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Govt jeepney ban has already cost drivers Php78,000

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by IBON Media & Communications

Thousands of small public utility jeepney (PUJ) drivers have lost as much as Php78,000 each from three months of mass transport suspensions since the lockdown.

The government has been insensitive and stingy assistance has pushed jeepney drivers and their families into poverty, said IBON.

Their troubles risk becoming permanent with the government exploiting the COVID-19 pandemic to keep small drivers and operators off the road to fast-track its jeepney phaseout program, it added.

The Duterte administration suspended mass transport, including jeepneys, when it declared enhanced community quarantines (ECQ) in Luzon then in other parts of the country in mid-March.

Quarantine measures have since eased to general community quarantine (GCQ) in many areas and public transport has resumed in phases.

The first phase started in June 1 and the second is due to begin on June 22.

Jeepneys, however, will still remain prohibited.

PUJ drivers have suffered lost incomes for over three months already, IBON said. Among them are the estimated 55,000-70,000 jeepney drivers in Metro Manila.

For instance, before the ECQ, drivers plying the MCU-Rotonda via Taft route earned an average of Php1,000 per day after a 12-hour shift, net of boundary and fuel expenses.

Jeepney drivers on this route usually worked six days a week.

This means that, to date, they have lost some 78 working days over the past 3 months or 13 weeks of suspended mass transport.

This translates to a total net income loss of Php78,000 or Php26,000 per month of lockdown, said IBON.

Out of work jeepney drivers lose Income with each passing day of transport suspension.

The group stressed that government assistance has been far from enough to make up for these lost incomes.

The social welfare department reports only 36,200 jeepney drivers getting cash aid in the past three months.

Even then, some jeepney drivers only received one tranche of the Php5,000-8,000 of social amelioration and it remains unclear if they will even get the second tranche.

Many small jeepney drivers and operators could become permanently out of work, particularly in Metro Manila, IBON said. 

Transport officials are using the mass transport suspension to force the phaseout of traditional jeepneys by only allowing modernized jeepneys to run.

Under the Land Transportation Franchising and Regulatory Board (LTFRB)’s Memo Circular 2020-017 on public transport guidelines in GCQ areas, only modernized jeepneys and traditional jeepneys under a corporation or cooperative are allowed to operate.

This leaves out small jeepney operators and drivers who, unlike big or corporate fleet operators, can ill-afford the costly Php1.6–2.2 million modernized units, or steep fees and requirements to form a cooperative.

They are even less able after three months of lost incomes and depleted savings, if any.

IBON said that the livelihoods of thousands of small jeepney drivers and operators are at stake. Instead of putting corporate interests first and pushing its phaseout program, the government should give immediate cash assistance to drivers and their families who have suffered three months of lost incomes.

It should also support drivers and operators in upgrading or replacing their units to meet safety, health and environmental standards. #

Open-air jeepneys safer against COVID-19 than enclosed modernized counterparts

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by IBON Media & Communications

With only modernized jeepneys allowed to resume operations this week, research group IBON said that keeping traditional jeepneys off the road inconveniences commuters and also denies them potentially safer means of transport.

The group said that the traditional open-air jeepney is likely even safer against COVID-19 than its air-conditioned modernized counterpart. With the pandemic still ongoing, insisting on jeepney modernization unnecessarily puts commuters at risk of possible airborne coronavirus infections.

The second phase of public transport resumption in general community quarantine (GCQ) areas will begin on June 22.

Public utility buses (PUB), modern public utility vehicles (PUVs) like modern jeepneys, and utility vans (UV) express will be allowed to operate.

Traditional jeepneys will remain prohibited.

IBON said that the Duterte administration is using COVID-19 as an excuse to force jeepneys off the road and fast-track its ill-conceived modernization.

IBON however said that the ban on traditional jeepneys should be lifted.

According to the group, there are studies which indicate that open-air transport may have advantages over enclosed, air-conditioned transport in controlling the spread of COVID-19.

Most coronavirus transmissions are acknowledged to occur via droplet infection, from coughing and sneezing, and partly through contaminated surfaces.

Nonetheless, recent studies show that the number of pathogens increases considerably in enclosed spaces and that regular ventilation reduces the risk of infection.

Despite physical distancing, enclosed modern jeepneys can become centers for spreading the virus compared to the natural ventilation of traditional jeepneys, said the group.

Medical researchers and physicists from the University of Amsterdam (UvA) have found that small cough droplets, potentially containing virus particles, can stay in the air of enclosed spaces especially when poorly ventilated.

Air quality and health experts from the Chinese Academy of Sciences similarly find that airborne transmission is a significant route of infection in indoor environments.

The UITP (Union Internationale des Transports Publics) or International Association of Public Transport, with 1,600 members in 96 countries, has issued guidelines warning that public transport systems are “high risk environments” due to the “confined space and limited ventilation”. 

The risk of community transmission through enclosed public transport has already prompted many countries to take specific measures against this, said IBON.

The European Centre for Disease Prevention and Control (ECDC) advises “proper ventilation in [public transport] at all times” and “the use of windows [to] increase replacement with fresh air”.

Similarly, the United States (US) Centers for Disease Control and Prevention (CDC) came out with guidelines for mass transit administrators which include, among others, “[increasing] circulation of outdoor air as much as possible”.

In Thailand, the transport ministry has instructed public transport operators to open windows for good air ventilation.

In China, some public transport groups have retrofitted window vents to air-conditioned fleets.

In India, buses are enjoined to improve ventilation by increasing the frequency of fresh air intake.

