Thursday, 8 July 2010

Press conference with P-Noy (7 parts)

If only we believe

Written by John Mangun
Outside the Box
Business Mirror

Several years ago, my ramblings in this space centered on how a people’s culture creates their economy.

For most of its history, the economic principles of the US were based on hard work, thrifty money management and solid, sensible business practices.

The entrepreneurial capitalism of 19th-century America was ruthless but efficient and beneficial to the consumer. At one time, John D. Rockefeller, founder of Standard Oil of Ohio, owned 90 percent of all the oil-refining capacity of the US. He accomplished this through buying, bullying and throat cutting of the competition. Yet the efficiency of his monopoly was so great, that over the life of the company, the price of kerosene, the basic heating and cooking fuel, decreased by 80 percent.

Rockefeller’s life motto, in addition to “God gave me the money,” was from religious leader John Wesley: “Gain all you can, save all you can, and give all you can.”

Those American principles changed after World War I gave way to the “Roaring Twenties,” which saw banks give up sound banking values in favor of speculation, primarily in the stock market. The 1920s saw a period of rapid expansion of both consumerism and the financial industry, during when the finance and insurance sectors doubled and tripled in size.

After World War II, the next 30 years saw a return to both cultural and economic principles that were more prudent and conservative. Then the 1980s brought another period of the “anything goes” mentality, where instant gratification became more important than looking at consequences. The sexual revolution of the 1960s and ’70s was followed by the “financial revolution” of the 1980s and ’90s. Sexual relations without commitment; making purchases without money. Currently, at least one in four US teenage girls has a sexually transmitted disease, a US government study found. Among girls who admitted to ever having sex, the rate was 40 percent. That is about the same percentage of US homeowners already in foreclosure or soon facing losing their houses.

The US and the West have shifted wildly in the last 50 years in their perception of right and wrong, good and bad, sensible and irresponsible practices, perhaps especially when it comes to money.

The e-mail inbox contained a very nice letter from a woman who works for a major Philippine bank. She forwarded to me comments from someone at another bank that included the following thoughts worth repeating. “Our positive traits, i.e., hard work, high literacy and an amiable disposition, are driving the numbers and steering this economy forward. We are on to something, I truly believe. If we can only all become more aware of the progress we are making, it will empower us to do more, be more.” And this is simply beautiful: “Enough of the thinking that the Filipino is small and is, therefore, incapable of thinking and doing smart.”

Perhaps, like many, I have been thinking back to the days nearly 25 years ago of the Cory Aquino presidency. The inaugural speech of our new President Aquino was of the same style as his mother. He faces many of the same problems; among them, a looming power/electricity deficiency, a transportation infrastructure that needs expansion, and, of course, corruption.

The reason I quote the lady’s e-mail is that it could have also been written in 1988. But so quickly then, the Filipino lost or had stolen the belief in the possibility of greater success and achievement.

I realized something else. The basic and fundamental aspects of the Philippine economy have not changed much since Cory led the government. And I think that is what has kept this country resilient.

Today, as then, people still buy real estate to live in, not purchasing expecting prices to double and double again as in the West. The only two investment bubbles I can recall where prices skyrocketed and then collapsed were in 5-star golf club memberships and seats on the Philippine Stock Exchange. While Japan and the West had their stock-market and real-estate market bubbles explode, we have not have that happen here.

This economy also has an ability to price the exact same goods at huge price differentials, allowing market participation throughout the economic classes. A toy or article of clothing bought at a department store can be found for half the price in Divisoria or Baclaran. This economy provides a great range of choices in goods and pricing.

We can buy the latest iPod for P30,000 at the same mall store selling a perfectly good Nokia “buy one-take one” for P2,500. Three local stores deliver purified water in my area. The cheapest is P28; the most expensive is P40. That is a 30-percent price disparity for the same product. And, apparently, all three owners are making money since they have been in business, in competition, for years.

Basic commodities are available the same way. You can pay 20-percent higher or 20-percent less for a kilo of pork at the supermarket or at the wet market, sometimes located within walking distance of each other. And often, the supermarket is cheaper.

The government is building a P9-million farm-to-market road in Bukidnon. This road is expected to increase the area farmers’ incomes by 20 percent. That is only the cost of a Jollibee franchise or two. It’s nothing. But this is what can be done when there is a will and a belief that economic progress can be achieved.

Yet the exact same problems and the exact same opportunities for excellence exist today as 20 years ago. It is almost as if the economy hides a buried treasure waiting to be dug up if and when the Philippines and its people decide to pick up the shovel.

Maybe it is exactly like the lady said: “I truly believe. If we can only all become more aware of the progress we are making, it will empower us to do more, be more.”

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Gov’t hikes exports growth target to 22%

Manila Bulletin

The government has revised its export growth target to 22 percent, a slight upward revision from the original 20 percent goal this year following the revised growth target of the electronics sector to 25-30 percent from 20 percent.

Bureau of Export Trade Promotion (BETP) Director Senen Perlada told reporters the services sector is expected to grow 30 percent this year while export of goods is expected to grow 20 from 18 percent although the share of the services share will account for 16 percent only of the country’s total exports.

