Tag Archives: global crisis

Economy

PH economy in 2011 (Last part): Dim growth prospects for 2012

Analysts say that the 2012 global economic condition could be worse than the 2008 crisis (Photo from inquirer.net/AFP)

First published by The Philippine Online Chronicles

(Read Part 2 here)

President Benigno S. Aquino III has described his first full year in office a fruitful year, citing the supposed gains in reducing poverty and corruption. Aquino claimed that he was able to increase this year’s budget for health and education without raising new taxes. This was supposedly due to savings from tighter procedures for implementing programs and projects. Savings also came from improved rice production that allowed the country to import less rice. As of September 2011, the President said government savings have already reached P42 billion.

Brighter New Year?

For Aquino, prospects for 2012 can only be brighter, repeating the favorite mantra of Mrs. Gloria Arroyo about the resiliency of the Philippine economy amid the global crisis. Better use of resources, and not underspending, Aquino said, has given government more fiscal space to step up spending for infrastructure this year. Officials have already announced the planned bidding of 16 major projects under government’s centerpiece program public-private partnership (PPP). Aside from infrastructure and agriculture, Aquino also pins his hopes on tourism. The Department of Tourism (DOT) has unveiled last week its new program “It’s more fun in the Philippines” in a bid to revitalize the industry. Together with agriculture, the President expects infrastructure development and tourism to be the lead growth drivers in 2012, which he hopes “will insulate us from whatever happens overseas.”

In fact, government is keeping its 5-6% target in gross domestic product (GDP) growth this year despite the global uncertainties. According to Cayetano W. Paderanga Jr., Director General of the National Economic and Development Authority (Neda), the target can still be achieved through increased government spending and full implementation of the PPP program. In fact, the country may even have a “pleasant surprise” if efforts to boost construction and services were successful. Note, however, that under the Philippine Development Plan (PDP) 2011-2016, the target annual growth is 7-8% to supposedly make a dent on poverty.

But the more bad news is that the brewing global economic implosion in 2012 could be much severe that what Malacañang is anticipating, with some analysts predicting a crisis even graver than the 2008 financial and economic crunch. And worse, the country is ill-prepared for the turbulent year ahead not only due to the misguided optimism of government, but due to the lack of a real policy shift towards the reorientation of the domestic economy.

Gloomy global economy

After selling the illusion that the global economy has started to recover from the 2008 crisis in the latter part of 2009, governments and institutions of the industrial world have been forced to recognize the hard reality that the crisis – described as the worst of the capitalist system since the 1930s Great Depression – is actually still unfolding. Some of them, like International Monetary Fund (IMF) chief economist Olivier Blanchard, are even warning about “the real possibility that conditions may be worse than we saw in 2008”.

Indeed, as noted by a recent article by Reuters, leading political strategists, academics and economists are predicting another round of global recession this year that may cause “political upheaval on a scale not seen since the 1930s” especially after seeing the extraordinary transpire in 2011 such as the unprecedented credit rating downgrade of the US.

Such pessimism is being fuelled by the weakening growth across the industrial world that started as early as the second quarter of 2010, which continued and hardened in 2011. For instance, real US gross domestic product (GDP), data from the IMF’s World Economic Outlook database show, rebounded from negative growth rates in 2008 (-0.3%) and 2009 (-3.5%) and grew by more than 3% in 2010. But after three quarters in 2011, its GDP growth decelerated to just 1.2 percent, according to data from the US Bureau of Economic Analysis (BEA).

The same trend is observed in other rich countries, with the IMF predicting that the collective GDP growth in 2011 of the G-7 countries (Canada, France, Germany, Italy, Japan, UK and US) will fall to 1.3% from 2.9% in 2010 (after contractions of 0.3% and 4.2% in 2008 and 2009, respectively). In the euro area, which has been facing a deteriorating sovereign debt crisis, the GDP is anticipated to further slow down to 1.6% in 2011 from the already weak 1.8% in 2010 (after growing by 0.4% in 2008 and declining by 4.3% in 2009).

Projections for this year are even dimmer with indicators showing that the euro zone “may be in a recession that could last well into 2012” (GDP likely contracted by 1.8% in the last quarter of 2011, said global financial institution ING) while there is a 50% chance that the US will fall into recession amid prospects of a European sovereign debt default. Japan has been in recession again in 2011 with negative GDP growth rates in each of the three quarters of the year. (See Chart)

Other important indicators such as employment data also paint a grim scenario, especially considering that the labor market situation has remained dismal even when the global economy was supposedly recovering in 2010. Unemployment in the euro zone remained at a historic high 10.3% as of November 2011, with 16.37 million jobless workers – the worst since the euro area started compiling such data in 1995, according to Eurostat, the European Union’s (EU) statistics agency.

Unemployment in the US, on the other hand, appears to be improving a bit as it declined to 8.5%, the lowest in almost three years, although it remains way above the pre-crisis level of 4.6 percent. Also, while the US economy added 1.6 million jobs in 2011, it still needs to create some 6 million more jobs to get back to its pre-crisis levels. Overall, the International Labor Organization (ILO), in its World of Work Report 2011, noted that the global economy needs to create nearly 80 million jobs in 2012 and 2013 to reach pre-crisis employment rates. But the slowdown in economic activity since 2010 suggests that only half of this may be created, and consequently, employment in the advanced economies will not return to pre-crisis levels until 2016.

Serious implications

These developments have serious implications for the Philippines. The slowdown in GDP growth last year and possible recession this year in the industrial world means a further weakening of demand for the country’s exports, which have already contracted for seven straight months (May to November) in 2011. From January to November 2011, exports have fallen by 5.6% compared to the same period in 2010, data from the National Statistics Office (NSO) show. The Semiconductor and Electronics Industries in the Philippines, Inc. (SEIPI) projects electronics exports, which comprise more than half of total Philippine exports, to contract by as much as 25% in 2011.

The jobs crisis facing the rich countries will also weigh down on the Philippine economy not only in terms of labor export and dollar remittances but also in terms of export of services such as through the outsourcing industry. President Barack Obama, who is facing a presidential contest this year where employment is among the focal issues, is promoting “insourcing” of jobs in an attempt to win over American workers who have been hit hard by prolonged joblessness.

If implemented, this will adversely affect the country’s business process outsourcing (BPO) sector, one of the growth areas identified by Aquino in his PDP and once described as recession-proof by economic managers. The BPO sector is said to employ about 600,000 workers and generates close to $10 billion in annual revenues. Note that our BPO sector is heavily dependent on the US market where about 80% of exports of Philippine BPO services go, according to a 2008 survey of the Bangko Sentral ng Pilipinas (BSP).