With COVID-19 still spreading, traditional jeepneys have the advantage of being open-air, dissipating droplets with the virus faster, and lowering the risk of transmission, said IBON.

Jeepney drivers prevented from going back to work by the government ask for help. (Kodao)

Yet the government’s narrow-minded focus on corporate-driven jeepney modernization threatens to forego this important built-in advantage in the mass transport system.

The pandemic is being used to put thousands of jeepney drivers out of work and take traditional jeepneys permanently off the road in a brutal enforced phaseout, the group said.

IBON stressed that efficient and reliable public transport is critical to resume as normal social and economic life as possible amid the pandemic.

Commuters suffering from the lack of jeepneys include many health workers and emergency service providers at the frontlines of the battle against COVID-19.

Jeepney drivers and operators need subsidies to make up for revenue losses and higher operating expenses. The current situation is also an opportunity to promote cooperativization towards the eventually nationalized public mass transport for ensuring this vital service. #

Duterte is a paper tiger in strategic terms and is in the process of being torn apart

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By Jose Maria Sison

In tactical terms, Duterte has still enough power and enough armed minions to abuse the people and act like a real tiger. He can still kill any specific social activist, critic or anyone opposed to his brutal and corrupt regime. He can still persecute journalists, lawyers, human rights defenders, bishops, priests and opposition leaders as well as their institutions and organizations in so many ways.

But in strategic terms, Duterte is a paper tiger already in the process of being torn apart. Every oppressive or exploitative act that he commits is rousing the people to fight back. Thus, the patriotic and progressive forces are gaining ground rapidly. Duterte is lucky if he can survive politically before the middle of 2022 or he will be even more unlucky and meet a more powerful resistance if he succeeds to extend his power beyond 2022 through any foul means offensive to the sovereign will of the people.

In taking advantage of the COVID-19 problem in order to grab emergency powers, subject the people to extreme repressive measures and steal public funds in the hundreds of billions of pesos, Duterte has sabotaged the Philippine economy and bankrupted his own government and has thus grievously offended the people whom he has deprived of the means of livelihood and frustrated with the false promise of food assistance and economic relief.

In their tens of millions, the workers, peasants and the lower middle class are hungry and angry at the Duterte regime and are eager to move against it. The professionals and entrepreneurs have been deprived of income and have fallen into debt and bankruptcy and are ready to join the toiling masses in concerted actions to protest and make demands. Even the big compradors and landlords who are not his close collaborators now consider him a plague worse than the COVID-19 virus.

The Christian churches are now calling on their people to make Duterte account for his crimes against humanity, his gross and systematic violations of human rights and his blasphemy in cursing and spitting on God’s face. He can invoke the freedom of thought and belief. But he cannot use his state power to persecute and humiliate the Churches without meeting the just resistance of believers,

Duterte has terminated the peace negotiations with the NDFP in obedience to Trump’s order for him to do so in 2017. And to prove his continuing puppetry to the US, he obsequiously promised to Trump that he would do everything in his power to destroy the revolutionary movement and to allow US corporations to have 100 per cent ownership of land and all types of businesses, including natural resource exploitation and public utilities.

Since then, the inter-imperialist contradictions between the US and China have sharpened. The US is now displeased with Duterte for having allowed China to build and militarize seven artificial islands in the exclusive economic zone of the Philippines, control the Philippine national power grid and to put up cell towers of China Telecom and its Philippine dummy in the AFP military camps in collision with the EDCA which privileges the US to have its own bases within AFP camps.

Despite his betrayal of Philippine sovereignty in his relations with China, Duterte has gotten far less than the loans that he expected to get from China even at the most onerous terms for his much-touted plan of infrastructure-building. It has become obvious that China has preconditioned most of the loans with demands for the most outright and brazen surrender of Philippine sovereign rights over the West Philippine Sea and its rich oil, gas and marine resources.

While Duterte and his military minions boast daily in government and commercial mass media that they have wiped out the armed revolutionary movement several times over, they expose their big lie by railroading a bill of state terrorism supposedly aimed at destroying at the same time the armed revolutionary movement in the countryside by likewise destroying any form of legal opposition that can be suspected or interpreted as being helpful to armed revolution.

The armed revolutionary movement of the Filipino people is daily being taunted and insulted by militarist psywar that it is already dead and being challenged to prove that it is still alive and kicking. In this regard, the leadership of the revolutionary movement has announced that each one of its more than 100 guerrilla fronts will deliver lethal blows to their enemy every week and every month in accordance with their current strength within the context of national guidelines under the principle of centralized leadership and decentralized operations.

Indeed, if the revolutionary forces of the people would carry out their fighting tasks very well against the enemy armed units, the human rights violators and plunderers, they can contribute significantly to the isolation, discredit and overthrow of the traitorous, tyrannical, genocidal and plundering Duterte regime. When they were much smaller and weaker and less experienced, the revolutionary forces contributed significantly to the overthrow of the Marcos fascist dictatorship from its inception in 1972 to 1986.

They are now definitely in a much stronger and better position to give a greater contribution to the effort of the Filipino people to get rid of a tyrant of a lower calibre than Marcos, a mediocre mimicry of his master monster. They can assure all their allies that under current circumstances the balance of forces does not yet allow seizure of political power by the revolutionary proletariat but certainly allows constitutional succession among the conservative forces to depose a physically, mentally and morally deranged tyrant and provide relief to the suffering people.

