Agrarian reform

Evicted farmers will be back at the Batasan gate, undaunted, more determined

On Friday (May 22) afternoon, members of the House of Representatives’ (HoR) Special Action Force (SAF) and the Philippine National Police (PNP) violently demolished the temporary structures set up by farmers camping out of the HoR. The farmers were on the 40th day of the campout, which they set up to press lawmakers on the passage of House Bill (HB) 3059 or the Genuine Agrarian Reform Bill (GARB).

I was there, with the other staff of Bayan, before the violent demolition took place. We rushed to the HoR after receiving word that there was a threat of demolition. When we arrived at past 12 noon, the farmers have started to voluntarily dismantle the temporary structures occupying one side of the main gate.

Ka Paeng Mariano of Anakpawis and Ka Daning Ramos of the Kilusang Magbubukid ng Pilipinas (KMP) told us that it was in compliance with their agreement with the House’s security officials. The farmers would be allowed to maintain the campout on one side of the gate and hold a moving picket on the other side. When we left at around 1:30 PM, we had the impression that everything was settled.

But as soon as we left, we received separate text messages from those at the campout that the SAF and police, backed up by a fire truck, have started to tear down the remaining structures on the other side. Gerry Corpuz of Pamalakaya later told me at the DAR (Department of Agrarian Reform) where the evicted farmers transferred, that they were able to defend the camp against the ruthless eviction by the SAF and police for about one and a-half hours.

In its press conference this morning, the peasant leaders, some of the injured farmers and supporters, and Anakpawis representatives Ka Paeng and Joel Maglunsod strongly condemned the demolition.

They pinned the blame directly on House Speaker Prospero Nograles and said House Secretary General Marilyn Yap, Sergeant-at-Arms Brig. Gen. Hortacio Lactao, Legislative Security Bureau (LSB) Isabelito Flores and the police and security guards must be held accountable for the violent eviction that injured 11 people. They will file charges before the Commission on Human Rights (CHR) and possibly before the United Nations Human Rights Council (UNCHR).

At the DAR where I dropped by last night, the farmers and their supporters have started to rebuild their camp. Many of them were physically hurt, but there were no signs of dampened fighting spirit. One “manang” (elderly woman) was animated, repeatedly, tirelessly telling how she got her bruises and how she held her ground against the police.

Gerry asked the designated cook that night to prepare dinner for at least 250 people. They were expecting six jeepneys to arrive from the provinces – reinforcing the farmers and supporters of genuine agrarian reform for the remaining days of the campout.

Yes. The farmers and their supporters will be back on Monday at the main gate of the House. Undaunted, more determined.

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Economy, Labor & employment

Why Arroyo’s P330-billion ‘stimulus’ package will not solve joblessness (Part 2)

Originally published in Bulatlat.com

Part 2 of a two-part series (See Part 1)

Photo from Getty Images

Photo from Getty Images

As Filipino workers marked Labor Day last May 1, about 400 from their ranks are being displaced daily as fallout of the global economic crisis.

By the Department of Labor and Employment’s (DoLE) own reckoning, the global crisis has already displaced almost 50,400 workers in the Philippines as of mid-March. It also reported that about 59,200 workers were affected by workday reduction, job rotation and compressed workweek.

Making the situation worse is the mass displacement taking place among overseas Filipino workers (OFWs). Official report pegs the number of retrenched OFWs at almost 6,500 in 19 countries as of January. But independent monitoring by migrant workers’ group Migrante International shows that the figures, as of February, could reach around 20,000 OFWs from 17 countries.

But government as usual wants us to believe that it is on top of the situation. The supposed resiliency of the economy and Filipino workers are once more being hyped. Government is doing what it can to preserve and create jobs amid the global recession, according to Arroyo administration officials.

In fact, one of the major components of Mrs. Gloria Arroyo’s PhP330-billion Economic Resiliency Plan (ERP) is the Comprehensive Livelihood and Emergency Employment Program (CLEEP). As a sub-program of the ERP, the CLEEP aims to hire for emergency employment and fund and supervise livelihood projects.

“Good news” or false hope?

From its earlier grim forecasts, officials have shifted to the “good news” approach when talking about the employment situation. As Labor Secretary Marianito Roque puts it when asked on the latest statistics on job losses, “We’re focused on job creation. We are not talking anymore of displacements.” Roque previously described as “abnormal” the dislocations of workers due to the global crunch.

Latest government press releases highlight opportunities awaiting Filipino workers. DoLE sees the job crisis “easing up” in the second quarter, with “fewer workers losing their jobs and tens of thousands of new jobs anticipated”. In Mindanao alone, business process outsourcing (BPO) could create half a million jobs, the Department of Trade and Industry (DTI) said.

In her Labor Day message, Mrs. Arroyo repeated her favorite theme – that the resilient economy protected us from the global crisis and allowed us to continue growing. She added that Filipino workers’ skills and talents are “confounding the gloomy forecasts of pessimists”. The DoLE, for its part, hyped its May 1 Jobapalooza which was supposed to provide 250,000 local and overseas jobs.But this (over)optimism only gives Filipinos a false hope.

For one, it ignores the dim reality of the global economy, which is facing a crisis that, according to World Bank president Robert Zoellick, “no one knows how long it will last.” With the International Monetary Fund (IMF), the World Bank said recently that “the global economic crisis is turning into a human and development calamity.” The International Labour Organization (ILO) earlier called it a “global jobs crisis”.

As a result of the global crunch, the ILO said unemployment in Asia will jump to 97 million in 2009 – 7.2 million higher than last year. While no country-specific estimates were given, the ILO expects the number of jobless workers in Southeast Asia to grow by 2-3 million this year. It also noted that the Philippines, Pakistan and Cambodia have the fastest expanding labor force in the region and thus are among the most vulnerable.

Already in worst jobs crisis

These gloomy prospects come at a time when the backward and pre-industrial Philippine economy has been undergoing its worst jobs crisis. Lack of genuine industrialization and land reform has made the economy incapacitated to produce and expand gainful and sustainable jobs. Worse, rapid globalization since the 1990s has destroyed countless jobs and livelihood and further debilitated domestic employment generation.

From 2001 to 2007, the average annual unemployment rate is pegged at 11.3 percent with almost 4 million jobless workers every year. In the Aquino years (1987-1992), the averages were 9.5 percent and 2.3 million and have progressively climbed during the Ramos (1992-1998), Estrada (1998-2001) and Arroyo (2001-present) administrations. (Note that since its April 2005 Labor Force Survey (LFS), the NSO started to use a new definition of unemployment, which excluded discouraged workers and those not willing or available for work from the labor force. The shift had a net effect of “statistically” reducing the number of unemployed. For 2007, for instance, the LFS showed only an annual unemployment average of 2.6 million workers under the new definition, or around 1.4 million less than the unemployment average using the old definition. This paper used the old unemployment definition but the NSO has not yet released official data comparing unemployment under the old and new definitions for 2008.)

Notably, the unemployment rate has remained at double-digit despite a period of relatively high economic growth. The gross domestic product (GDP) grew by an average of more than 5 percent a year in 2001-2007, and peaked at a 30-year high 7.2 percent in 2007. Also significant is the increase in number of poor Filipinos (by almost 4 million between 2003 and 2006) during that period of high economic growth.

This again exposes the hollow optimism of government based on some projections that the Philippine economy is among the few that will not contract this year. If almost 4.1 million workers were jobless in an economy that grew by 7.2 percent in 2007, how many will be jobless when economic growth decelerates to, say 4.4 percent (government’s most optimistic scenario) this year?

Will the ERP mitigate the displacements?

In response to the massive dislocations of OFWs and local workers, the Arroyo administration came up with the CLEEP to “save and create jobs.” Government estimates that the program could generate at least 800,000 jobs. (See Table)

ERP table 3

As of February, Malacañang reported that the CLEEP has already created 70,000 jobs nationwide. But even if government achieves its target of 800,000 jobs under the CLEEP, it will still fail to even mitigate the rapid displacements of workers. Note that the labor force grows every year by an average of 900,000 while the number of jobless workers, even before the global recession, grows by 90,000 a year.

