Economy, SONA 2022

SONA 2022: Marcos Jr. to keep neoliberal policy track

Image from Rappler

In his first State of the Nation Address (SONA), President Ferdinand Marcos Jr. left no doubt that his regime would continue the path toward neoliberalism. The general direction for the economy that Marcos Jr. outlined will lead to more liberalization and privatization at the expense of genuine national development, Filipino industries, and local jobs and livelihoods.

He opened his SONA with this pronouncement on the macroeconomic blueprint that his administration will pursue: Our country must become an investment destination, capitalizing on the Corporate Recovery and Tax Incentives for Enterprises or the CREATE Law and the economic liberalization laws such as the Public Service Act and the Foreign Investments Act.” 

Marcos Jr.’s priority is to ensure that the neoliberal policies that his predecessor Pres. Rodrigo Duterte passed are maximized to create the most favorable environment for big businesses, including foreign capital. To become an investment destination, the administration will provide massive tax breaks to corporations through the CREATE Law and provide foreign companies more profit-making opportunities with the amended laws on public services and foreign investments.

According to the research group IBON Foundation, the CREATE Law would provide around ₱372 billion in additional profits for corporations from 2021 to 2023, an amount that also represents revenue losses for the government. 

The Public Service Act or Republic Act (RA) 11659, which Duterte signed into law just six weeks before the national elections, paves the way for 100% foreign ownership in telecommunications, railways, expressways, airports, and shipping industries. 

These policies tie up to the infrastructure development program of the Marcos Jr. regime, which will be pursued through public-private partnership (PPP) or privatization. As he declared in his SONA, he will keep the momentum of Duterte’s “Build, Build, Build” program with “Build Better More.” 

Allowing greater corporate, much less foreign, control over critical public infrastructure is flawed development planning. More than anything else, infrastructure development is meant to provide essential services that address the country’s economic and social needs based on a clearly defined national agenda. Turning over the design, construction, management, and operation of infrastructure to private and foreign interests primarily motivated by profits distort at a fundamental level such orientation of an infrastructure development program.

The Philippines already has a long history of how privatized infrastructure caused massive burdens on the people and the economy. Exorbitant user fees for the use of rail transit, toll roads, and power and water services, among others, have made the cost of decent living increasingly unaffordable for many Filipinos. Meanwhile, valuable public resources are siphoned off to guarantee the profit rates of private corporations involved in PPP projects.

Moreover, complete foreign control over critical infrastructure like telecommunications could compromise national sovereignty and security. A glaring example is China which has already established a strong presence in the country’s infrastructure development through Duterte’s Build, Build, Build program. Marcos Jr. has declared his regime’s plan not just to continue this relationship with Beijing but even to shift it into a “higher gear.” The expansion of Chinese equity in the global telecommunications industry, including in the Philippines, is creating legitimate concerns about security risks and vulnerabilities such as espionage and acquiring vital information. 

Marcos Jr.’s push in his SONA to make the country an investment destination through liberalization will further stunt local capital development and undermine our long-term industrialization. The amended Foreign Investments Act or RA 11647 allows foreign nationals to own an enterprise with a minimum paid-in capital of just US$100,000. It opens the floodgates for stiff and undue foreign competition that could drive the bankruptcy of more Filipino micro, small, and medium enterprises (MSMEs). It also exposes the local workforce to foreign competition as 100% foreign-owned MSMEs are only required to hire a minimum of 15 Filipino employees from 50 under the old law.

While potentially destroying more jobs with his preferred economic policies, Marcos Jr. has also signaled in his SONA that his administration will continue to impose new taxes on the consumers, another neoliberal agenda. He cited, for instance, the value-added tax (VAT) on digital service providers that will burden consumers with an additional ₱11.7 billion in new taxes in 2023 alone. 

All of these make the SONA promises of Marcos Jr. on prosperity for the people, including the attainment of a single-digit (9%) poverty rate by 2028 and upper-middle-income status with a per capita income of US$4,256 by 2024, ultimately meaningless. Without a radical shift from the long-discredited neoliberal paradigm, the Filipino people are doomed to greater destitution and exclusion under the Marcos Jr. presidency. Economic production may increase (i.e., the SONA targets an annual growth rate of as high as 8% in our gross domestic product or GDP from 2023 to 2028), but income and wealth will remain heavily concentrated in the hands of the local elite and foreign businesses.

The President did make notable commitments to address the plight of landless farmers, such as the one-year moratorium on the land amortization and interest payments of agrarian reform beneficiaries (ARBs) via executive order, towards the condonation of such debts through a new law. But consistent with his neoliberal policy bias, Marcos Jr. was silent in his SONA on reversing the decades of neoliberal restructuring of agriculture that has driven millions of farmers into landlessness and bankruptcy. He instead talked about strengthening the value chain, which in the context of the country’s neoliberal agriculture means deepening the ties to the global market and enhancing land monopoly that harm local food security and destroy farmers’ livelihood. 

Marcos Jr. spent a substantial portion of his SONA presenting his regime’s plans for the economy amid the daunting global and domestic challenges confronting the country. But what he gave, unfortunately, are hollow targets based on the obsolete and failed policies of liberalization and privatization. Like his predecessors, Marcos Jr. worships unaccountable foreign capital as the driver of economic and national development instead of a more significant government role in the provision of public services and protection of domestic agriculture and local industries, especially the MSMEs and small food producers.

The COVID-19 pandemic and its disastrous socioeconomic impacts are teaching policymakers to be more inward-looking in terms of development planning. Marcos Jr. and his team of recycled neoliberal bureaucrats are not learning, or refusing to learn, the lesson. ### 

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Poems

Huwag pigilan na lumuha

Huwag pigilan na lumuha

Hindi lahat ng pagtangis

Ay hinagpis

Hindi ba’t mas dalisay 

Ang maiyak sa galit

Nang dahil sa pag-ibig

Para sa bayang sawi?

Kaya huwag umiyak 

Nang tahimik

Huwag ikubli ang hibik

Sa halip hayaang 

Ligaligin ng taghoy

Ang himbing ng gabi.