The growth in the services sector, Perlada said, is propelled by the continued growth of the Business Process Outsourcing (BPO) and the Knowledge Process Outsourcing (KPO) sectors.

“Now is the time to exports. There is no excuse because there is demand and huge goodwill from the international community following the holding of the successful automated elections,” Perlada said. He even said that the 25-30 percent revised growth target of the Semiconductor and Electronics Institute of the Philippines Inc. is a little bit conservative.

In the meantime, Perlada said the BETP is working closely with the Export Development Council (EDC) to prepare for the Philippine Export Development Plan (PEDP) 2011-2013.

“We intend to start this plan by September this year and be presented to the new President Noynoy Aquino,” he said.

The new PEDP would take into consideration all the factors and the situation. “What we have done already is the visioning and reviewed the mission that includes the competitiveness and innovations,” he said.

China firm $75-million wind energy project lifts investments in Subic to $185 million

Manila Bulletin

Chinese firm Sunnew Subic Investments Ltd. is investing $75 million for the construction of 50-megawatt wind energy projects in Subic Bay Freeport bringing Subic’s the total investments to $185.9 million, which is more than double the $92.18 million approved projects in the first half last year.

Subic Bay Metropolitan Authority (SBMA) administrator Armand C. Arreza said Sunnew-Subic has proposed to construct 25 wind turbines on a 50,000 square meter each in Mt. Sta. Rita and the Redondo Peninsula sites.

“Once completed, these wind turbines will make Subic the country's first economic zone to have a renewable energy facility,” Arreza said.

The project will produce about 50 megawatts of power by 2012, and will initially employ 103 workers.

The second biggest investment project was pledged by Filipino firm Subic Bay Town Center Inc., which committed a total of $36.42 million for the development of a commercial center.

Tied in at third place in terms of committed investments are Alubat Aviation Composites Phils., a German-United Kingdom joint venture in aviation repair and maintenance services, and Vapco International Corp., a joint Jordanian-Filipino venture, which both pledged $15 million.

“Considering that we’re still on the tail end of the global recession, it’s quite remarkable that Subic would be hitting more than $37 million per month in terms of new investments,” Arreza noted.

“Last year, our monthly investments average in the first half was only about $17 million due to the financial slowdown that affected trade in Subic,” he added.

According to Arreza, a total of 56 new projects were approved by the agency in the first half, compared to 51 in the same period last year.

Of the new projects, foreign direct investments totaled $114.58 million or an increase of 98.28 percent over the first half record of $57.78 million in 2009.

Local investments, meanwhile, reached a total of $71.29 million, a 140 percent increase over last year’s $29.67 million in the first half.

Arreza said that once operational, the new investment projects are expected to create some 6,725 new jobs.

Arreza also noted the growing participation of local companies in the economic development of the Subic Freeport, as the global recession somewhat curtailed the entry foreign investments.

He said that of the top 10 new investors in the first half this year, seven companies are fully Filipino-owned.

Rounding up the top 10 largest projects are: Sands of Triboa Resorts, a Filipino company with commitments of $14.37 million; Fertuna Holdings Corp., Filipino, $5.35 million; Holy Land Subic Foundation, Inc., Filipino, with $5.33 million; San Bernardo Shores Beach, Filipino, $2.21 million; Advance Subic Screw Inc., Taiwanese, $1.5 million; CW-Subic Bay Dev’t, Inc., Filipino, $1.49 million; and Chinmei Metal Mfg. Inc., Filipino, with $1.45 million.

Leaders reconciled

All’s well with Aquino, Corona
President Noy acknowledges Chief Justice

Manila Bulletin

In what could be the start of a good working relationship between the Executive and the Judiciary, President Aquino finally acknowledged on Wednesday Chief Justice Renato C. Corona during the “Red Mass” held at the Manila Cathedral.

During the prayer part of the mass, Aquino directly recognized Corona and addressed him as “Chief Justice Corona,” which is pretty much the opposite of what happened during his inaugural.

Aquino then did not acknowledge Corona, who heads a co-equal branch of government, and merely gave a general greeting to “members of the Supreme Court.”

After the mass officiated by Manila Archbishop Gaudencio Cardinal Rosales, Corona took the initiative to shake Aquino’s hands.

The President smiled as he shook hands with the Chief Justice.

Corona, in an interview with reporters, said he wanted to greet Aquino during the “peace be with you” portion of the mass but the President came an hour late and when he arrived, they were too far from each other.

But when the mass ended, Corona said he had the chance to talk to the President.

He also said that when the President passed near him after reading the “Prayer for the Nation’s Leaders,” they shook hands and told Aquino, “Mr. President, peace be unto you.”

When asked how the President responded, Corona said, “Tumawa lang sa akin and pressed my hand.”

Corona explained that he and Aquino just wanted the same thing, which is to do their jobs well and serve the people.

He said he has been praying for the President from the start and has forgiven the people who criticized or questioned his appointment.

“Pinagdadasal ko siya from Day One naman. Lahat nga ng bumatikos sa appointment ko napatawad ko na e. I think it’s time,” he said.