Statistically, they may “mitigate” job losses as reflected in the Labor Force Survey (LFS) of the National Statistics Office (NSO). The LFS simply asks if a worker is employed or has a livelihood but does not probe the duration of employment. More, CLEEP’s temporary jobs will cater, theoretically, to those who are displaced by the global crisis, not to the usual 4 million plus jobless workers the country has in the pre-recession years.

Overall, the ERP does not modify, but in fact continues, the flawed basic orientation in job generation of current and past administrations. Out of 800,000 target jobs under CLEEP, for instance, more than 500,000 will come from infrastructure projects of the Department of Public Works and Highways (DPWH). Most of these jobs and the other CLEEP targets, meanwhile, are aligned with the priority projects of the Super Regions.

The Super Regions, first unveiled by Mrs. Arroyo in her 2006 State of the Nation Address (SoNA), aims to attract foreign investments for export zones, mining, BPOs, agribusiness, etc. Thus, in terms of long-term employment, it will further undermine domestic job generation as local industries and producers are further marginalized.

Unreliable, insecure jobs

Meanwhile, the domestic job crisis is mitigated only through labor export, which under Mrs. Arroyo has been officially proclaimed as government policy for job generation. OFW deployment has now already reached one million per year, or almost three times the volume of annual deployment during the Aquino administration.

Despite its vulnerability as a means to generate jobs as shown by the current recession, the Arroyo administration continues to promote labor export. In fact, it is one of the job creation/preservation tools of the ERP. DoLE is mandated under the ERP to assist displaced OFWs by redeploying them to other emerging markets and identifying and developing new market niches, among others.

For affected workers in the export sector, the DoLE has established quick response teams (QRT) in its regional offices to devise an early warning system on possible displacements. It has been busy as well in organizing job fairs in various parts of the country such as the Jobapalooza last Labor Day.

But because jobs created by the economy are in the main dictated by foreign investments like BPOs and tourism, available employment at these job fairs are usually detached from the actual needs of the domestic labor market. While government hypes the number of potential jobs, it does not report how many workers were actually hired in these job fairs and how many were turned away due to jobs and skills mismatch.

If the Jobapalooza turnout is any indicator, it appears that a very small portion of the supposed available jobs translates to actual employment. Initial media reports say only 7,000 workers were hired on the spot during the Jobapalooza. If accurate, that figure is only less than 3 percent of the much-advertised 250,000 jobs that the activity was supposed to provide.

Worse, DOLE, unable to create a reliable job generation plan, has further legitimized labor flexibilization in the guise of preserving jobs. Under the ERP, it is actively promoting shortened work shifts, rotating forced leaves and other flexible labor schemes. These are contained in DoLE’s Advisory No. 2 which gives all employers more leeway to undermine the job security of their workers.

Flexible work arrangements must have the consent of affected workers, according to the said advisory. The issue however is that existing policies have already created an environment favorable to employers. The DOLE, by promoting flexible work, even if based on certain conditions, reinforces such environment that is hostile to workers.

The same argument holds true in terms of a substantial wage hike. The Bangko Sentral ng Pilipinas (BSP or Central Bank of the Philippines) declared as early as February that there is no need for a wage increase since the inflation rate is slowing down. This bolstered the excuse of companies, which Malacañang officials echo, that because there is a global recession, wage hikes will only further destroy jobs.

These preempt the initiatives of workers to negotiate with their employers for a wage increase. Besides, a review of past retrenchments and shut downs shows that unfair foreign competition, overdependence on a volatile global market and lack of government support, among others – and not wage hike – are behind the woes of most local firms.

In summary, the ERP of the Arroyo administration aims to create and preserve jobs through temporary, insecure and externally-driven (i.e. labor export and foreign investment) employment with even more measly pay. It is no longer new; such has been the case of employment in the Philippines for decades. But the ERP is pushing it to a new and higher level, at a greater expense, oppression and exploitation of Filipino workers.

People’s Fighting Demands

The ERP clearly shows that the Arroyo administration is not only unable but is also unwilling to deal with the global crisis outside the framework of its flawed economic program. We are thus challenged to put forward an alternative set of policy reforms and measures that will serve and protect our interests as a people and as a country struggling to achieve real and sustainable economic development.

On a positive note, the crisis is offering a unique opportunity for all vulnerable, oppressed and neglected segments of society – from the basic sectors to the marginalized Filipino businessman/woman – to unite and advance a common agenda for deeper economic reforms.

Such reforms must provide urgent economic relief as well as give an opening for a more substantial policy shift in terms of long-term direction and paradigm for the economy. With this in mind, the Bagong Alyansang Makabayan (Bayan or New Patriotic Alliance), through consultations with various sectors, has come up with the People’s Fighting Demands for Immediate Economic Relief and Long-Term Reforms. (See Annex)

The Fighting Demands builds on the people’s ongoing campaigns to establish a pro-people, pro-Filipino and nationalist economy. As a concrete alternative to the defective ERP, it outlines a set of short-term or urgent relief measures to truly mitigate the impact of the global crisis on ordinary Filipinos.

More importantly, the Fighting Demands advocates medium and long-term reforms that aim to gradually reorient and redesign the domestic economy towards the path of self-reliance and genuine industrialization. Needless to say, it would not materialize without a great and broad movement that will campaign and work hard to translate these proposals into actual national policies.

Annex

People’s Fighting Demands for Economic Relief and Long-Term Reforms: Ensuring a Pro-People and Nationalist Response to the Global Financial and Economic Crisis

I. Protection and Promotion of Jobs and Immediate Provision of Benefits and Assistance to Affected Workers

  • Ensure that due process are accorded to all workers, including overseas Filipino workers (OFWs), who are facing retrenchment or dislocation to prevent unreasonable termination.
  • Review all the cases of displaced workers with the employer citing the global financial and economic crisis as the reason behind such termination to determine if due process was observed and the reason cited was legitimate.
  • Ensure the easy access of all workers to all the benefits accorded to them by their social security and insurance systems.
  • Ensure that all claims due to the displaced workers such as separation pay and other entitlements must be given without delay by their employers.
  • Provide immediate relief, including but not limited to, direct cash assistance grant to all workers displaced by the global financial and economic crisis.
  • Ensure that displaced OFWs obtain from their employers the immediate provision of full compensation including separation pay, payment for the unexpired portion of their contracts, and reimbursement of air transportation fare.
  • Stop the imposition of onerous and additional fees on workers leaving the country to look for employment opportunities abroad.
  • Ensure that all benefits due to OFWs from their contribution to the funds of the Overseas Workers Welfare Administration (OWWA) are easily accessible and readily provided.
  • Stop contractualization and all forms of labor flexibilization schemes.
  • Stop the massive and systematic retrenchment of all public sector workers by scrapping all so-called “rationalization plans” such as Executive Order (EO) 366 and EO 102, and all privatization programs for various government agencies, government-owned and controlled corporations (GOCCs), and other public enterprises and institutions.
  • Stop the ejection of peasants from their land
  • Provide substantial and immediate government assistance to farmers in areas hit by natural or man-made calamities that affected farm production.
  • Suspend the clearing operation of the Metro Manila Development Authority (MMDA) against sidewalk vendors.

II. Provision of Sufficient Social Services

  • Provide sufficient social services especially public education (excluding military education), public health, and public housing by substantially increasing their national budget allocation and increasing public spending on them.
  • Reduce substantially the national budget allocation for the military and debt servicing and redirect the savings to allocation for public education (excluding military education), public health, and public housing.
  • Stop the privatization and commercialization of all public schools and state colleges and universities, public hospitals, and public housing to ensure that the services they provide are accessible and available especially for the poor and ordinary income earners.
  • Stop the demolition of urban poor communities and provide decent and secure housing for the poor.

