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Yearstarter: Seeking better normal in 2022

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by IBON Foundation

What’s in store for the economy in 2022? Omicron is on everyone’s mind now and coughs, colds, sore throats and fevers are everywhere among the vaccinated and unvaccinated. That feeling of tiredness may not necessarily be due to COVID-19 though.

It could be the Duterte administration’s underwhelming response for two years now that’s getting tiresome. The government can do so much more than its emerging twin-pronged strategy of downplaying the pandemic – including hiding its true impact from the public – and putting the burden of adjusting to it on the people.

Reopened

The biggest thing the economy had going for it coming into 2022 was reopening after the protracted and periodic lockdowns since the coronavirus first hit the country. Key indicators such as Google mobility data clearly show increased activity especially since September 2021 and through the holiday season, also corresponding to lower COVID-19 response stringency index measures since the middle of the year.

Despite this reopening, it is however conspicuous that the economic rebound has still been very shallow. It looks like gross domestic product (GDP) growth in 2021 will still just make up for barely half of the -9.6% growth (contraction) due to the lockdowns in 2020. (See Chart 1)

This is most of all due to the economic managers putting more emphasis on so-called fiscal consolidation than the fiscal stimulus so needed by the lockdown-ravaged economy. National government budget increases in 2020 (11.3% increase) and 2021 (9.9%) were actually even below the 14.3% average increase in the period 2016-2019. The 11.5% increase in the recently approved 2022 budget is also still below par.

So while there’s some momentum from reopening, the economy is still weighed down in 2022 by the effect of government conservatism and stinginess. It still isn’t doing enough to fix the damage its lockdowns caused on aggregate demand and supply.

Dampened

Household consumption accounts for some 70% of the economy. The loss of incomes and livelihoods is however huge and the Bangko Sentral ng Pilipinas (BSP) reports that around seven out of ten (69.8%) households didn’t have any savings as of the fourth quarter of last year. This is consistent with a Social Weather Stations (SWS) self-rated poverty survey in September that had 79% of families reporting themselves as poor (45%) or borderline poor (34%).

Implicitly low incomes are eroded further by how inflation has been mostly accelerating since the end of 2019 or even before the pandemic. (See Chart 2) These are huge dampeners on aggregate demand aside from indicating considerable distress to poor families and household welfare.

On the supply side, the Philippine Statistics Authority (PSA) reported 138,843 establishments employing 565,446 people permanently closing in 2020 and 2021. (See Table 1) This however does not count likely tens of thousands more informal unregistered establishments that closed but were not captured by official statistics.

December labor force figures still aren’t out but these will likely only confirm that 2022 is starting with high unemployment and greatly worsened quality of work. These repress consumption spending and, by extension, enterprise growth. They are difficult conditions for smaller establishments to reopen, expand or even just stay in business. Telecommunications, energy, water, banking and finance, and real estate and construction where tycoons concentrate are the only ones recovering quickly and looking to thrive.

Unemployment is officially reported at 3.2 million as of November 2021. But it may be as much as 8.3 million if unpaid family workers (3.7 million) and uncounted jobless merely because of a stricter definition of unemployment since 2005 (some 1.5 million) are also counted. Unemployment and unpaid work have remained stubbornly high despite the economy reopening. (See Chart 3)

Reported increases in employment unfortunately do not really reflect stable or decent-paying work. The 2.9 million net employment created by November 2021 compared to pre-pandemic January 2020 is wholly informal in irregular self-employment (1.5 million) and unpaid family work (1 million).  It should moreover be noted that there are 389,000 less full-time workers and 457,000 less wage and salary workers in private establishments.

Slowing world

The government target of 7-9% growth in 2022 is questionable – the economic managers have never met their declared original growth targets since 2017, and just revise targets as actual adverse performance becomes evident. (See Chart 4) The so-called growth momentum is mainly imagined.

The effects of reopening are overemphasized and the impact of economic scarring underestimated. It also remains hazy if the pandemic really is on the way out in the country or abroad. The impact of new variants like Omicron and others that are different in terms of transmissibility, severity and resistance to vaccines remains to be seen.

And it’s not as if all is well in the world economy. It may seem a long time ago but when the pandemic hit in 2020, global capitalism was into 11 years of striving, and failing, to overcome protracted stagnation since the 2008 global financial and economic crisis. As in the Philippines, rebounding back to this only seems desirable because of how bad things were when the world locked down.

Today, there is still that protracted stagnation to deal with but also a number of additional stressors. Foremost is vastly higher global debt which hit a record US$296 trillion, equivalent to 353% of global GDP, by the middle of 2021. Monetary policy will likely tighten soon to rein in high inflation. Rising interest rates will cause tremors in the debt pile including in the Philippines.

But global unemployment is also higher and supply chains are possibly in flux. Global growth will almost certainly decelerate in 2022 and beyond especially as fiscal stimulus in other countries fade – real stimulus, unlike the press release version in the Philippines. The United States (US) and China are the acknowledged biggest drivers of the global economy; they are each already hitting their respective rough spots aside from still bickering with each other.

Slowing PH

Domestically, the base effect driving the country’s GDP growth last year will start tapering off in the first quarter of 2022. With the rebound from reopening over and weighed down by lockdown-induced economic scarring, the economy is unlikely to return anytime soon to even just its pre-pandemic growth rates.

The pre-pandemic trajectory is perhaps also not even something to want to return to. Economic growth was slowing for three consecutive years even before the pandemic from 7.1% in 2016 to 6.9% (2017), 6.3% (2018), and 6.1% (2019). (See Chart 1) Despite much administration hype, the economy was not really developing any long-term growth drivers.

Lacking fresh ideas, the government is also putting too much faith in its stale Build, Build, Build infrastructure program to revive the economy. As the Duterte administration’s economic managers do not tire of telling, the public infrastructure budget has been continuously rising under its watch. It almost doubled (78% increase) from Php590 billion in 2016 to Php1.1 trillion in 2019, with the equivalent share in GDP increasing from 3.9% to 5.4% over that time.