As they did in the fight against the Marcos fascist dictatorship, the conservative forces can avail of the broad united front of forces against the Duterte tyranny, persuade the civilian and armed personnel of the state to withdraw support from the tyrant and apply their principle of constitutional succession to get rid of him and his gang of butchers and thieves. If they succeed, then they shall have created the conditions for the resumption of peace negotiations with the NDFP. All advocates of a just peace can seriously consider this point. #

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The author is the chief political consultant of the National Democratic Front of the Philippines.

Duterte administration’s recovery plans help the rich more than the poor

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by IBON Media & Communications

IBON said that the government’s supposed recovery plans are more concerned about supporting business profits than helping the mass of unemployed Filipinos.

The finance department’s Philippine Program for Recovery with Equity and Solidarity (PH-PROGRESO) and stimulus bills in Congress give considerable support to businesses while millions of affected families get token support at best.

PH-PROGRESO of the economic managers does not give any cash support to poor and low-income families most in need, including the mass of unemployed, noted IBON.

The Corporate Recovery and Tax Incentives for Enterprises Act (CREATE) proposal of PH-PROGRESO wants to give Php667 billion worth of corporate tax breaks, the biggest in the country’s history. The Php133.7 billion in loans and guarantees, Php142.8 billion in other tax cuts and foregone revenue, and Php233.3 billion in additional liquidity will also benefit mainly enterprises.

The group said that the stimulus bills in Congress, including the Accelerated Recovery and Investments Stimulus for the Economy of the Philippines (ARISE) recently passed by the House of Representatives (HOR), are not much better.

ARISE allocates a total of Php40 billion for cash-for-work programs and Php42 billion for education subsidies.

On the other hand, it allocates Php1.2 trillion for formal enterprises, said the group.

There is a strong likelihood that the bulk of this will go to large firms of oligarch conglomerates and possibly even foreign transnational corporations.

Big firms dominate the tourism, transport, import and export, manufacturing, and service industries identified for support.

There is also no explicit prohibition of foreign companies, IBON noted.

Meanwhile only Php135 billion of the Php1.2 trillion is explicitly for micro, small and medium enterprises (MSMEs).

Giving large firms equal access to the subsidized financing will likely crowd out MSMEs especially the neediest smaller firms, IBON said.

The focus on formal enterprises will also mean that vast numbers of informal earners and displaced workers will not be reached.

This Php1.2 trillion includes the Php110 billion for wage subsidies. The stimulus bill says that freelancers, professionals, self-employed, and overseas Filipino workers can also receive this.

In practice, however, there is likely to be a bias for workers in formal enterprises, which means the subsidies are in effect subsidies for firms’ payroll expenses, said the group.

IBON said that support to enterprises should give much greater and more explicit priority to Filipino MSMEs.

These are the foundations of the domestic-oriented development so urgent amid the global recession and increasing protectionism even by the world’s most powerful economies.

At the same time, government recovery plans need to give much greater direct income support to poor and low-income households.

This is both direct support for families’ welfare as well as a meaningful stimulus that increases effective demand in the economy. #

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Kodao publishes IBON articles as part of a content-sharing agreement.

Duterte gov’t giving up Php667-B in potential COVID response funds to boost corporate profits

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by IBON Media & Communications

At a time when funds are urgent for the huge COVID-19 response needed, research group IBON said that the Duterte administration is giving up Php667 billion in revenues to boost the profits of the country’s largest corporations.

Oligarch profits are boosted at the expense of aiding poor families, containing the spread of the coronavirus, and treating those with COVID-19, said the group.

In a Senate hearing on Tuesday, Department of Finance (DOF) Secretary Carlos Dominguez III said that the administration wants to cut the corporate income tax (CIT) from 30% to 25% starting July this year.

The CIT will be lowered again starting 2023 to fall to just 20% by 2027.

This will result in an estimated revenue loss of Php42 billion in 2020 and a further Php625 billion over the succeeding five years.

The faster and bigger CIT cut proposed is grossly unconscionable at a time when the government is blaming its incomplete response to the COVID-19 crisis on the lack of funds, said IBON.

Cash transfers are inadequate for tens of millions of Filipino families, the government says mass testing is unaffordable, and small businesses and workers are bearing the burden of precautionary measures.

There is also no substantial increase in the number of health workers, beds, intensive care units, and ventilators in the public health system, the group noted.

And yet, IBON stressed, The DOF is using the COVID-19 crisis as an excuse to increase the profits of large corporations.

Corporate Recovery and Tax Incentives for Enterprises Act (CREATE) pushed by the DOF as “one of the largest stimulus measures in the country’s history” is the very same regressive TRAIN Package 2 it has been pushing for over three years, said the group.

CREATE is only its latest renaming after being called Corporate Income Tax and Incentives Reform Act (CITIRA).

The finance department is also being untruthful in saying that the measure “is meant to fuel economic dynamism, especially among the country’s growth engines – the micro, small and medium enterprises (MSMEs) – that employ a majority of Filipino workers”, said IBON.

In a Senate Ways and Means Committee hearing in 2018, the DOF itself reported that 75% of CIT revenue collected comes from large corporations and only 25% from MSMEs. Hence, it is large corporations and not MSMEs who are the biggest winners getting the biggest boost in their profits from the CIT cut.

IBON said that if the government is really serious about supporting MSMEs and not just using them as a smokescreen to increase oligarch profits, it can instead introduce a more progressive two-tiered CIT scheme with 20% CIT for MSMEs and a higher 35% for large enterprises.

The group said that countries with such segmented CIT schemes in ASEAN include Thailand, Malaysia, Cambodia and Brunei.

The proposed measure is also misguided in being designed as an incentive for foreign investors to come to the Philippines, IBON added.