Due to the dim outlook for the global economy this year, even prospects for tourism are not as bright as government depicts it to be. Data from the United Nations World Tourism Organization (UNWTO) show that the growth of the global tourism industry is expected to further slow down to as low as 3% in 2012, after an anticipated growth of as much as 4.5% in 2011 and actual growth of 6.6% in 2010.

Set the facts straight

As for Aquino’s claim of a fruitful 2011, in particular the imaginary gains in poverty alleviation, it is necessary to set the facts straight. On the issue of increased budget for education and health, for instance, it has been pointed out that in reality, social services remained the lesser priority of government. In the 2012 national budget, Debt Service Expenditures (interest payments and principal amortization) are almost seven times the combined education and health budget that will directly benefit the poor.

Also, while the budget allocations for education and health appear to have increased, they are still way below the minimum amount to meet the pressing needs of the people. To illustrate, the Department of Health (DOH) budget is about P40 billion short of its estimated requirements while the Department of Education (DepEd) budget could only meet 27% of the backlog in classrooms; desk, 19%; and teachers, 13 percent.

The so-called savings have been achieved not mainly because of wiser spending but due to inadvertent factors such as the failure of the PPP program to take off last year that slowed down disbursements. Also, the country imported less rice in 2011 than the previous year, resulting in less public expenditure, mainly due to improved weather conditions (see reports by the Bureau of Agricultural Statistics here) and the over-importation of rice by the Arroyo administration in 2010. Aquino said government saved about P7 billion from less rice imports, which is almost 17% of the total savings.

In reality, not much has changed in the spending priorities of the current administration. As in the past, a huge portion of public funds continued to be siphoned off by payments for government debts. Since July 2010 up to November 2011, Aquino has spent 40.3% of total expenditures (including principal amortization) for debt servicing, not much of an improvement from Mrs. Gloria Arroyo’s 41.5% during her nine-year reign. In fact, in absolute terms, Aquino is spending more on debt servicing at P55.12 billion per month compared to Arroyo, who spent P48.18 billion per month.

Not shared by the people

Aside from short-term doles in the form of the conditional cash transfer (CCT) program, which was first implemented in the country by Arroyo, the Aquino administration has no poverty reduction program to speak of. Also, it has no job creation program apart from the unsustainable four-decade old labor export policy.

Combined with the distorted priorities in spending public resources and continued implementation of neoliberal policies that inflate the cost of living such as privatization and deregulation, the failure of Aquino to alleviate poverty and generate long-term livelihood has naturally resulted to worse poverty and hunger for a great portion of the population. Based on the surveys of the Social Weather Stations (SWS), for instance, the number of Filipinos who consider themselves poor increased to 51% of families in 2011, up from 48% in 2010 while the portion that experienced hunger remained at 19% in the past two years.

Thus, it is not surprising that the optimistic sentiment of Aquino and his economic managers are not shared by the people. In its latest survey released last January 8, the Pulse Asia reported that 45% of Filipinos feel that the economy did not improve from a year ago while 38% said that it has actually even deteriorated. In the year’s first week, consumers were greeted by news of substantial increases in water rates and oil prices (with another round of larger oil price hikes expected this week), further dampening the little optimism that the people have for the New Year.

Aquino may be reaping political brownie points from its seemingly heightened efforts to make Gloria Arroyo accountable, including the upcoming impeachment trial of Supreme Court (SC) Chief Justice Renato C. Corona. But as much as the people long to make Arroyo and her minions accountable for their many crimes, they will not be forever distracted by the impending intramurals at the Senate. And unless real reforms that will reverse the policies that destroyed jobs and livelihood; increased profits of big foreign and local businesses at the people’s expense; and made the country highly vulnerable to the global crisis, Aquino’s legitimacy will very soon be challenged. #

Also read

Part 1 – Flawed development plan

Part 2 – Elusive “inclusive growth”

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Economy

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

Anti-Arroyo groups trooped to the Senate on the opening day of Corona's impeachment trial.

Cause-oriented groups yesterday (Jan. 16) marked the opening of the impeachment trial of Supreme Court (SC) Chief Justice Renato Corona with a mass action near the Senate. Among those present was political satirist Mae Paner who came as Jus-tiis Juana Change (see video below). Activists deem the conviction of Corona a positive step in making Mrs. Gloria Arroyo accountable for her many abuses. But they are also warning against a possible scheme by President Benigno S. Aquino III to control the judiciary for selfish political and economic ends.

It is important to note that the ongoing impeachment trial of Corona is also happening amid a very real threat of global recession. Given the amount of national attention that is being devoted to this historic trial, which could last for several months, there are valid fears that the country might be caught flatfooted when the impact of the global economic contraction kicks in. But beyond government’s and the media’s apparent preoccupation with Corona’s impeachment trial, there are more fundamental reasons why we should be anxious. For one, the Aquino administration has not put in place an emergency program to ease the blow of the looming recession, much less reorient the economy to substantially address its external vulnerabilities.

(For more discussion on the latest economic situation and global prospects, read here and here)

Meanwhile, the people continue to be impoverished by the defective policies of deregulation and privatization. We greeted the New Year with fresh hikes in deregulated oil prices and privatized water rates. More increases are forthcoming in the costs of petroleum, toll, transportation, power, etc. Social services for the poor like health, education, and housing continue to be undermined with insufficient allocations in the 2012 budget, which as usual prioritized debt servicing as well as the public-private partnership (PPP) program. Violent demolitions of urban poor communities (such as in Corazon de Jesus in San Juan) amid lack of sustainable relocation, and the privatization and commercialization of public schools and hospitals further aggravate the plight of the people. The youth-led Mendiola campout last month tried to highlight these economic issues and engage the Aquino administration but was aggressively suppressed by security forces.

In a paper entitled “It’s the economy, student”, Arroyo also tried to draw attention to the deteriorating economic situation under her successor, claiming that Aquino squandered the supposed gains achieved by the economy during her nine-year reign. But reading the paper, the only accurate assertion made by Arroyo is when she said that Aquino “has simply not replaced my legacy with new ideas and actions of his own”. Indeed, Aquino merely continued Arroyo’s anti-people and anti-development legacy of heavy dependence on exports and foreign capital and markets; high prices and depressed wages; lack of social services and privatization; unemployment, job insecurity, and labor export; indebtedness and debt servicing; lack of genuine land reform; dole-outs, etc. that deepen the poverty of our people and backwardness of the economy.