Yet over 2017-2019, economic growth still kept slowing and annual average job creation of 313,338 was the slowest in 35 years or among all post-Marcos administrations. The gains were disproportionately low even in construction subsector employment. Between 2016 and 2019, this only saw a 23% increase to 4.2 million mainly low-paying and short-term jobs.

Election spending this year may also not give the accustomed boost many may be hoping for. The more unresolved the pandemic and the less physical campaign-related activities, then the weaker the additional impulse.

As it is, the best-case scenario with the government’s business-as-usual approach is that the country ends 2022 at around its pre-pandemic 2019 level of economic output. This means that three years of economic growth will still have been lost, not to mention the immeasurable suffering and hunger over that time of tens of millions of poor and low-income families.

There will be growth in 2022 – this is inevitable with the reopened economy – but it will not be broad-based. Nor will it fix worsening job scarcity.

Recovering

Which is not to say that all this has to be a foregone conclusion. If it chose to, the administration that is exiting and the new one entering can take a more rational and humane approach to recovering and reforming the economy.

This starts with breaking the inertia of tepid public health measures to contain the pandemic. Mass testing, diligent contact tracing, and smart quarantines that do not burden the working class remain the ideal measures to avert explosive case numbers and the uncertainty and distress in their wake. The Omicron variant has shown how over-relying on vaccinations is insufficient when new variants can still arise because global vaccination is still so uneven and lacking especially in the global South.

Giving meaningful cash assistance to the poorest 18 million families will not just improve their welfare but also spur consumption spending and aggregate demand. The hundreds of billions put in their pockets to spend will also be a much more effective fiscal stimulus than the same amount going to capital-intensive or import-dependent or corruption-wracked infrastructure projects.

This does not have to be inflationary. Likewise giving meaningful support to domestic agriculture and local enterprises can ensure a supply response. This support can also be given with a long view to expanding rural productivity and spurring Filipino industrialization. These are still the essential foundations of the national economy, job creation, and dynamic modernization.

The fiscal constraint need not be binding. Large government deficits and, to some degree, even rising debt can be justified if these result in increased economic activity. The problem is not large deficits and debt per se – rather, it’s why we cannot more quickly grow out of these deficits and debt in a way that lifts the conditions of the majority instead of just a few.

Radicals

The economic managers also favor credit ratings, competitiveness, openness to foreign investments, international reserves, and other such indicators. This however confuses what are merely possible means to development as ends in themselves. In the worst instances – such as with regressive tax “reforms” – outright anti-development measures are portrayed as steps forward.

The result is paying scant attention to real economic foundations, decent work, and eradicating poverty for the majority – while over-emphasizing profitability for conglomerates and the wealthy families owning them.

The pandemic has been a radical shock to the country. Entering the new year and, soon, a new administration, it is also timely to ask for more radical measures breaking from the economic conservatism which has weighed down the economy and development for the people for so long. #

Hatid Probinsya and Balik Probinsya, more harm than good?

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by Casey Salamanca

The national government’s program of sending people back to their hometown recently came under fire for spreading COVID-19 in the provinces. For example, Tanauan town and Baybay City in Leyte each recorded their first respective confirmed COVID-19 cases last May 28. Both confirmed cases were among the first and so far only batch of beneficiaries of the Balik Probinsya, Bagong Pag-asa Program (BP2). Meanwhile, in the war-torn city of Marawi, nine confirmed cases are beneficiaries of the Hatid Probinsya program.

BP2 and Hatid Probinsya

BP2 is a pet project of President Duterte’s long-time trusted aide and now Senator Bong Go. Executive Order 114, which enabled the said program, came two days after the Senate adopted Go’s resolution urging the executive department to formulate and implement a Balik Probinsya program.

BP2 is a “long-term program of the government intended for Metro Manila residents who want to go home to their provinces for good”. It reportedly aims to decongest the National Capital Region (NCR) and is mostly targeted at people from urban poor areas. It is also packaged as “redistributing wealth” by bringing development to the countryside.

According to BP2’s website, the first batch was composed of 112 individuals from the province of Leyte. Leyte Governor Dominic Petilla said that most of them are workers who lost their jobs due to the Luzon-wide lockdown. BP2 has three phases of intervention, namely short-, medium-, and long-term.

The short-term intervention provides beneficiaries transport, cash assistance of Php15,000, and livelihood opportunities. All government programs, activities or projects with funding will be adapted for the program.

The medium-term intervention involves projects or programs for implementation after the lockdown and lifting of travel restrictions. This includes establishing new special economic zones in Visayas and Mindanao, among others. The long-term plan includes passing of laws deemed important for rural development.

The program’s goals look good on paper but its pretentious character is exposed by the absence of concrete plans for strengthening rural production. Beyond the program’s promises, what work will people going back to their hometowns really have?

Likely not much, because the program’s vision of developing the countryside is still under the framework of neoliberalism which continues to destroy the country’s agricultural sector. The special economic zones the program envisions to build will, if anything, just cater to the needs of foreign capital but with scant domestic linkages and contributions to national development.

The long-term plan includes the passage of the Duterte administration’s priority bills like the National Land Use Act and giving tax incentives to tourism industries – both have the potential to hasten land conversions. Even legislation supposedly giving incentives for agriculture is more inclined to push for more destructive corporate plantations. There is also the self-serving political logic and push for shifting to a federal system through Charter change.

On the other hand, Hatid Probinsya is intended to help individuals stranded in Metro Manila by quarantine travel restrictions go back to their home provinces. This includes overseas Filipino workers (OFWs). The program arose after reports of thousands of OFWs stranded for more than a month in quarantine facilities. BP2 trips have been temporarily suspended to prioritize the Hatid Probinsya program.

Infecting the provinces

In the absence of a mass testing program, BP2 and Hatid Probinsya are turning out to be additional sources of COVID-19 transmission in some provinces. It is a disaster slowly unfolding especially with the healthcare capacity in rural areas much lower than in NCR.

Mass testing means testing all suspected cases whether symptomatic or asymptomatic, testing all close contacts of positive cases, regular testing of all frontline healthcare workers, and testing for surveillance of high-risk communities or vulnerable populations. Testing is crucial to detect cases, isolate carriers, and trace contacts to contain the spread of the virus.