Hanggang ang bawat 

Patak ng luha

Ay maging unos

Hanggang bawat agos

Ay maging daluyong

Hanggang maging sigwa

Na tatapos

Sa muling pagtutuos.

Kaya umiyak ka

Pero huwag malulugmok 

Sa lungkot

At sa halip ay 

Masiglang bumangon

Sa bawat umaga

Ng tunggalian

At mga hamon –

Gaya noon.

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Oil deregulation

Record oil price hikes: People must rage vs neoliberalism

Photo from BusinessMirror

Nearly three decades ago, neoliberal apologists, multilateral creditors, and the big oil companies peddled the lie of the Oil Deregulation Law that the so-called free market will ensure reasonable pump prices for the benefit of all. Today, that free market is telling the jeepney drivers, farmers and fishers, ordinary motorists, and households to endure the most significant oil price hikes in the country’s history. 

As the oil firms, economic managers, and energy officials have been telling the public for the past 26 years, these price adjustments are warranted. The crisis in Ukraine jolted world oil prices that have already been on a steady upswing since last year. A month before the conflict, crude oil prices as measured by the International Monetary Fund’s (IMF) index for global benchmark spot prices were 62% higher already than its level a year ago. 

Market forces

Oil price hikes in the first ten weeks of 2022 already surpassed the price increases in diesel and kerosene in the whole year of 2021. But we are told that it is only natural that the local pump prices are moving the way they do, given that the Philippines imports practically all its oil requirements. As always, under the Great Free Market, the price of oil will eventually find its proper place once the dust of uncertainties stirred by the inter-imperialist competition in Ukraine, the COVID-19 pandemic, etc., has settled. All of us just need to hang on tight and allow the forces of the free market to do their thing. In the meantime, policymakers hope that the most vulnerable sectors can get by the price shock through targeted cash assistance

Neoliberalism makes us believe that all we can do as hapless consumers is to try to survive the market’s wrath. This is what the fuel subsidy aims to achieve – a life jacket in a tumultuous and stormy sea of runaway prices. There is no guarantee of survival.

But who or what exactly are these market forces anyway? Neoliberal fundamentalists will tell us that they are the “supply and demand”. They do not say that supply and demand, and ultimately the determination of prices, are decided by people with vested commercial interests. They are not supernatural beings; they are just super-rich – the monopoly capitalists in the oil industry, the finance oligarchs, the OPEC+ cartel, and the local compradors. They are motivated by earning the most enormous profits in the fastest way possible. 

Paper barrels

The US ban on Russian oil triggered the latest surge in prices as Washington sought to widen the economic sanctions against its imperialist rival. The way that prices are behaving, it is as though a tenth of the global oil supply (the Russian production) has been wiped out from the market overnight, which is not the case. In addition, the US is only importing 8% of its crude oil and petroleum products needs from Russia, which it can easily offset from its domestic production or other oil-producing countries. 

According to the Organization of Petroleum Exporting Countries (OPEC), there is “no physical shortage” of oil. So, what is happening then? As in the case of major oil price volatilities this century, excessive speculation in the oil derivatives markets is pushing up prices, not the disruptions in oil’s actual or physical trading. 

Reports say that the volume of speculative trading in oil has surged since the Ukraine crisis erupted. In the US’s CME (the world’s largest financial derivatives exchange), the volume of buying and selling crude oil options or bets in oil’s future price has almost doubled from 126,000 daily in the first week of February to 240,000 contracts in the first week of March. These are all paper transactions, not actual, physical trading of oil, by financial players who profit from the volatility of oil prices. 

As OPEC said, futures markets are “paper barrels”, but in the physical market, supplies are guaranteed. And not only supplies are guaranteed in the physical market, but the prices also are covered by long-term supply contracts. In other words, the actual costs of physical oil – the diesel that a jeepney driver put in his tank – are not as volatile as the daily market reports make them appear.

The Philippines is not importing oil from Russia, whether crude or refined. Most of our crude oil imports come from Saudi Arabia (45%) and UAE (34%), while finished petroleum mainly comes from refineries in China (37%) and Singapore (18%). The Energy department said that there is no actual supply shortage in the country and that oil inventories or reserves can last for more than 40 days. 

Real impacts

But neoliberalism and deregulation exposed Filipino consumers to speculative paper barrels, resulting in weekly oil price hikes not justified by actual costs in production and trade. Worse, oil companies are exploiting the unregulated weekly price adjustments for profiteering. Based on this author’s estimates, the oil companies overpriced gasoline by around ₱6.58 per liter in 2021 by simply imposing higher oil price hikes or smaller rollbacks than they are supposed to implement based on regional price benchmarks. For diesel, the estimated overpricing is ₱4.74 per liter. In the first two months of 2022, gasoline is overpriced by ₱0.24 a liter and diesel by ₱2.22.

While prices are speculative, the impacts of the actual increases in pump prices are very much real and felt on the ground. The series of oil price hikes last year, for instance, potentially eroded a jeepney driver’s income to the tune of a month’s worth of his family’s rice consumption. The central bank fears that inflation could accelerate to as high as 4.7% in a worst-case scenario of $120-140 per barrel in global oil prices. At those levels, the average pump price of diesel and gasoline could be more than ₱69 and ₱78 per liter, respectively. Given the amount of speculation and the continued implementation of deregulation, it is not implausible. According to IBON Foundation, inflation has already eroded the minimum wage to just half of the family living wage in the capital region. Overall, the oil price crisis could wipe out around ₱330 billion of the domestic economy, and the Philippines is projected to have the sharpest drop in economic growth in Asia.

The people must rage against neoliberalism and deregulation. We can no longer allow being at the mercy of financial speculators, the profiteering oil companies, and the unaccountable global market. We can no longer afford to be content with cash aid and temporary relief while oil monopolies and finance oligarchs rake billions at the expense of our livelihoods. There are very concrete and doable steps that government can take to end the madness of the free market and truly protect the people and economy. ### 

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Oil deregulation

Beyond fuel taxes, regulate and nationalize the oil industry

Photo from Anakpawis

Exactly how much are jeepney drivers losing because of the unabated oil price hikes?