III. Generating Resources While Easing the Undue Burden Caused by Taxes and Debt

  • Stop the automatic appropriation for debt servicing through the repeal of Presidential Decree (PD) 1177 or the Budget Reform Decree of 1977 and Executive Order (EO) 292 or the Administrative Code of 1987 to free up resources for social services spending.
  • bDeclare a moratorium on foreign debt servicing and review all foreign debts to determine which are odious and illegitimate and therefore shall no longer be repaid.
  • c. Remove the 12% value added tax on oil, power, water, and other basic consumer goods and basic services to lower prices and stretch the budgets of ordinary households.
  • d. Provide tax breaks for all minimum wage earners in the private sector and their equivalent in the public sector. Review all pertinent laws and policies to ensure that such tax breaks are appropriately enjoyed by targeted workers and employees.
  • Provide tax breaks and other forms of financial assistance to Filipino-owned small and medium enterprises (SMEs) to boost their viability. Various forms of fiscal incentives accorded to transnational corporations (TNCs) and other foreign businesses operating in the country must be redirected to Filipino-owned SMEs.
  • Re-impose tariffs on imported goods that have been cut back or eliminated under past and present trade liberalization programs and international trade agreements to generate revenues for the national government.
  • Implement a serious crackdown against government corruption, bureaucratic wastage, and smuggling that take away much-needed public resources.

IV. Mitigating the Cost of Living and Controlling the Prices of Basic Goods and Services

  • Implement the demand of all private and public sector workers for a substantial increase in their wages through legislation.
  • Impose price control mechanisms on basic consumer goods and provide state subsidy to mitigate sudden increases in prices. Review all pertinent laws and policies to ensure that price control mechanisms are properly implemented and are actually beneficial to consumers.
  • Repeal Republic Act (RA) 8479 or the Oil Deregulation Law of 1998 and RA 9136 or the Electric Power Industry Reform Act (EPIRA) of 2001 to stop and reverse the privatization and deregulation of the oil and power sectors that have led to increasing petroleum prices and electricity rates.
  • Stop all new increases in water and power utilities caused by various automatic rate adjustment mechanisms under privatization contracts forged by past and present administrations.
  • Stop all new increases in mass transportation fares. In the case of public utility jeepneys, buses, and taxis, government must provide considerable assistance to drivers and small operators including, but not limited to, subsidies on petroleum and spare parts. Onerous and additional fees imposed by government agencies on the public transport sector must be scrapped as well.
  • Freeze the increases in tuition and all other fees imposed by public and private schools, colleges, universities, and other educational institutions nationwide. Stop the deregulation of tuition and other fees by repealing the Education Act of 1982.
  • Ensure the availability of affordable food, especially rice. Make available to the general public the P18.25 per kilo rice subsidized by the National Food Authority (NFA), which is currently restricted to holders of family access cards (FACs). The privatization of the NFA must be stopped and its mandate to ensure food security must be promoted, including its procurement of at least 25% of domestic rice production. At the same time, it must maintain its palay support price of P17 a kilo for palay farmers.
  • Review all relevant laws and policies to ensure that affordable, essential, and safe medicines are available and accessible to the people.

V. Ending and reversing the liberalization of trade and investment

  • Reverse all trade and investment liberalization policies to support and promote domestic production. All previously removed and reduced tariffs, quantitative restrictions, foreign equity limits, and other forms of control and regulation must be restored and strengthened to check the undue competition posed by foreign goods and capital on Filipino producers.
  • Stop the implementation of existing bilateral, regional, and multilateral free trade agreements (FTAs) such as, but not limited to, the Japan-Philippines Economic Partnership Agreement (JPEPA) and the various trade deals under the World Trade Organization (WTO). All ongoing negotiations for new bilateral and regional FTAs as well as talks for new liberalization commitments in the WTO must be immediately discontinued.
  • Stop all moves to further liberalize the investment regime in the country such as, but not limited to, House Resolution (HR) 737, which calls for 100% foreign ownership of land and resources in the country through Charter change (Cha-cha).

VI. Orienting the Domestic Economy Towards Self-Sufficiency and Self-Reliance

  • Promote local industries by providing government support and incentives that will allow them to expand and create jobs inside the country.
  • Reorient the import-dependent and export-oriented design of light industry in the country towards the production of basic consumer goods as well as basic producers’ goods to meet the needs of Filipino consumers and domestic economic sectors.
  • Undertake a program for national industrialization including developing the country’s capability to produce industrial goods. Effective state control over strategic sectors and economic activities such as energy, raw material production, utilities, etc must be ensured.
  • Establish and implement a genuine agrarian reform program in the country and undertake rural industrialization to spur development and deal decisively with unemployment, poverty, and hunger.

VII. Addressing the Roots of the Armed Conflict in the Country

  • Considering that poverty and marginalization are the roots of decades-old armed conflict in the Philippines, it is vital to address these issues head-on instead of the current militarist approach, including military operations cloaked under so-called poverty alleviation initiatives. There is a need to resume the stalled peace negotiations, including the talks between the Government of the Republic of the Philippines (GRP) and the National Democratic Front of the Philippines (NDFP), as well as with the Moro Islamic Liberation Front (MILF) to allow discussions on comprehensive and extensive social and economic reforms that the Filipino people urgently need especially amid a worsening global economic condition.
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Poems

odnum an datgilaB

J-Lo Pagbabago

Poster from Pagbabago!

.ang nanuhol at nanakot ang siyang argabyado
sa odnum an datgilaB

.ang saksi sa krimen ang siyang naging preso
sa odnum an datgilaB

.ang mamamatay-tao napupunta sa kongreso
sa ondum an datgilaB

.hindi rape ang rape kung ang rapist ay kano
sa ondum an datgilaB

.buhay ang demokrasya sa madayang halalan
sa odnum an datgilaB

.ang pekeng pangulo, habambuhay pinuno
sa odnum an datgilaB

.ngunit dilang matalas ay lalong tumatalas
sa odnum an datgilaB

.at kahit ang pipi ay hindi tatahimik
sa odnum an datgilaB

Maghihimagsik at ititiwarik
ang odnum an datgilab!

May 2, 2009

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Economy

Cordillera Day 2009 and notes on the national situation

Photo from the Cordillera People's Alliance

Photo from the Cordillera People's Alliance

On April 23-25, 2009, the Cordillera People’s Alliance (CPA) held the 25th Cordillera Day celebrations. Unlike in previous years, this year’s celebrations were decentralized and held simultaneously in the five provinces of the region (Benguet and Baguio, Kalinga and Apayao, Ifugao, Mountain Province and Abra). I was later told this was not the first time that the Cordillera Day celebrations were decentralized. In 1995, simultaneous celebrations were also held in the region’s provinces.

This annual event is a political solidarity activity of the people’s movement in the Cordillera. It is one of those annual events that Filipino and foreign activists alike anticipate as it showcases the rich indigenous culture and inspiring struggles of the people of the region.

The Cordillera Day commemorates the death of Macliing Dulag, a respected pangat (tribal chieftain) of the Butbut tribe. Macliing was a prominent leader of the Cordillera people’s campaign to stop the construction of the World Bank-funded Chico Dam project during the Marcos dictatorship. On April 24, 1980, Macliing was assassinated by soldiers from the Philippine Army’s 4th Infantry Division. The annual commemoration of his martyrdom eventually evolved into the Cordillera Day.

Below is the keynote speech and input on the national situation that I presented, in behalf of Bayan, in the Cordillera Day’s celebrations in Bokiawan, Ifugao.

25TH CORDILLERA DAY KEYNOTE SPEECH AND NOTES ON THE NATIONAL SITUATION

By Arnold Padilla, Bagong Alyansang Makabayan (Bayan)
Bokyawan, Hungduan, Ifugao
April 24-25, 2009

In behalf of the national leadership of the Bagong Alyansang Makabayan (Bayan), I congratulate the Cordillera People’s Alliance (CPA) – our regional chapter here in the Cordillera – and the Bokyawan Farmers Organization (BFO), the host organization for the celebration of Cordillera Day here in Ifugao – for successfully organizing the 25th Cordillera Day in Ifugao and in four other provinces of the region.

