Category: economy

con-ass economics

promise ni nograles, reported by manila standard today june 8, charter change will be limited to economic provisions:

LAWMAKERS who will convene as a constituent assembly will be limited to easing the economic provisions of the Constitution to provide investors with the stability they need for their investment and allow them to own land, House Speaker Prospero Nograles said yesterday.

Under the recently-approved House Resolution 1109, the assembly “will tackle only the two economic provisions of the Constitution on foreign land ownership,” Nograles said.

…By focusing on economic provisions, the assembly would assure foreign investors that they could stay here for the long term since they could own the land where their factories and buildings were located, Nograles said.

…Nograles also criticized National Economic Development Authority director general Ralph Recto for warning that Charter change would cause more shocks to the economy.

“If Neda thinks that this could cause more shocks to the economy, it is also therefore correct that the reason why our economy has been suffering from shocks, since most of us can remember, is because of this Cha-cha issue,” he said.

on the same day, former neda director-general cielito habito, in his business column in the inquirer, blasted the house of representatives for sinking so low:

Lame excuse for Con-ass
By Cielito Habito

THE BRAZENNESS with which the majority in the Lower House rammed the now-infamous House Resolution No. 1109 through is yet another instance of naked exercise of political brute force that properly earns them that monicker many of them despise–claiming “larger” to be more apt than “lower.”

… Indeed, many believe that this current Lower House has sunk the Philippine legislature to its lowest point ever in our nation’s political history.

Economic provisions

Proponents of the resolution would have us believe that it has become so urgent to amend the 1987 Constitution that we now have to resort to the fast-track method available to effect Charter change (“Cha-cha”).

And this fast-track way is to convene the legislature into a constituent assembly (“Con-Ass”) to act on proposed amendments. The purported rationale–which as the last and relatively brief “whereas” clause in the resolution, comes across more as an afterthought–is that the economic provisions of the current charter need urgent revision.

To quote: “Whereas, there is a specific proposal that for the Philippines to be internationally competitive in attracting foreign investments and technology transfers that the economic provisions of the Constitution is proposed to be amended in an appropriate manner …”

The economic provisions being alluded to are those in Article XII on National Economy and Patrimony limiting foreign ownership in certain reserved economic activities to 40 percent.

Could easing up on these provisions really save our economy from recession at this time?

No urgency

There are two questions involved here: First, do we really need these amendments now? Second, do we even need these amendments at all?

The first is easier to set aside. The second is open to debate, and has indeed been debated for some time now.

Let’s tackle them one by one.

Are these legislators telling us that opening our economy even wider to foreign ownership cannot afford to wait until after the 2010 elections? Can foreign direct investments really lift our economy out of the current downturn?

Well, I have news for them (as if they didn’t know!). The UN Conference on Trade and Development (Unctad) reports that flows of foreign direct investments (FDI) fell globally by 21 percent in 2008, and will likely fall even deeper in 2009.

For developed countries, the source of the global downturn, the decline is even steeper at 33 percent. Note that much of what is reported as FDI are in the form of mergers and acquisitions, where existing enterprises merely change hands; thus, no newproduction and employment necessarily result.

Greenfield investments, or those that start new production activities, are projected to fall even more steeply.

Will an urgent Constitutional amendment to permit full foreign ownership in the very few remaining restricted economic activities be the key to rejuvenating our economy at this time, then? (I could almost hear someone say … “Hello?!”)

Wide enough

This brings us to the second, more debatable question. Is a constitutional amendment to eliminate all restrictions on foreign ownership even desirable or necessary at all?

Consider the following:

First, investment in this country had been opened substantially to foreign participation as far back as 18 years ago, with the Aquino administration’s Foreign Investments Act of 1991.

That law turned around our foreign investment policy from a “positive list” mode-where foreign participation was only allowed in a limited list of investment areas-to a “negative list” approach.

Here, all activities were opened to foreign investment except those in a short list of strategic enterprises limited to Filipinos by the Constitution (e.g., public utilities, exploitation of natural resources).

This opening up led to the surge in foreign investments that the country reaped in the 1990s.

Second, even within the few remaining restrictions in law, the government has found creative ways to open the way for foreign participation, such as through coproduction, joint venture, or production-sharing agreements, or in the case of mining, through the controversial Financial and Technical Assistance Agreement (FTAA) mechanism, which virtually opens mining to 100 percent foreign-owned companies.

Some may disagree, but the door for foreign investors is wide enough.

Other things are keeping them away.

But why even bother debating this now? We’ve known all along that the economic provisions are only being used by the Palace sycophants as a smokescreen.