The pump price of diesel has already increased by ₱18.45 per liter (including the latest adjustments on Oct. 26) this year. That is equivalent to two passengers paying the minimum fare of ₱9. Considering that jeepneys are only allowed a maximum of 50% passenger capacity, the impact on a driver’s income is tremendous. A 20-passenger jeepney can carry only ten passengers. With the rise in diesel prices this year, jeepneys practically take a maximum of just eight passengers paying the minimum fare.

A month’s worth of rice

Let us look at the UP Diliman to SM North Edsa route, for instance. This entire route is about 13.25 kilometers roundtrip. Based on one study, a jeepney consumes around one liter of diesel per seven kilometers. So, the UP-SM roundtrip uses up about two liters of diesel. Meaning, a driver loses ₱36.90 per roundtrip due to the price hikes. That amount is almost equivalent to the lowest rice price per kilo (₱38) in NCR. 

A 20-passenger jeepney usually has a full tank capacity of 60 liters, which means that the driver is spending ₱1,107 more to fill up his tank. That is equivalent to about 29 kilos of rice – or two weeks’ worth of the regular consumption of a 5-6-member household. 

For the UP-SM driver, his full tank will last for around 30 roundtrips. Assuming he makes ten roundtrips per day, it means that he must refill every three days – or twice in one week. He thus spends ₱2,214 more on diesel due to the price hikes. That is equivalent to a month’s worth of his household’s rice consumption.

However, raising the minimum fare will only shift the burden of the oil price increases from the drivers to the commuters. Like the jeepney drivers, commuters are also working-class people whom the pandemic severely battered and barely make a living. 

What about the proposal to revive the Gloria Arroyo-era Pantawid Pasada program? For one, the cash aid like during Arroyo’s time will likely be too small to make a dent in runaway oil prices. The proposed subsidy cited in media reports, for instance, is between ₱1,700 to 2,000 per month. As mentioned, the UP-SM driver is already spending an additional ₱2,214 per week. But the amount of cash subsidy is a secondary issue. The primary point is that the Pantawid Pasada merely shifts the burden of the oil price hikes to the taxpayers, including the drivers themselves. 

Making oil firms, government accountable

Meanwhile, the oil companies that profit immensely from high prices and unreasonable price hikes are left off the hook. Policy interventions should primarily target them. One is through effective price regulation to stop their profiteering when they adjust prices every week.

Like the oil companies, we must hold the government accountable as well. The people should press the policymakers to abolish the regressive and exorbitant fuel taxes, such as the 12% value-added tax (VAT). This move can immediately bring down pump prices and provide much-needed relief for the jeepney drivers and the public.

At 12%, the Philippines charges the highest rate in Southeast Asia for VAT or VAT-like impositions. Cambodia, Indonesia, Laos, Malaysia, Thailand, and Vietnam charge 10%, while Singapore charges 7%. We also charge a higher rate than some of the most prosperous countries in the Asia Pacific like Australia, Japan, and South Korea that all charge 10%, and Taiwan, which charges just 5 percent.

While it is not the Philippine government that sets the price or the price adjustments in the global oil market, it should nonetheless drop its defeatist attitude and cries of imagined helplessness as Filipinos suffer from rising prices.  The government can directly and immediately reform its tax policy on petroleum products and reduce the cost not just for jeepney drivers and their households but for the entire economy.

Regulation and nationalization

Beyond abolishing oppressive fuel taxes, the government can and must repeal Republic Act (RA) 8479 or the Oil Deregulation Law to protect the public and the country from excessive prices and unreasonable price increases. In its place, policymakers must develop and implement a comprehensive program for regulating the downstream oil industry. 

This program, which Congress can legislate, should contain the following essential components: (1) Centralized procurement of imported crude oil and refined petroleum products; (2) Buffer fund, which can be financed through the operations of the centralized procurement to cushion the impacts of sudden surges in global prices; (3) Transparent determination of pump prices, including through full public disclosure of pricing scheme and inventory of the oil firms; (4) Democratic public consultations or hearings to justify oil price adjustments; and (5) State participation in refining and distribution of petroleum products.

Seldom discussed is that the issue of high oil prices and allegations of price manipulation is just a consequence of the fundamental problem of the Philippine oil industry, which is foreign monopoly control through their direct investments and strategic partnerships with the local compradors. The country must seriously pursue a long-term nationalization program that would end the domination of transnational companies and their local agents. The initial reforms cited earlier to regulate the downstream activities of the oil companies are a positive step towards nationalization. 

Nationalization requires the reorientation and restructuring of the oil industry to uphold the people’s welfare and advance the national interest. For example, with a nationalized oil industry, the people and economy would genuinely benefit from undertakings like the Malampaya instead of foreign capital and local cronies and oligarchs exploiting such projects for their narrow private interests.It is hard to nationalize the oil industry if the government would not shift from its current neoliberal development paradigm, which permits the unbridled operation of so-called market forces and relies too much on imported commodities and foreign capital. The nationalization of the oil industry can only be successful within a national industrialization program where internal sources of growth are promoted and protected. ###

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Consumer issues, Oil deregulation

Why are oil prices rising, and what we can we do about it?

Photo from SunStar

Since the start of the year, local pump prices have increased significantly. The government, as always, explains this as the operation of global market forces. Remember that the government deregulated the oil industry, and the country imports almost all its petroleum needs. As such, local price adjustments merely reflect the movement of international oil prices and fluctuations in the peso-dollar exchange rates. At least, that is what government and the oil firms want us to believe.

₱4-5 overpricing at the pump this year

But this explanation is not as straightforward as it appears to be. Pump price adjustments do not reflect global price movements. As of the first week of October, the price of gasoline in the Mean of Platts Singapore (MOPS) gone up by about ₱11.49 per liter. Meanwhile, the pump price of gasoline as of Oct. 5 has jumped by ₱16.55 per liter – ₱5.06 higher than MOPS. The same thing is true with diesel. MOPS diesel increased by around ₱10.86 per liter while the pump price of diesel surged by ₱15.00 – a difference of ₱4.14 per liter.

MOPS is the benchmark that the country uses for local petroleum products, according to the Department of Energy (DOE). It is “the daily average of all trading transactions of diesel and gasoline as assessed and summarized by Standard and Poor’s Platts, a Singapore-based market wire service.”