The central theme of the 25th Cordillera Day, “Strengthen People’s Solidarity. Intensify the Struggle for Land, Life and Rights”, fittingly captures the urgent challenges and tasks that the people not only of Cordillera but of the entire nation face today. The raging global financial and economic crisis, the worsening backwardness, poverty and oppression that we face everyday while the despised and anti-people Arroyo administration ceaselessly maneuvers to cling to power beyond 2010, compel us to defend with even greater resolve and with even stronger solidarity our land, our life, and our rights as a people.

Looming “Greater Depression”

Today we are in the midst of what some experts called a looming Greater Depression. The housing bubble in the US, which started to burst in 2006, has caused the collapse of some of the biggest and most prominent figures of US imperialism, among them some of its oldest financial giants. Expectedly, the crisis has quickly spread from the financial sector to the real economy. The giant American automakers, the remaining huge investment banks, and the rest of the monopoly corporations in the US have managed to keep afloat only because of the bailout money that Presidents Barrack Obama and George Bush Jr. have squeezed from the American working class. Latest estimates say that the Obama and Bush administrations have already spent an amount that is equivalent to almost 30% of the US gross domestic product (GDP) to stimulate recovery in the world’s largest economy. That amount is about 12 times more than the stimulus spending during the Great Depression.

The current global financial and economic crisis has exposed the deep-seated flaws of capitalism, in particular neoliberal free market fundamentalism that has dominated national economic policies and thinking around the world in the last three decades. Even some of the most ardent supporters of neoliberal economics have began to acknowledge the “excesses” of unregulated markets like the US financial market.

In its recent summit last April 2, the Group of 20 (G20) richest nations said in a communiqué that “major failures in the financial sector and in financial regulation and supervision were fundamental causes of the crisis”. And they want to remedy the crisis by extending “regulation and oversight to all systematically important financial institutions, instruments and markets” including, for the first time, “systematically important hedge funds”. In effect, the richest nations want to moderate the greed of their corporations and banks. But as history has taught us, capitalist greed for profits could never be moderated.

This is because while the mortgage meltdown set off the financial crunch, at the heart of the crisis is capitalism’s nature to overproduce. The ceaseless need of the monopoly bourgeoisie to extract surplus value from the working class and to increase superprofits through further depression of incomes have continuously and progressively undermined the capacity of society to absorb capitalist production. Capitalism tries to correct this through, among others, creating the illusion of wealth such as the housing loans and other forms of credit. But as the mortgage meltdown showed, such an illusion is simply that – an illusion.

Indeed, in reality, the American working class is in its most miserable state. US households are deeply in debt and millions are being economically displaced. US household debt, in the last few years, has stayed close at around 100% of the GDP – the average throughout the 1900s is 40-70% – and the last time it reached 100% was in 1929, the year that the Great Depression started. Meanwhile, the US unemployment rate is pegged at 8.5% as of March, the highest since 1983, and is expected to reach more than 9% this year, with an additional 2.4 million jobless Americans.

The crisis is felt throughout the industrial world that even imperialist institutions like the International Monetary Fund (IMF) and the World Bank are forced to recognize its gravity, of course only to use the crisis as a pretext to impose more conditionalities and policy dictates on the Third World. Bankruptcies and bailouts of financial and industrial firms and record joblessness and economic dislocations are also unfolding from Europe to Japan. Media reports noted that this will be the first time since the 1974-75 oil price shock that the centers of global capitalism will enter into a recession around the same time. Unprecedented as well is the collective decline in economic output of the member-countries of the Organization for Economic Cooperation and Development, an organization of the world’s largest economies, since the group started keeping records in 1970.

Overall, the World Bank projected that the global economy will contract by as much as 2% this year, while the International Labour Organization (ILO) estimated that global unemployment will increase by 40 million.

Deepening Permanent Crisis, Worsening Poverty

Amid the global financial and economic crisis, the Philippine economy faces deepening backwardness as it continues to rely on the export of raw materials and low-value added semi-manufactures, such as garments and electronics, which are also mainly assembled from imported inputs. For more than a century, the Philippines has been dependent on the US for market and capital as a result of colonial and neocolonial policies designed to make the domestic economy serve the needs of the huge US economy.

Such subservience explains the permanence of the crisis in the Philippines, which has remained backward and pre-industrial and where the great majority of the people are in perpetual and worsening poverty. Neoliberal globalization in the last three decades has further opened up the domestic economy and deepened its links to the global economy, especially with the US.  Thus, the Philippines is vulnerable more than ever to the impact of the economic crisis raging in the US and other industrialized countries.

The US remains the biggest trading partner of the Philippines, directly accounting for around 17% of the country’s exports (as of Feb 2009), of which garments and electronics comprise about 62 percent. Meanwhile, the US absorbs 78% of the country’s garments exports and 13% of electronics exports. The importance of the US market for Philippine exports becomes bigger when its exports to East Asian countries that are ultimately shipped to the US, through the vast network of American affiliates and subcontractors in the region, are factored in. Because of declining consumption in the US, garment exports fell by 15% and electronic exports, by 8 percent.

For Filipino workers, of whom more than 30% are directly employed in the export sector, this translates to massive economic dislocation. Based on the latest estimates of the Department of Labor and Employment (DOLE), there are 50,353 workers displaced by the global crisis with a huge portion coming from the export firms in the Cavite-Laguna-Batangas-Rizal-Quezon (Calabarzon) region, particularly in Laguna, where more than 31,000 workers have been retrenched. Meanwhile, 59,149 workers are also affected by flexible work arrangements such as job rotation, work day reduction and compressed work week as firms try to cope with the crisis.

These workers will add up to the already huge army of jobless Filipino workers officially pegged at a record 4 million yearly. Note that under the Arroyo administration, the country has already been experiencing its worst jobs crisis even before the recent wave of massive displacements, with the annual unemployment rate pegged at 11.3 percent. The semi-feudal and semi-colonial economy has perpetually failed to create domestic jobs and livelihood for the people. Lack of national industrialization has stunted the country’s domestic industries while lack of genuine land reform has continuously deprived 7 out of 10 Filipino farmers ownership of land and source of livelihood.

The most recent Labor Force Survey (LFS) of the National Statistics Office (NSO) conducted last January shows that the total number of jobless has jumped by 170,000. The industrial sector lost 170,000 jobs, wherein manufacturing lost 120,000 jobs. Overall, if the first quarter trend in dislocations persists according to DOLE, the number of Filipino workers who may be displaced by the crisis could reach 300,000 by midyear – equivalent to 1,643 workers who would be displaced every day. Such volume is more than 10 times the average volume of workers who are losing their jobs daily from 2000 to 2008.

The domestic job situation will further worsen as overseas employment, which in the last three decades has mitigated the domestic jobs crisis, also feels the pinch of the global economic crunch. Note that Arroyo is the first Philippine president who has declared labor export as an official government policy and job generation program. Deployment of overseas Filipino workers (OFWs) under the Arroyo administration has already reached 1 million per year, or almost three times the volume of annual deployment during the Aquino administration.

OFW deployment today is also equivalent to almost 3% of the combined labor force and deployment, compared with only 2% in the late 1980s, which shows the increasing dependence of the country on labor export for jobs. This of course is expected in an economy with a shrinking productive base that hampers sustainable domestic job creation. The huge and still increasing size of Filipino migrant workers is directly proportional to the intensifying destruction of local industry and agriculture, which could not provide jobs for new entrants in the labor force and whose displaced workers could no longer be accommodated by an overstretched service sector.

Aside from providing employment, labor export has also become the most important source of foreign exchange earnings for the bankrupt economy and a source of much needed cash by households for consumption. From 2000 to 2008, remittances from overseas Filipinos have been expanding by almost 14% per year and reached $16.43 billion last year. Remittances from overseas Filipinos is the single largest factor that sustains the Balance of Payments (BOP) position, which measures the foreign exchange transactions between the domestic economy and the rest of the world.

But the raging global crisis, especially in the US, also seriously threatens the viability of labor export for jobs and foreign exchange earnings. Of the 8.7 million overseas Filipinos at any given time, more than 32% are based in the US and are thus immediately vulnerable to the crisis. Meanwhile, almost 48% of total remittances in 2008 also came from the US.