Aquino had been very vocal about his objection to the March 17 decision of the Supreme Court that allowed former President Gloria Macapagal Arroyo to appoint the successor to then Chief Justice Reynato S. Puno, who turned out to be Corona.

This was precisely the reason why Aquino picked Associate Justice Conchita Carpio-Morales, the lone dissenter in the controversial decision, to administer his oath.

Aquino said he and Carpio-Morales are of the same opinion that Arroyo’s designation of Corona as replacement for Puno, who retired last May 17, was in violation of the constitutional ban on midnight appointments.

But the High Court, voting 9-1 with three justices inhibiting and two others dismissing the case for being premature, ruled that appointments to the High Court are not covered by the ban.

The Red Mass for lawyers and justices was delayed for 30 minutes because church organizers tried to wait for the arrival of Aquino.

A source from the Archdiocese of Manila, however, stressed that the Chief Executive did not ask for them to wait for him.

“He said we should go ahead with the Mass,” said the source.

The President arrived at the Manila Cathedral in Intramuros, Manila at 10 a.m.

In his homily, Manila Archbishop Gaudencio Cardinal Rosales led the faithful in praying for the country’s leaders so they may be guided by the Holy Spirit.

“Today, we pray, with you and for you, that the Holy Spirit will, as He did for the apostles in the early days of the Church, continue to guide those who serve our people, taking advantage of no one,” he said.

“We continue to invoke that the manner of serving may never disaffect the people’s trust in transparent governance and the selfless politics of the public servants,” added Rosales.

Aquino, in his prayer for the nation’ leaders, sought the guidance and protection of the Lord in fulfilling their promise to lead the country with integrity and honor.

“We pray that the leaders representing co-equal branches of government — judges, justices, mayors, governors, congressmen and senators — will all strive for unity at the risk of sacrificing their personal ambition so that the people’s ambition to achieve a decent quality of life for every citizen becomes more real,” he said.

“May the greatest of all your commandments, of emulating your unconditional love for us through our love for our fellowmen, serve as a constant reminder of how we must choose to surpass the challenges that we face today, especially when confronted with choices to either love other’s or to love just ourselves,” added Aquino.

At least 22 other bishops concelebrated the Mass with Cardinal Rosales led by Catholic Bishops’ Conference of the Philippines (CBCP) president Tandag Bishop Nereo Odchimar. In attendance were Vice President Jejomar Binay, Corona and officials of the Commission on Elections led by its Chairman Jose Melo.

In the Catholic tradition, the Red Mass requests guidance from the Holy Spirit for all who seek justice, and offers the opportunity to reflect on what Catholics believe is the God-given power and responsibility of all in the legal profession.

It originated in Europe and derives its name from the red vestments traditionally worn in symbolism of the tongues of fire that descended on the Apostles at Pentecost.

Tuesday, 6 July 2010

Peza investments rise 59% to P61.3b

by Julito G. Rada
Manila Standard

Investments in the country’s economic zones grew 59 percent to P61.296 billion in the first six months of the year from P38.612 billion a year ago, reflecting economic recovery.

Peza director-general Lilia de Lima said in a report to Trade Secretary Gregory Domingo that P44.981 billion went into the expansion of existing projects while P16.315 billion were contributed by new companies in economic zones and IT parks.

Investments in expansion projects reached P24.521 billion on year while new ones reached P14.090 billion.

De Lima said the number of projects in the first half reached 246, with annual exports projected at $2.840 billion, up 92 percent from $1.482 billion on year.

Employment is projected to increase 5 percent to 44,127 from 41,977 on year.

Promotions and public relations manager Elmer San Pascual said Peza was sticking to its 15-percent growth investment target this year, 10 percent for exports and 10 percent for employment.

“We are sticking to it because there were goals [investments] which are yet to be realized. We are waiting for big investments which may possibly come in the second half of the year,” he said.

He said Peza was not likely to revise the P201-billion target set at the start of the year. “Surpassing P201 billion is very stiff and quite tough for us,” he said.

He expressed optimism that a number of investment pledges from investors in Japan and Taiwan would be realized in the second half of the year. “If those investments come in the second half, there is a possibility that the target of P201 billion would be realized,” he said.

De Lima earlier said meeting the investment target of P201 billion this year was possible following a good performance in 2009 when the agency surpassed its 10-percent growth target.

De Lima said investments in the electronics sector would help fuel the growth, noting last year’s performance.

San Pascual said a Taiwanese investor and a big Japanese company engaged in the manufacture of medical products were finalizing their investment sites in the Philippines.

He also said the medical tourism project of boxer Manny Pacquiao still needed a local government endorsement and an environment certificate before it is cleared by Malacañang.

What global economic crisis?

Written by John Mangun
Outside the Box
Business Mirror

The news that the Bangko Sentral ng Pilipinas (BSP) expects second-quarter economic growth to be better than the 7.35 percent experienced in the first quarter of 2010 is significant. The BSP, unlike economic departments of the government such as Finance or Neda, tends to be more conservative and realistic.

The article carried in the BusinessMirror attributed the outlook to increased consumer spending, which, according to BSP estimates, accounts for some 70 percent of gross domestic product. The conclusion was that this increase in spending was due to increasing overseas remittances and outsourcing industry income.