The Department of Health (DOH) claims that its expanded risk-based testing broadens the coverage of persons to be tested. However, according to the Department Memorandum No. 2020-0285, RT-PCR testing is still based on a prioritization scheme.

RT-PCR is the gold standard for COVID-19 testing. In the Hatid Probinsya program, locally stranded individuals (LSIs) are tested only using the rapid test method. Scientists and medical groups do not recommend relying solely on rapid tests to check if individuals are positive for COVID-19. Their results are not that reliable and hence of very limited use in infection control.

The country’s current healthcare capacity is also still not suited to respond to pandemics like COVID-19. It is very much privatized and uneven between regions; thus access is an issue.

As of June 27, the NCR recorded 17,450 total confirmed COVID-19 cases surpassing scientists’ projection of 16,500 cases by the end of June. As of June 26, the region has 2,487 isolation beds, 1,071 ward beds, 569 ICU beds and 879 ventilators dedicated to COVID-19. The 10 doctors per 10,000 population and 12 nurses per 10,000 population in the region generally meets World Health Organization standards (10:10,000 for doctors and nurses). However, there are much fewer physicians and nurses in regions outside Metro Manila.

According to DOH Region 8, there are 499 total confirmed cases of COVID-19 in Eastern Visayas, of which 68% or 341 cases are returning residents, as of June 27. Of these returning residents, 293 are LSIs, 45 are OFWs, and three are BP2 beneficiaries. Leyte, which accounts for 40% of the cases in Region 8, is the destination of most of the returning residents who tested positive with COVID-19.

Meanwhile, in the Bangsamoro Autonomous Region in Muslim Mindanao (BARMM), there are 58 confirmed cases, with the province of Lanao del Sur having the highest number of cases at 35. This includes the nine returning residents confirmed to be COVID-19 positive in Marawi City.

Eastern Visayas has only two COVID-19 testing centers, both are located in Tacloban City. Of the two, one is a private testing center and the other one, the Eastern Visayas Regional COVID-19 Testing Center, is a public facility. BARMM, on the other hand, has only one testing center, the Cotabato Regional and Medical Center, located in Cotabato City, Maguindanao.

The majority of licensed COVID-19 testing centers in the country are in the NCR, accounting for 29 of the 67 total centers. This could be a factor why Metro Manila is the top region with total number of cases—higher testing capacity results in more cases detected.

In terms of facilities, the province of Leyte only has nine ICU beds, 203 isolation beds, 50 ward beds, and 10 mechanical ventilators dedicated to COVID-19 cases, as of June 26. Data from the 2018 Field Health Service Information System (FHSIS) shows that there are only 57 medical doctors in Leyte, including 7 doctors in Ormoc City, 4 doctors in Tacloban City, and 117 public health nurses.

Quarantine facilities in Region 8 are currently running on full capacity prompting the Regional Task Force 8 and local government units to request for a 14-day moratorium on the national government’s Hatid Probinsya program.

Lanao del Sur meanwhile reported 3 ICU beds, 30 isolation beds, one ward bed, and four mechanical ventilators exclusive for COVID-19 cases. There are only 31 medical doctors and 16 public health nurses. In the city of Marawi there are only 2 doctors and 2 nurses.

In the whole region of BARMM, the doctor and nurse ratio per 10,000 population are 0.8 and 3.8 respectively. For Region 8 the ratios are 2.5 doctors per 10,000 population and 6.6 nurses per 10,000 population.

The increase of confirmed cases in Leyte is disproportionately affecting healthcare workers. On June 16, of the 59 new cases reported in Region 8, 22 are hospital workers. Of the 59 new cases, 52 are from Leyte. As of June 27, there are already 94 healthcare workers infected with COVID-19 in the region.

Ill-conceived plan and self-serving agenda

The Hatid Probinsya and Balik Probinsya programs are proof of government’s ill-conceived COVID-19 response. The less able rural areas are now bearing the brunt of the lack of a cohesive response plan that addresses the gross socioeconomic and healthcare incapacity of the country.

The government failed to maximize the three months of lockdown to start the mass testing, tracing of all contacts of positive cases, and isolation and quarantine needed to contain the spread of the virus. It also did not increase the health system’s capacity to treat all COVID-19 cases.

Instead of focusing on boosting the country’s healthcare capacity, the government apparently even used the pandemic to boost the political career of Palace favorites and to push for more neoliberal and authoritarian policies. Injecting a self-serving political agenda undermines the competent health response so needed by the people.

The administration’s prescriptions and practice to deal with the health crisis are not working. This only makes the call for an alternative approach that contains the virus and cures patients, instead of compromising them, even more urgent. #

ECQ disrupts livelihood of 19M: Millions of working people left behind by poor gov’t response

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by IBON Media

Research group IBON estimates that the enhanced community quarantine (ECQ) has disrupted the livelihoods of 18.9 million working people. Some 7.7 million working Filipinos and their families have not received emergency subsidies and are being pushed into deeper poverty, and that what support has been given has not even been enough to cover the almost seven week-long military lockdown.

The group said that the Duterte administration’s poor response is causing widespread suffering and passing the burden of containment onto the poorest and most vulnerable.

IBON estimates, using 2018 and 2019 labor force data, that 18.9 million working Filipinos or 45% of 42.4 million employed have been displaced by the ECQ. ‘Displaced’ refers to job losses, part-time work, reduced pay, and other disruptions in livelihoods especially by informal earners.

Most of these are: vendors, shopkeepers, and sales persons in the wholesale and retail trade subsector (4.4 million); construction workers (2.7 million); farmers, farm workers and fisherfolk (2.5 million); pedicab, tricycle, jeepney and truck drivers and mechanics in the transport sector (1.8 million); manufacturing workers (1.5 million); and hotel and restaurant employees (1 million). The balance is largely in other sectors especially services.

The government promised to give 18 million households assistance through Department of Social Welfare and Development (DSWD), Department of Labor and Employment (DOLE) and Department of Agriculture (DA) programs.