Most foreign investment in the country is in low value-added operations. Reducing tax revenues collected from them reduces among the biggest concrete benefits from letting them operate in the country, the group explained.

The big business bias of the government’s COVID-19 response is becoming increasingly evident, according to IBON.

The Duterte administration is giving them CIT cuts, supporting lower wages for workers, and preparing huge loans, loan guarantees and bailouts.

These should be corrected in favor of more generous income support for affected families, strengthening the public health system, and supporting Filipino MSMEs, said the group. #

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Kodao publishes IBON articles as part of a content-sharing agreement.

Financial strength, development weakness

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By Sonny Africa

The Inter-Agency Task Force on the Management of Emerging Infectious Diseases (IATF), presided by Pres. Rodrigo Duterte, addressed the country on Tuesday. Finance Secretary Carlos Dominguez III was a moment of lucidity especially compared to his principal’s rambling incoherence. Unfortunately, being lucid doesn’t necessarily mean being correct.

Resilient and the best?

Sec. Dominguez opened by rejoicing about the Philippines being ranked number six out of 66 countries in the world for “economic resiliency” and supposedly “the best in Southeast Asia for financial strength”. The compulsion to welcome any sort of accolade is understandable especially coming from The Economist, a well-regarded business newspaper. We’re so starved of good news that ranking highly on any international scale – like in boxing or beauty pageants – always gives an endorphin rush.

But then again, it’s probably useful to be a little more circumspect about the metrics used to say that the country is supposedly doing well. The four measures of ‘financial strength’ in the magazine’s report are of course fine as they are and include the most important usual measures of financial strength – public debt, foreign debt, cost of borrowing, and foreign exchange reserves. Hence Sec. Dominguez’s elation over our so-called financial strength and the country’s credit ratings.

But we should presumably see things from a real development perspective and beyond the shallow endorphin rush. In which case, the main problem is the confusion between means and ends. This is actually a recurring problem with our neoliberal economic managers in particular, and free market-biased economists, policy folks, and business minds in general.

The four metrics and credit ratings aren’t valuable in themselves but for how useful they are for the presumably real development ends of policymaking – enough jobs and livelihoods so that there are no poor Filipinos, and an equitable, stable, self-reliant and sustainable economy. It’s always been odd that whenever policymakers see a conflict between financial strength and social development, the latter always loses.

Which is also to highlight that while those measures are of course better favorable than unfavorable, supposedly favorable performance can actually be undesirable depending on the price paid to get them.

Financially strong for whom?

So, some thoughts on Sec. Dominguez’s self-congratulatory echoing of an assessment that the Philippines “continues to enjoy the confidence of the international community” – meaning all the foreign creditors and investors whose main interest in the country is that we keep borrowing and stay profitable for them, to put it bluntly.

First, “financial strength” is a misnomer if this is in any way taken to refer to the level of development of the Philippine economy or even of the government. The only underlying so-called strength these metrics refer to is the country’s perceived ability to pay its foreign debt obligations. There’s no direct correlation between such so-called financial strength and a country’s level of development – a quick scan of the ranking with countries like Botswana, the Philippines, Nigeria, Indonesia and India ranking high should make that easily clear.

Finance secretaries, central bankers, and other economic managers around the world are regularly feted as the World’s Best this or that by global finance magazines and organizations. Their countries, economies and governments correspondingly benefit from the halo effect and are projected as developing – even if, as is often the case, they’re not.

Second, it matters how “good performance” along these indicators was achieved. Put another way, what may be good for financial strength may be bad for development. As is often the case.

For instance, the Philippines has had comfortable foreign exchange reserves since the 1990s mainly because of remittances from the unprecedented export of cheap labor and overseas Filipino workers. We’re so used to it, but it’s worth keeping in mind that this enormous reliance on overseas work is at huge social costs for families and exposes the inability of the domestic economy to create enough jobs for its population. It also actually distorts the economy with a huge imbalance between domestic production and incomes and final household demand. Mammoth overseas remittances – not brilliant economic managers – are arguably the biggest factor in the country avoiding foreign debt payments crisis such as in the 1980s.

Public debt, including public foreign debt, has moderated and credit ratings also improved. However, this was done on the back of an increasingly regressive tax system that relies more and more on consumption taxes rather than on direct taxes. The regressive trajectory of the country’s tax system started in earnest with the introduction of value-added tax (VAT) in the 1980s then worsened with VAT expansion in the 2000s and 2010s, and with cuts in personal income, estate and donor taxes particularly through the regressive Tax Reform for Acceleration and Inclusion (TRAIN) reforms since 2018.

All this increases so-called financial strength by unduly burdening poor and low-income groups who make up the majority of the population, while making it easier for the narrow sliver of the richest in the country. Sec. Dominguez is unrepentant and noticeably still pushing for the Corporate Income Tax and Incentives Rationalization Act (CITIRA) bill which, among others, lowers corporate income taxes – most of all to gain further favor from the international community.

Lastly, what is prevented by insisting on these measures as if they were ends in themselves also matters. The onset of COVID-19 and the national and global measures to control the pandemic have a tremendous impact on the economy. The Philippines and the world are in recession, and some are saying that the world is in its worst economic crisis since the Great Depression almost a hundred years ago.

Our current pandemic panic will eventually settle in the coming months, but the economy will still be stumbling. Worse, poverty and unemployment will be soaring. In such circumstances, it doesn’t make sense to be so insistent on narrow indicators of so-called financial strength to the point that urgent development measures are prevented.