While it was nice to see outsourcing mentioned in the same sentence as remittances for a change, the depth of spending that would generate over 7-percent economic growth is much greater than simply inflow of foreign funds from whatever sources.

There will be those who discount government numbers and immediately talk about mass poverty, if the Philippines can come near a 7-percent growth, it is very significant. Granted that the numbers are based off a miserable economic performance in 2009, still, something is happening here in the Philippines.

Critical to the growth of an economy is investment. Without capital investment, jobs are not created and individual wealth cannot grow. Both the Philippine Economic Zone Authority (Peza) and the Board of Investments (BOI) saw investments jump in 2010. Peza-approved investments for the first half went up by 59 percent to P61.3 billion, and the BOI said its approvals jumped by 318 percent to P170 billion.

Even as the BSP tended to dismiss a little of the impact of these investments, saying that it was partly due to the need to rebuild from the natural disasters of 2009, companies do not spend unless they think they can profit from their expenditures.

Further, the consumer who ultimately is the financial beneficiary of all this investment is not hesitating at all to buy and increase personal spending.

Although a good portion of the rest of the world is in financial panic mode, here in the Philippines there is a confidence and optimism that is surprising, as if business and consumers understand that the Philippines is in an entirely different place. The general mood seems to be one of “What global economic crisis?”

Look at the exploding activity in the residential real-estate sector. Every major property developer, Ayala, Century, Robinsons, Megaworld, Shoemart, and the rest, is building thousands of new units across the Metro area. Multiple tens of billions of pesos are being put into these projects almost nonstop.

The old conventional wisdom that these are being sold just to foreigners and balikbayan does not hold any more. Overseas remittances cannot be the only driver behind the profitability of this real estate. This is housing for local buyers.

More important, this is sustainable economic activity with the positive results reaching far into the future. People do not just buy condos; they must also buy the furniture, appliances, and the rest to live in these condos. And next to these condos rise shopping centers, creating more employment and more wealth. The multiplier effect for a development that eventually holds several thousand residents is far-reaching, from local transportation like jeepneys and tricycles to the banks that provide the financing to buy the units.

In addition, the desire to invest is reaching deep into the structure of the economy. While the government cautions that the country faces the serious potential of a power deficiency, companies are turning to this sector also as a profitable venture. Phinma group is planning to put up a 270-megawatt (MW) coal-fired power plant in Batangas.

The range of investments is large. Metro Pacific Investments (MPI) has been systematically and aggressively buying hospitals all over the country. MPI sees P10 billion in annual revenues when it eventually secures 3,000 beds within five years. Currently MPI owns Riverside Medical Center in Bacolod, Makati Medical Center and Cardinal Santos Medical Center in Metro Manila, and Davao Doctors Hospital in Mindanao. MPI is also looking at smaller hospitals in the provinces.

The significance of this kind of an investment cannot be ignored. A company of MPI’s size and stature venturing into rural health care improves health-care delivery in those areas with, again, a great multiplier economic effect.

I particularly like this statement: “Nestlé Philippines Inc., Friday announced an initial investment of P4.3 billion over two years for a new factory in Tanauan, Batangas, to expand production capacities of coffee creamer and milk products to cope with a strong domestic market.” From the Nestlé CEO John Miller, “This is an investment in the future.” Notice the words “strong domestic market.”

While the exporters are worried about an appreciating peso, in truth, business looks good for that sector also. “Semiconductor and Electronics Industry of the Philippines Inc. chairman Arthur Young said in an interview with Philexport News and Features that the industry has scaled up its export projection for the whole year to a range between 25 percent and 30 percent.” And coconut oil replaced garments as the country’s second-largest export for the month of April with a 372-percent growth.

Those in the media and too many of those in the Philippine stock market still believe that the Philippines is some sort of branch office or subsidiary of the West. It is just not true anymore. The Philippine economy has matured to the point where it is beginning to stand on its own. Sure, remittances from all sources are still critical and vital. But with every quarter that passes, the country becomes more self-reliant and confident of that self-reliance.

There is a long way to go. Agriculture, power generation, less dependence on imported energy sources are all top priorities. But the Philippines is not the basket case of the 1990s anymore. And the more people that realize that and get on board with pushing and demanding government policies and personal behavior to achieve economic prosperity, the sooner that prosperity will become a reality.

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Bumps ahead to test gov’t

Analysts stress need to address fiscal situation

THE AQUINO ADMINISTRATION appears to have hit the ground running but fiscal headaches -- some of the new president’s making -- could test its resolve to move the country forward.

Fiscal consolidation and a correction of the downturn-induced slippage, analysts said in two reports, are necessary if President Benigno C. Aquino III is to avoid disappointing both his voters and investors.

This would require more than just administrative improvements, economists Margarita D. Gonzales and Romeo L. Bernardo of research firm GlobalSource Partners said in a July 3 report titled "A Good Start."

They noted that while Mr. Aquino had put together a "commendable" economic team, he had also hampered fiscal managers by populist promises such as not adopting new taxes.

