type of private accommodations that are being made with the major business groups in the country. Why, news just came down that Ayala is seeking to reinvest in the MRT-3. Funny, they’ve been out of the infrastructure business for a while. I am not anti-business by any means, but with the history of the government in supporting certain business groups I find the trends in the Aquino administration worrisome.

    Open and transparent bidding that supports new competitors into the PPP game is a must. If the government does not do this, and focuses instead on wooing and working with a select few our economy will remain top-heavy and overall…stagnant.


  5. "

    When President Ferdinand Marcos was airlifted from the Philippines on a United States Air Force jet on February 1986, he left behind an economy in shambles. The average yearly income was US $540 per person, and like many averages, this concealed vast disparities. While the rich lives in an ostentatious splendor symbolized by the legendary extravagance of the Marcoses, the majority of Filipinos could not afford to consume the minimum daily calorie requirement…

    The magnitude of the Philippine development strategy’s failure can be appreciated by comparisons with neighboring countries. In 1962, per capita income in the Philippines was comparable to that of Taiwan, and one-quarter of that in Japan…In 1986, it was one-seventh of Taiwan’s and three percent of Japan’s. Infant mortality in the Philippines in 1986 was equal to that in Vietnam, a country on which the US had rained bombs rather than banknotes*. The Philippine external debt burden, measured by its ratio to national income, was the heaviest in East and Southeast Asia.**


    James K Boyce, The Political Economy of Growth and Impoverishment in the Marcos Era

    *During the Marcos regime, the United States lent approximately $4 billion.

    **Foreign debt in 1962 was about US $360 million, that rose to $28.3 billion in 1986.


  6. These figures, however, are misleading. Yes, China spent more money buying wind turbines and solar panels than any other country last year. But consumption does not necessarily translate into technological leadership — if it did, the United States would have little to worry about in most product categories. Massive deployment of clean energy will give the Chinese government leverage with foreign firms (because Beijing will be able to demand concessions in exchange for market access) and provide opportunities for incremental innovation. But the cutting edge is, in most cases, far away: The Chinese innovation system still has enormous difficulty moving ideas from the laboratory to commercial application.

    The actual technological leader in wind and solar energy are companies based in the Basque Country. Which, when you consider the relative dearth of natural resources in the region, is unsurprising.

    For the Philippines, these companies have made attempts to enter (along with another world leader in light rail systems) but continually have come up against government obstacles (corruption, regulatory and support as well). A situation that has not changed (though the name of the so-called organizing entity has) under the Aquino administration. It’s one area that I hope they make strides in; the Philippines must foster a welcoming environment for domestic and international business partnerships.  What we have that remain are serious roadblocks for non-aligned (diplomatic? I hope so) international  and domestic corporations to engage in new business. Our atmosphere does not foster new entries for major projects.


  7. A ‘Royal’ Upheaval

    I’ve mentioned before how the Royal Economic Society (Real Sociedad Economica de Filipinas, sounding so much more awesome in the original), founded in 1780 by Basque badass Governor-General Jose Basco y Vargas, was instrumental in laying the foundation for the economic and agricultural boom in the latter part of the 19th century. However, its influence was not only felt in economic terms but, in its later incarnation, it served as a vehicle for the spread of egalitarianism and Enlightenment ideals in the Philippines. It becomes an example of how economics and culture are not mutually exclusive; or at least how those who are economically minded must be cognizant of their wider social and cultural responsibilities.

    From inception, the whole idea behind the Society was to provide a mechanism to encourage the growth of ‘enlightenment’ in the Islands; economic and cultural. Basco, unsurprisingly, based it on the 1754 English Society for the Encouragement of Arts, Commerce, and Manufactures. Prior to the founding of the Society the Church was essentially the sole force for art and cultural growth in the country, as well the Philippines growth potential was shackled to the elitist Galleon Trade. A trade that, while financially a boon for a select few, limited the potential for broad and deep economic growth. The Society was strong in its first few years. Among its various economic projects was the cultivation of hemp and flaxseed, pepper, coffee, indigo and silk. On the human rights side, it started the fight for native rights in 1782. However, as with many personality driven projects, it went fallow in 1787 with the retirement of Basco y Vargas. In 1819 it was reborn. Again, with a cultural and social outlook. This time though it was called the Real Sociedad Economica de Amigo del Pais de Filipinas (Royal Economic Society of Friends of the Country of the Philippines…yikes).

    A sister organization to the Society was the Real Compania de Filipinas (another institution Basco successfully organized with his Basque brethren). And while it failed to become financially successful for its investors, much like the Society, its positive effect on the economic fortunes of the country was felt later on. Again, much like its sister organization, it also championed enlightenment ideals. Articles 51 and 52 dictated that the Company must provide free transport for artisans and various professors (mathematics, chemistry etc) to the colony. Additionally, Article 53 decreed that ‘native’ Filipinos would be 1/3rd of all ship crews; no matter creed, color and status. As well, they were to be treated as the equals of European sailors. 