(Read more on the economic legacy of Gloria Arroyo here)

Amid all this, there are legitimate concerns that the impeachment trial will just be used by Malacañang to distract the public and conceal its inability, or unwillingness, to address the pressing economic issues facing the people. It does not help that the degree of coverage that mainstream media is giving the trial tends to displace many important issues such as developments in the global economy, its impact on the country, what government intends to do about it, etc.

But while the mainstream media tend to focus more on the impeachment trial, an overwhelming portion of the population continues to feel strongly about the economy. The latest (Nov. 2011) Pulse Asia survey on the state of the economy shows that 8 out of 10 Filipinos feel that the economy either did not improve or deteriorated compared to the previous year. The said survey also indicates that economic issues remain the biggest source of the people’s disenchantment with Aquino, and the more bad news for the government is that this trend is worsening. Those who feel that the economy deteriorated more than doubled from 16% (Oct. 2010) to 38 percent (Nov. 2011). The disapproval rating of Aquino in terms of reducing poverty worsened from 21% in May 2011 to 36% in November 2011; on job creation (from 11 to 21%); on prices/inflation (from 21 to 37%); and on wage hike (14 to 25%).

Indeed, 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. #

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Economy

A scintillating 7.9 percent GDP growth?

Election-related spending acted as some sort of “stimulus” to an otherwise anemic economic growth in the first half of the year (Photo from 2010presidentiables.wordpress.com)

Maybe the government thought that after the terribly mishandled Quirino Grandstand hostage crisis, Filipinos could certainly make use of some good news. Thus, the National Statistical Coordination Board’s (NSCB) declaration today (Aug 26) of a scintillating gross domestic product (GDP) growth of 7.9 percent. The country just posted back-to-back quarterly growth of more than 7 percent, the NSCB said, after the GDP expanded by 7.3 percent in the first quarter.

But the truth is nothing in the supposedly scintillating growth is scintillating. Note, for instance, that the year-on-year GDP, which at constant 1985 prices is valued at P383.91 billion, is being compared to a very low base that barely grew from its previous level, and thus will naturally result in a high growth rate. In second quarter 2009, GDP was valued at P355.69 billion which only grew by 1.2 percent compared to 2008 (P351.57 billion) as the economy started to feel the impact of the global crisis. So if you remove this “base effect” and compare the 2010 second quarter GDP to the same period in 2008, and similarly compare 2008 to 2006 GDP figures (P313.11 billion), economic growth has in fact decelerated by more than three percentage points.

Source: National Statistical Coordination Board

Even so, it is still a “major, major” recovery from the previous year’s slowdown, the NSCB may argue. But what are the circumstances behind the supposedly scintillating recovery? Was the spurt caused by sustainable and long-term growth drivers and by a fundamental shift in macroeconomic direction? Were the gaping holes of economic vulnerabilities that expose the Philippines to the harsh impact of the still raging global crunch finally plugged by correct policies?

Election-related spending

The second quarter result is actually less anticipated than how the GDP will fare starting in the third quarter which covers the start of the new government. For one, the relatively high economic growth under the old Arroyo administration has long been exposed as hollow and meaningless in terms of addressing poverty and job scarcity. Aquino’s economic managers described the economic growth of the previous years as “poverty-inducing, narrow-based, and jobless growth” and the latest GDP figures are no exception.

Growth in the last nine years stood on shaky ground as macroeconomic policies did not address structural issues long beleaguering the economy. The GDP has instead relied on unsustainable growth drivers such as remittances from overseas Filipino workers (OFWs) for domestic consumption and export markets and foreign capital for production.

Apart from these unsustainable factors, the backward economy also got momentary spurts from four national elections held since 2001. This year’s second quarter GDP, for instance, has been inflated by election-related spending similar to the 7.3 percent growth it had in the first quarter. All in all, according to Arroyo’s NEDA, poll spending could contribute 0.34 percentage points to real GDP growth this year. NEDA, of course, wanted to downplay the actual impact of the elections on the economy in order to highlight government policies in relation to high GDP performance.

The NSCB itself noted that the last time the country posted similar successive quarterly growths of more than 7 percent was in the first two quarters of 2004, which like the first two quarters of 2010, covered a period expensive presidential elections.

In truth, the economic impact of the last elections, considered as the costliest yet in Philippine history, was without doubt higher than the NEDA estimate. For one, the agency wrongly assumed a total election spending of just P15 billion that already cover the combined spending of the Commission on Elections (COMELEC) and all the candidates. But the COMELEC alone already had a budget of P11.3 billion, of which P7.3 billion went to the lease of the controversial precinct count optical scan (PCOS) machines.

Computing the maximum spending allowed under Republic Act (RA) 7166 or the Synchronized Election Law of 1991 of the 18 presidential and vice presidential bets and 64 senatoriables that participated in the last elections would already yield around P10.34 billion. Note that there were 50,247 candidates (from presidential to municipal council bets) that participated in the May polls and many of them certainly spent way above the limits imposed by law.

For example, the Philippine Center for Investigative Journalism (PCIJ) estimated that national bets and party-list groups spent P4.31 billion on TV, radio, and print advertisements alone during the official 90-day campaign period. Candidates with larger war chests spent an additional P1.1 billion for “pre-campaign” political advertisements.

Out of the P4.31 billion in ad spending, presidential bets spent P1.11 billion, the PCIJ study said. However, based on their submitted campaign expenditure reports to the COMELEC, the presidentiables claimed to have spent a TOTAL of only P1.19 billion. The COMELEC explains that the cap on election spending is outdated which forces candidates to mis-declare their actual expenses.

Add to these enormous amounts the even larger cost of greasing the fraud machinery and maintaining political patronage that characterize elite-dominated and undemocratic Philippine elections. During the May polls, various incidents of vote-buying indicate that the buying rate per ballot now ranges from P150 to as high as P1,400.

Aside from spending their own money, candidates also got financial boost from big landlords and businesses to pay for both the legitimate and illegitimate expenses of waging an electoral campaign. Thus, the actual cost of “election-related spending” is much higher and how it distorts domestic economic growth is much deeper than what the NEDA estimate indicates.

Global crunch

Besides the one-time boost from election spending, the export-oriented, foreign investment-led economy has gained as well from the slight improvement in the global economy. But despite such improvement, vital indicators show that the global economy effectively remains in a state of depression and belie claims that the latest flare-up in the boom-and-bust crisis of monopoly capitalism is over. Even some mainstream economists point out that the global economy confronts a very real threat of double-dip recession.