The DSWD Social Amelioration Program (SAP) is the largest program, supposedly reaching 18 million, but where beneficiaries of similar DOLE and other programs will no longer be eligible. The DOLE’s programs include CAMP for formal workers (650,000 beneficiaries), TUPAD for informal workers (235,948) and AKAP for overseas Filipino workers (135,720). The DA’s RFFA and FSRF programs target 591,246 beneficiaries.

A month-and-a-half into the ECQ, IBON said that the government has only been able to give emergency subsidies to 11.2 million beneficiaries according to latest data available. These are from the DSWD (10.2 million), DOLE-CAMP (407,3000), DOLE-TUPAD (275,0000), DOLE-AKAP (70,000), and DA (354,875).

This means that, even according to government targets, there are 6.8 million beneficiaries without cash assistance to compensate for the lost income of families or their breadwinners who were displaced due to the lockdown.

Measured against the 18.9 million estimated displaced by IBON, 7.7 million working Filipinos and their families still need to be reached.

The cash assistance given has also been very slow and much less than needed to compensate for the month-and-a-half disruption in livelihoods.

The government’s official poverty line is an average of Php10,727 for the whole country but beneficiaries have been getting much less than this.

According to the president’s 5th report to Congress on the government’s COVID-19 response, the average assistance received is mostly very low: 4Ps beneficiaries (Php4,392); non-4Ps (Php5,771); PUVs/TNVS drivers (Php8,000); workers under CAMP (Php5,000); and informal workers under TUPAD (Php2,611). Reported aid is only relatively large for overseas workers under AKAP (Php10,000) and farmers (Php11,971).

IBON said that working Filipinos are a key force in helping the country overcome and recover from the COVID-19 pandemic.

The Duterte administration should give their full support to and aid those displaced. It should immediately remove bureaucratic hurdles to accessing social amelioration and address inefficiencies. It also needs to ensure sufficient funds to cover all vulnerable Filipinos. Also, government assistance should not only be given for the duration of the lockdown but also until households have recovered from weeks of lost wages and incomes, IBON said. #

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

Counterproductive counterinsurgency

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By Sonny Africa

Development policymaking is hard enough as it is – the Philippines after so many decades of so many development plans is a case in point. Now the military wants to take that over as well? The government’s whole-of-nation approach where the military hijacks governance will just make the country’s maldevelopment worse.

Authoritarian creep

Pres. Rodrigo Duterte’s authoritarianism of course started with a big bloody bang – the thousands of urban poor the government killed in a show of intimidating force. The militarist takeover of government took a little bit longer but is well underway. The transformation has a thin veil of legality but the nation is as far away from real democracy as it has ever been.

The Duterte administration’s brand of militarism started with the National Security Policy (NSP) 2017-2022 it released in April 2017. Conspicuously, national security was defined broadly to “[encompass] virtually every aspect of national life and nation-building” where “economic development and security are inextricably linked”.

While conceptually valid, in retrospect these were less a sign of vision than gross and insidious ambition. It is difficult to credit a military establishment notorious for human rights violations, unwarranted violence, lying and deceit with having positive long-term aspirations. On the other hand, the appetite for dictatorship is easier to see.

The National Security Council (NSC) prepared the NSP. This collegial body includes many Cabinet members and legislators but is really dominated by the security sector – especially by the Armed Forces of the Philippines (AFP) and the Philippine National Police (PNP).

The broad definition of national security was immediately used to give the military and police an entry point into everywhere else in government. Executive Order (EO) No. 16 was released simultaneously with the NSP. This directed that “all government departments and agencies, including government owned and controlled corporations (GOCCs) and local government units (LGUs), shall adopt the NSP 2017-2022 in the formulation and implementation of all their plans and programs which have national security implications”. This is a far-reaching mandate because, according to the NSP, virtually everything has national security implications.

This was followed by the National Security Strategy (NSS) in 2018. The NSS was prepared by National Security Adviser Hermogenes Esperon and presented as a “blueprint [to] foster better coordination, synchronization and cohesion of government functions”. Its sweeping strategy included “the combined, balanced and effective use of the instruments of national power, namely: political and legal, diplomatic, informational, intelligence, economic, and military and law enforcement”.

Ominously, Pres. Duterte called for Filipinos to “stand behind our national security apparatus” and “strengthen the foundations of a secure, peaceful, modern and prosperous Philippines”. Towards this, the president gradually appointed 73 military and police officials to civilian positions in at least 46 agencies. There are now more military and police officials in government than at any time since the Marcos dictatorship nearly 50 years ago.

They were made heads in 38 of these as Cabinet secretaries, director generals, chairpersons, executive directors, administrators or presidents. As it is, former military and police officials account for 11 of 50 cabinet and cabinet-level officials or one-fifth of the Cabinet.

President Rodrigo Roa Duterte presides over a meeting with the National Task Force to End Local Communist Armed Conflict (NTF-ELCAC) at the Malacañan Palace on April 15, 2019. SIMEON CELI JR./PRESIDENTIAL PHOTO

Authoritarianism now

All this fell into place when Pres. Duterte issued EO No. 70 in December 2018 creating the so-called National Task Force to End Local Communist Armed Conflict (NTF-ELCAC). The EO invoked the armed conflict to justify creating the task force and institutionalizing a “whole-of-nation approach” that will “integrate and harmonize the various efforts of the whole of government and of all sectors of society”.

Pres. Duterte is National Task Force Commander and chairperson with Esperon as vice chairperson. This places Esperon second only to the president at the top of an expansive organizational structure encroaching on virtually every government agency that matters, reaching from the regional to the barangay level nationwide. They preside over 18 Cabinet officials and two private sector representatives.

The high-level task force includes the secretaries of national defense, interior and local government, and justice as well as the AFP chief of staff, PNP director general, National Intelligence Coordinating Agency (NICA) director general, and Presidential Adviser on the Peace Process. Propaganda is handled by the Presidential Communications Operations Office (PCOO) Secretary.