    The second life of the Society saw a definite focus on social and cultural outreach programs; as a matter of fact it deemed anything relating to culture, commerce and engineering within its purview. One of its most enduring was the Damian Domingo school of art. Famously, in its charter, the Society dictated that the Damian Domingo school had to accept artists no matter their social standing or ‘color’. Again, upholding the ideals of egalitarianism and the Enlightenment.

    …that he will enroll any applicant of whatever class whether Spanish, mestizo or Indio…

    Among its other projects was the funding of engineering students, the publication of Father Blanco’s famous Flora de Filipinas, scholarships to send Filipino students abroad and even the first Botanical Garden (founded in 1865 and surviving up until World War II). Aside from this it continued funding and supporting efforts to improve the economic situation in the Philippines; whether through studies or supporting entrepreneurial activities.  After the disastrous 1863 earthquake that razed Manila, it even donated funds for the relief of artists and farmers.

    In essence, through the work of these two ‘Royal’ institutions the intellectual, cultural and economic flowering of the Philippines in the 19th century was encouraged. They both serve as reminders for civil society (since these were predominantly privately owned) that their responsibilities extend beyond the bottom-line. Then again for some I hazard they serve as warnings: When you encourage economic and cultural innovation you provide a country and its people the tools to change their circumstances, for the better.

    Oh yes and these two examples effectively demonstrate that those with influence in the 18th and 19th centuries were not solely fixated on exploiting the Philippines. They saw the potential for this country to be vibrant and dynamic, not only economically, but culturally as well. It is not a stretch to say that prior to the Society and the Company the Philippines was more than just a little backward economically and culturally. And in part, they were catalysts for the explosive growth seen in both arenas during the 19th century. Whether purposefully or accidentally they were contributing factors in the positive evolution of the Philippines and Filipinos.


  8. To get on my economics and social development soapbox for a second (just a second, promise).

    As the ODI points out there is most definitely a connection between growth and MDGs. WIthout growth, we can’t achieve them. And yes there is an intersection between growth and poverty alleviation. It can’t all be handouts and social programs, if real substantive economic uplifting is envisioned. Development requires more than that. It demands interconnected and rationalized policies. Which are implemented properly of course.

    Yet the problem is, especially over the last 10 years, growth has not been inclusive and broad. Quite the contrary in fact. Growth in economy has been felt in only very limited subsections; little of it has actually trickled down. This is a function of certain systemic inefficiencies, as well as misguided growth-focused economic measures. Focusing solely on pumping GDP numbers is a recipe for disaster for developing economies such as ours.

    Growth then must be inclusive and government policies enacted must take this into account; ie addressing system inefficiencies and flaws. We haven’t done it yet. Which is really why the GDP growth that has been touted has had little effect on poverty. In essence, little effect on our attempting to achieve the MDGs.

    The Overseas Development Institute had a round table back in June tackling this issue. They released ten propositions geared towards linking growth, government policies and development measures to achieving the MDGs. Well worth the read:

    1. The MDGs need to contribute to transformative change, and while the immediate 2015 targets are important, we need to support change that is economically, politically and socially sustainable and tackles the underlying causes of poverty. 
    2. We have not done well enough on either equity or economic growth. To achieve the MDGs, an accelerated and transformative process of redistributive and inclusive growth is urgently needed. 
    3. High initial levels of inequality are a poor foundation for both growth and poverty reduction. 
    4. The structure of growth is important, not just the rate.
    5. Employment matters, but decent work even more so, and needs to be backed by effective and large-scale social protection policies, and trade issues, including trade capacity building, are critical. 
    6. Gender inequality is a key part of the story, and transformative growth processes need to tackle the challenges women face in terms of care, employment and lack of opportunities. 
    7. Growth does not automatically lead to progress on the non-income MDGs and therefore social policies – including education, health and social protection – are central and must not be sidelined. 
    8. Transformative change requires developed country governments and institutions to put their own houses in order in terms of trade policies, financial stability, climate change, green growth and other issues that are often beyond the control of individual low-income countries. 
    9. Transformative change requires national governments of low-income countries to make interconnected, strategic and coherent decisions on policy areas once seen as discrete, such as industry, trade, migration, taxation, agriculture, social protection and basic services (even if their room for manoeuvre is limited). 
    10. Policy solutions need to be home-grown and be reinforced by a political settlement and social dialogue that ensures they address not only the needs of society’s ‘winners’, but those who are, for whatever reason, society’s ‘losers’.

    And then for fun. Think of the nature of the government’s growth policies for the last decade. They have been touting growth, growth, growth. GDP! GDP! GDP! It’s a mantra with them. A sleight of hand designed to blind with positive numbers, while ignoring the slide in extreme poverty the majority Filipinos find themselves in.

    Any wonder we have had a delinked relationship between growth and poverty levels?

  9. theeconomist:

    Daily Chart: the world’s largest container ports. Singapore nabs the top slot.

    Thank you @ellobofilipino. I had no idea my favorite newsmagazine was on tumblr!

    Oh and I hope people take a look there at the bottom of the chart; Manila was one of the largest container ports in the world. That adequately represents the diminished status of the Philippines as an industrial hub. Don’t forget as well, Subic is one of the largest and deepest ports in the world and has never been effectively leveraged.