North America, Europe, and Japan – major centers of monopoly capitalism – all face a raging public debt crisis and continuing destruction of jobs even as their production and consumption are again slowing down. Thus, external trade, foreign investment, and OFW remittances, most of which come from these major centers, could not sustain their “growth-inducing” impact on the GDP.

Philippine neocolonial trade, for example, has remained concentrated with the US and Japan, which took in almost one-third of the country’s total exports from January to June this year, based on data from the National Statistics Office (NSO). While shipments to China, Singapore, Hong Kong, South Korea, Thailand, and Taiwan are also significant (together they accounted for 39.7 percent of total exports in the first half of the year), a portion of these exports were re-exported to the US, Japan, and Europe.

Exports, which soared by 27.4 percent in the second quarter – the highest since third quarter 1986, the NSCB noted, but in reality simply recovered from an equally huge 18 percent contraction in 2009  – face a major slowdown or even contraction in the coming months. Latest data show that imports are substantially slowing down as the year progresses, which signals lower job orders from the US and other major export markets of the Philippines since our main exports are dependent on imported inputs.

Furthermore, as the richest capitalist countries grapple with rising debts and decelerating monopoly profits, foreign direct investment (FDI) that actually flowed into the Philippines has immensely declined. Bangko Sentral ng Pilipinas (BSP) data show that year-on-year FDI from January to May 2010 fell by 68 percent. Meanwhile, OFW remittances, based on BSP data, have also substantially slowed down to a year-on-year growth of 6.9 percent from January to June 2010. Prior to the global crisis, OFW remittances have been posting double-digit expansion every year.  

In a way, election-related spending acted as some sort of “stimulus” to an otherwise anemic economic growth in the first half of the year. But obviously it can no longer be relied upon – at least until the 2013 midterm polls – to moderate the impact of the still unfolding and protracted global financial and economic crisis.  

Real reforms in economic policies and priorities are urgently needed to lessen our vulnerabilities to the global crunch and create sustainable growth that produces jobs and boosts income. Unfortunately, based on the medium-term development blueprint that the economic managers of the Aquino administration have presented in broad strokes during their first economic briefing last August 18, no meaningful reorientation of the domestic economy is forthcoming. On the contrary, the Aquino administration is turning out to be an even fiercer advocate of flawed and long discredited neoliberal policies of privatization, liberalization, and deregulation.

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Economy, Events

Forum on global crisis

The Bagong Alyansang Makabayan (Bayan), IBON Foundation, and RESIST!, an anti-globalization network, organized a forum on the global financial and economic crisis last February 9 and 10 at the De La Salle University (DLSU) in Manila and the University of the Philippines (UP) in Quezon City. Almost 400 participants, from a broad array of sectors representing the workers (including those displaced by the crisis), farmers, urban poor, students and youth, the academic community, and the diplomatic community among others, attended the event. The forum also launched a nationwide education and information campaign on the roots and nature of the global crisis, the people’s immediate demands and long-term alternative, and what the people can do – an initiative of Bayan, IBON and other partners. Canada-based Prof. Michel Chossudovsky, an award-winning author and economics professor, was among the speakers.

Below is the paper presented by Bayan at the said forum.

bayan-logo2Global Financial and Economic Crisis: The People’s Response

The challenges we face and opportunities for broadening and strengthening the people’s movement for meaningful reforms

The deep-seated neocolonial linkage of the Philippine economy to that of the US and its deepening ties with the global economy in the era of “neoliberal globalization” have undermined and compromised the country’s growth and development. With the US and global economy facing what some analysts describe as a “supercrisis” and a looming “Greater Depression”, the country’s purported  major drivers of growth and employment,   the export of commodities and labor, are further exposed as extremely hollow, unreliable and unsustainable. Unable and unwilling to undertake a radical shift in economic model  that will promote internal and sustainable sources of growth, the Arroyo administration is poised to further intensify  sellout of the national patrimony and sovereignty; give more incentives and openings for foreign goods and capital amid the greater destruction of local agriculture and marginal industries, small  businesses, jobs and livelihoods; impose more taxes and incur more onerous debts; and allow prices to go higher  amid even more depressed wages and incomes.

Mrs. Gloria Arroyo at first tried to downplay the impact of the global financial and economic crises on the domestic economy and the people, claiming that her administration has built a “firewall” of reforms as protection. Alas, GMA is not referring to fundamental reforms that will make the economy strong, self-reliant and less vulnerable to the US and global recession but rather of fiscal measures such as the hiked value added tax (VAT) that today represents an even heavier burden for the people. But even the most optimistic bureaucrats of the administration could not belie the gravity of the situation. Arroyo’s own chief economist, for instance, is projecting job losses this year to reach 800,000 and is ridiculously encouraging the expected 900,000 new entrants to the labor force to “return to school” so as not to aggravate job scarcity.

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 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 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.

We need to dispute the presumption, for instance, that the crisis can be corrected by bailing out the giant banks and industrial corporations in the US and other industrialized countries. Or that the crisis the Philippines has been facing is just a temporary, albeit violent, storm that can be weathered by a supposedly resilient domestic economy and so-called sound macroeconomic fundamentals. Or that the worsening job scarcity can be addressed through the same flawed policies of labor export, cheap and flexible labor, neocolonial trade, unbridled foreign investment, etc.

Uncritical acceptance of these erroneous ideas passed off as conventional wisdom will trap us into accepting the extremely short-sighted and palliative government response. One such major plank is the P330-billion “stimulus package” that is intended to create highly temporary jobs through infrastructure pump-priming.  Furthermore, we will be trapped into accepting that the people must shoulder even further burdens through more massive jobs loss, labor flexibilization and job insecurity, more depressed wages and incomes, more onerous taxes, etc. in order to save a floundering economic system. Thus we are challenged to put forward our own views and analyses on the crisis, learned not just from books and as discussed by economic experts, but more important from our accumulated concrete experiences as a people struggling for national liberation, democracy, peace and all-round progress.

In this spirit, Bayan, together with our partners IBON and Resist and in cooperation with friends from the La Salle community, organized this public forum. The forum launches a nationwide lecture series on the global financial and economic crisis and alternative solutions. Through this initiative, we hope to reach the widest possible audience from among the universities, urban and rural poor communities, factories, the business community, policy and opinion makers, and the rest of our people all over the country. We wish to spark discussion on  our current socio-economic situation and its exploitative and oppressive roots.  We aim to generate substantial collective discussions on what we can do as a people and what we can demand of government in terms of immediate relief and more substantial socio-economic reforms.