Based on the latest estimates of the DOLE, almost 6,500 OFWs have been sent home due to the global crisis. A huge portion of this number, around 2,500, came from export factories in Taiwan that have closed shop due to falling global demand. But in a separate monitoring by Migrante International, a group of Filipino migrant workers, the total number of displaced OFWs due to the crisis could already reach almost 20,000 from 17 countries as of end-February. DOLE estimates that almost 100,000 OFWs may be sent home as the crisis intensifies, although half a million overseas Filipinos are directly vulnerable. While migrant workers may continue to find employment as a ready source of cheap labor, this will entail even more oppression and exploitation.

On the other hand, remittances from overseas Filipinos remained flat in January 2009 from a 15% expansion in the same month last year. The Bangko Sentral ng Pilipinas (BSP) has earlier said that remittances will likely not grow in 2009, but independent estimates predict that remittances would fall by a minimum of 3% to as high as 11% this year.

In response, the Arroyo administration has come up with its Economic Resiliency Plan (ERP) worth PhP330 billion. The ERP aims among others to create more than 800,000 emergency jobs, expand social security and protection, and assist displaced workers in finding a new source of livelihood and income. Publicized as a “stimulus package”, the ERP is criticized even by neoliberal economists as severely lacking in funds to stimulate economic activity amid the global downturn. According to them, a real stimulus package needs significant additional resources on top of what the government has already planned to spend.

But while the ERP is severely wanting in funding and scope to be a real stimulus package, it must be stressed that the program is still framed within the same, flawed economic policies and priorities of the Arroyo administration and thus will not offer even temporary relief for people. For instance, more than 61% of the target job generation of the ERP are from infrastructure projects of the so-called Super Regions. The Super Regions – unveiled by Arroyo in her 2006 SONA – aim to expand foreign investment in agribusiness, tourism, export zones, BPOs, etc. These are the same national policies and strategies that have destroyed millions of jobs and livelihood in the past.

Furthermore, the funding issues confronting Arroyo’s stimulus plan are aggravated by the perennial shortfall in government revenues to support its expenditures. The budget deficit this year is expected to jump to P177.2 billion to as much as P257 billion, which some analysts predicted as not even the worst case scenario. Such high budget deficit is not entirely due to government’s pump priming efforts, which could not even be considered real pump priming. Revenues will surely fall this year as corporate incomes drop and the number of wage earners decline because of the global crisis, adding to the already significant number of businesses that have been folding up and displacing workers even before the recession of the world economy. Already, the Bureau of Internal Revenue (BIR) and the Bureau of Customs (BOC) have both lowered their collection targets for this year by P44.4 billion and P39.8 billion, respectively.

The Arroyo administration then will have to further increase its borrowing. This year, it plans to increase its foreign debt by $500 million and its domestic debt by P55.45 billion. But borrowing from domestic banks will further worsen the situation for local businesses scrambling for much needed capital as they will need to compete with government for loans and raise interest rates in the process. Government thus would have to turn more to foreign creditors and has already announced its intention to do so by the second half of 2009. But the question is will the foreign loans be available? According to the Institute of International Finance (IIF), net bank lending to emerging economies this year will see a negative swing of $227 billion (i.e. more outflows than inflows) as investors become more risk averse amid the deepening global crisis. With a tight supply of credit from foreign sources, government would be forced to accept even more onerous terms, including more burdensome conditionalities such as liberalization, deregulation and privatization, tied to these foreign loans.

To fund these debts, government is pushing for more onerous taxes on consumers already heavily burdened by the regressive 12% value added tax (VAT). Proposals to impose a tax on text messaging have been revived in Congress aside from plans to enforce new taxes on so-called sin products, soft drinks, and other consumer items. These additional taxes on ordinary consumers amid massive displacements and worsening poverty become even more outrageous considering that at the same time, proposals to provide new tax perks for big business are also being pushed in Congress while fresh liberalization commitments – reducing or eliminating tariffs on imports – through free trade deals are also in the offing.

They include House Bill (HB) 6073 of Speaker Prospero Nograles which intends to attract more agribusiness firms in the country by giving them a host of tax incentives, implementation of new liberalization commitments under the ASEAN Free Trade Area (AFTA) and the Japan-Philippines Economic Partnership Agreement (JPEPA), as well as negotiations for new deals such as the Partnership Cooperation Agreement (PCA) with the European Union (EU). All these will deprive the country of billions of pesos in potential revenues, which the Arroyo administration plans to compensate as usual by burdening consumers and ordinary income earners with more taxes.

Aside from paying for the additional debt that government will surely incur to fund the ERP, ordinary income earners and taxpayers will also directly shoulder a significant amount of the Arroyo administration’s stimulus package. The supposed added benefits to members of social security institutions apparently would come from their extra contributions, and not from government funds. Meanwhile, the cash subsidies under the stimulus package will also come from the pockets of ordinary income earners such as through the so-called “Katas ng VAT”. Furthermore, these cash subsidies are also meaningless amid skyrocketing cost of living, deteriorating jobs crisis and worsening poverty in the country that remain unaddressed and are even aggravated by liberalization, deregulation and privatization.

Meanwhile, the education and health components of Arroyo’s stimulus package will not have an impact on the social protection needs of the people as long as the overall policy direction of government is to privatize and commercialize the country’s public hospitals and schools such as House Bill (HB) 3287, which intends to corporatize 68 public hospitals nationwide. The health and education programs under stimulus package are also lip service in the context of meager and declining national budget for social services. In fact, compared to the Aquino, Ramos and Estrada administrations, the Arroyo administration posts the lowest annual budget allocation for health (1.7% of the national budget), education (15.2%, second lowest behind Aquino’s 12.3%) and housing (0.4%).

Clinging to Power

With the accelerating economic decay that the country faces, brought about by the permanent crisis of a semi-feudal and semi-colonial economy and made worse by globalization and the global depression, factional conflicts among the various cliques of the local political elite to control state power and protect their wealth and further enrich themselves could only but intensify. The never-ending political instability that has pestered the Arroyo administration and has expressed itself in endless political conflicts, factional strife and bickering among the elite, and widespread social unrest is an unmistakable manifestation of the unprecedented level of systemic crisis that characterizes our national situation today.

The Arroyo clique of the political elite has managed to stay in power through tremendous repression, opportunism, corruption and patronage politics. Leaders and members of legitimate progressive people’s organizations continue to fall prey to the Oplan Bantay Laya (OBL) counter-insurgency program of the Arroyo administration. Human rights group Karapatan noted an upsurge in extra-judicial killings in the Bicol region and in Mindanao. Abduction, illegal arrest, torture and prolonged detention continue and in some regions are on the rise in intensity and scale. In one case, 72 people, including all prominent mass leaders, have been illegally charged in a local court in Southern Tagalog – resulting in the detention of some of them and the forced hiding of the rest.

Cronyism has become increasingly pronounced under Arroyo, whose cronies have partnered with big foreign businesses to corner government contracts, investment deals and privatization projects. Her former chief of staff Mike Defensor, who now sits as director of Geograce Resources Philippines Inc. and chair of Nihao Mineral Resources together with the brothers of Arroyo’s Interior secretary and her adviser on trade and investments, has bagged mining exploration deals with two Chinese mining companies worth $150 million through government facilitation. Enrique Razon, who served as treasurer and financier of Arroyo’s Team Unity ticket in the 2007 senatorial elections, has bagged the 25-year concession contract to operate the National Transmission Corp. (Transco) for $3.95 billion through Monte Oro Grid Resources Corp. through Arroyo’s pet program – the Electric Power Industry Reform Act (EPIRA). Malacañang has also repeatedly attempted to take over Meralco, the country’s largest power distributor, first through the GSIS and now through the San Miguel Corp. of Danding Cojuangco.