To cover socioeconomic development concerns, the group also includes the secretaries of economic planning, finance, budget and management, public works and highways, agrarian reform, education, and social welfare and development, as well as the Presidential Adviser for Indigenous People’s Concerns, National Commission on Indigenous Peoples (NCIP) chairperson, and Technical Education and Skills Development Authority director general.

The 17 regional task forces (RTFs) under the NTF-ELCAC are each chaired by a Cabinet Officer for Regional Development and Security (CORDS) designated by the president. The military and police officials in the Cabinet are handy for this — eight (8) of the 17 Cabinet members appointed as CORDS are former military officers: Esperon (NSA), Carlito Galvez (Presidential Peace Adviser), Eduardo Año (DILG), Gregorio Honasan II (DICT), Roy Cimatu (DENR), Eduardo del Rosario (HUDCC), and Delfin Lorenzana (DND).

The RTFs supplant regional structures in place and merge the existing Regional Development Councils (RDCs) and Regional Peace and Order Councils (RPOC). RDCs are the highest policy-making and direction-setting bodies for overall socioeconomic development in the regions. The RDC is composed of all governors, mayors, and development-related line agency regional directors. Upon EO No. 70, RDCs are also adding active military and police officials as special non-voting members.

RPOCs take up major issues and problems affecting peace and order. RPOCs are also composed of all governors, mayors, peace and order-related line agency regional directors, plus AFP commanders. Similar task forces are organized at the provincial, city/municipal, and barangay level. In effect, all these far-reaching multi-stakeholder bodies are put in a direct chain of command under the NTF-ELCAC and the national security adviser. This cumulatively amounts to hundreds of task forces nationwide and potentially even thousands if barangay efforts are counted.

The NTF-ELCAC’s seemingly disproportionate budget of just Php522 million belies its influence. All the memorandum circulars implementing EO No. 70 are clear that “the budgetary requirements for the implementation of EO No. 70 may be authorized chargeable against the respective LGUs and agencies in accordance with EO 70”. Regular agency budgets are put at the service of the NTF-ELCAC.

The NTF-ELCAC is fully up and running. The first RTF-ELCAC was organized in CALABARZON in February 2019 and the first provincial PTF-ELCAC in Cavite in March soon after. The national task force approved its National Plan in its first meeting in April 2019, held in Malacañang.

Other regions and provinces followed suit to organize their respective task forces. One-day island group summits of regional task forces were held in Luzon, Visayas and Mindanao in October to all culminate in a national summit with Pres. Duterte.

This year has already seen a frenzied surge of EO No. 70 implementation-related activity at every level of government across the country. This has gone far beyond armed conflict areas and the government’s militarism has intruded into schools, urban poor communities, offices, media, embassies, international agencies, and elsewhere. A National Capital Region (NCR) task force was even created in September 2019 even if there are no signs of armed conflict or insurgents in Metro Manila. The NCRTF-ELCAC is a hammer and activists, critics and political opposition are the nails it will be used on.

President Rodrigo Roa Duterte presides over a meeting with the National Task Force to End Local Communist Armed Conflict (NTF-ELCAC) at the Malacañan Palace on April 15, 2019. SIMEON CELI JR./PRESIDENTIAL PHOTO

Hijacking development

EO No. 70 implementation includes weaponizing the law and criminalizing dissent. But it also in effect enables the military to hijack socioeconomic development policy for its militarist ends. Having construed national security and addressing the roots of armed conflict expansively, the national task force is broadly “authorized to evaluate, modify or integrate policies and programs” of government according to its plans.

The recent midterm update of the Philippine Development Plan (PDP) 2017-2022 is a case in point. This is regularly done for PDPs but there was something new this time around. Supplementary guidelines were issued to RDCs to “integrate” the NTF-ELCAC’s Cluster Implementation Plans in the updated regional development plans (RDPs) and regional development investment programs (RDIPs).

Accustomed processes were overridden and the NTF-ELCAC gave the RDCs plans to “mainstream” in the update. Regional planning committees were assigned to clusters as defined by the NTF-ELCAC, all of which had military officials from the defense department and AFP as members.

The national task force members include 18 government agencies. The various program clusters of the NTF-ELCAC implementation plan include most of these and 38 others, for 51 agencies in total. At least some of these agencies have created NTF-ELCAC “steering committees” to implement EO No. 70 and operationalize the national task force within their respective departments.

The problem with the national task force and the extensive machinery it creates is that it is, underneath a lot of development-speak and bureaucratese, still just another military scheme driven by a narrow-minded enemy-focused military mindset. It is essentially the Duterte administration identifying ‘enemies’ and using the full force of government against them.

EO No. 70 is not the military suddenly genuinely getting insights about the roots of underdevelopment and, much less, suddenly having the skills set to address this. The military is using the task forces to command resources for community programs, welfare services, and the like for its narrow counterinsurgency and anti-activism purposes. This muddles decision-making and prioritization according to actual development needs.

EO No. 70 is also being used to justify State security forces cracking down on development NGOs, people’s organizations, and all civil society groups whose advocacies the administration deems overly critical and putting it in a bad light. More to the point — the government is using all its political, legal, diplomatic, informational, intelligence, economic, military and police resources against any perceived domestic political opposition. In short, using all “the instruments of national power”.

The Duterte government is systematically going after organizations of workers, farmers, urban poor, youth, teachers, indigenous peoples, environment advocates, alternative media, cultural workers, disaster responders, and even researchers. Freedom of expression, freedom of assembly and even freedom of thought are under siege with the government deciding and enforcing what is and is not acceptable.

This gravely sets back prospects for real and democratic development. Curbing civil society suppresses a crucial check on government, stifles fresh development ideas upholding the rights of the majority, and constricts people’s participation in governance.

President Rodrigo Roa Duterte presides over a meeting with the National Task Force to End Local Communist Armed Conflict (NTF-ELCAC) at the Malacañan Palace on April 15, 2019. KING RODRIGUEZ/PRESIDENTIAL PHOTO

What is it all for?

At one level it is the Duterte administration coming down hard on the strongest voices against its authoritarianism, corruption, and policies enriching elites at the expense of the people. It is the Duterte clique putting down organized opposition to its self-serving agenda to stay in power and enrich itself.