We are not starting from scratch in terms of alternative, pro-people, pro-Filipino proposals and campaigns to address the crisis. Bayan, as a multisectoral alliance of progressive people’s organizations, for instance, has campaigned hard to press the government to scrap the burdensome 12% VAT on oil and power during these hard times. Together with patriotic individuals and people’s organizations under the alliance NO DEAL! Movement, we have exerted  efforts to stop the Senate ratification of the Japan-Philippines Economic Partnership Agreement (JPEPA) for being a patently  one-sided  agreement that will further destroy jobs and local industries. Bayan, together with a broad array of political forces, has also vigorously and consistently pressed the campaign to have Mrs. Gloria Arroyo step down from power.  The point is not just to call for her accountability for wanton graft and corruption, systematic electoral fraud, and grave human rights violations perpetrated by state forces, but also for imposing even greater poverty and misery on our long-suffering people.

We are inspired by the efforts of our allied sectoral organizations like COURAGE, a nationwide confederation of unions in the public sector that recently launched a campaign called “Tanggol Trabaho” opposing the massive displacement of government employees such as those in the National Food Authority. MIGRANTE, an organization of OFWs, has been actively campaigning for genuinely pro-OFW emergency relief measures and for decent jobs at home as a long-term reform. The Kilusang Mayo Uno (KMU) continues to campaign for a decent wage hike and against labor contractualization while the Kilusang Magbubukid ng Pilipinas (KMP) has engaged Congress to pass the Genuine Agrarian Reform Bill (G ARB). PISTON, an alliance of public transport drivers and operators, has been active in the campaign to repeal the Oil Deregulation Law (ODL) and GABRIELA, which advocates women’s rights and welfare, for price control on basic consumer goods especially food. Our allied youth organizations like the League of Filipino Students (LFS) and Anakbayan have also been active in the campaign for economic reforms, particularly greater state support for public education.

However, 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.  In addition to rallying greater numbers among the masses, we need to encourage the greater participation of the academe –  students, faculty and  enlightened administration officials; the experts, the opinion makers and policy makers; nationalist Filipino businesspersons, and other segments of the Philippine society that are marginalized or yearning for reforms.  All their contributions should input into a common people’s agenda.

This process can take different forms, through public fora such as this, through direct consultations at the basic level, through discussion groups in homes and workplaces, etc. What is crucial is that these discussions should translate into concrete actions and campaigns, whether they are a mass signature drive or coordinated activities, or an actual alliance or coalition of like-minded groups and personages. Furthermore, these efforts must be able to link up with the efforts of people’s movements in other countries, whether in underdeveloped countries like Philippines or in advanced capitalist countries like the US, that are campaigning for a similar platform of pro-people economic reforms and a total overhaul of an existing abusive and exploitative economic system.

Our fighting demands for economic relief, survival and long-term reforms: Ensuring a pro-people and nationalist response to the crisis

Allow us now to share with you the urgent reform measures that we vow to fight for in this time of hardship and crisis. These demands range from the 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.

1.    On jobs and benefits

a. Ensure easy access to social security benefits and expand                 unemployment benefits for displaced workers

b. Provide immediate and easy availment of cash assistance for displaced OFWs

c. Stop the retrenchment of government workers; Scrap the so-called “rationalization plans” under Executive Order 366

d. Stop the erosion of wages and protect jobs against flexible labor policies and unjust retrenchment

2.    On taxes and debt

a. Full-implementation of tax breaks for minimum wage earners and their equivalent in the public sector. This includes tax rebates for the year 2008 under RA9504 or the Act Amending the Internal Revenue Code (only partially implemented last year)

b. Removal of VAT on oil, power, food items and other basic goods and services as an urgent measure to lower prices and ease the tax burden on consumers

c. Moratorium on debt payments (to include cancellation of onerous debt), and prioritize instead support for displaced workers and farmers, social services and job creation

d. Tax breaks and financial assistance package for small and medium-size Filipino-owned enterprises

e. Crack down on government corruption, bureaucratic wastage, and smuggling and re-impose tariffs on imported goods

3.    On prices

a. Imposition of price control mechanisms on basic commodities especially food. Repeal deregulation policies on oil and power

b. No new increases in utilities such as water, power and transportation

c. Freeze in tuition increases in both public and private schools; repeal deregulation policy for tuition fees

d. Ensure availability of affordable food, especially rice; bring back to the markets and make accessible the P18.25 NFA rice; increase domestic rice purchased by the NFA and ensure that palay will be bought from farmers at P17/kilo

4.    On liberalization

a. Put the brakes on free-trade agreements (FTAs) that severely undermine and weaken the domestic economy; stop the impending implementation of the JPEPA; stop negotiations of new FTAs; no new commitments in the WTO and stop the implementation of WTO agreements

b. Oppose moves for more investment liberalization such as House Resolution 737 that proposes 100% foreign ownership of land and resources in the Philippines

c. Reverse the neoliberal policy of trade liberalization; support local production  by restoring tariffs

5.    On the domestic economy

a. Orient the economy towards production for domestic self-sufficiency, self-reliance and consumption

b. Government should provide incentives and support domestic industries to allow them to expand and create jobs at home; uphold the policy of national industrialization and the establishment of national industries should be a priority

c. Implement genuine  land reform and undertake rural industrialization to spur development and deal decisively with rural unemployment and poverty

The global financial and economic crisis, as projected even by mainstream economists, will be long and deep. Meanwhile, the further economic dislocation and impoverishment of countless of Filipinos as the crisis drags on and intensifies will fuel even greater political turmoil and social unrest. The powers-that-be, as represented today by the Arroyo administration, is clearly incapable of providing lasting, pro-people solution to the crisis. On the contrary, it will further aggravate the crisis on the ground experienced daily by the ordinary people even as it incessantly schemes to cling on to power. The people must collectively fight back. It is where our greatest and only hope to get out of the raging crisis lies.

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Economy, Labor & employment

Despite P330-B stimulus package, job losses to hit around 1.2 M in 2009

layoffs-graphWith the entry of fresh graduates and first time workers into the labor force, the number of unemployed Filipino workers could increase by around 1.2 million by yearend. While this is bad news enough, the worse news is that the Arroyo administration could not adequately handle the worsening jobs crisis despite its much-touted P330-billion economic stimulus package.