In the face of even more dwindling wealth available in the domestic economy as the global crisis worsens, Arroyo and her cronies are expectedly more aggressive to consolidate and expand their control of whatever wealth is left in the domestic economy, and prolong their control over government through various schemes such as Charter change (Cha-cha). This, of course, is on top of the immediate objective to avoid accountability and the numerous charges Arroyo will surely face for massive corruption, electoral fraud and human rights violations once she is stripped of presidential immunity and effective control of government. Despite strong public opinion and opposition against Cha-cha, Arroyo’s lackeys in the House of Representatives have decided to push through with the resolutions of Speaker Prospero Nograles and Kampi president Luis Villafuerte. This week, Nograles’s House Resolution (HR) 737 calling for economic amendments, in particular on allowing 100% foreign ownership of lands in the country, and Villafuerte’s HR 1109, which intends to convene Congress into a constituent assembly (Con-ass) with the House and Senate voting jointly, have been officially introduced in the lower chamber.

Despite repeated assurances that the initiatives do not intend to prolong the term of Arroyo and all incumbent officials and that the 2010 elections will push through as scheduled – in fact Villafuerte’s resolution even contains these provisions – many people are still averse to the idea of Cha-cha especially as long as Arroyo is in power. Even if their terms were not extended and elections do push through, Cha-cha still creates conditions for the Arroyo clique to stay in power. One scenario is for Arroyo to run as representative in a Pampanga congressional district and later become Prime Minister in a Parliament that they will establish through Cha-cha. In this context, prospects for clean and peaceful elections in 2010 remain dim despite the automation program of the Commission on Elections (Comelec), which incidentally has been reinforced in the past months by new Arroyo people who have been appointed under questionable circumstances.

Total Sellout of National Patrimony and Sovereignty

Arroyo has earned the notorious distinction of being the most reliable puppet of US imperialism in the Philippines as US support has been crucial in undermining efforts to oust the unpopular Arroyo administration. She has maintained very close ties with the Bush administration through her unwavering support to the widely discredited US-led war on terrorism, which Arroyo used to repress her most vocal, active and relentless opponent – the progressive mass movement – and equip and train the Armed Forces of the Philippines (AFP), where she bought the loyalty of certain generals through political patronage.

Arroyo has shamelessly attempted many times, but to no avail, to set a meeting with US Pres. Obama apparently to ensure that her administration will still enjoy the same support it had under the Bush administration. It took a serious challenge and snowballing public opposition to the Visiting Forces Agreement (VFA) – triggered by the continued resistance of the US Embassy to turn over rape convict American soldier Daniel Smith to the Philippines – for the new US government to take notice of Arroyo. With increasing competition and sharpening contradictions among imperialist powers today to protect their spheres of influence amid the global crisis and with US hegemony seriously being challenged by other imperialist powers, the Obama administration could not afford to lose strategic military access to the Philippines through the VFA and weaken its military presence and position in the Asia Pacific region.

This puppetry of Arroyo has resulted in the grave abuse and violation of our national sovereignty and patrimony, and caused tremendous harm to the Filipino people’s basic human rights. The case of “Nicole”, the Filipina raped by Smith, concretely illustrates how ordinary Filipinos become victims and denied of justice by their own government in order to protect US interests. Malacañang’s eager conspiracy with the US Embassy to pressure “Nicole” to issue her second affidavit clearly shows to what extent that the Arroyo administration will go just to remain in the good graces of its long-time colonial master. “Nicole’s” second affidavit had the effect of casting doubts to the conviction of Smith, and in the process derailed calls to junk the patently unconstitutional and one-sided VFA. Fortunately, the Supreme Court (SC) acting on a petition by Bayan and others decided that the questionable circumstances surrounding the said petition be investigated.

The Arroyo administration knows that it could not maintain its hold to power, detached as it is from the people and perennially bankrupt due to corruption and neoliberal policies, without the indispensable patronage of the US and other rich countries. As such, it has vigorously facilitated the increased imperialist plunder of the country’s natural resources, such as through FTAs like the JPEPA and others, making Arroyo a steady and reliable agent for the imperialist powers which are scrambling to expand their access to Third World markets and resources. Arroyo’s push for Cha-cha should also be appreciated in this context.

Existing policies such as the Long-Term Lease Act, which already practically allows foreign firms to own land in the Philippines, are no longer enough for the transnational corporations as the ever-worsening crisis of overproduction compels them to look for the most favorable conditions to extract more surplus value such as permanent land ownership. Riding on this imperialist agenda and to conceal their narrow political interests, Arroyo’s clique has repeatedly claimed that the more important and urgent motive behind Cha-cha is the liberalization of the economy such as the proposal of Nograles in his HR 737. Aside from the support of imperialist powers, Arroyo also hoped to generate and consolidate the support of the biggest local landlords and bourgeois compradors that also stand to benefit from the increased liberalization.

The Challenges We Face and Our Response

Prof. Jose Maria Sison, in a recent speech, noted that “US imperialism is already anticipating the upsurge of people’s resistance on a global scale”. US authorities recognize that that the deepening economic crisis poses the greatest danger to the stability and security of the world capitalist system. Prof. Sison said that “Wall Street has brought about the crisis that is pushing state terrorism and imperialist war as well as inciting the people of the world to wage revolution.”

The worst crisis of global monopoly capitalism and the intensifying permanent crisis of the semi-feudal, semi-colonial Philippine economy present favorable objective conditions for exposing the decaying economic and political system and propose genuine alternatives. The raging crisis only serves to affirm the legitimacy and correctness of the Filipino people’s struggle to build a progressive and self-reliant economy through national industrialization and genuine land reform. But these crucial reforms will not happen without a people’s movement clamoring for fundamental change. The raging crisis confronting the country and the world is providing unparalleled openings for progressive social movements and people’s organizations to struggle for alternative policy frameworks and programs, rally the people, especially the exploited and oppressed, around these, and seriously challenge the current failed models of economic development.

This broad, grassroots-based, people’s movement for meaningful socio-economic reforms, and the political changes that necessarily go with it, must continue to enlighten the biggest possible number of people on the roots and nature of the crisis. The displaced workers and farmers, government employees, office workers, small- and medium-scale Filipino businesses, the youth, women, the urban poor, the indigenous peoples and other sectors most affected by the crisis will only pour out in hundreds of thousands and even millions clamoring for meaningful reform if they can comprehend the historical and current roots of the crisis and not be swayed by deceptive explanations by the government and vested interests.

The intensity of the crisis and its still-unfolding destructive effects on our people’s well-being, challenges us to face the situation with even greater resolve to struggle, not just to mitigate the crisis, but to work for a resetting of the policy framework and actual direction of the economy for the benefit of our people. We must build upon our ongoing campaigns to help bring about an even bigger and broader people’s movement that will resolutely struggle for this kind of change. Towards this, Bayan has initiated the process of putting together what we call the People’s Fighting Demands for Economic Relief and Long-Term Reforms. A product of consultations with our member organizations, the Fighting Demands is a package of short-term or immediate relief measures to the medium to long-term pro-people, pro-Filipino and nationalist economic reforms that need to be supported by the people and undertaken by government.

We are challenged to further intensify our struggles against US imperialism and its puppet Arroyo administration, to oppose and bring an end to the various expressions of imperialist intervention and domination in the country such as the VFA and the various agreements and legislations that have allowed the wanton abuse and plunder of our natural resources and the exploitation of our people. We must remain vigilant in the never ending schemes of the detested and corrupt Arroyo administration to stay in power such as through Cha-cha and electoral fraud.

We welcome the formation of new coalitions and movements such as the Makabayang Koalisyon ng Mamamayan (Makabayan), initiated by progressive party-list groups in Congress, which will bring to a new and higher level the people’s electoral struggle based on a patriotic and progressive platform. By next month, we expect the formal public launching of Pagbabago! People’s Movement for Change which gathers together progressive and reform-oriented individuals, including those who have been active in the campaign to oust Arroyo. This movement intends to carry a more comprehensive reform program and not simply issue-based; a movement that intends to contribute in addressing the underlying problems of Philippine society and resonates with the people’s basic demands and most deeply-held aspirations.