But it is also much more than that. The Duterte government has come but, as with others before, it will also go. Unfortunately, what is happening is also the State pushing obsolete neoliberalism forward by eliminating obstacles to the market and to capital dominating every aspect of Philippine society. The groups being attacked have their own stresses and versions but nonetheless share a vision for a more just, humane and democratic Philippines.

This is consequential for the country’s political and economic prospects. We are in the middle of the Left and social movements violently being put down, under a thin veneer of rule of law, to increase the power of capitalists, landlords, and political elites. Activists are targeted because their clear politics, concrete organizations, and advocacies threaten the ruling class’s grip on power.

The ruling class embraces the Duterte government because it increases their wealth and profits: tax cuts on the rich and big corporations; infrastructure to keep the comprador economy humming and to preserve real estate wealth; privatization of transport, water, health and education; wage repression; land monopolies; and market- and capital-friendly policies all around.

The Philippines is in dire need of reforms and the sheer scale of the problem demands system-wide thinking and massive mass movement solutions. Yet the heavy-handed authoritarianism and military meddling in governance will just stoke even more unrest. This includes polarizing the nation and actually fueling the radicalism, and revolutionary armed struggles that the Duterte administration is so fearful of. #

(Kodao publishes IBON.org’s reports and analyses as part of a content-sharing agreement.)

Inflation slowing due to a sluggish economy — IBON

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by IBON Media

Research group IBON said that despite reported slower inflation, daily expenses are still rising and too expensive for the majority of Filipinos who suffer low and stagnant incomes.

The group also said that slowing inflation mainly reflects a slackening economy.

The Philippine Statistics Authority (PSA) reported lower nationwide inflation at 0.8% in October 2019 from 0.9% the previous month and 6.7% in October last year.

Meanwhile, National Capital Region (NCR) inflation increased to 1.3% in October 2019 from 0.9% in September 2019 but was lower than the 6.1% inflation in October 2018.

The uptick in NCR inflation was due to higher annual inflation in alcoholic beverages and tobacco, food and non-alcoholic beverages, and clothing and footwear.

IBON executive director Sonny Africa said that lower inflation is generally better for poor and low-income consumers as slower price increases will weigh less on low wages and incomes.

He noted however that lower reported inflation is from a high base last year when prices dramatically rose. Yet some food items are still more expensive now than last year.

In Metro Manila, for example, the cost of pork, chicken, fish, eggs and many vegetables in the last week of October 2019 was much higher than in the same period last year.

The price of pork increased by Php50; chicken by Php30; tilapia by Php20; string beans by Php20; and potato and native pechay by Php15. Rice is a notable exception in being slightly cheaper.

Africa said however that the majority of Filipinos’ incomes are still far below what is needed to live decently and still eroding further despite reportedly lower inflation.

In NCR for instance, the real value of the minimum wage or taking inflation into account is actually lower today compared to November last year.

Measured at 2012 prices, the real value of the Php537 NCR minimum wage has fallen to Php453 today from Php459 in November 2018.

It is also likely that inflation is slowing because the economy is slowing from faltering investments, stalling infrastructure spending, and the global economic slowdown, said Africa.

So far under the Duterte administration, gross domestic product (GDP) growth has declined from 6.9% in 2016 to 6.7% in 2017 and 6.2% in 2018. The 5.5% growth in the second quarter of 2019 is the lowest in 17 quarters.

Foreign direct investments shrank by 39.8% from US$6.8 billion in January-July 2018 to US$4.1 billion in the same period in 2019.

Meanwhile, infrastructure spending growth contracted from 45.9% in January-September 2018 to -4.3% in the same period this year.

Africa said that lower inflation alone is meaningless if Filipinos especially the poor continue to be burdened with high prices and little to no incomes. The government should not ignore this nor the signs of a slowing economy.

Immediate steps for government should include supporting and developing domestic agriculture, as well as substantially increasing wages and salaries to give relief to Filipino households, Africa said. #

(Kodao publishes IBON.org’s reports and analyses as part of a content-sharing agreement.)

PH minerals benefit foreigners not Filipinos

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By IBON.org

Majority of Philippine minerals are exported and mainly benefit foreign corporations, research group IBON said. While ensuring environmentally safe and responsible mining methods, the Duterte administration should also ban the exodus of the country’s raw minerals. These should instead be efficiently reserved for and utilized to support and develop the country’s key industries towards national industrialization, said the group. Read more

Under TRAIN, taxes are cut on the rich

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TRAIN will make the rich richer – The net impact of the change in income taxes, expansion of VAT coverage, new oil excise taxes, and inflationary effect is that the highest-earning 40% of Filipino households, or 9.1 million households with some 40 million Filipinos, will have more money in their pockets after the tax reform. This includes among the richest households in the country.

They have net gains because their increased take home pay from lower personal income taxes more than offsets losses from additional VAT, oil taxes, auto taxes, the sweets tax, and inflation. The net gains remain even if higher taxes on automobiles and especially on high-end luxury cars, which is sensible, are factored in.

Middle class households in the seventh to ninth income deciles certainly deserve relief from changing decades-old tax brackets. These include Filipino families whose only moderate incomes are doubly-eroded by inflation and by excessively high taxes. It can even be argued that the minimum figure for tax exemptions can be raised to those earning up to around Php33,000 monthly.

However it does not make sense for supposed tax reforms to give a corporate executive already earning Php303,059 monthly (or Php3.7 million yearly) an additional Php1,212. Nor does it make sense to only tax a company’s chief executive officer earning Php706,017 monthly (or Php8.5 million yearly) just an additional Php20,694; this is probably just what would be spent on a weekend family dinner. Yet the DOF’s TRAIN does just this while, to recall, taking hundreds of pesos away from the poorest Filipinos who already have so little as it is. The poorest are made to pay more out of much smaller incomes to begin with and this is not by any reasonable interpretation a “fairer and more equitable” tax system.