Clearly, the real agenda is to shift to a parliamentary system (forget about the “covenant” in the “whereas” clauses promising no term extensions; this all becomes inapplicable if the whole structure changes), thereby paving the way for perpetuating those now in power.

You think the Lower House has brought the country low enough? Think again.

marck, edel, benignO

over @ the collective filipino voices, young blogger marck ronald rimorin laments:

When are people going to write for the poor, the downtrodden, the laid-off, the fired, the underpaid, the hungry, the sick, the ill… those people who are as sickened about everything as we are, yet don’t have the benefit of blogs or computers to do what they can of it, no matter how small?

radical u.p. intellectual edel garcellano, “sir” edel to many generations of comparative lit students, has this comment on bloggers post-bambi that might explain why it aint gonna happen, marck.

The ANC journalists find blogging the most competitive for mainstream media. Now anyone can infiltrate the public sphere when once in the pre-cyber years only the favored & the ideologically acceptable icons could smugly perorate.

Bloggers of varied IQ & credentials can deliver their daily spiel in cyberspace. Let a hundred flowers bloom? There are, of course, the attendant risks of libel & other judicial threats in a feudal environment, but the current scenario simply exemplifies that the huge energy of counter-discourse is being tapped to mount an offensive against the canonical satraps of state apparati.

This is what the valley golf brawl has uncovered: the rise of cyber critics, who responsible or not, middling or talented, tilt the balance in favor of the unarticulated response, the publicly repressed, the individually marginalized. The personal-& the quotidian, the everyday-has assumed the political: & militarist mentors are hard put to clamp the irreverent folks in jail, much less stem the textual avalanche. In the techno-terrain, words transform, mutilate.

Of course, bloggers must necessarily be middle-class, professional. No informal settlers would figure in the equation, even if OFWs infest their fold. The discourse therefore is basically extension/amplification of capitalist production, some internal resistance that however falls within the ambit of reformist negotiation. The very idea therefore of a radical dialogue isfar-fetched.

It might even cultivate the impression that freedomflourishes in a fascist state. For which a Maoist revolution is old hat, impractical, naïve, discredited.

yes, the discourse is reformist rather than radical.  most if not all bloggers are middle-class and the middle-class is, at best, reformist — we want changes, an end to corruption (which we think will solve poverty) but nothing too drastic, nothing that would rock the boat or upset the status quo.  in contrast, “radical” is associated (and outlawed) with the communist left and means drastic deep-seated changes in the way wealth and resources are distributed and how we do business with each other as a people.  the kind of discourse that threatens and shakes the status quo, indeed the kind of discourse (in filipino) that can be found elsewhere in the blogosphere, but not in sosyal fv.

HOWEVER, fv is not entirely without substance.  i hate to disagree with practically everyone who has ever dissed and continues to diss marck’s co-blogger benignO.  i’ve just been to his blog getrealphilippines — i visited once long ago to check out his ebook but was turned off, i don’t remember why now, senior moment ;) — the book’s gone, in its place a brief analysis of and solutions to the poverty and backwardness of the filipino that is the best stuff i’ve read so far on the subject from a filipino (okay, filipino-australian), who is obviously influenced by third wave thinkers and informed by the filipino experience, and whose context of solutions is actually another way of redistributing the wealth and doing business with each other as a people.  his current post substance matters in an economic crisis is also worth cross-posting @fv.

Decades of dependence on foreign employment (and a lack of appreciation of its social costs), sustained prostitution of the economy at the altar of the gods of “foreign direct investment”, and a consumer market opened to a flood of non-durable imports has rendered Philippine society one that utterly lacks substance — one that could now be providing a safety net for workers once hailed as “heroes” of the Republic now returning to become its burden.

it’s a pity that rather than flesh out, test, develop further his ideas @  fv — the perfect venue, i’d say — mostly benigno heckles and baits and asks hard questions, the latest of which is:  what does “the filipino” stand for?

Even as we struggle with the low bar of defining an identity, the aim for a stand – the higher bar – I realise seems a virtual impossibility for a people such as ours based on what I’ve seen so far.

What does the “Filipino” stand for?

The question remains unanswered; not that it ever will be convincingly.

Then again isn’t conquest of perceived impossibility the very essence of achievement? Maybe not so if you are a Filipino. And that kind of regard for achievement is probably what defines us.

what does “the filipino” stand for?  right now “the filipino” (collective, as opposed to the individual) does not stand for anything, much like fv, which does not stand for any one thing that the group as a whole can agree on — if there is, it has yet to be articulated.  in the case of the nation, the possibility of standing for something, the capacity to stand for something, has yet to be grasped, thanks to mainstream media that continue to fail the people.

economic experts urge: fix rate @ 55php to 1$

now that we know for sure, thanks to the world bank and senator miriam defensor santiago, that corruption is alive and doing very well under gloria macapagal arroyo, lalong nakakatakot at nakakailang all the talk about stimulus funds, a whopping php330 billion, to be spent on infrastructure in aid of generating jobs, raising consumption, and weathering the global recession.  u.p. economics professor, once budget secretary, benjamin diokno is right:

“Big projects take time to implement and a big chunk of the funds are usually lost to corruption,” he told reporters at the sidelines of the Export Development Council forum on Thursday at the Hotel Sofitel.