The difference between the adjustments in MOPS and actual price changes at the pump is a form of overpricing that has thrived under the Oil Deregulation Law. This 25-year-old law allows oil companies to implement automatic price adjustments based on global price movements. 

By implementing higher price hikes or lower rollbacks than international price adjustments, oil firms and the government can collect billions of pesos in extra profits and taxes. Overpriced gasoline and diesel, for instance, gave them an estimated ₱38.47 billion in additional income, of which ₱4.62 billion went to the government as value-added tax (VAT). This exploitation of the consumers by the oil companies and government becomes even more reprehensible amid the pandemic that has massively wiped away jobs and incomes.

In other words, regardless of whether oil prices are up or down, deregulation allows oil companies to earn additional profits. But the situation for the consumers becomes doubly burdensome when oil prices are rising. There have been 32 rounds of oil price hikes for gasoline and 31 for diesel already this year, including the past seven straight weeks. Diesel, at one point, saw its pump price go up for 14 consecutive weeks between April and July.

The direct cause and effect relationship between higher oil prices and faster inflation means more significant distress for most people battered by COVID-19 and the economic crisis. This year, the prices of essential goods and services are moving nearly twice as fast compared to the first year of the pandemic. The inflation rate from January to August averaged 4.4%; during the same period last year, it was at 2.5 percent.

Rising global prices amid speculation

Global oil prices are much higher this year than in 2020, which most analysts credit to the rebound in demand amid tight supply. Economies are recovering from the impacts of pandemic lockdowns, and they need more oil for increased production, estimated at an extra 450,000 barrels per day (BPD) through the rest of the year. There were calls to boost global output by as high as 800,000 BPD amid pressure from the world’s largest oil consumers like the US, accounting for more than 20% of global oil consumption. 

But members of the Organization of the Petroleum Exporting Countries (OPEC) and their partners (collectively, the OPEC+) are only increasing output by 400,000 BPD. OPEC+, led by Saudi Arabia and Russia, earlier tightened oil supply when global prices collapsed due to the pandemic last year. 

Looking at commodity prices compiled by the International Monetary Fund (IMF), the July price index of the world’s three major spot prices for crude oil (i.e., Brent, West Texas Intermediate or WTI, and Dubai) was its highest monthly average since November 2018. From January to August this year, the average spot prices ($65.14 per barrel) for crude oil are 61% higher than during the same period last year ($40.47 per barrel). More updated weekly data quoted in news reports say that Brent spot prices reached a three-year high of $83.47, and WTI reached a seven-year high of $79.35.

However, as usual in neoliberalism, much of the price increases in the global oil markets are driven by speculation and not by the actual supply and demand. This speculation is being fueled this time by how the global health crisis could further develop. OPEC+ members are reluctant to supply the market with more oil out of fear that demand and prices could weaken again all of a sudden due to another wave of COVID-19 infections. The opposite side of this is the bullish outlook that global economic recovery from the pandemic will remain faster than expected, with speculators from Goldman Sachs and the Bank of America projecting oil prices to climb further up to $90 to $100 per barrel. The last time global spot prices averaged more than a hundred dollars was August 2014. Meanwhile, traders, especially those in the futures markets, also speculate that demand could further increase due to the colder than anticipated winter season amid the climate crisis.

The Philippines is especially vulnerable to global supply and demand speculation because the country is a heavy consumer and big importer of petroleum. Out of 214 countries worldwide, the Philippines ranks top 36 in terms of oil consumption. In the first half of 2021, the country imported 10.03 billion liters of finished petroleum products and 1.21 billion liters of crude oil to meet the domestic demand of 67.70 million liters per day. The oil import bill went up by 55.9%, from $3.07 billion in the first half of 2020 to $4.79 billion in the same period this year due to higher import volume and rising global prices.

Ending oil deregulation is a must

Deregulation fully exposed the country to the price impacts of speculative activities by oil producers, traders, investment firms, and other financial institutions that exploit the uncertainties in the world market. As mentioned, oil companies can automatically implement price adjustments based on international price fluctuations under a deregulated regime.

The continued domination of monopoly corporations in the oil industry, which can dictate how much local pump prices would move, further exacerbated such vulnerability. Only four companies (Petron, Shell, Phoenix, and Chevron) control 47.2% of the domestic oil market, and just one (Petron) retain 100% of the country’s crude oil refining capacity. These companies are tied to the transnational corporations in oil and finance through investments, long-term supply contracts, and other strategic partnerships.

With deregulation, the government abandoned its mandate to guarantee oil supply security and protect the economy and people from excessive petroleum prices. Policy tools to regulate prices and safeguard supply are always necessary but are even more crucial today as the country tries to get back on its feet from the impacts of the pandemic. 

Reminding oil companies to ensure the country’s oil supply which is the only “intervention” that the DOE has done amid surging prices, is extremely not enough. The government itself must play the leading role in stockpiling fuel supply through, for instance, a system of centralized procurement of imported oil. Under this system, oil companies will have to buy from the state-owned Philippine National Oil Co. (PNOC). Oil firms thus will have to sell it at a price based on PNOC’s cost of importation, which is cheaper than commercial deals as the government can explore various ways to get discounted prices or even waive taxes. In addition, the government can quickly determine if the oil firms are profiteering or selling at a price that is outrageously higher than the cost of buying from the PNOC.There are numerous policy options and possibilities, but it must start at ending the oil deregulation regime. ###

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Governance

Revisiting the legacy of Noynoy Aquino

The late President Aquino is now being remembered as the Philippine leader who stood up to China; but let us also not forget that he was the President who signed the Enhanced Defense Cooperation Agreement (EDCA) with the US, further deepening the neocolonial ties between the two countries and all the atrocities it brings to the Filipino people.

A Radical’s Nut has produced 62 blog posts tagged as “Noynoy Aquino” during his term as president from 2010 to 2016. As people revisit his legacy as the country’s 15th president, let me share here 15 of these notes on the Philippine economy and politics under Aquino, which I think could help remind the public of his true legacy as a leader.

Not included in the list below are two articles that summed up his legacy in relation to his centerpiece economic program – the public-private partnership or PPP, and the state of the Filipino people at the end of his term.