The DOF cites the supposedly higher income tax rate of 35% applied to the highest income bracket, compared to the current 32%, as proof of the progressivity of their proposals. This is a half-truth though because using the complete formula which includes a minimum lump sum and applying the tax rate only on the excess of income over Php5 million means that many of the country’s rich will actually end up paying less than under the current tax system.

The DOF also gives the example of the country’s top two income taxpayers whose take home pay falls in 2018 upon the tax reform to reinforce the impression that the new tax system is progressive. This is however an exaggeration and is oblivious to how the country’s super-rich use various legal and illegal strategies to avoid paying taxes including tax havens, off-shore accounts, shell companies and trust funds, smuggling and others.

The tax reform program really does nothing to address, and actually worsens, the continuing accumulation of massive wealth in the hands of a few. The country’s richest for instance also gain additional benefit from the lowering of estate and donor’s taxes to a flat rate of 6%, with the DOF estimating that they will pay at least Php3.1 billion less per year starting 2018.​ (From Buwis(et!): DOF’s Top Five Tax Reform Lies, www.ibon.org)

Will the poor benefit from paying higher taxes?

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by Audrey de Jesus/Ibon.org

Ibon graph.

Among the hyped claims of the Department of Finance (DOF) about the government’s tax reform package is how taxes paid by the poor will go back to them in the form of infrastructure projects and social services. The reality however is that the taxes will go largely to big-ticket infrastructure projects in and around the National Capital Region (NCR) that the poor will hardly benefit from.

TRAIN: easy money for the rich

Currently undergoing Senate deliberations, the Tax Reform for Acceleration and Inclusion (TRAIN) bill is the first of five packages under the Duterte administration’s Comprehensive Tax Reform Program (CTRP). The DOF’s version of the CTRP aims to raise an additional Php157 billion in revenues per year, while the version passed by the House of Representatives (HOR) will raise Php130 billion.

Under TRAIN, there will be higher consumption taxes through the removal of value-added tax exemptions, such as on socialized and low-cost housing and power transmission; new excise taxes on fuel, sugar-sweetened beverages (SSB), and automobiles; and reduced personal income tax rates, estate taxes, and donor’s taxes.

Despite DOF claims that the poor benefit most from their tax reform program, the truth is that the poorest majority of Filipinos bear a heavier tax burden than the rich.

The poorest 60 million Filipinos will pay Php47.0 billion in additional taxes next year, or 2.3% of their combined family income of some Php2.0 trillion. Meanwhile, the highest income 40% will pay Php47.6 billion, or only 0.8% of their total family income of some Php4.1 trillion.

This means the highest income 40% who have twice as much income as the poorest 60% of Filipinos will be paying virtually the same amount in additional taxes. Measured as a share of their total income, the poorest 60% will pay three times as much as the highest income 40% including the richest Filipinos.

TRAIN to nowhere?

Aside from covering up how much the CTRP will burden the poor, the DOF claims that the poor will mainly benefit from these tax revenues, as these will be used for the government’s infrastructure program and social services.

Studying the 2018 Budget of Expenditures and Sources of Financing (BESF) that the Duterte administration submitted to Congress is revealing. The 2018 national government budget submitted to Congress presumptuously assumes that the TRAIN will be passed and implemented next year. Yet the government’s spending pattern is not consistent with the claim that TRAIN will benefit mainly the poor.

It is misleading for the DOF to say that the TRAIN is for funding infrastructure AND social services.  TRAIN is really about funding the infrastructure program, while much-needed social services continue to take a back seat, as seen in the proposed 2018 national budget.

The 2018 BESF shows that there is an exceptional 27.5% increase in infrastructure spending in 2018 to Php1.1 trillion from Php861 billion in 2017. The government reportedly needs an estimated Php8 to 9 trillion over the next five years, or Php1.6 to 1.8 trillion per year, to fund its ambitious “Build! Build! Build!” infrastructure program.  The Duterte administration is clearly counting on additional tax revenues to help fund this.

However, social services spending increases by only 5.4% including just a 5.2% increase in social welfare, a 5.8% increase in education, and a 9.2% increase in health, among others. These increases are unremarkable and follow the same trend as in previous budgets even before TRAIN.

The DOF itself also explains that government infrastructure spending will increase from 4.3% of the gross domestic product (GDP) in 2017 to 6.1% in 2022, i.e. a 1.8 percentage point increase. In contrast, over the same period, health spending will only marginally increase from 0.9% to 1.0%; social protection from 1.9% to 2.0%; and education from 4.4% to 4.9 percent. Cumulatively, spending in health, social protection and education will increase from 7.2% to 7.9%, or just a 0.7 percentage point increase.

There are actually even notable cuts to the social service budget. The housing budget will be markedly cut by 68.9 percent. Under the health budget, Department of Health (DOH) hospitals will see an average 24% cut in their maintenance and operating expenses, and many regional hospitals will see cuts of 30-40 percent. The budget for preventive health programs will be cut by Php16.7 billion or 52%, including those focusing on significant public health concerns like tuberculosis, malaria and HIV.

Infra for the poor?

The DOF claim that the much higher infrastructure spending will go primarily to the poor is also misleading.

Comparing the regional distribution of the government’s flagship infrastructure projects by value and poverty incidence by region, there is a general trend of higher infrastructure spending in regions of low poverty incidence, and of low infrastructure spending in regions of high poverty incidence.

For instance, the NCR has the lowest official poverty incidence of 3.9% but takes up the largest chunk of flagship projects at Php343 billion, while the Autonomous Region of Muslim Mindanao (ARMM) with the highest official poverty incidence of 53.7% accounts for among the least flagship projects at just Php5.4 billion. Central Luzon (CL; Region III) and part of Southern Tagalog (ST; Region IV-A), which also have low poverty incidences of 11.2% and 9.2% respectively, are also among the top recipients of the flagship projects. (See Chart)

It may be argued that infrastructure spending has to consider the nature and degree of economic activity, population density, geographic conditions, and a host of other considerations. But none of these detracts from how infrastructure spending is biased away from poor regions and, indeed, is biased away from the kind of infrastructure projects that the poor directly need and will be directly using.