"Although there are well-known low-lying fruit including the eradication of wholesale oil smuggling, estimated revenue gains from this exercise would hardly be enough to bring back the country’s tax effort ratio to around 15%, which is the new government’s announced goal," they said.

The ratio was at 13.1% last year.

Tax administration improvements, the economists claimed, added just 0.6% and 0.5% to gross domestic product (GDP), respectively, during the terms of Mr. Aquino’s mother, the late Corazon C. Aquino, and her successor, Fidel V. Ramos.

Global experience, meanwhile, has shown that achieving a revenue collection improvement equal to of 1% of GDP "would already be a feat."

The economists also noted that Mr. Aquino’s campaign slogan of "Kung walang corrupt, walang mahirap (without corruption, nobody will be poor)" had created expectations that would be difficult to meet.

Poverty eradication, they said, requires "broader solutions encompassing a complete set of reforms". Failure to deliver on inaugural speech promises of emergency employment, better education, universal health insurance and housing -- which means added spending -- could set the president up for "quick disappointment of his voters."

Mr. Aquino, they said, should make use of his current political capital -- he won over 40% of the vote in the May 10 elections -- to push reforms as he has "little time to waste, especially as financial market sentiment is becoming less forgiving of growing fiscal deficits and debt ratios with the world eventually exiting recession and reversing from a fiscal stimulus mode."

GlobalSource highlighted two measures -- excise tax adjustments and the rationalization of fiscal incentives -- as among those needed, adding that hopefully it would take "not that long" for economic managers to prod Mr. Aquino.

"We are confident though that the new government will live within its means in the meantime, as fiscal authorities will likely ensure that spending will be controlled," the economists said.

But they warned that the 2010 deficit could top P300 billion, rising to as high as 3.8% of GDP and exceeding the 3.6% target, given uncertain privatization prospects and the P145.2-billion first half cap having been substantially overshot by P17 billion in May.

GlobalSource also said that the central bank was expected to "stall exit plans" as inflation remained moderate. The report noted monetary authorities’ expectations that remittances would "normalize" to 5-6% growth in the near future, among other external indicators, and said analysts saw the domestic stock market remaining bullish and could "still approach highs reached in 2007."

"This confidence, especially of local investors, is bolstered by studies showing how equities typically jump 12 months after an election, with this coming year unlikely to be an exception in view of the smooth turnover of leadership and the new president’s strong mandate," Global Source said.

Meanwhile, in a research note dated June 29, the Institute of International Finance (IIF) said the Aquino administration’ "first order of business would be to correct the fiscal slippage."

But the IIF -- a global association of financial institutions -- said the government should be able to do so before investors lose their confidence, noting state debt of less than 60% of GDP and an economy that has recovered from last year’s downturn.

"Fiscal adjustment will complement President Aquino’s anti-corruption campaign, so his first budget due out in the third quarter should reveal much about the new government’s intentions," it said in the report, titled "Philippines: New President’s Fiscal Policy Headache."

It noted that the global crisis had interrupted the previous government’s gains in controlling the deficit which, excluding privatization proceeds, was kept below 2% of GDP between 2006 and 2008. Crisis-induced revenue weakness and pump-priming expenditures pushed this to 3.9% last year and even higher to 6.9% as of the first quarter of 2010.

The revenue picture, however, has since improved, the IIF said, as it cited gains by the tax and customs bureaus, among others.

Limited market reaction has supported the tack that had been adopted, it said, adding that large reserves -- at a record $41 billion in May -- and a balance of payments surplus "help assuage near-term market concerns."

The economy, the IIF said, could rebound to 6.2% growth this year from 2009’s 1.1%, moderating to 5.2% in 2011.

"All this suggests that President Aquino is likely to take the window of opportunity provided by favorable economic trends and market support to correct the fiscal slippage and set a positive tone for his administration," it said.

63rd Philippine Airforce Anniversary sitners and full speech

Monday, 5 July 2010

Don’t pooh-pooh growth

Manila Bulletin

It is fashionable among critics and skeptics to pooh-pooh the growth of 7.3% in GDP attained during the first quarter of 2010. The usual line is that the high growth is not accompanied by poverty reduction and increase in employment. Too many people are still living in dehumanizing poverty. Too many workers are unemployed or underemployed. These criticisms are useful to the extent that they remind us that the end all of human development is development for each and every person and of the whole person.

It would be tragic, however, if the new Administration is not going to try its best to attain a GDP growth of 7 percent or more annually during the next six years. Economic growth is not a sufficient condition for eradicating poverty. But it is a necessary condition. Countries in Asia that have succeeded in eradicating or at least diminishing poverty in the last 30 years have done so because they have attained growth of 7 percent or more for 10, 20 or more consecutive years. The notable case is China that has liberated 300 or more million of its citizens from abject poverty because its leaders have known how to make the Chinese economy grow at an average of 9 to 10% for two decades. At a less dramatic rate, India and Vietnam are doing the same thing. Soon Indonesia will follow. These emerging markets are following the example set by Singapore, Taiwan, Hong Kong and South Korea in the last century when their economies also grew at rates of 9 to 11 percent annually for two decades.