Now, the list –

1. Kung walang corrupt, walang mahirap: How Noynoy obscured the link between Hacienda Luisita and poverty

“The basic premise of Noynoy’s advocacy conceals the structural roots of poverty. It hides the universal truth that the working people are poor because a very small minority monopolizes ownership over production means and the wealth society produces.”

2. Noynoy’s Cabinet of recycled bureaucrats

“Instead of surrounding himself with new people who have fresh ideas (or even old names but with unblemished and worthy track record), he may end up with people from the administrations of his late mother Cory, Fidel V. Ramos, and even Arroyo. Not only are these bureaucrats recycled, but they also played major roles in crafting and implementing policies that hurt the poor and the economy.”

3. Walang wang-wang: Noynoy’s economic vision

“Abused with impunity by an arrogant Arroyo administration for more than nine years, many were predictably thrilled by this strong statement from the new President. But beyond the walang wang-wang rhetoric, did President Benigno “Noynoy” Aquino III offer anything fresh in substance, as his vision of long-term economic development, in his much-hyped inaugural speech?”

4. Noynoy to continue Cory’s privatization legacy

“Aquino’s promotion of PPPs and privatization in his SONA has further reinforced the view that his administration is incapable of introducing new policies that will reverse the old pro-business, pro-market neoliberal policies of the past administrations, including the Arroyo administration.”

5. Noynoy’s US visit: RP to get more counterinsurgency aid

“It is true that the greater the poverty of the people, the more that they will embrace revolution to achieve social justice such as the four-decade civil war being waged by the NPA. But using supposed poverty reduction and development projects as part of a military campaign to end the insurgency shortcuts the process of achieving genuine and lasting peace, and thus could never truly address the root causes of the conflict.”

6. The Philippines for sale (Part 1 and Part 2)

“After 100 days, it has now become unmistakably clear that the Aquino administration is far from being a reform-oriented government that it has depicted itself to be, especially in the realm of economic management and policies. The good news is that the public saw this reality as early as now and thus could immediately start exerting pressure on the Aquino administration to shift its course towards the genuine “straight path”, the one that puts people’s interests above all.”

7. Aquino could not hide the worsening economic crisis and poverty behind Corona impeachment trial

“As much as the people long to make Arroyo and her minions accountable for their many crimes, the Aquino administration could not hope that the public would be forever distracted by the ongoing impeachment trial. Unless real reforms are implemented soon, even the conviction of Corona and Arroyo could not bail out the weakening popularity and legitimacy of the Aquino administration.”

8. Mindanao power is more expensive than Asia’s major cities

“Aquino must apologize to the people of Mindanao for blaming them for the power crisis and accusing them of being spoiled by “cheap” power rates. Aquino must apologize for being shamelessly insensitive to the plight of Mindanao where 36% of the country’s poorest families live.”

9. How the rich are getting (scandalously) richer under Aquino

Aquino’s apathy to the working class is matched only by his concern for big business. In fact, among the major commitments he made in his so-called Social Contract, creating favorable conditions for private business is the only promise that Aquino has been fulfilling.

10. Noynoy relatives funded Akbayan’s poll expenditures

“The simple fact that a significant amount of their 2010 electoral spending was directly bankrolled by the Aquino family further bolsters the argument that they do not represent the under-represented and marginalized. How can they claim to represent the farmers when Akbayan is being funded by one of the country’s richest and most powerful landlord families? How can Akbayan claim to fiscalize Aquino on the issue of land reform when the president’s family bankrolled their electoral campaign?”

11. Sabah crisis: Is Aquino siding with Malaysia to protect relatives’ business interests?

“It is also notable that since taking over in 2010, Aquino’s relatives who bankrolled his presidential bid have inked business deals with Malaysia. Could these business interests be another possible explanation for the administration’s handling of the Sabah crisis?”

12. PNoy and the Big Water monopolies

“Aquino indeed has deep ties with the Big Water monopolies. The Ayala family, which controls Manila Water, has a long history of close association with the Aquino family, dating back to the time of Aquino’s late mother Cory as Philippine President. Manny V. Pangilinan, who controls Maynilad, has done a number of mega business deals with presidential cousin and officially declared top Aquino funder in the 2010 polls, Tonyboy Cojuangco such as the PLDT and TV5 deals. MVP and the Ayalas are seen as among the major backers of Aquino in his presidential bid. So don’t be surprised that the chief executives of their business interests landed strategic Cabinet positions.”

13. How Aquino betrayed public interest in LRT 1 privatization

“In forging the Concession Agreement with the MVP-Ayala group, President Aquino has betrayed the public interest and welfare and has put the government in a patently disadvantageous position. While DOTC officials claim that the MVP-Ayala group submitted a negative bid of P9.5 billion – meaning they will pay the government such an amount to do the project – it is the commuters who will ultimately bear the burden as the concessionaire will recover the money from the riding public through higher fares.”

14. Presidential pork, election budget, and Aquino cronies

“These planned expenditures show how public funds, raised mainly through taxes of ordinary wage earners and consumers, are being wasted and drained not only through corruption and political patronage but also through questionable economic policies that only benefit a favored few such as big business groups involved in PPP projects.”

15. More than meets the eye: People’s fact-finding on Mamasapano

“While the media coverage has so far mainly focused on the death of the 44 police commandos after the botched operation on January 25, little has been publicly said about the Moro communities in Mamasapano, Maguindanao. But on the ground, reports of human rights abuses, violations of the International Humanitarian Law during combat, and involvement of US military personnel were persistent.” – (Initial Report of the People’s Fact-Finding Mission on the Mamasapano incident, February 9-11, 2015) ###

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COVID-19, Labor & employment, Poverty

Among ASEAN countries, income woes most severe, economic aid most lacking in PH

Photo: George Calvelo, ABS-CBN News

Among all members of the Association of Southeast Asian Nations (ASEAN), the impact of the pandemic on incomes is worst in the Philippines. The even more dreadful news is that the Duterte administration is providing the least resources for economic aid to support affected workers and other vulnerable sectors.