Rapid pace of dislocations

The additional 1.2 million jobless Filipinos this year assumed that the labor force will grow by 900,000 this year, the annual average since 2001. The National Economic and Development Authority (NEDA), meanwhile, projected job losses could reach as high as 800,000 by the end of 2009. Assuming an optimistic scenario that the stimulus package could create 500,000 jobs this year, and then the job creation deficit will still be around 1.2 million by December.

Add to this the expected massive displacements of overseas Filipino workers (OFWs); of which at the rate they are being retrenched could reach at least 21,000 by yearend. The number could be much higher in reality because 575,000 OFWs are directly and immediately vulnerable to displacements due to the crisis including some 268,000 factory workers in Taiwan, Macau, and South Korea.

Such estimate is also supported by the fact that foreign direct investment (FDI) and commodity exports, main drivers of local job creation in the country, are contracting due to the financial and economic crisis. Thus, except perhaps for a few thousands of contractual jobs from the outsourcing business, there is no expected significant expansion in jobs this year that could make a dent on the rapid pace of unemployment.

As of January, the official tally by the Department of Labor and Employment (DOLE) pegged the cumulative number of retrenched workers at 40,000 and that of displaced OFWs at 5,404.

The rapid pace of dislocations will aggravate the perennial job scarcity facing the Philippines, where an average of almost 4 million workers, or more than 11% of the labor force, are unemployed every year since 2001 – based on official surveys.

Consider that even before the recent wave of massive displacement of Filipino workers here and abroad, the growth in the number of jobless was already alarmingly high at more than 90,000 per year under the Arroyo administration.

Temporary, flexible jobs & labor export

The main response of the Arroyo administration is emergency employment through the so-called stimulus package. Around 500,000 jobs could be generated from it mainly through pump priming on infrastructure projects, according to the NEDA. But these jobs, which also include street sweepers hired by the Metro Manila Development Authority (MMDA), are highly temporary, lasting for a couple of weeks and will have no meaningful impact on the accelerating pace of displacements.

Aside from temporary employment, labor flexibilization is the other “solution” that the government offers. Labor flexibilization has long characterized domestic employment and has compounded the problem of job insecurity and scarcity in the country. But the situation is sure to deteriorate as the DOLE has further legitimized labor flexibilization in the guise of responding to the crisis.

Under DOLE Advisory No. 2 series of 2009, the labor department has issued guidelines on compressed workweek arrangements; reduction of workdays; rotation of workers; forced leave; broken time schedule; and flexible holiday schedules.

Alas, the guidelines just create more room for the intensified abuse and exploitation of Filipino workers. At the expense of the workers, many firms, even the ones that are not hit hard by the crisis, will take advantage of the guidelines to implement flexible work arrangements to maximize profits. The guidelines also send the unmistakable message that the workers alone should bear the brunt of the crisis.

But while labor flexibilization may jack up the profits of some companies, it will in general fail to keep many local businesses afloat as long as key issues behind the jobs crisis, such as overdependence on foreign markets and capital, are not dealt with. Thus it will fail to even moderate the massive job losses.

Finally, labor export continues to be the principal job “creation” strategy of the Arroyo administration. Reintegration and retraining programs have been set to re-export displaced OFWs to other potential labor markets. At the same time, aggressive “marketing missions” and facilitation are being carried out by the Philippine Overseas Labor Offices (POLOs) in 30 so-called strategic host destinations worldwide. The 1.4 million-jump in global deployment of OFWs last year further boosted the bullish outlook of the Philippine Overseas Employment Administration (POEA) on government’s labor export policy.

This optimism is however oblivious to recent developments in the global labor market. The International Labor Organization (ILO) has projected the number of jobless worldwide to increase by as much as 50 million as the economic crisis deepens. Mounting demand from workers abroad to protect and generate domestic jobs will limit opportunities for OFW deployment. Countries like Macau and Malaysia have already started efforts to curb the entry of migrant workers in certain jobs. Industrial unrest is sweeping Europe with British workers protesting the entry of foreign workers amid rising unemployment.

Responding to the “supercrisis”

Experts have described the recession as a “supercrisis” and could be long and deep. Its impact on poor and underdeveloped economies like the Philippines is just starting to unfold. Obviously, emergency employment through a stimulus package as well as labor flexibilization and export will not do the trick. A total overhaul of the economy’s orientation must now be started – shifting from an externally driven growth and job creation to a one driven by internal sources of economic expansion and employment.

This requires the creation of a medium- to long-term comprehensive development plan for local industries especially the small and medium enterprises (SMEs) that will primarily cater to the domestic market. Indispensably, this means refocusing the decades-old colonial bias towards foreign goods, capital, and market to a nationalist bias for local investment and commodities. SMEs account for more than 60% of total employment in the country.

Deeply related to this is genuine and lasting agrarian development, which must be pursued with real land distribution to the tillers at its core. Schemes that will further dispossess the tillers of land must be abandoned such as extending the flawed Comprehensive Agrarian Reform Program (CARP) and 100% foreign ownership of land through Charter change (Cha-cha). The Genuine Agrarian Reform Bill (GARB) pending at the House of Representatives must be passed as it could set off the process for genuine and lasting agrarian development to take place.

A highly developed agricultural sector, instead of catering to the First World markets like it has been doing since time immemorial, should supply the needs of local industries and form crucial linkages in the domestic economy. It must be noted as well that the agricultural sector directly and indirectly accounts for more than 70% of domestic employment.

Immediately, the government must desist from further opening up the domestic economy to foreign competition – an economic policy which for decades has pushed thousands of Filipino firms into bankruptcy and dislocated millions of Filipino workers, farmers, and farm workers. More liberalization of trade and investment through bilateral, regional, and multilateral free trade agreements (FTAs) and economic partnerships must be stopped.

Instead, a host of readily available and accessible support package such as tax breaks and exemptions and other privileges must be exclusively extended to Filipino SMEs and other local direct producers such as the farmers and their organizations. This will spur domestic production and consumption, invigorate the economy and create more jobs at home.

But these important reforms will not materialize without a movement of people clamoring for change. The raging crisis confronting the country and the rest of the world is providing fresh opportunities for progressive social movements to present alternative economic policy frameworks and programs that will challenge the current flawed paradigm of development.

Amid the economic gloom, there is reason to be hopeful.