Economic growth provides an economy with the necessary resources to spend on education, health, housing and the infrastructures that address directly the needs of the poor. In the last 30 years, the Philippines has not attained the necessary growth rate to make a significant impact on mass poverty.

This is very well stated in a most comprehensive report on Poverty in the Philippines published by the Asian Development last year. Written by Filipino economist Dr. Fernando Aldaba, the well documented report contrasts the Philippine experience with those of its peers in the Asia Pacific region: "Poverty and inequality have been recurrent challenges in the Philippines and have again come to the fore in the wake of the current global financial crisis and rising food, fuel, and commodity prices experienced in 2008. The proportions of households living below the official poverty line has declined very slowly and unevenly in the past four decades, and poverty reduction has been much slower than in neighboring countries such as the People's Republic of China (PRC), Indonesia, Thailand and Vietnam. The growth of the economy has been characterized by boom and bust cycles and current episodes of moderate economic expansion have had limited impact on poverty reduction."

I am sure President Noynoy Aquino is fully aware of the fact that the target year of the United Nations Millennium Development Goal (MDG) is 2015, the year before his last as President of the Philippines. His economic advisers must have informed him of the accomplishments so far of MDG goals. As reported in the ADB Report, the following gains have been made under the last Administration: (1) decrease in the proportion of people living in extreme poverty; (2) visible improvements in household and population poverty indicators; (3) maintenance of net enrollment rates by sex at both elementary and primary education levels; (4) reduction in infant deaths per 1,000 live births; (5) prevalence of HIV\AIDS below the national target of 1% of the population; (6) improvements in environmental protection; and (7) active participation in the World Trade Organization.

I have made no secret about my strong disagreement with the United Nations, the Asian Development Bank and other international agencies that have a fixation on population control. As I have written countless of times in these columns, there are enough natural forces that have reduced the fertility rate from a high of 6 babies per fertile woman in the 1970s to 3.1 today. In the next 20 years, the decline will continue so that within another generation, the Philippines will reach the replacement rate of 2.1 babies per fertile woman through increased education of women, especially in the poor regions of Mindanao; increased urbanization; later marriages; and the practice of responsible parenthood by the lower-income families facing extreme poverty, with the help of NGOs and business enterprises. I suggest that the next Administration focus completely on maternal health and forget the very controversial reproductive health programs. I find it more reasonable that mothers should be helped to deliver safely rather than to stop them from being mothers in the first place.

I disagree with one of the conclusions of the ADB report, i.e. that high levels of population growth are direct causes of poverty. As my colleague at the University of Asia and the Pacific, Dr. Roberto de Vera, has pointed out in his research on Philippine demography, large families are poor not because they are large. What distinguishes a large family that is well-to-do from one that is poor is the level of education of the head of the family. This conclusion of Dr. de Vera once again highlights the importance of spending a larger portion of the government budget on education. Where will the government get the funds to spend more on education? From the relentless fight against corruption promised by President Aquino during the campaign. Close to P400 billion can be made available annually for government spending if tax evasion of P200 billion and another P200 billion from misappropriation of public funds are prevented.

To summarize, the fight against poverty will require attaining economic growth of 7 percent or more for the next two decades, starting the next six years under President Noynoy Aquino. To attain this growth rate, the government must continue to invest in critical infrastructures, especially in the countryside.

There must also be an all-out effort to promote private investments in such high-growth sectors as energy, infrastructures, tourism, agribusiness, business process outsourcing, education, health care and medical tourism, and logistics. The role of foreign direct investments will be critical here, as has been shown by the experiences of China, Vietnam and Indonesia. All unreasonable restrictions against FDIs must be removed in the first year of the Aquino II Administration. For comments, my email address is

Sunday, 4 July 2010

What ex-presidents do

For the latest Philippine news stories and videos, visit GMANews.TV

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President Aquino's speech during AFP change of command


Ito ang unang pagkakataon kong makasama kayo bilang inyong Pangulo at inyong commander-in-chief. Ngunit noong Miyerkules, natanggap ko na ang inyong unang parangal: hindi lang ako, kundi ang buong sambayanan ay nagalak sa propesyonalismo, disiplina, at kurtesiyang inialay ninyo hindi lang sa akin, kundi sa buong bansa.

I commend all of you: officers and men and women of our Armed Forces, for the dedication to duty you displayed during the last elections. Kayo ang tagapagtanggol ng ating estado: ito ay nakasaad sa ating Saligang Batas. Karapat-dapat lamang na ang unang pahayag ko sa inyo bilang inyong Pangulo ay ang pagpapaabot ng pasasalamat ng sambayanang Pilipino sa pagganap ninyo ng inyong mga tungkulin sa nakaraang kampanya at halalan: wala kayong kinilingan kundi ang mamamayang Pilipino. Wala kayong piniling panig kundi ang pagpapalakas lamang ng ating demoksraya.

Sa araw na ito, nais ko kayong kausapin nang tapat at nang walang paliguy-ligoy. Marami tayong haharapin na pagsubok. Alam ko na pinakinggan niyo ang aking Inaugural Address at alam na ninyo na malapit kayo sa aking isipan. Makakaasa kayo na ang inyong mga pangangailangan ay tututukan ng aking administrasyon.