Today, it’s incredibly important to put more money in people’s pockets both to help them maintain their welfare as well as to boost effective demand. It’s also important to support rural producers and small enterprises to ensure that the goods and services needed are still available. It’s also important to rapidly expand the public health system to deal with the pandemic and to meet the country’s vast COVID-19 and non-COVID-19 health problems.

Attending to all this means the government having to spend more as well as building up its capacity to intervene. Giving unwarranted emphasis on measures of ‘financial strength’ unfortunately sets artificial limits to the government meeting its human rights obligations to intervene on a massive scale.

To force an analogy, it’s like being in the hinterlands of the Philippines with an emergency case in the back of the car and the nearest hospital hours away. In this kind of situation, you don’t obsess about fuel-efficient driving or not red-lining the tachometer or limiting the car’s mileage – you step on the gas. Glorifying ‘financial strength’ is stepping on the brakes. #

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Kodao publishes IBON articles as part of a content-sharing agreement.

The fate of BBB in the time of COVID-19

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by Jose Lorenzo Lim

The COVID-19 lockdown and further containment measures are drastically slowing down economic activity in the Philippines and elsewhere. The government sees the Build, Build, Build (BBB) program as jumpstarting the Philippine economy in the time of the pandemic. But with its current neoliberal framework, will BBB be enough?

Even before COVID-19, multilateral funding institutions like the World Bank and Asian Development Bank (ADB) have been pushing for an infrastructure offensive especially in developing countries. Moreover, as early as the late 1980s the World Bank proposed using the private sector to fund and undertake these projects in lieu of the Keynesian idea of giving the State a bigger role in the economy especially in terms of large public spending.

The Golden Age of Infrastructure

Infrastructure is a tool for reducing poverty and driving economic growth. But the current framework of infrastructure development in the Philippines and other developing countries is profit-driven and hence overly focused on economic infrastructure. Contrarily, development in so-called advanced and high-income countries such as the US, Singapore, South Korea, and Taiwan also included substantial public investment in social infrastructure such as education and health.

The Duterte government’s focus on a narrow set of economic infrastructure is aimed at attracting foreign capital. This is driven by the belief that having better infrastructure attracts more foreign investments, which enables countries to attain economic development. The World Bank claimed that, in Asia, around US$8.6 trillion worth of infrastructure investments are required in 2010-2020 to achieve economic development. It cited a huge infrastructure investment gap in Asia, Sub-Saharan Africa, and Latin America, which are mostly composed of developing countries.

One of the promises of the Duterte government is to usher in a “Golden Age of Infrastructure” through its grandiose BBB program. The project includes high-impact projects under the Department of Transportation (DOTr), Department of Public Works and Highways (DPWH), and the Bases Conversion and Development Authority (BCDA) to build more railways, urban mass transport, airports and seaports, more bridges and roads, and new and better cities.

In selecting the original 75 flagship projects, the government applied the following criteria, among others: 1) consistency with regional and national development plans; 2) implementability (i.e. must be accomplished within the Duterte administration); 3) high economic impact with 10% minimum social discount rate; and 4) “big-ticket” (above Php500 million or US$10 million).

Etienne Girardet@etiennegirardet/Unsplash

Issues, from 75 to 100

Despite the supposedly meticulous criteria for identifying the most important projects to undertake, many issues surround the infrastructure flagship projects (IFPs). Its neoliberal fixation with pleasing investors and big business puts to question whether or not it will benefit the people and lead to genuine development.

First, the identification of IFPs was problematic from the start. In November of 2019, the government announced that it revised the list of IFPs from 75 to 100. The National Economic and Development Authority (NEDA) Board chaired by the President approves each project before it is even considered as a flagship infrastructure project. However, the BCDA said that the Duterte administration put the wrong projects on the list. Moreover, some projects turned out to be unfeasible, which is strange because this was presumably a basic criterion for selecting the 75 flagship projects in the first place.

The Duterte administration had been boasting of the 75 IFPs since assuming office in June 2016. Former Budget and Management Secretary Benjamin Diokno was even optimistic that the Duterte administration would complete 74 of the 75 projects before its term ends in 2022. Now, the BCDA expects only 38 of the 100 IFPs to be completed by the time Duterte steps down.

The Metro Manila Bus Rapid Transit (BRT) Line 1 and Line 2 and Cebu BRT project, for example, were taken out of the 75 IFPs due to narrow roads and right-of-way issues. The DOTr even wrote a letter to the NEDA Investment Coordination Committee (ICC) to cancel the projects. Yet the projects were eventually re-included after a technical inspection by the World Bank and NEDA on Quezon Avenue (one of the main stations of Metro Manila BRT) and in Cebu.

The Metro Manila and Cebu BRT projects are targeted to be funded by France and the World Bank, but they have faced problems with financing. It also did not augur well that Pres. Duterte suspended all talks on loans and grants from the 18 countries that supported a United Nations Human Rights Council (UNHRC) resolution to probe his controversial drug war, which included France. Ultimately, the fate of the Metro Manila BRT is in limbo since it is no longer among the 100 IFPs. The Cebu BRT meanwhile is still included and is targeted for completion by 2021.

Second, the priorities of the infrastructure projects are questionable. The majority of the projects are for transport when the country badly needs social infrastructure. For instance, there is a need especially for more hospitals and health facilities as bared by the country’s glaring incapacity in the face of the COVID-19 pandemic. The country also badly needs infrastructure for agriculture production, and to support local industries.