Based on a recent survey by the Asian Development Bank Institute (ADBI), 67% of Filipino households saw their income drop by more than 25% due to the pandemic. Indonesia ranked second with 64% of households and Malaysia, the lowest, with 40 percent. The ADBI study was published in March 2021.

Further breaking down the data, more Filipino households also suffered the steepest declines in income during the pandemic than any of our ASEAN neighbors. About 21% of Filipino households had their income fall by more than 75 percent. Three countries (Cambodia, Indonesia and Thailand) had 11% of their households experience such decline in incomes during the pandemic; Vietnam posted the lowest with four percent. Similarly, an income decline of more than 50% was felt by 41% of Filipino households; Indonesia is a far second with 27% of households while Vietnam recorded the lowest with 15 percent.

The ADBI survey also noted that in the ASEAN overall, the income class of household on average is not related to the likelihood of experiencing a decline in income. This suggests that the pandemic affects the income of all households regardless of their economic status before the pandemic. But the trend is different in the Philippines where households in the lower-income classes are more likely to have income declines than those in the upper-income classes. This means that the fall in income in the Philippines described above was a phenomenon mainly felt by the poorer households.

Consequently, the Philippines also ranked first in the region in terms of households that experience financial difficulty during the pandemic. About 85% of Filipino households indicated in the ADBI survey that they were having financial difficulty; Indonesia followed with 84% while Myanmar ranked the lowest at 27 percent. 

Obviously, the poorer the household, the greater the likelihood of financial difficulty during the pandemic. This however is more felt in the Philippines than in any other countries in the region. In ASEAN overall, the average difference in the likelihood to get into financial difficulty between the richest group and the poorest group is 20 percentage points. But in the Philippines, the difference is a huge 40 percentage points, the worst in the region. 

More than half of Filipino households or 51.8% said that if they lose all of their income sources, their resources to cover daily needs could only last up to two weeks. It is the second worst to Indonesia which had a staggering 86.6% of households saying that their resources will not last for more than two weeks. About 73.2% of households in the Philippines will not last beyond a month; 87.3% will not last beyond three months.

These numbers summarize the economic hardship experienced by millions of households when lockdowns are implemented. The ADBI study illustrates how such suffering is more severe for poor households in the Philippines compared to other ASEAN countries. 

According to government data, 9.1 million workers lost their job between March 2020 and February 2021. Of this number, 2.2 million remain jobless up to this day, adding to the current number of unemployed which stands at 4.2 million based on official data. 

The actual extent of unemployment could be much widespread than what government numbers show. For instance, based on surveys of the Social Weather Stations (SWS), the number of jobless adults averaged 21.2 million in 2020. In 2019, the average was 9.3 million which indicates that the number of jobless swelled by 11.9 million during the pandemic. 

Nonetheless, latest available official unemployment data again show the Philippines as the most impacted by the pandemic. As of February 2021, the unemployment rate among Filipino workers is pegged at 8.8% and was at 8.7% in January. In Indonesia, unemployment rate is at 7.1% (August 2020); Malaysia, 4.8% (December); Vietnam, 2.5% (December); and Thailand, 1.9% (December).

With the reimposition of lockdowns, Filipino households face more miseries. The National Economic Development Authority (NEDA) said that lockdowns cost PHP 700 million to PHP 2.1 billion in lost wages every day. Government economic managers also expect unemployment rate to remain at almost twice the pre-pandemic levels up to 2022. 

Sadly, the Philippine government also allocates the scantiest resources for economic support to those impacted by the pandemic. Based on the COVID-19 policy tracker of the International Monetary Fund (IMF), the Duterte administration’s fiscal package for vulnerable individuals and groups is equivalent to 3.1% of the gross domestic product (GDP). The package includes cash aid program for low-income households and social protection measures for vulnerable workers, including displaced and overseas Filipino workers (OFWs).

In contrast, Thailand’s package of support for its workers, farmers, and other vulnerable sectors, including subsidies for daily household needs like water and electricity is about 9.6% of its GDP. Indonesia allotted an equivalent of 4.4% of its GDP for assistance schemes to its low-income households, for unemployment benefits and tax relief. Malaysia’s stimulus package is around 4.3% of its GDP, intended for cash transfers to low-income households, wage subsidies, electricity subsidies, etc. Even Vietnam allocated a higher 3.6% of its GDP for cash transfers, deferred tax payments, etc.

Duterte, in a leaked memo, instructed all government media platforms “to carry regular updates about the world data on COVID-19, specifically to convey to the public that the Philippines is faring better than many countries in addressing the pandemic”. The order is an attempt to counter the widespread criticism on government’s inadequate response to the crisis, but it merely further exposed Duterte’s incompetence. 

Because no matter how government spins the data, the deteriorating situation on the ground confirms what the numbers show – that the Philippines has among the worst levels and suffers the gravest impacts of the pandemic; and that government response is among the most inadequate and failed. ###

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Oil deregulation

Duterte backers, other oil firms rake in millions from overpricing amid pandemic

Amid the misery and deaths caused by COVID-19, oil companies, including those controlled by prominent Duterte backers, have been raking in millions of pesos in extra profits from overpricing. This is beyond unconscionable and appalling as the socioeconomic fallout of the pandemic – i.e., record joblessness, hunger and poverty – continues to burden the people.

How oil firms manipulate prices

With the pandemic raging last year, the oil firms imposed a net overpricing of about PHP 4.96 per liter for gasoline and around PHP 2.86 per liter for diesel. The overpricing continued in the first three months of 2021, as the country suffers an even worse surge in COVID-19 cases. For gasoline, the overpricing is estimated at around PHP 0.71 per liter as of end-March this year; for diesel, it is pegged at PHP 0.88 per liter.

These estimates were computed by comparing the supposed adjustments in prices based on the weekly fluctuations in international oil prices and the foreign exchange rate, and the actual adjustments in local pump prices implemented by the oil companies.

Last year, oil prices saw a sharp decline as the global economy came to a standstill with countries enforcing months of lockdowns to contain the spread of the novel coronavirus. Based on the International Monetary Fund’s (IMF) monitoring of primary commodity prices, the price of Dubai crude oil fell from USD 63.73 per barrel in January 2020 to as low as USD 23.38 per barrel in April. It finished the year with a monthly average of USD 49.32 per barrel in December.

