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EO 130: Much fuss about paltry gains

by Xandra Liza C. Bisenio and Rosario Guzman

President Duterte recently signed Executive Order (EO) 130 which lifts a 9-year ban on new mining agreements. The economic managers say that Philippine mineral resources have been vastly untapped and could bring significant benefits to the economy. The Department of Environment and Natural Resources (DENR) expects to generate some Php21 billion from two phases of 100 new mining projects. The mining industry can also provide raw materials for the Build, Build, Build program and employment opportunities for the Balik Probinsya, Bagong Pag-asa program, the EO justifies.

EO 130 lifts the moratorium on new mineral agreements, which was set by the Aquino administration’s EO 79, then pending a new revenue law. Save for this provision, EO 79 actually continued and enhanced the destructive features of the Philippine Mining Act of 1995 – opening more mining areas and reservations, including marginal lands, and clipping the powers of local government units (LGUs), say to impose mining bans and declare mining-free zones. EO 130 seeks to intensify these, especially by removing the moratorium – the perceived barrier to full-blast mining – leaving a thicker trail of damage on the environment and communities and with little benefit to the national economy.

Asking for coins

But the Duterte administration has exaggerated how mining investments can help the economy recover amid COVID-19. Like its predecessors, it has mainly focused on mining’s contribution to export earnings, revenues and jobs creation, instead of counting on mineral development for the country’s own industrialization. The Duterte administration uses the same shallow metrics to justify renewing and expanding foreign interests in mining.

But even in these terms, mining has delivered paltry gains. From 2001 to 2020 (available data is for January to September only), total exports of minerals and mineral products grew almost seven-fold from US$537 million to US$3.7 billion, but this contributed only 1.7% in 2001 and 8.3% in 2020 to total Philippine exports.

Ironically, while the country has practically given up its chance to build industries from its own minerals, the exports sector remains dominated by semi-processed electronics and electrical equipment.

Taxes, fees and royalties from mining, despite Duterte’s tax law (TRAIN) having doubled the rate of excise on minerals and quarry resources from 2% to 4%, have remained miniscule – only 0.5% of total excise taxes and 0.07% of total taxes in 2020.

The sector’s contribution to total employment in 2001 to 2020 was also negligible at an annual average share of 0.49 percent.

Foreign direct investment (FDI) in mining from 2002 to 2020 amounted to US$754.8 million, an annual average of US$39.7 million. This translates to an insignificant annual average contribution of 0.95% to total FDI.    

At the bottom line is mining’s little contribution to the national economy. The gross value added of the mining and quarrying sector grew from Php54.4 billion to Php136.9 billion from 2001 to 2020. But its average annual share in the gross domestic product (GDP) has only been 1.02 percent.

These figures have barely changed after more than two decades of the Mining Act, exactly because the law’s vision is for the country to remain merely the resource and host of an extractive economic activity that supports the industries of the industrialized countries. The Duterte government’s goal has also been unambitious, which is to continue orienting mining towards exports and, by offering natural resources for extraction, make the country attractive to foreign investors.

Catering to other countries

Why then, despite small change for the country, is the Duterte administration so keen on easing the approval of more mining applications – 280 pending to date?

Interestingly, unlike its predecessors, the Duterte administration is also talking about a “raw materials” contribution to its infrastructure program. This is notable, because the so-called Philippine mining industry does not have beneficiation, smelting and refining stages for iron ores. What it does have are foreign monopoly processing plants. There is one copper smelter, the Philippine Associated Smelting and Refining Corp. (Pasar), the previous company headed by Department of Finance (DOF) secretary Carlos Dominguez, which is operated by the Anglo-Swiss company, Glencore. There are two gold processing plants operated by Australian firms, CGA Limited and Medusa Mining, and two nickel processing plants operated by Sumitomo of Japan.

What the country also does have are direct purchase agreements for our nickel ores with Australia, Japan and China through Nickel Asia Corporation, also under joint venture with Sumitomo. For instance, in November 2019 before the pandemic, the Philippine Nickel Industry Association inked a memorandum of understanding with China Industrial Association of Power Sources to have the Philippine nickel mining industry supply China’s production of nickel batteries for electric vehicles.

The Philippines is one of China’s major sources of ore supply. On the other hand, about 90% of the country’s nickel ores are being shipped to China. To cater to China’s nickel demand, in 2019, the Duterte government even allowed suspended mining firms to operate, and pushed for the rehabilitation of government-owned nickel mines.

Is the EO simply referring to how these countries, China in particular, would eventually pour in capital, processed minerals as construction materials, technology, and expertise into the Duterte administration’s foreign investment-led and import-dependent Build, Build, Build? If so, that would really be ludicrous.

Interestingly too, available data show that China is the top nationality with ownership in mining tenements in the Philippines and also accounts for a huge number of mining permits and pending applications.