All of these efforts build on decades of untiring struggle and gains of the Filipino people – including the struggles and victories of the people of Cordillera against exploitation, plunder and state terrorism – for national freedom and genuine democracy. Let the theme of the 25th Cordillera Day celebrations – of strengthening the people’s solidarity, of intensifying the people’s struggle for land, life and rights – reverberate and be heard not only in Cordillera. Let it echo throughout the country and let it help rally the entire nation towards greater solidarity, struggle and resistance.

Mabuhay ang mamamayang lumalaban ng Ifugao at ng Cordillera!

Mabuhay ang lumalabang sambayanang Pilipino!

Thank you.

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Economy, Fiscal issues, Poverty

Why Gloria’s P330-B “Stimulus Package” Will Fail (Part 1)

A Critique of the Economic Resiliency Plan (ERP)
Part 1 of a two-part series, originally published in Bulatlat.com

gloria-pointing-up1The Economic Resiliency Plan (ERP) is a package of programs put together by the Arroyo administration in response to the global financial and economic crisis. Its stated objectives include the mitigation of the crisis’ impact and the invigoration of the domestic economy through a mix of accelerated government spending, tax cuts and public-private sector investments in infrastructure projects.

For the Filipino workers, the ERP aims to save and create as many jobs as possible and to protect the returning overseas Filipino workers (OFWs) and workers in export industries. The whole package costs P330 billion, of which almost half would be funded by the increase in the 2009 national budget. (See Table 1)

Funding issues

Publicized as a “stimulus package”, the ERP is criticized even by neoliberal economists as severely lacking in funds to stimulate economic activity amid the global downturn. According to them, a real stimulus package needs significant additional resources on top of what the government has already planned to spend. But it is estimated that of the P330 billion (US $6.92 billion based on current exchange rate of USD 1 = PhP47.672) allocated for the ERP, only P50 billion ($1.85 billion) can be considered as new funds. The said amount represents the sum realigned from the P252 billion allotted for servicing debt interest payments in the P1.41-trillion ($ 29.58 billion) national budget for 2009.

erp-table-13

The P50 billion ($1.85 billion) forms part of the P160 billion ($3.35 billion) allocated for the ERP from a total P188-billion ($3.94 billion) increase in the 2009 budget. Thus, P110 billion ($2.3 billion) of the said amount could not be considered a stimulus fund because it was already a planned increase without accounting the global crunch. If we compute the P50 billion as a portion of the gross domestic product (GDP), it is equivalent to only 0.67 percent, said economist Winnie Monsod. Compare it with, say China’s stimulus package, which is about 18 percent of its GDP. In a briefing paper, think tank IBON Foundation pointed out that the 2009 national budget is equal to only 16 percent of the GDP – the lowest since 1986! It confirmed that the current budget was not designed to respond to the global crisis.

Meanwhile, the P100 billion ($2.09 billion) of which a portion would be bankrolled by government financial institutions and social security institutions is facing serious uncertainty. A counterpart fund is supposed to come from private investors to raise the amount needed to fund large infrastructure projects. But as of this writing, administration officials have yet to clinch a definite commitment from private business. They have been negotiating with the Philippine Chamber of Commerce and Industries (PCCI) but the said group threatened to back out in February if they will not get guarantees from government and if the projects will not start in the first half of the year. A portion of the P100 billion ($2.09 billion) will be also sourced from the Social Security System (SSS), which proposed to shell out P12.5 billion ($26 million) for the ERP. However, it is facing uncertainty as well due to strong resistance from SSS members and some lawmakers.

The P40 billion ($839 million) in tax cuts under the ERP are of course not fresh funds provided by government. They represent the estimated additional savings for low- and middle-income earners and corporations accruing from the Reformed Value Added Tax (RVAT) Law enacted in 2005. Finally, the P30 billion ($629 million) in additional benefits to members of social security institutions like the SSS and Government Service Insurance System (GSIS) are also unsure. They will depend on the viability of the said institutions’ investments. Arroyo’s own economic adviser, Albay Governor Joey Salceda, doubted such viability and pointed to the “paper losses” of the SSS and GSIS in their stock market investments, a consequence of the global economic turmoil.

More debts, more onerous taxes

Aggravating these funding problems is the perennial shortfall in government revenues to support its expenditures. The budget deficit this year is expected to jump to P177.2 billion ($3.71 billion) up to as much as P257 billion ($5.39 billion), which some analysts predicted as not even the worst case scenario. Such high budget deficit is not entirely due to government’s pump priming efforts, which as already discussed, could not even be considered real pump priming. Revenues will surely fall this year as corporate incomes drop and the number of wage earners decline because of the global crisis, adding to the already significant number of businesses that have been folding up and displacing workers even before the recession of the world economy. Already, the Bureau of Internal Revenue (BIR) and the Bureau of Customs (BOC) have both lowered their collection targets for this year by P44.4 billion ($923 million) and P39.8 billion ($834 million), respectively.

The Arroyo administration then will have to further increase its borrowing. This year, it plans to increase its foreign debt by $500 million and its domestic debt by P55.45 billion ($1.16 billion). But borrowing from domestic banks will further worsen the situation for local businesses scrambling for much needed capital as they will need to compete with government for loans and raise interest rates in the process. Government thus would have to turn more to foreign creditors. But the question is will the foreign loans be available? According to the Institute of International Finance (IIF), net bank lending to emerging economies this year will see a negative swing of $227 billion (i.e. more outflows than inflows) as investors become more risk averse amid the deepening global crisis. With a tight supply of credit from foreign sources, government would be forced to accept even more onerous terms, including more burdensome conditionalities such as liberalization, deregulation and privatization, tied to these foreign loans.

To fund these debts, government is pushing for more onerous taxes on consumers already heavily burdened by the regressive VAT. Proposals to impose a tax on text messaging have been revived in Congress aside from plans to enforce new taxes on so-called sin products, soft drinks, and other consumer items. These additional taxes on ordinary consumers amid massive displacements become more outrageous considering that at the same time, proposals to provide new tax perks for big business are also being pushed in Congress while fresh liberalization commitments – reducing or eliminating tariffs on imports – through free trade deals are in the offing.

They include House Bill (HB) 6073 of Speaker Prospero Nograles which intends to attract more agribusiness firms in the country by giving them a host of tax incentives, implementation of new liberalization commitments under the ASEAN Free Trade Area (AFTA) and the Japan-Philippines Economic Partnership Agreement (JPEPA), as well as negotiations for new deals such as the Partnership Cooperation Agreement (PCA) with the European Union (EU). All these will deprive the country of billions of pesos in potential revenues, which the Arroyo administration plans to compensate as usual by burdening consumers and ordinary income earners with more taxes.

Social (in) security

Aside from paying for the additional debt that government will surely incur to fund the ERP, ordinary income earners and taxpayers will also directly shoulder a significant amount of the Arroyo administration’s stimulus package. The supposed added benefits to members of social security institutions apparently would come from their extra contributions, and not from government funds. NEDA, for instance, is proposing to extend P10, 000 ($209) in so-called “unemployment benefits” to SSS members affected by the global economic turmoil. The said agency did not specify where it intends to source the money for this, but SSS raised the option of increasing the contributions from its members to bankroll the unemployment benefits.

As part of expanding the benefits of members of social security institutions, the SSS has already approved a P500-million ($10.48 million) fund to allow its members hit by the global crunch to avail of a maximum P15, 000 ($314) in emergency loans. But because the scheme involves loans instead of grants, it only threatens to bury in deeper debts the jobless SSS members who face a worsening uncertainty of finding a job soon, if at all. The said social security institution has also set strict and highly restrictive guidelines for those who can avail of the emergency loan. To illustrate, only SSS members who were retrenched from work starting January 1 are eligible, must have updated contributions and updated loan amortization. In other words, the SSS is further milking the workers dry instead of making available to them funds, which come from the workers themselves through their contributions, to help them cope with the raging crisis.