The 100 IFPs are now composed of projects for transport and mobility (73), water resources (10), urban development (9), information and communication technology or ICT (6), and power and energy (2). The overwhelming majority are for transport and mobility. In the absence of a basic strategy for developing agriculture and domestic industry, these will mainly end up supporting the overly import-oriented and export-oriented enterprises constituting our economic backwardness.

Third, BBB will be hugely funded by loans from other countries and financial institutions and will further bloat Philippine debt. The 100 IFPs are worth around Php4.3 trillion and official development assistance (ODA) is the biggest funding source of projects. There will be Php2.4 trillion funded with ODA, followed by Php1.2 trillion through public-private-partnership (PPP) funding, and Php172 billion funded solely from the General Appropriations Act (GAA).

Leading the ODA funders is Japan with a total of around Php1.3 trillion, China with Php700 billion, and ADB with Php273 billion. Data from NEDA as of June 2019 show that the Philippines has US$8.1 billion worth of ODA loans from Japan, US$2.8 billion from ADB, and US$273 million from China.

Fourth, contrary to the goal of infrastructure pushing development, most of the 100 IFPs are still centered in Luzon, where poverty incidence is relatively lower compared to other parts of the country.

Of 26 projects worth Php1.6 trillion in Luzon, the biggest concentration of 22 projects worth Php916.5 billion will be built in the National Capital Region. Meanwhile, there are 17 projects worth Php474.6 billion in Visayas, and 25 projects worth Php474.4 billion in Mindanao. Additionally, there are projects worth Php913.5 billion that will be implemented nationwide, the bulk of which is taken up by the New Manila International Airport located in Bulacan.

Fifth, vested interests appear to be benefiting from the BBB infrastructure offensive. Bong Go’s family has been accused of being the largest contractor in BBB projects. Go’s father, Desiderio Go, owns the Davao-based construction company CLTG builders. Through CLTG builders, the Go family secured 20 contracts in 2017 for road networks in Davao. These were worth around Php3 billion in solo projects and joint ventures. In 2018, CLTG Builders also bagged Php116 million worth of projects in Davao.

Aside from Go’s family, other businessmen may also be gaining from the BBB program. For instance, DPWH secretary Mark Villar’s father, Manuel Villar, through Prime Asset Ventures Inc. (PAVI) is eyeing two unsolicited proposals worth Php213.3 billion. These include the LRT 6 Cavite Line A project worth Php56.3 billion and the Cavite LRT Line 6c and Sucat Line 6b projects worth Php157 billion.

The COVID-19 pandemic does call for a “new normal”. This should include a change in the way the government spurs economic growth where the current infrastructure push is becoming irrelevant.

Fons Heijnsbroek@fonsheijnsbroek51/Unsplash

Jumpstarting the economy

The BBB program is seen by the government as essential in jumpstarting the economy. While economic managers have already insisted that they will hardly touch funding for infrastructure projects to augment the budget for COVID-19 response, they took a step back and realigned some of the infrastructure budget.

The DOTr in April realigned funding for infrastructure projects worth Php16.9 billion that is from 35 projects. The MRT-3 rehabilitation and the PNR Clark Phase 1 are some of the projects that had their budget realigned for the government’s COVID-19 response, which are transportation related.

Data from NEDA show that there are 34 projects from the 100 IFPs that are already being implemented. Of the 34 projects, 26 are transport and mobility related, 2 are ICT projects, 3 are urban development, and 3 are water resources.

Meanwhile, there are 43 pending projects in the 100 IFPs to be implemented within 6-8 months. Majority is still composed of transport and mobility projects with over 30 projects, 4 water resource projects, 4 ICT projects, and 5 urban development and redevelopment projects.

These roads and airports under the 100 IFPs would have been useful to aid economic activity in the long run, particularly tourism and trade. But will these be useful in the “new normal”? For instance, the Department of Tourism has already acknowledged that the number of foreign visitors will drastically fall until at least next year. The United Nations World Tourism Organization estimates that foreign travel will fall by 20-30% and tourism receipts by one-third in 2020. Meaning, the tourism industry in the time of COVID-19 is practically suspended indefinitely.

The 2020 Budget of Expenditures and Sources of Financing shows that the government has allotted Php989.2 billion for infrastructure outlays. Of this, the highest share or Php349.9 billion is allotted for road networks. Government should review the budget for road network projects which could be additionally used for the country’s COVID-19 response. Another source could be the outlay for airport systems worth Php2.4 billion.

The composition of BBB projects being mostly road networks and airports is attributed to its business and trade inclined framework. Basically, the aim of the government’s infrastructure program is to push for high-impact projects to stimulate the economy and arrest its further slowdown and possible decline. But while the Philippines does need these types of infrastructure, the factor of the COVID-19 pandemic highlights a long-overdue change in this framework.

Josue Isai Ramos Figueroa@jramos10/Unsplash

The future of infrastructure

Looking at IBON’s economic blueprint dubbed People Economics, developing the countryside, building Filipino industries and protecting the environment could be used as the new framework for the government’s infrastructure development.

One way to reframe the government’s infrastructure program in the time of COVID-19 is to focus on social infrastructure such as government hospitals and health centers in the provinces, sanitation facilities on barangay level, and housing projects for the poor. This should be coupled with a plan for countryside development and building rural and national industries. This puts substance in a ‘Balik-Probinsya’ program if it genuinely aims inclusive development.

With a plan of building Filipino industries and making them competitive, the Philippines won’t have to be dependent on importing a wide range of commodities. The countryside could also benefit from a much-needed infrastructure push with irrigation, post-harvest facilities, farm-to-market roads, and ICT projects such as marketing, prices and production support. This does not end with a basic social services and infrastructure push but ensuring that people have decent jobs and living wages to support domestic consumption and demand. Decongesting Metro Manila then won’t be a problem.