Big bucks for the mining firms

The amounts that the country gets from mining pale in comparison with the gross revenues of the big mining corporations. The gross revenues of all mining firms in the top 1,000 corporations ballooned from Php10.4 billion in 2001 to Php171.1 billion in 2018. Meanwhile, the gross revenues of the mining transnational corporations (TNCs) in the top 1,000 corporations increased from Php1.7 billion to Php78.9 billion in the same period.

The amounts that the country gets from mining pale in comparison with the gross revenues of the big mining corporations. The gross revenues of all mining firms in the top 1,000 corporations ballooned from Php10.4 billion in 2001 to Php171.1 billion in 2018. Meanwhile, the gross revenues of the mining transnational corporations (TNCs) in the top 1,000 corporations increased from Php1.7 billion to Php78.9 billion in the same period.

There are 50 operating metallic mines in the country, composed of 30 nickel mines, 10 gold mines, 3 copper mines, 4 chromite mines, and 3 iron mines. Large mining conglomerates and TNCs control Philippine mineral production.

Accounting for half of gold production as of 2020 are Masbate Gold Project jointly operated by Filminera Resources Corp. and Phil. Gold Processing & Refining Corp. of Australian CGA Limited, and Co-O Gold Project of Philsaga Mining Corporation in Agusan del Sur owned by Australia-based Medusa Mining.

Accounting for 43% of nickel ore production are Taganito Mining Corporation, Rio Tuba Nickel Mining Corporation, and Cagdianao Mining Corp/ East Coast Mineral Resources Co. These are all operated by Nickel Asia, a partnership between local corporates led by Manuel B. Zamora Jr. and Sumitomo Metal Mining Philippine Holdings of Japan.

Other mining TNCs include those from the US, Canada and China. Local oligarchs in mining meanwhile include Ramon Ang (Philnico Industrial Corp.), Lucio Tan (MacroAsia Mining Corporation), Manuel V. Pangilinan (Philex Mining Corp.), Consunji family (Semirara Mining Corp.), and Sy (Atlas Consolidated Mining and Development Corp.).

The legacy of the Philippine Mining Act of 1995 (Mining Act) is full foreign investment liberalization by granting four kinds of mining rights, one of which is the Financial and Technical Assistance Agreement (FTAA) that allows 100% foreign ownership. The Didipio Copper Gold Project in Nueva Vizcaya operated by Australian OceanaGold Philippines Inc. that has been contested by the indigenous people and anti-mining groups was a holder of FTAA until it expired in 2019. Despite feelers put out by the Mines and Geosciences Bureau (MGB) of the DENR to reopen it along with other closed mines, the protests prevailed. In December 2020, however, OceanaGold reportedly learned that the Office of the President of the Philippines has instructed the DENR to inform the mining firm and the Department of Finance (DOF) to finalize the renewal of the mining firm’s FTAA. The Philippine government has also apparently certified that the OceanaGold’s FTAA area is outside the ancestral domain of the indigenous people.

The Duterte administration has apparently used the pandemic crisis again to listen to the demands of big local and foreign mining corporations while remaining deaf to the urgent public clamor for health support, economic aid, social amelioration, and production support. It cites imagined benefits from unleashing hundreds of mining permits even to unexplored areas, while making certain that giant mining firms and even their financial speculators get super-profits.

The Duterte government is banking mindlessly on an otherwise overcast economic future. It has apparently not learned a thing from the bitter, disastrous past that large-scale mining has left behind for us and the future generations to bear.

We badly need people economics

Large-scale mining in the country has always been equated with environmental devastation and disasters. This is precisely because of liberalizing the mining sector to foreign exploitation for export and relegating the Philippine economy to being a mere source of raw materials. Mining investments are simply for extraction, and to maximize gains further, the mining methods employed by the mining corporations are the cheapest and dirtiest.

More than twenty years of the Mining Act are replete with mining scandals of heavy, irreparable blows on the ecosystems, displaced communities, lost livelihoods, encroachment into ancestral lands, and human rights violations. This is while the government has only been feeble in the face of the perpetrators, the mining conglomerates and TNCs who have dodged accountability for such disasters and even continued their operations. The government has even taken over mine sites abandoned by mining TNCs for government to rehabilitate.

Minerals are non-renewable resources, and oftentimes damages are irreversible. Yet, The Duterte government with its EO 130 continues to argue for the reckless exploitation of the country’s vast mineral wealth for other countries’ corporate gains and industrial benefits. This makes the projected gains from large-scale mining even paltrier than they already are. We are giving up the non-renewable resource, the Philippines’ huge potential to industrialize, for nothing.

Neoliberal apologists often ask whether the country can ever have the needed capital for it to tap and make use indeed of its mineral resources. They immediately point out that there is no alternative but to open up mining to foreign investors. Precisely the kind of thinking that has rendered government inutile in its pandemic response.