Consequently, local pump prices in the Philippines, one of the world’s most oil import-dependent economies, also declined. According to the monitoring of the Department of Energy (DOE), oil companies implemented a net price rollback of PHP 1.97 per liter for gasoline and an even bigger PHP 5.96 per liter reduction in the price of diesel. 

But these price rollbacks are much smaller than what the oil firms should have implemented if they were simply reflecting movements in global prices, as they and the DOE are wont to say. Based on the Mean of Platts Singapore (MOPS), the international benchmark used by the Philippines in pricing petroleum products, and the fluctuations in the peso exchange rate to the US dollar, the price of gasoline should have gone down by about PHP 6.93 per liter. Similarly, the price of diesel should have been rolled back by PHP 8.82 per liter.

Comparing these to the actual adjustments per liter in pump prices that the oil firms implemented and the DOE allowed (i.e., rollbacks of just PHP 1.97 for gasoline and PHP 5.96 for diesel), the overpricing estimates of PHP 4.96 per liter for gasoline and PHP 2.86 per liter for diesel were calculated.

For 2021, even as global oil prices continued to pick up, the price of gasoline should not have gone beyond PHP 5.44 per liter in total increases based on MOPS price movements from January to March; but the oil companies hiked their gasoline prices by a total of PHP 6.15 per liter during the period, resulting to an overpricing of PHP 0.71 per liter.

Similarly, the price of diesel based on MOPS should have not increased by more than PHP 3.72 per liter. However, oil firms have already jacked up their diesel prices by P4.60 per liter, resulting to an overpricing of PHP 0.88 per liter.

Duterte regime, allies gain from overpricing 

Deregulated oil prices under Republic Act 8479 or the “Downstream Oil Industry Deregulation Act of 1998” allows oil firms to adjust pump prices – supposedly as dictated by global market forces (e.g., international prices and exchange rates) – without the benefit of public consultation. Such neoliberal policy in oil price setting has only enabled the oil companies to abuse the consumers with impunity. 

It must be emphasized that the overpricing estimates based on so-called global market forces do not illustrate the magnitude by which foreign oil monopolies such as Shell, Chevron, etc. artificially inflate prices. Such estimates merely show how oil firms under a deregulated regime can easily further manipulate oil prices through implementing adjustments that are above (in case of price hikes) or below (in case of rollbacks) the supposedly justified amounts based on international price benchmarks.

A crisis as grave as the COVID-19 pandemic should have been an opportunity to review and reverse this flawed policy. Unfortunately, it is clear that President Duterte, his political clique, and the neoliberal champions in his economic team will not entertain such policy turnaround to protect the public. 

For one, with its obsession to collect taxes to appease creditors for its debt-driven infrastructure projects, oil overpricing provides additional revenues for the Duterte regime. Based on a rough approximation of petroleum demand in 2020 of about 14.69 million liters per day for gasoline and 24.32 million liters per day for diesel (reflecting the overall decline in demand of 23% in the first half of 2020 due to the pandemic, as reported by the DOE), it can be guesstimated that the total additional profits generated by the oil firms from overpricing gasoline and diesel is about PHP 142.50 million a day. Of this amount, PHP 17.10 million went to government in the form of the 12% value-added tax (VAT).

For another, Duterte’s political backers and their foreign partners with interests in the oil industry benefit hugely from oil overpricing. Due to overpricing, it is estimated that Petron Corp. earned PHP 23.19 million daily in 2020 on top of its regular profits based on market share. The largest oil refining and marketing company in the Philippines, Petron is majority owned by Ramon Ang’s San Miguel Corp. (SMC). Ang is among the tycoons who financed the presidential campaign of Duterte in 2016 and appears to be one of the most favored oligarchs by the administration, cornering big-ticket infrastructure contracts such as the controversial PHP735.6-billion Bulacan aerotropolis.

Dennis Uy, the Davao-based businessman and longtime ally of Duterte, also continues to make a fortune in the oil industry through Phoenix Petroleum, which in terms of market share (7% in 2019) ranks as the fourth largest oil retailer in the Philippines behind the old Big Three of Petron (25%), Shell (18%) and Chevron (8%). Uy and Phoenix Petroleum had a declared campaign contribution of PHP 36 million to Duterte’s presidential campaign in 2016. Based on market share, it is estimated that Phoenix raked in PHP 8.85 million daily in extra profits last year from overpricing.  

Uy has seen his wealth grow tremendously under Duterte, including in the Philippine oil and gas industry where he has been expanding and consolidating his interests. Last year, Uy’s Udenna Corporation bought the 45% stake of Chevron in the Malampaya natural gas field and plans to partner with government through the Philippine National Oil Company (PNOC) to acquire as well the 45% stake of Shell. ###

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COVID-19, Governance

#DutertePalpak: PH worst in Southeast Asia in COVID-19 response amid surge in new cases

For two straight days, the Philippines posted record highs in daily new COVID-19 cases. The DOH reported Mar 20 that the country registered 7,999 cases, breaking the previous all-time high of 7,103 monitored just a day before.

The surge in new COVID-19 cases in the Philippines is the second worst in Southeast Asia. Based on data compiled by the Economist, the Philippines registered 78 confirmed new cases per 100,000 people in the past 28 days as of Mar 20. That puts the country behind Malaysia which had 166 new cases per 100,000. Indonesia ranked third with 70 confirmed cases.

But what is even more alarming for Filipinos is that amid the surge in new COVID-19 cases, the response of the Duterte government to the pandemic more than a year into the crisis remains grossly inadequate and incompetent. While implementing the strictest and longest lockdown in the region, the Philippines continues to lag behind our neighbors in Southeast Asia in actually responding to the pandemic.

To illustrate, Malaysia, which has the worst surge in new cases over the past month, has been providing more than 97 vaccinations per day per 100,000 people. The Philippines, on the contrary, is providing only 23 per day per 100,000 people. Indonesia, which has a comparable intensity of surge in new cases with the Philippines, is way ahead in terms of vaccination as it administers 139 vaccinations per day per 100,000 people.