The flagship projects, which are concentrated in urban areas, especially in NCR, CL and ST, will mainly benefit big foreign and local corporations. Such targeted big-ticket infrastructure like mass transit, roads and bridges, railways, seaports, airports, communication and information, will primarily serve and boost the profit-making enterprises of these corporations that contribute little to develop and strengthen domestic industries.

Tax the rich, not the poor

As much as the DOF claims otherwise, the Duterte administration’s tax reform program is ultimately anti-poor and pro-rich. The poor majority will have to fork over more of their already meager incomes to pay higher consumption taxes. Revenues generated from these taxes will go towards infrastructure projects that hardly benefit them, while funding for much-need social services will be cut or remain stagnant.

Instead of further burdening the poor, the Duterte administration should be challenged to implement a genuinely progressive tax reform program and aggressively collect taxes from the wealthy and big corporations. It can raise hundreds of billions of pesos by increasing direct income taxes on the wealthiest Filipinos and by correctly collecting taxes especially on the biggest corporations.

The revenues generated from a progressive tax system should then fund infrastructure projects spread throughout the country that will support real development of local industry and agriculture. It should also be used for much-need social services and development that will truly benefit the poor. ###

PH mining law has gone on for 22 years too long, environmentalists say

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By Abril Layad B. Ayroso

THE third of March 2017 marked the twenty-second year since the implementation of Republic Act 7942, or the Philippine Mining Act of 1995, began. Mining companies have since flourished even more, exporting raw materials in greater volume to more countries including China with its gigantic and insatiable manufacturing industries.

According to the Center of Environmental Concerns (CEC) the Philippines has 7.1 billion metric tons of metallic mineral reserves (such as gold and nickel) and 51 billion metric tons of non-metallic deposits.  The estimated total value of all these mineral riches is estimated at around $840 billion to $1 trillion, larger than both the country’s gross domestic product and its entire external debt.  “If properly developed, these vast and rich reserves can sustain a strong, self-reliant and progressive domestic economy balancing agriculture and industrialization and breaking the existing cycle of underdevelopment,” CEC said.

Environmentalists, however, described RA 7942 as a law that liberalized foreign control over the domestic mining industry that was “instituted along with policies liberalizing existing country controls in other strategic economic sectors.” The current condition the law has created has gone on for 22 years too long, they said.

Clemente Bautista of Kalikasan People’s Network for the Environment belied claims made by mining companies and pro-mining advocates that the mining industry in its current state was vital in the promotion of jobs and businesses, and that the industry made efforts to reforest the areas affected by their operations.  “According to the government’s own data, mining only contributes around one percent of total local employment, amounting to only 200,000 jobs,” Bautista said.

A recent study conducted by Ibon Foundation also shows provinces with the largest mining activities are among the poorest.  It added that in 2009, mining had the highest poverty incidence among industry groups at 48.71 per cent, the highest since 1988. In addition, most of the Philippines’ mineral production goes to export, leaving little raw materials for local manufacturing. In 2015, 73 per cent of total production value went to foreign markets. “Mineral extraction and production often incur significant social and environmental costs which in fact fall disproportionately on the poor,” Ibon concluded.

Destruction

 Aside from depriving local industries of much needed raw materials, current mining activities are also destroying the local environment possibly beyond rehabilitation, the groups said.

Bautista cited the Marcopper disaster of 1996 in Marinduque as an example of how bad the Mining Act allowed things to deteriorate.  A fracture in the drainage tunnel of a large pit in one of the Canadian firm’s mines led to a discharge of toxic waste materials into the Makulapnit-Boac river system and caused flash floods in areas along the river. Barangay Hinapulan was buried in six feet of muddy floodwater, displacing 400 families. Twenty other barangays also had to be evacuated. Drinking water was contaminated, killing fish and freshwater shrimp as well as animals that drank from the rivers. The flooding caused the destruction of crops and irrigation channels.

“Many years later after their livelihoods and environment were destroyed by the operations and subsequent disaster, things have not improved,” Bautista said.  “There has been no proper rehabilitation for the residents, and the government has so far failed to bring the responsible companies to justice,” he added, citing the Marinduque provincial government’s failed lawsuit against Marcopper, its parent company Placer Dome and eventual buyer Barrick Gold, which was blocked by United States courts in 2015.

Bautista also belied claims of other mining companies that they reforest the areas affected by their operations. “The impact of their alleged efforts is negligible. The negative effects of their operations on surrounding forests, mountains, seas, rivers and communities greatly outweighs whatever attempts they have made to help the environment,” he said.

Replacing the Mining Act of 1995

CEC sees House Bill 4135 or the People’s Mining Bill as a solution to the problems created by RA 7942. Instead of the government merely promoting exploration and other mining operations in collusion with big mining companies, the bill seeks to have the government lead or at least supervise large-scale operations to ensure that these operate for medium and long-term benefits of the country, the group said.  In addition, it would help ensure the protection of human rights of communities and the right to self-determination of national minorities that may be affected.

First filed in the 15th Congress on March 2, 2011 by Reps. Teddy Casino, Neri Colmenares, Rafael Mariano, Luzviminda Ilagan, Raymond Palatino, Emmi De Jesus, and Antonio Tinio, the People’s Mining Bill aims to reorient the current mining policies towards national industrialization and national development. If enacted, the prospective law shall only allow Filipino companies to hold permits for large-scale operations to keep mining gains within the Philippines.  Under the bill, foreign companies may invest in exceptional cases identified by the government after undergoing rigorous screening, regulations and a mandatory program for technology transfer and equity shares.

But Bautista said that the struggle against injustices wrought by the Mining Act of 1995 should go beyond the parliamentary initiative to have the law replaced by HB 4135.

“The Filipino people must act against destructive practices and the Mining Act of 1995.  People from affected areas should call for the foreign and private corporations to leave their communities in peace. They must assert their rights to land, peace and health,” he said.

“In addition, the Filipino people must call for the scrapping of the Mining Act of 1995, which is the root of the current abusive mining system,” Bautista said. # (Featured photo by CEC-Philippines)