What we need foremost is the kind of people-centered economics that aspires for national industrialization, of which mining is an integral part. A well-planned utilization of mineral resources for the benefit of the communities and the national economy ensures regulation of mining activities, which is diametrically opposed to liberalization and surrender to foreign ownership. It will also ensure that the sacrifices made by a few will benefit the majority and future generations, and not vice versa.

Instead of neoliberal economics, what we need is people economics that is oriented towards national development, serves the needs of the citizenry, protects the environment, promotes sustainable consumption and production systems, promotes people’s access to land and natural resources for them to harness, and upholds people’s rights and national sovereignty.

Capital can come from progressive taxation, that is taxing the super-rich and big local and foreign corporations. It can eventually come from the values created by well-supported and prioritized agriculture and manufacturing.

But before that, mining giants should be made to pay reparation to the communities they have devastated and their ecological debt to the Filipino people. Again, foremost we need a strong, reliable and pro-people government for this endeavor, one that genuinely prioritizes people-centered pandemic and economic solutions. #

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

Duterte’s new mining order disastrous to environment—groups

President Rodrigo Duterte lifted the nine-year moratorium on new mineral agreements, earning warnings from various groups of further corporate plunder of the environment and more natural disasters.

Bayan Muna Representative Eufemia Cullamat said she is dismayed with Duterte’s decision that would most likely result in the worsening of the environmental crisis in the country.

“Instead of putting a stop to environmental destruction that causes disasters, he is allowing further exploitation of our natural resources,” Cullamat said.

Cullamat, a Manobo Lumad persecuted for her community’s opposition to further mining activities in their ancestral domain, said mining projects have only brought untold suffering to various indigenous communities around the country.

“The country only earns two percent in royalty taxes in exchange for the tons of soil they extract, the poisoning of our waterways by mine tailings and the loss of livelihood and homes in mining sites,” she said.

In his Executive Order (EO) 130 issued Wednesday, April 14, Duterte amended former President Benigno Aquino’s EO 79, granting permission to the government to enter into new mineral agreements.

“The Government may enter into new mineral agreements, subject to compliance with the Philippine Mining Act of 1995 and other applicable laws, rules and regulations,” Duterte’s order said.

“The DENR (Department of Environment and Natural Resources) may continue to grant and issue Exploration Permits,” it added.

Duterte’s order said new mineral agreements will usher significant economic benefits to the country that can support various government projects, such as the Build Build Build and Balik Probinsiya, Bagong Pag-Asa Program by providing raw materials and new employment opportunities.

‘Unfettered corporate greed’

Environmental group Kalikasan People’s Network for the Environment (Kalikasan PNE) however agreed with Cullamat, adding Duterte’s order will only result in more environmental disasters.

“Mr. Duterte’s order to lift the mining agreement moratorium will be a disaster upon disaster because the Mining Act of 1995 is still in place. We cannot allow this deluge of destructive large-scale mining when communities are still suffering from the converging pandemic and climate crises,” Kalikasan PNE national coordinator Leon Dulce said.

The Mining Act encourages 100% ownership of mineral lands by foreign corporations that operate based on “unfettered corporate greed” and does not orient the mining industry to extract based on people’s needs, he added.

Kalikasan PNE said the law also has provisions that allow companies to renege on rehabilitation, polluter taxation and waste management obligations.

“Mining companies need only to pay P50.00 per ton of waste disposed of in unauthorized areas and only P0.05 for every ton of mine waste and P0.10 for mine tailings in terms of compensation for resulting damages,” the group explained.

“Let us recall that in the industry-wide audit made by the late Environment Secretary Regina Lopez, at least 68 percent of mining companies had been found with serious violations. This revelation already spells the potential disaster that the Executive Order will bring to the environment and communities,” Kalikasan added.

Beneficial to foreign corporations

Economic think-tank IBON said that Duterte’s new order will most likely benefit foreigners, not the local industry.

“Without domestic industries to process and use the minerals, [EO 130] will just mean that the most significant value-added from our finite mineral resources will keep going to foreign firms, industries and economies,” IBON executive director Sonny Africa said.

Africa said that at the expense of even more environmental damage and displacement of rural communities, real economic gains from Duterte’s decision are negligible.

“Even before the pandemic, mining and quarrying only employed around 190,000 in 2019. That’s not even half a percentage point of total employment and the 2-week NCR+ ECQ even displaced more jobs than that,” Africa said.

Similarly, the Php15.5 billion in taxes, mining fees and royalties paid to government in 2019 is negligible even with the additional excise tax under the TRAIN (Tax Reform for Acceleration and Inclusion, Republic Act No. 10963) law,” the economist explained.