What the country needs during these difficult times, he said, are easily implementable and quickly felt initiatives.

more than ever, professor diokno’s recommendation that the exchange rate be fixed at 55php to 1$ seems infinitely more sound, if the idea is truly to pump-prime the economy before things get worse.  writes filomeno s. sta. ana of action for economic reforms:

Benjamin Diokno’s proposal to peg the exchange rate at PhP 55 to a US dollar is gaining a broader constituency.The exchange-rate debate is no longer an esoteric one, confined to finance executives, exporters, and academic economists.

Those engaged in the manufacture of import substitutes now recognize that a competitive exchange rate can be a better alternative to tariffs to protect domestic industry and jobs. The tourism industry also sees the importance of the exchange rate, aside from its freedom-to-fly advocacy, for the country to draw in bigger numbers of inbound tourists.The BPO (business processing and outsourcing) industry has seen how a rapidly appreciating peso (in 2007) can sharply cut profit margins. Note that some of the Philippine corporate giants—the Henry Sy family and the Ayalas, for example—have stakes in the tourism or BPO industry.


The largest constituency that has added its voice for a competitive exchange rate is made up of the overseas Filipino workers (OFWs).They are highly organized and politically articulate.… Specifically, undervaluing the peso by fixing the exchange rate at PhP 55.00 to US$ 1.00 from the current PhP 47.00 to US$ 1.00 is a pump-priming tool to boost consumption.Thus, for every US dollar that an overseas Pinoy sends home to her family, the latter obtains an additional PhP8.00.In a manner, that’s a windfall gain of 17 percent based on the present exchange rate.In the aggregate, assuming that the US$15 billion in OFW remittances in 2008 will hold, we can expect an additional PhP 120 billion in the pockets of OFW families in 2009.

meanwhile, instead of spending the 330 billion bucks on the usual infrastructure projects in urban areas most of that stimulus fund could be spent on farm-to-market roads and irrigation systems that would pump-prime the agricultural sector so we can produce our own rice, among other crops, instead of relying on imports.

but of course we’re going to hear objections from the globalists, not least of them the gma camp.  says men sta. ana:

A criticism that the Diokno proposal cannot evade is that a currency undervaluation is improper at a time of a global economic crisis.The deep recession that has hit the advanced economies requires global collective action.Beggar-thy-neighbor practices such as devaluing the currency will undermine the recovery of hard-hit countries that suffer from current account deficits and overvalued currencies.

but really it’s about time we started thinking of ourselves first, what’s best for us, which is what other nations are doing, worrying about themselves first.  sabi nga ni senador manny villar:

“We have to think on our own and come out with an economic model that is suited to the Philippines,” he said.

“It is no longer automatic that what is good for others is good for us. We have the intellectual capacity to decide on the model that we should follow and not depend on other countries,” Villar said.

He said the country has a large pool of economists, both in the government and the private sector, who could be tapped to formulate an economic model for the Philippines.

Villar explained the economic models used by western governments and international organizations have turned out to be ineffective in preventing the housing credit problem in the United States from developing into a global crisis.

“The global financial crisis has crunched or destroyed some conventional economic thinking, particularly the Washington consensus. When we finally get out of this crisis we will find that things will never be the same again,” the senator said.

“First, we have been led to believe that big is good, so we encourage consolidations, mergers, combinations, like in the banking system,” he said. “However, the collapse or near-collapse of the world’s biggest banks – UBS, Citigroup, Bank of America and, of course, Lehman – has shattered this once-held gospel truth,” he pointed out. “Big is not necessarily good because being too big also means being unwieldy,” Villar added.

He also said the crisis has shattered belief that less government intervention is better.

“In reality, we know now that the damage wrought on the global economy would have been far greater if governments did not intervene,” he noted.

a new economic model, one appropriate to our strengths and cognizant of our weaknesses, is exactly what we need to turn things around, and not a copy-cat model based on whatever obama manages to work out with europe, russia, and china.

finally, wise words from a presidentiable.  of course he has yet to comment on diokno’s proposal of a 55-to-1 exchange rate.  if he says yes, he  just might get my vote.