The Philippines has to improve the current state of infrastructure especially in the context of COVID-19: one that supports a strong public health system and the stable production of the nation’s needs in order to withstand and battle a pandemic. The problem with the BBB program is how this massive infrastructure program is not only disconnected from correcting but even reinforces the fundamental problem. BBB ignores the need for reliable, strong and public-controlled social services and public utilities infrastructure, for agricultural development and national industrialization, and healthy environment.

What infrastructure to build should figure in a larger strategic plan that supports sustainable consumption and production and social well-being. The current infrastructure framework needs to be transformed. #

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The author is a researcher at IBON Foundation. His research topics include Build, Build, Build, the oil industry, and social services. Prior to IBON, he served as Editor-in-Chief of the UPLB Perspective for the academic year 2016-2017. When not in the office, Jose Lorenzo enjoys writing with his fountain pens and trying out new ink.

Kodao publishes IBON articles as part of a content-sharing agreement.

Oil tax hike insensitive and will make poor Filipinos suffer more

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by IBON Media & Communications

Research group IBON said that raising taxes on imported oil products will push prices up and burden many poor households already struggling with jobs and income losses amid the COVID-19 pandemic.

The group said that government should instead look to better sources of response funds such as taxing the super-rich.

The Duterte administration recently issued an executive order increasing taxes on imported crude oil and refined petroleum products to 10 percent. This is supposed to fund government’s COVID-19 response.

IBON said this oil tax increase will ultimately be passed onto consumers, especially the poor, through higher prices. Some 18.9 million working people and their families are already dealing with mass unemployment, income losses and delayed and insufficient social amelioration.

The oil tax hike comes on top of additional oil excise taxes already from the government’s regressive Tax Reform for Acceleration and Inclusion (TRAIN) program.

The TRAIN law hiked oil excise taxes by Php6 per liter of diesel, Php5.65 per liter of gasoline, Php5 per liter of kerosene, and Php3 per kilogram of liquefied petroleum gas (LPG).

The additional oil tax will make socially-sensitive products more expensive as well as increase the general price level.

Instead of pursuing this grossly insensitive revenue measure, IBON said that government should instead impose a wealth tax on the country’s super-rich.

The Philippines’ 50 richest have Php4.1 trillion in combined wealth, which is more than what the poorest 71 million Filipinos own put together, the group said.

A tax of 1% on wealth above Php1 billion, another 2% above Php2 billion, and another 3% above Php3 billion will raise Php236.7 billion from these 50 richest individuals alone.

The wealthy can well afford to pay more taxes and this will not have any effect at all on their already extremely high standards of living, said IBON.

Tax revenues from this can then be prioritized towards fighting the COVID-19 crisis and providing sufficient social amelioration for poor and vulnerable Filipinos, the group said. #

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PH economy was already slowing – COVID-19 just made it worse

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by IBON Media & Communications

The Philippine economy was already weak coming into the COVID-19 crisis, research group IBON said. Growth will remain slow if the government does not acknowledge pre-existing weaknesses that the pandemic merely intensified.

The group said that recognizing the problem is the first step to the bold measures needed for long-term growth and development.

The Philippine Statistics Authority (PSA) reported -0.2% growth in gross domestic product (GDP) in the first quarter of 2020, marking a significant drop from the 5.7% growth in the same period last year.

The National Economics and Development Authority (NEDA) attributed this to the Taal volcano eruption in January, decrease in trade and tourism due to COVID-19 in February, and the eventual lockdown in March.

IBON said however that the economy was already slowing for three consecutive years and headed for its fourth such year even before COVID-19 came into the picture.

Official figures show annual GDP growth falling from 7.1% in 2016 to 6.9% in 2017, 6.3% in 2018 and 6.0% in 2019.

Year-on-year first quarter growth also reflects this trend, falling from 6.9% in the first quarter of 2016 to 6.4% in 2017.

This slightly increased to 6.5% in 2018 but fell to 5.7% in 2019. In 2020, first quarter growth dove to -0.2%, which is the first GDP contraction since the fourth quarter of 1998 (-3.4%).

Important accustomed drivers of growth were falling even before the eruption of Taal Volcano in January and the COVID-19 crisis since February and especially since the lockdown starting mid-March.

Growth in overseas remittances slowed from 5.3% in 2017 to 3.9% in 2019, and foreign investment flows from US$10.3 billion to US$7.6 billion over the same period.

The manufacturing sector slowed from 8% in 2017 to 3.2% in 2019, and agriculture from 4.2% to 1.2% over the same time.

Tourism had also been lackluster, said the group. Growth in gross value added of tourism industries remained virtually stagnant from 10.1% from in 2016 to 10.3% in 2017 and 10.6% in 2018.

In terms of expenditure, gross capital formation considerably slowed from 10.9% growth in 2017 to 2.5% in 2019 and exports from 17.4% to just 2.4 percent.

Household consumption spending remained steady at 6% in 2017 and 5.9% in 2019.

Hence, overall economic growth has just been artificially driven by government consumption spending, which increased from 6.5% in 2017 to 9.6% in 2019 and by public infrastructure projects rather than an underlying dynamism from vibrant domestic agriculture and industry.

These basic economic weaknesses result in record joblessness and the proliferation of informal and irregular work.

Correcting the official methodology which underreports joblessness, IBON estimated that the number of unemployed reached a record 4.7 million in 2019.