We are lagging behind even the poorest countries in Southeast Asia. The Philippine economy is about 14 times the size of the Cambodian economy but the latter is providing six times the number of vaccinations per 100,000 people than the Philippines.

As of today, only 0.3% of the Philippine adult population has at least one dose of COVID-19 vaccine – the worst among Southeast Asian countries with high levels of cases. Poorer neighbors like Cambodia, Myanmar and Laos have even much better vaccination numbers.  ###

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Governance, Human rights

A weaponized justice system brings the worst injustices

On Mar 7, yet another wave of coordinated arrests and alleged extrajudicial killings struck the activist and cause-oriented groups in the country. According to media reports, nine were killed and six were arrested in simultaneous operations carried out by the Philippine National Police (PNP) in Southern Tagalog. The victims are activists from organizations of workers, urban poor, farmers and fishers, as well as from human rights groups based in Batangas, Cavite, Laguna and Rizal provinces.

This latest spate of attacks against activists came a mere nine weeks since the PNP launched a similar operation in Panay island. Nine people were killed and 17 were arrested by the police in several indigenous Tumandok communities on Dec 30, 2020. 

Common to both cases is the PNP claim that they were enforcing search warrants against the targeted activists for supposed illegal possession of firearms and explosives. Even more strikingly similar is that in both police operations, apparently the same judge issued the search warrants – Judge Jose Lorenzo R. Dela Rosa of Branch 4 of the Manila Regional Trial Court (RTC). (Note: in the Tumanduk case, another Manila RTC judge, Judge Carolina Icasiano Sison, was also named as behind the warrants.)

Less than two weeks prior to the Tumandok operations, the PNP also searched the houses of activists in Metro Manila and nabbed seven people on Dec 10, 2020. Again, the police secured search warrants for firearms and explosives to legitimize their operations. Providing the warrant was Judge Cecilyn Burgos-Villavert of the Quezon City RTC Branch 89. Villavert first gained notoriety for issuing the search warrants that led to the arrest of 57 individuals (including 15 minors aged 12 to 17) in Negros Occidental on Oct 31, 2019. 

Activists and communities in the island of Negros have been repeatedly targeted by joint police and military operations using court-issued search warrants as a cover. On Mar 30, 2019, state forces, in the process of enforcing 36 search warrants, killed 14 people and arrested 16 more in Negros Oriental. Just three months earlier, on Dec 27, 2018, six people were killed and 31 were arrested in simultaneous police operations in the same province. This time, the PNP was armed with more than 80 search warrants, according to reports. One judge sanctioned both Negros operations – Judge Soliver Peras of Branch 10 of the Cebu City RTC. 

The Duterte administration has blatantly weaponized the regional trial courts and included the legal system in its arsenal against activists and the marginalized communities and sectors they serve. When the justice system itself is weaponized to repress the people, the injustices committed become doubly abhorrent. Where else are people supposed to go to correct the wrongs made against them when those who are supposed to dispense justice are perceived as hoodlums themselves? 

The police and military template of taking in activists based on concocted lies and justified by dubious warrants has naturally led to ludicrous cases of arrests. In several instances, the arrested victims involve elderly women whom state forces laughably insist are in possession of explosives and firearms in her home, a household that usually includes young grandchildren. Even the United Nations Human Rights Office in a June 2020 report raised the alarm (in the context of Duterte’s equally vicious drug war) on how the Philippine police would “repeatedly recover guns bearing the same serial numbers from different victims in different locations” during their operations. 

For those killed during bloodstained police operations, even Duterte’s Justice department could no longer fully rationalize the “nanlaban”narrative (i.e., the victims resisted arrest and were killed by the police in the process). In a report to the UN Human Rights Council (UNHRC), the Justice department admitted that in more than half of the nanlaban cases they reviewed in the drug war, law enforcement agents did not follow protocol and no full examination of the recovered weapon was conducted. 

While the victims are involved in legitimate advocacies on the issues of land, labor, human rights, etc., they have been set up for state-perpetrated assaults through the non-stop red-tagging (labelling activists and their organizations as communists terrorists) by the regime. All these – the red-tagging, the use of courts to legitimize the raids on the houses and offices of activists, and the consequent killings and arrests, are part of the counterinsurgency campaign of Duterte. The made-up narrative is that the activists belong to the armed communist rebellion, thus the search warrants for firearms and explosives.

The UN Human Rights Office pointed out that that “the vilification of dissent and attacks against perceived critics are being increasingly institutionalized and normalized” in the country, as it noted how red-tagging “has posed a serious threat to civil society and freedom of expression”. It correctly argued that activists have become the targets of verbal and physical attacks, threats and legal harassment as “human rights advocacy is routinely equated with insurgency and the focus diverted to discrediting the messengers rather than examining the substance of the message.” 

What exactly is the substance of the message?

Some of those who were killed and arrested in the latest attacks in Southern Tagalog are workers and labor rights advocates. The minimum wage in the Calabarzon region (Cavite, Laguna, Batangas, Rizal and Quezon) is between PHP 317 and PHP 400, barely 20% of the estimated cost of living. Southern Tagalog workers and their supporters, as elsewhere in the country, have every reason to organize and struggle for their interests and rights, including on decent living. This is especially so under Duterte whose presidency is the worst in terms of addressing the issue of low wages.

Some of those who were killed and arrested are farmers, fishers and peasant rights advocates. With chronic landlessness and lack of government support, farmers suffer the worst poverty in the country. Based on data from the Philippine Statistics Authority (PSA), the poverty incidence among farmers is at 31.6% – the highest among all sectors, followed by fishers with 26.2 percent. Meanwhile, based on the official Census of Agriculture, as high as 62% of farmlands in Calabarzon in terms of area are not fully owned or controlled by the tillers. Farmers and peasant rights advocates in Southern Tagalog have every reason to organize and struggle for their right to land and life; especially so under Duterte who has openly instructed the police and military to shoot and kill farmers who are asserting such rights.

Like all the oppressed, the workers, farmers and people of Southern Tagalog do not only have the reasons to fight their oppression – they also have the legitimate right to do so. Indeed, no court warrant can arrest or kill the people’s collective right to resist injustice. ###

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