The ERP also intends to supposedly expand government’s social protection programs including the so-called Conditional Cash Transfers (CCTs). But this program is also criticized for being extremely limited both in funding and scope. For instance, out of some 4.5 million poor households nationwide, CCTs target only 321,000, mostly in Metro Manila. (See Table)

erp-table-2

The CCTs is an old program of the Arroyo administration that is being funded mainly through the so-called “Katas ng VAT”. But since a huge portion of government’s VAT collections comes from the poor and ordinary income earners through their VAT payments for petroleum products, electricity, water and other essential goods and services, the ordinary people themselves are the ones funding the CCTs. Furthermore, CCTs are also meaningless amid skyrocketing cost of living, deteriorating jobs crisis and worsening poverty in the country that remain unaddressed and are even aggravated by wrong economic policies of government.

Meanwhile, the education and health components of the ERP will not have an impact on the social protection needs of the people as long as the overall policy direction of government is to privatize and commercialize the country’s public hospitals and schools such as HB 3287 of Rep. Roque Ablan Jr., which intends to corporatize 68 public hospitals nationwide. ERP’s health and education programs are also lip service in the context of meager and declining national budget for social services. In fact, compared to the Aquino, Ramos and Estrada administrations, the Arroyo administration posts the lowest annual budget allocation for health (1.7 percent of the national budget), education (15.2 percent, second lowest behind Aquino’s 12.3 percent) and housing (0.4 percent). (To be continued)

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Governance

Lenten thoughts on Gloria’s birthday wish

Inquirer.net photo

Inquirer.net photo

Mrs. Gloria Arroyo turned 62 last Palm Sunday, April 5.

It was meaningful, Mrs. Arroyo said, because it coincided with the start of the commemoration of the death and resurrection of Jesus Christ.

Her birthday wish, she said, would be “unity and volunteerism to see the country through the global recession”.

To be sure, Mrs. Arroyo would need a miracle far greater than the resurrection of Jesus Christ to inspire unity and volunteerism among Filipinos.

Her corruption and wanton abuse of power, together with that of her political allies and family, have made the Arroyo administration one of the most despised regimes the country ever had, rivaling that of the late strongman Ferdinand Marcos.

If there is anything that the Filipino people will unite and volunteer for, that would be to ensure that Mrs. Arroyo and her cabal do not stay longer than 2010.

Her chief publicity officer, Mr. Cerge Remonde, said that Mrs. Arroyo has no personal gift for herself. On the contrary, it was Mrs. Arroyo who has a birthday package for the Filipino people: “her heart, her soul and her sacrifices”.

Well, I am sure many people would want to pluck out Mrs. Arroyo’s heart anytime – if she has one.

As for her soul, I am sure the Devil has already reserved the right to take it.

As for her sacrifices, what in hell’s name is Mr. Remonde talking about?

Mrs. Arroyo attempted, rather vainly, to underscore selflessness in her supposed birthday wish for the country.

She has lost so much credibility and moral authority that to talk about unity, volunteerism and sacrifice will surely make Jesus Christ rise, and rage.

Lent or not.

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Oil deregulation

The OPSF and Malacañang’s efforts to blunt calls to regulate the oil industry

Cartoon by Salvador Jorque/Ibon Foundation

A think tank based at the House of Representatives (HoR), the Congressional Planning and Budget Department (CPBD), on Tuesday released a report upholding Republic Act (RA) 8479 or the Downstream Oil Industry Deregulation Act of 1998. The report, written by CPBD director general Rodolfo Vicerra, warned that without RA 8479, the domestic oil market would need price intervention and taxpayers would have to bear the burden of keeping oil prices stable. The CPBD report argued that scrapping the oil deregulation law “would require reviving the Oil Price Stabilization (OPSF) to be funded again by the taxpayers”.

On the same day that the CPBD report was released to the media, the Big Three (Petron Corp, Pilipinas Shell, and Chevron Philippines) has again hiked their gasoline prices by P1 a liter, and kerosene and diesel by 50 centavos. The price increases followed a 30 centavo-hike in diesel prices implemented by the same firms four days earlier, citing increasing prices in the global oil market.

The recent rounds of oil price hikes further amplified persistent calls to repeal or at least amend RA 8479. At the HoR, its Oversight committee chaired by Representative Danilo Suarez (Quezon province, 3rd district, KAMPI) is pushing for an amendment of RA 8479. Suarez said he and House energy committee chairman Rep. Mikey Arroyo (Pampanga, 2nd district, LAKAS-CMD) are crafting a bill that will “partially” regulate the downstream oil industry. The bill, according to Rep. Suarez, would focus on regulating pump prices, controlling oil imports and limiting industry participants.

The details of Suarez’s bill remain sketchy at this point, and we are not certain what he exactly means by partial regulation. Nonetheless, some quarters have expressed opposition to moves to entirely scrap RA 8479 and have instead pushed for amendments to supposedly plug its loopholes and prevent excessive and predatory pricing. This is the official position of the Department of Energy (DOE), and by extension of Malacañang, and which explains the initiatives on the oil industry of Reps. Suarez and Arroyo. These developments should make consumers wary because they blunt the calls to junk RA 8479 and establish an entirely new set of measures to effectively regulate the downstream oil industry.

A misleading and often recycled argument against proposals to regulate the country’s downstream oil industry is the discredited OPSF. Aside from the CPBD, the DOE has also raised the OPSF as an issue to thwart calls for regulation. The department’s Oil Industry Management Bureau (OIMB) chief Zenaida Monsada said that government “should be cautious about reverting to a regulated system as it could not afford reviving the OPSF” which “cost the country a lot of money”. In 2005, the DOE formed an “independent” body to review RA 8479 and among its findings was that “subsidizing oil prices (through the OPSF) is not feasible in a regime of rising crude prices due to lack of government resources”.

While a buffer fund will be needed in a regime of regulated oil prices, such fund is entirely different from the flawed OPSF. It must be emphasized that it is possible to establish a buffer fund without passing on the burden to the taxpayers and consumers. One way of doing it is for the buffer fund to be financed by government earnings and savings from its increased participation in a regulated downstream oil industry.

Under this proposal, the government will become the exclusive importer of crude oil and petroleum products. As such, the country can expand potential oil sources and shop for the cheapest available oil. Bilateral agreements with state-owned companies from oil exporting countries may be pursued under special arrangements, including commodity swaps, which can provide the country considerable discounts. Savings and earnings from these transactions can be used to finance the buffer fund. Such system of centralized procurement also addresses the concern that a buffer fund will not work because of rising global oil prices.

The national government should also participate in storing, refining and retailing oil products in the country and use whatever earnings it will generate from these activities to finance the proposed buffer fund. Initially, the buffer fund can be financed through allocating a portion of the national budget and when un-utilized within the fiscal year should be carried over to the next fiscal year. Uncollected taxes from the oil companies, such as the P21 billion in unpaid custom duties of Shell, can also serve as seed money for the buffer fund.

Remember that the OPSF failed because it was not used strictly as a buffer fund but was designed to protect the profits of the Big Three during oil price shocks. Established under Presidential Decree (PD) 1956 on Oct 10, 1984, oil firms replenished the OPSF when their pump prices were higher than world prices and withdrew from it when the reverse happened. To prevent the OPSF from drying up, government delayed rolling back the pump price even if world prices fell thus imposing the burden to refill the OPSF on hapless consumers while protecting the profits of the Big Three.

A strict set of guidelines must be drawn up on when the government can tap into the buffer fund to prevent unwarranted utilization and corruption. A trigger price may be computed by the Department of Energy (DOE) that will determine when the buffer fund should be used to mitigate sudden and huge increases in oil prices.

The point is there are alternatives to the Oil Deregulation Law and a concrete set of measures to implement them are available if only the legislators will seriously study these proposals. We must engage the lawmakers, government agencies, and their technocrats in a debate on these issues so as to prevent questionable policy proposals like the planned bill of Reps. Suarez and Arroyo from hijacking the people’s demand to scrap RA 8479 through their so-called partial regulation. Of course, they will have an advantage if we limit the engagement in congressional hearings alone. These efforts must be complemented by continued public pressure through protest actions, etc. and broadening public support for oil industry regulation.

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