Katulad ng sinabi ko noong Miyerkules, nagsisimula ang wastong pamumuno sa pagpili ng mga wastong pinuno. Our Constitution explicitly provides for civilian authority over the military. That is why your commander-in-chief is a civilian, and his alter ego for the Department of Defense is one, too. This is why the Secretary of National Defense, while a distinguished veteran officer, has spent ample time in civilian life. This is also why your senior officers must undergo confirmation by the Commission on Appointments of Congress.

Within the Armed Forces, there is a structure that places a general officer at the head of the officer corps together with your major service commanders. This is why we have a chief of staff who is appointed by the commander-in-chief.

Noong Hunyo 29, aking ipinakilala si retired Lt. Gen. Voltaire Gazmin bilang aking Secretary of National Defense, at si Lt. Gen. Ricardo David bilang susunod na AFP chief of staff. Nandito tayo ngayon upang saksihan ang assumption of command ni General David, at upang ipaabot ko sa kaniya, at sa inyo, ang mga magiging patakaran ng ating pamahalaan.

I expect of you professionalism, integrity, discipline, valor, and hard work. You can expect the same of me.

Ang inyong propesyonalismo – ang pagsusunod sa mga utos na legal, sa wastong paraan ng walang pasubali - ay posible lamang kung nagsisimula ang propesyonalismong ito sa mga hanay ng inyong Pangulo at mga heneral. Wala akong duda na nais ng ating officer corps na panatilihin ang kanilang integridad. Makakasiguro kayong lahat na ang inyong Pangulo at ang ating Kalihim Gazmin ay hindi gagamitin ang sistema ng pagpili at pagpromote upang pairalin ang pansariling interes.

Ang iba sa ating mga officers na kamakailan lamang ay hindi nakaabot sa deadline ng Commission ng Appointments, ay makakasiguro na ang kanilang mga promotion ay isusumiteng muli sa simula ng sesyon ng Kongreso. Katulad ng sinabi ko noong Pangulong-halal na ako, sisiguraduhin lang natin na basta’t dumaan sa wastong proseso ang mga promosyong ito, ipapadala natin ang mga ito sa lehislatura.

Ngunit kahit nakatanggap na ang inyong mga koronel at heneral ng karapat-dapat na promosyon, kung ang ating mga kawal ay kulang sa kagamitan, benepisyo at tirahan, wala sa atin ang makakagawa ng ating mga tungkulin.

Alam nating lahat na kakambal ng isang masiglang ekonomiya ang kapayapaan at seguridad. Without stability we cannot expect people to invest in our county. Achieving and maintaining stability is your obligation. Ngunit, naiintindihan ko na mahirap itong makamit hangga’t hindi sapat sa kagamitan at kaalaman ng ating hukbong sandatahan. Hangga’t hindi natutugunan ang mga pangangailan ng bawat sundalo, paano matutugunan ng bawat sundalo ang pangangailangan ng sambayanan?

Tell us what you need and we will give it to you, as long as they are based on principles of professionalism and utilitarianism; as long as they will benefit the whole institution and not only the interests of a few. If we use and allocate our resources efficiently, we will not only be able to improve the well-being of our armed forces but also that of our citizenry. With a livelier and more responsive economy, we will be able to further address your needs.

Kaya inatasan ko si Secretary Gazmin na siguraduhin na ang modernisasyon ng ating hukbong sandatahan ay hindi lamang maitutuloy, kundi higit na magiging instrumento pa para sa pagpapatibay at pagpapalakas ng inyong pagmamahal at pagsisilbi sa sambayanan. Kasama na dito ang pagpapalawak ng inyong hanay, dahil habang dumoble na ang ating populasyon, nanatili pa rin ang inyong bilang. Sibilyan man o militar, hindi kailangang puro pagtitiis ang tadhana ng Pilipino. Uulitin ko ang sinabi ko sa bayan at sa mundo: hindi tama na ang nagmamalasakit ay kinakawawa.

Therefore, the things I expect of you, and which you can expect of your commander-in-chief, are things necessary to undertake the modernization of our armed forces. If all of us follow the rules, and insist on professionalism, integrity is enhanced. If we undertake our tasks with discipline, we can confront all challenges with the valor the history of our country has proven we all have. If we all work hard, we can find creative solutions to our problems, assured of strategic harmony within the armed forces, and between the civilians and the military.

I say strategic harmony because we must confront the reality that over the past years, strategy took a back seat to tactical considerations. I believe that the military functions best when the civilian and military leadership all share a clear understanding of the national security, and have crafted a clear plan which in turn can properly inform tactical decisions.

Ang ating bagong chief of staff ay nagpatunay na ang mga konsiderasyong ito ay maisusulong niya anuman ang pagsubok na haharapin.

We will need the experience, the expertise, and known probity of General Ricardo David, who shares my view that our national security objectives should be a multi-stakeholder effort focused on protecting our rights and civil liberties. He brings with him years of experience as NOLCOM commander which, I am confident, will likewise benefit the rest of the nation, not just Luzon.