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Economy

Worsening permanent crisis amid the global crunch

In her New Year message, Mrs. Gloria Macapagal-Arroyo described 2008 as “tumultuous” due to the global recession. But fortunately, according to her, this “has not become a crisis in the Philippines”. In several occasions, Mrs. Arroyo had credited her “tough, unpopular” decisions for supposedly cushioning the impact of the world economic crisis on the country.

poverty1Malacañang assures Filipinos that the economy will not be in recession (i.e., two consecutive quarters of fall in the gross domestic product or GDP) this year. We are repeatedly told that the economy and the people are resilient. With supposedly correct policies and sound fundamentals, the country could weather the storm rocking the world’s largest industrial economies. However, the definite effects of the recession in the US and other major capitalist economies on the Philippines could not be denied. The National Economic and Development Authority (NEDA) already said that the GDP growth in 2009 will further slow down to 3.6%. The GDP has started to decelerate last year posting a third quarter growth of 4.6% from 2007’s 7.1%.

The structural defects of the domestic economy – fashioned and strengthened through centuries of colonialism and decades of neocolonialism – have tied a great majority of the Filipino people to perpetual and worsening poverty, have denied local productive forces of any real shot at genuine industrialization, and have condemned the economy to a permanent state of crisis. In the face of what some analysts describe as its worst crisis ever, US imperialism, which is primarily responsible for the country’s own permanent crisis, shall become more vicious in its exploitation, plunder, and aggression. This in turn will translate into more bankruptcies, joblessness, and poverty in the Philippines, feeding ever worsening social discontent and unrest, especially under the hugely unpopular Arroyo administration.

Emerging economic trends

1. Falling exports

The US remains the single largest market for commodities produced and shipped from the Philippines, directly absorbing 16.28% of the country’s total exports from January to September 2008. In addition, it is estimated that as much as 70% of the country’s exports are dependent on the US (and EU) market through networks of subcontractors, joint ventures, and affiliates established by its transnational corporations (TNCs) operating in China, the NIES and ASEAN countries, which directly consume a huge portion of Philippine exports of intermediate goods.

This early, the impact of a contracting export market is already being felt by the country. In October 2008, exports fell 14.9%, the worst in seven years. The drop was attributed to falling US demand for electronic products, which comprised 59% of the country’s total export receipts. Electronic exports slumped by 18.9%, as big US-based electronics retailers start to close shop due waning consumer spending.

Because the country’s supposed export-winners are import-dependent, falling imports of materials and components for their manufacture indicate the depth of the impact of the global crisis on Philippine exports in the coming months. The January to September 2008 imports of electronic products declined by 26% as electronic firms cut production due to the global economic crisis, and this will impact on electronic exports in the months ahead. While falling imports ideally could mean increasing local content of exports and thus a positive development, such contraction, in the context of the Philippines, is described by mainstream economists as a “sign of a weakening economy” and a “worrisome situation”.

2. Worsening destruction of domestic jobs and livelihood

As domestic production is in the main dictated by the whims of foreign capital and markets, primarily of the US and other centers of monopoly capitalism, the economy continues to fail to generate enough jobs and livelihood for the people. The huge army of unemployed Filipinos in fact continues to grow as imperialist globalization has further destroyed the domestic productive sectors that could provide local employment. With the worsening of the cyclic crisis of the US economy and global monopoly capitalism in general, domestic production will be further undermined and consequently, millions more of Filipinos will be added to the number of jobless.

Job scarcity is at its worst under the Arroyo administration. From 2001 to 2007, the official annual unemployment rate has consistently remained double-digits, with the yearly jobless rate pegged at almost 11.3% and almost 4 million workers unemployed every year. Due to the global crisis, the overall domestic unemployment situation is turning from bad to really, really worse. The Bureau of Labor and Employment Statistics (BLES) noted the three-year downtrend in what it calls “job opening rate”, a measure of the tightness of the labor market and an indicator of the economy’s ability to create new jobs. From 2005 to 2007, the job opening rate has been progressively declining and was pegged at 1.21%, with agriculture and manufacturing posting the lowest rates.

With the global economic crisis seen to deteriorate in the coming months, Filipino workers should indeed brace themselves for even more severe job insecurity and even more dwindling local employment opportunities. Around 1/3 of manufacturing employment can be found in the EPZs and thus will be directly hit hard by the falling US and global demand. The impact could be greater considering that EPZ locators have also built their own local subcontracting networks to further cut labor costs.

The much-hyped employment driver aggressively promoted by the US-GMA regime, the BPO service subsector, could be hit in the immediate term by slowing demand and possibly investment from the US, the country’s number one BPO client and investor. One BPO firm, Advanced Contact Solutions (ACS), has reportedly downscaled its workforce by about 900 call center agents in November due to declining business volumes from the US. But over the long-term, the BPO sector may continue to thrive precisely because of the never-ending efforts of TNCs in the imperialist countries to cut production cost and increase profits. However, this also means intensified exploitation of the country’s cheap labor as call center agents face even more depressed wages and exploitative and oppressive working conditions. Employment in the BPO firms will thus continue to grow until the next episode of the periodic crisis of the US and other monopoly capitalist countries.

3. Increasing exploitation Filipino migrant workers

The domestic job crisis is mitigated only through labor export, which under the Arroyo administration has been officially proclaimed as government policy for job creation. As of December 2007, there are 8.73 million overseas Filipinos at any given time, of which more than 2.8 million are based in the US (of which, in turn, 2.5 million are immigrants or permanent residents), according to official records.

Like the case of BPO, OFW deployment could be undermined in the immediate term by the raging global economic crisis. Domestic helpers who accounted for the largest portion of newly-hired OFWs last year at 15.6% of the total, for instance, could be immediately vulnerable as households in recession-hit countries like Hong Kong, Singapore, and Taiwan cut costs to cope with the crisis. In the US’s agriculture and service industries, more than 50,000 OFWs were already “possibly” displaced, according to a government report. Readying itself for the possible influx of jobless OFWs, the government has devised a contingency plan to redirect them to other potential foreign labor markets or to encourage those with savings to start a small business.

This betrays the lack of any comprehensive and long-term government plan to invigorate domestic sources of growth that could sustain local job creation.

But then again, since OFWs are a reliable provider of cheap labor power, American and other foreign businesses will continue to hire them, although expectedly at even more exploitative terms. The crisis in fact creates more conditions including the feared increase in number of undocumented OFWs as displaced migrant workers refuse to return home since no jobs await them, that make OFWs even more vulnerable to various forms of abuse and exploitation.

4. Intensifying economic liberalization

To address its economic crisis caused by overproduction, the US and other rich countries are also expected to become more aggressive in pushing for more trade and investment liberalization. Recent pronouncements by the imperialist powers, such as in the APEC and G20 meetings last year, indicate a renewed drive to further pry open the markets of neocolonies to accommodate their surplus commodities and create new openings for their capital to operate and squeeze more profits from the cheap labor and cheap raw materials of the Third World.