The group also estimated that 27.2 million or 64% of employment in the same year was really poor quality work comprised of non-regular and agency-hired, government contractuals, and informal earners.

Widespread poverty is another indicator of a sluggish economy, said the group.

According to PSA data, some 12.4 million or over half of 22 million families nationwide were trying to survive on less than P132 per person per day.

IBON pointed out that the last three years of slowing growth has been despite the Duterte administration’s expanding Build, Build, Build infrastructure program.

Despite annual appropriations for infrastructure increasing to 4.7% of GDP in 2019, economic growth still fell for a third consecutive year.

The group explained that infrastructure spending is a short-term stimulus at best and that domestic agriculture and Filipino industry have to be strengthened for growth to be higher and more sustained.

The agriculture sector has been weakening due to long-time government neglect. It grew from -0.1% in 2016 to 4.2% in 2017, but steadily declined thereafter to 1.1% in 2018 and 1.2% in 2019.

First quarter growth in agriculture slid to -0.4% in 2020 from 0.5% the previous year. Continued agricultural liberalization, such as of the rice subsector, will only weaken agriculture further.

Growth in manufacturing, which has long been foreign-dominated and export-oriented, has also been dwindling. The sector registered 6.8% growth in 2016, which increased to 8.0% in 2017. But this dropped to 5.1% in 2018 and 3.2% in 2019. First quarter growth in manufacturing went down to -3.6% in 2020 from 5.2% in 2019.

IBON said that the government will be making this same mistake in overly relying on infrastructure spending as its response to the unprecedented COVID-19 crisis.

The group stressed that the government needs to implement bolder measures that prioritize the needs of Filipinos, especially the most vulnerable, and that genuinely develop the national economy.

These include: immediate emergency relief, and especially with unemployment soaring, extended income support to poorest households; expanding the public health system and providing universal social protection; and repurposing the economy for domestic demand-driven employment and growth by strengthening agriculture and building Filipino industry.

The resources needed for these can be raised by imposing a wealth tax, higher personal income taxes for the richest families, and higher corporate income tax for the largest corporations.

IBON said that if the government insists on its old neoliberal policies and does not change course, the economy will be even weaker after the COVID-19 crisis. #

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POGOs not an essential sector, only 0.23% of gov’t annual tax revenues

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by IBON Media & Communications

Research group IBON said the Philippine Offshore Gaming Operations (POGOs) generate minimal income and employment for the country, contrary to government’s claim that it is an essential sector and should be partially reopened.

The group said that the insistence on reopening POGOs appears to be yet another example of partiality towards China.

The public interest is better served by giving more attention to public health measures for when the lockdown is lifted, stressed IBON.

The administration recently announced that it will allow the partial reopening of POGOs while the lockdown is ongoing.

It claims that POGOs are categorized as business process outsourcing (BPO) which is an essential sector due to its revenue and employment generating capacity.

IBON however questioned the administration’s defense of POGOs as an essential sector.

It does not bring in much government income nor job opportunities for Filipinos, said the group.

According to the Bureau of Internal Revenue (BIR), it has collected only around Php6.4 billion from POGOs in 2019, which is not even one-fourth of one percent (0.23%) of the Php2.8 trillion in total tax revenues for the year. The government is not even able to collect the expected Php50 billion in taxes from offshore gaming operators.

Meanwhile, POGO regulatory fees averaging only Php3.8 billion annually in the last five years were a measly 1.5% of the annual average non-tax revenues over the same period.

Philippine Amusement and Gaming Corporation’s (PAGCOR) collects these fees, and POGOs only contributed 7.6% to its gross income of Php75.8 billion in 2019.

The bulk or 58.1% of PAGCOR’s earnings are from regulatory fees of licensed casinos and electronic gaming sites.

Some 34.1% of PAGCOR’s gross income is from its share of tables and electronic gaming machines.

POGOs also avoided paying franchise taxes, added the group.

A Senate hearing last March, the BIR said only 8 out of 11 POGOs pay the 5% Philippine franchise tax.

IBON also explained that POGOs contributed little to the country’s employment because they employ mostly Chinese citizens.

2020 data from PAGCOR show that more than half or 57.3% of the 188,239 POGO employees are Chinese citizens and 25% from other nationalities; only 17.7% are Filipinos.

PAGCOR has also been touting that POGOs had driven Php25 billion in real estate profits through office space leasing. Its own data however reveal that POGOs are mainly leasing office space in buildings owned by top Philippine oligarchs, noted IBON.

One example is PB Com Tower in Makati owned by Lucio Co. PB Com Tower is home to 31 POGOs and POGO service providers.

Additionally, the Yuchengco Tower in Makati is a leasing space for 16 POGO service providers. The Yuchengco Tower is owned by RCBC Realty Corporation, a subsidiary of RCBC.

It could be recalled that RCBC was put into controversy in 2019 due to its ex-bank manager being found guilty of money laundering in connection with the US$81 million cyber heist on Bangladesh’s central bank.

IBON found that in RCBC’s May 2019 disclosure to the Securities and Exchange Commission (SEC), one of the banking corporation’s independent directors from 2016 to present, Gabriel Claudio, is also serving as a director at PAGCOR.

IBON said that if government is really sincere in addressing the COVID-19 pandemic, it should prioritize improving the country’s testing capacity and isolation of COVID-19 cases over reopening businesses such as POGOs.

The group added that improving the country’s health system would have avoided a longer lockdown.

Moreover, IBON said that if the government focused on productive sectors such as agriculture and manufacturing, the Philippine economy could jumpstart faster rather than depending on the piddling contribution of POGOs. #