In General David, I expect not only decisive leadership, but an innovative spirit that would drive reform in the Armed Forces, as well as the effective and efficient realization of the national defense and security thrusts that I have just outlined. I ask everyone to support your new chief of staff, to follow the chain of command and to look forward to proud and glorious days ahead.

As our country suffered, so have our soldiers, and the situation could only worsen unless priorities are met. Simple problems and deficiencies have compounded over the years due to corruption, which our administration has vowed to stop. I expect the entire Armed Forces of the Philippines to be the vanguard of the government’s quest to reform itself, to clean up its own backyard to serve as the model and inspiration for other government agencies.

With your long tradition of sustaining the high military ideals of honor and discipline, sacrifice and dedication to serve the people and country, I am certain that the Armed Forces will once again take the lead in delivering our country and our people lasting peace and stability, development and social progress.

Men and women of the armed forces: to adopt the words of Winston Churchill, I will give you the tools to do your job. I will hold all of you to the highest standards not because I doubt you, but precisely because I have the fullest confidence in all of you. You have done well and will do even better; I will be fair, just, and supportive. I expect you to be the same. Our people expect no less of all of us, and I know that you will further consecrate yourselves to defending our democracy, and that you will fight for our Republic, for the liberty and prosperity of our people.

Sa ating kasundaluhan, kasama ninyo ako sa adhikaing magkaroon ng repormang makabuluhan, makatao, maka-diyos at maka-bayan. Maraming salamat po sa inyong lahat! Mabuhay ang Hukbong Sandatahan ng Sambayanang Pilipino!

Foreign currency deposits hit $24b

by Roderick T. dela Cruz
Manila Standard

Bank deposits denominated in the US dollar and other foreign currencies hit a record level of $24.062 billion as of the first quarter of 2010, Bangko Sentral reported Friday.

The figure was up 13.7 percent from just $21.168 billion year-on-year and 6.4 percent higher from $22.617 billion in the fourth quarter of 2009.

About 98 percent of the deposits came from Filipino depositors, and the balance from non-residents, Bangko Sentral said.

Outstanding loans granted by foreign currency deposit units of banks, however, fell 6 percent year-on-year and 2.3 percent quarter-on-quarter as of end-March, as many companies and individuals decided to repay their short-term loans, instead of obtaining new ones.

With the contraction in FCDU loans and expansion in deposits, the overall loans-to-deposits ratio declined to 19.8 percent in the first quarter from 21.5 percent in the fourth quarter.

Bangko Sentral said the outstanding loans granted by FCDUs of banks fell $115 million to $4.8 billion as of end-March from $4.9 billion in December.

It attributed the decline to higher loan repayments, which in effect reduced “the potential risk to FCDU borrowers posed by adverse foreign exchange movements.”

An FCDU is a unit of a local bank or a branch of a foreign bank granted with a license by Bangko Sentral to receive foreign currency-denominated deposits or extend foreign currency loans.

Foreign currency loans dipped $311 million or 6 percent from $5.1-billion level in March 2009 as a result of the transfer of certain FCDU loans to an offshore branch of a foreign bank that had the effect of reducing the FCDU loan portfolio.

Outstanding loans with medium and long-term maturities that are payable over a term of more than one year accounted for 64 percent of total foreign currency loans.

Strong RP civil society the envy of Singapore

By DJ Yap
Philippine Daily Inquirer

SINGAPORE—If there was something ultra-rich Singapore could learn from the still-developing Philippines, it would be how to have a more engaged civil society, a Singapore official here said.

Lionel Yeo, chief executive officer and dean of Singapore’s Civil Service College, praised the Philippines for having such a strong civil society that had taken on some roles traditionally assumed by government.

“When I visited Manila a few years ago, I was struck by the strength of its civil society,” Yeo said in response to a question about the ideal division of roles between government and private sector to ensure the sustainable future of cities.

On the sidelines of the World Cities Summit at Suntec City here held from June 28-July 1, Yeo spoke before reporters from several Asian countries, including the Philippines.

Social infrastructure

In some governments like Singapore, he said the residents expected the government to take a leadership role in providing what he called “social infrastructure,” which included housing, education and health.

In Singapore, Yeo said all residents enjoyed free basic education and heavily subsidized housing and health care.

But the context is different in other countries, like the Philippines, where the civil society has taken a much more participatory role in such social infrastructure programs.

He cited the “massive programs” of Gawad Kalinga, a nongovernmental organization which constructs low-cost houses for indigent families around the country.

“Personally, I would like to see Singapore have the same kind of active civil society,” Yeo said.

Sharing experiences

The official said the summit sought to be a platform in which local government officials and ministers could share each others’ experiences and best practices in urban management.

The goal, he said, was to replicate some of these practices in other countries, while considering their different histories and contexts.

Yeo admitted that no two cities are the same; thus what worked for one would not necessarily work in another, although by adapting these practices with the city’s profile, they could still be of great help.

The event drew several hundred local executives, academics and policy-makers who came to share and discuss practical and sustainable strategies to respond to the challenges faced by an increasingly urbanized world.