The imperialist powers find a ready and reliable ally in the Arroyo administration in its efforts to push for increased free trade. The regime has been aggressively pursuing new bilateral and regional FTAs in a misguided endeavor to increase access to export markets and invite more foreign investments for job generation. Last October, the Senate, under tremendous pressure from Malacañang and the Japanese government and businesses, railroaded the ratification of the Japan-Philippines Economic Partnership Agreement (JPEPA). Also in the pipeline is a Partnership Cooperation Agreement (PCA) with the EU as part of the process to establish an EU-ASEAN FTA. The RP-EU PCA formal negotiations will this year. And finally, the stalled negotiations for an RP-US FTA are expected to be revived soon as the US intensifies efforts to surmount its recession.

In terms of national policies, the US-GMA regime has recognized that trade and investment liberalization may have already reached its limits and thus the only way that the domestic economy can achieve more liberalization is through Charter change (Cha-cha). GMA said so herself in a roundtable with the business sector last October that the “next liberalization has to be through the Constitution… to liberalize economic provisions… mostly the 60-40 restriction (on foreign equity)”.

5. Increasing desperation for foreign capital

While tighter access to credit, aid, and investments may be felt in the immediate term, the export of capital from the monopoly capitalist economies to the neocolonies will continue and intensify. The export of capital remains one of the imperialist means to extract profits from the neocolonies and to accelerate the rate of profits. Usurious debt payments from the neocolonies, for instance, have remained a steady source of financial profits for the banks and financial institutions controlled by monopoly capitalists in the US, Europe, and Japan. From 2001 to June 2008, the cumulative debt service burden (interest and principal) already reached $56.66 billion – more than enough to wipe out the current external debt of $54.81 billion.

However, the bigger danger for the Philippines in the long run is not so much that it will have less access to foreign loans but that commercial creditors and the bilateral and multilateral banks will impose even more usurious terms and impose even more painful restructuring as conditionalities in their desperate attempts to get out of the crisis and increase profit rates.

With more foreign exchange actually being squeezed from the country through foreign direct and portfolio investments, ODA and foreign debt, and through colonial trade as mentioned earlier, it is OF remittances that really save the day for the country in terms of foreign exchange earnings and in keeping the dollar-dependent national economy afloat. Most of the OF remittances come from the US, which accounted for 55.2% of the accumulated remittances from 2000 to September 2008 of around $82.13 billion. OF remittances 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. However, the BOP surplus may not last for long as the global economic crunch intensifies and investors particularly from industrialized countries resort to “risk aversion” as an immediate reaction to protect their wealth. While most OFWs may be able to keep their jobs or are able to find other jobs illegally as discussed earlier and deployment continues, migrant workers face the reality of even cheaper wages or lower incomes. Combine this with even higher taxes and higher consumer prices and cost of living like what is happening in the US, the migrants’ remittance flows will certainly be not as brisk as before which will affect not only the BOP’s current account but household spending and domestic production as well.

6. Aggravating poverty and inequities

The years leading to the three-decade high GDP growth of more than 7% in 2007 ironically have been characterized by a dramatic increase in the official poverty figures. Between 2003 and 2006, the number of poor Filipinos grew by 3.8 million, according to the government. It was also in 2007 that the most number of Filipinos have perceived themselves as hungry, based on the regular hunger survey of the Social Weather Stations (SWS). This phenomenon highlights structural flaws in the country’s economic system which could not only produce enough wealth for its own industrialization but also whatever little wealth it creates is monopolized by TNCs and other foreign corporations and share what is left to their local agents composed of compradors and landlords.

In the face of even more dwindling wealth available in the domestic economy as the imperialist crisis worsens, local compradors and landlords will be even more aggressive to consolidate and expand their control of whatever wealth is left in the domestic economy. As such, bureaucrat capitalism in the form of cronyism has become more pronounced under the US-GMA regime. These cronies, such as Mike Defensor and Enrique Razon, have partnered with big foreign businesses to corner government contracts, investment deals, and privatization projects.

Immediate relief and long-term reforms

The immediate challenge today is to assert for urgent economic relief and policy reforms that will at the minimum address the further deterioration of the state of the domestic economy and the people. With increased uncertainties in the global economy, the key is to promote internal drivers of growth, increase domestic consumption, and in the process invigorate domestic production. This can be achieved through substantial reduction in and effective control of the prices of basic goods and services that the people consume. The 12% VAT and other onerous taxes must be scrapped and proposals for additional burdensome taxes must be vehemently opposed. Neoliberal policies that have allowed global and local cartels to abuse the people with exorbitant prices must be opposed such as the ODL, EPIRA, and ongoing, gradual privatization of the NFA and implement state regulation and increased intervention.

Complementing these efforts to bring down prices and keep them in check is the implementation of a substantial wage hike that will allow millions of poor families to at least lessen the disparity between the cost of living and their daily incomes. Filipino small and medium enterprises (SMEs) must be supported and protected by the government not only to allow them to substantially increase their workers’ wages but also to help them cope with the raging global and local crises.

Domestic resources must be freed up and public investment in social and economic services urgently needed by the marginalized sectors must be significantly increased. This entails the repeal of automatic debt servicing, the cancellation of odious debt, and a big cutback in military spending so that enough resources will be immediately made available for social services such as education, health, and housing. More taxes must be collected from big business, especially the TNCs operating in the country and reverse the trend of declining tariffs on international trade.

The domestic economy and local industries must be protected. The implementation of the JPEPA should be stopped and all means must be exhausted to abolish the treaty. Ongoing FTA negotiations must be opposed, including the concession of additional liberalization commitments in the WTO especially on agriculture and non-agricultural market access. New efforts aimed at more trade and investment liberalization such as through Cha-cha must be decisively derailed.

Finally, the latest flare-up in the periodic crisis of monopoly capitalism and its consequent impact on the weak and pre-industrial domestic economy have made it more imperative to create the material conditions that will allow the economy to break free from its permanent crisis of backwardness and poverty. This necessitates the implementation of a genuine agrarian reform program to encourage the productivity of Filipino farmers and farm workers, who comprise a great majority of the direct producers of wealth in the economy. This will allow agriculture to create the needed economic surplus for industrial development and widen industrial production as it boosts domestic consumption in the countryside where an overwhelming majority of poor and exploited Filipinos live. (END)

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