“This EO No. 130 is just the latest sign that it really is just business as usual for the economic managers. The refusal to really reform economic policies combined with the pandemic will just mean that people will remain worse off than before the pandemic for many years to come,” Africa said. # (Raymund B. Villanueva)

Joblessness worsens in February and will get worse with ECQ — IBON

The February 2021 labor force survey confirms that unemployment and underemployment are worsening despite economic managers’ hype of rebounding employment, said research group IBON. The group also said the country’s jobs crisis will get even worse with the government still resorting to economically-destructive enhanced community quarantine (ECQ) rather than smarter containment measures as its main strategy against COVID-19 while waiting for vaccines.

In a joint statement, the economic managers said that the gradual reopening of the economy is bringing more people back to the labor force and has restored 1.9 million jobs in February 2021. The Philippine Statistics Authority (PSA) reported employment increasing to 43.2 million in February 2021 from the previous month. This is higher than the pre-pandemic employment level of 42.5 million in January 2020.  

IBON however said that merely higher employment compared to the pre-pandemic level is a low standard for claiming recovery and ignores how Filipinos rejoining the labor market still cannot find enough decent work. 

The group pointed out how joblessness and the lack of decent work continue to worsen. The combined number of unemployed (4.2 million) and underemployed (7.9 million) rose to 12 million in February, IBON stressed. This is 39% more than the 8.7 million unemployed (2.4 million) and underemployed (6.3 million) in pre-pandemic January 2020.

IBON also noted how the official estimate of 12 million combined unemployed and underemployed in February 2021 is an increase from 10.5 million in January 2021. As it is, this is the highest since April 2020 according to official figures. The group however said that the real tally is likely actually worse because the official methodology has stopped counting millions of jobless Filipinos who stopped looking for work or are not immediately available for work.

IBON stressed that a closer look at the 1.9 million jobs created shows that these are mostly of poor quality, meaning low-paying, insecure or informal work. Of the supposedly new jobs generated, some 48% (923,000) were merely part-time or less than 40 hours per week, and a large 23% (446,000) were actually categorized as “with a job, not at work”.

The group pointed out that this has resulted in the combined number of Filipinos in part-time work and those “with a job, not at work” now comprising 40% of the total employed, which is a marked increase from the 32.4% in pre-pandemic January 2020. On the other hand, mean hours worked per week is markedly down to just 38.9 hours in February 2021 from 41.3 hours in January 2020.

IBON also raised how many of the jobs supposedly generated are in sectors where employment is temporary or poor quality.  For instance, those working in wholesale and retail trade increased by 995,000 to 9.6 million, in other services (which includes household based work) by 294,000 to 2.8 million, in transportation and storage by 147,000 to 3.1 million, in public administration and defense by 142,000 to 2.6 million, and in manufacturing by 136,000 to 3.3 million.

The trade subsector, in particular, is known for its low-paying and insecure work. Wage and salary workers in this sector were paid just Php358 compared to the average daily basic pay in industry (Php404) and across all services (Php483), according to latest available data in 2018.

IBON suspects that a significant number of new jobs are in the informal sector, with many Filipinos struggling to make a living however they can rather than be completely unemployed. Using the combined share of self-employed, employers in family farms or businesses, and unpaid family workers as a proxy for informal sector work, they make up a huge 57% (1.1 million) of net employment created in February 2021. This is as the group noted the number of employers in family farms or businesses decreasing by 189,000, possibly due to small business closures during the pandemic.

IBON said the jobs situation will only get worse in March and April with the Duterte administration implementing another round of ECQ in the “Greater Manila area” which accounts for as much as 47% of the country’s gross domestic product (GDP). The group said that enterprises in the trade, transport, hotel and restaurant, recreation and other non-essential sectors will be particularly hard hit.  This is while they are still reeling from the worst economic contraction in the country’s history.

The group said that the country’s economic recovery most of all starts with the government testing more, tracing better, and ensuring that COVID patients are isolated and do not spread the coronavirus. Household distress can also be immediately relieved and economic activity spurred by meaningful amounts of emergency cash aid, wage subsidies, and other fiscal stimulus measures. #

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

Shifting to MGCQ a short-sighted and desperate move without containing pandemic

By IBON Communications

Research group IBON said that lifting COVID-related restrictions to boost the economy is a short-sighted and desperate move amid continuing failure to contain the pandemic. The group agreed that the government’s excessive quarantine restrictions since last year are behind the economy’s unprecedented and continuing collapse. IBON however said that easing restrictions will not spur recovery without a real fiscal stimulus while risking the more rapid spread of COVID-19.

Economic planning secretary Karl Kendrick Chua recently advised Malacañang to put the entire country under modified general community quarantine (MGCQ). The ‘less restrictive’ MGCQ will supposedly allow the resumption of business activities previously limited under the pandemic lockdown.

IBON pointed out that the proposal to ease restrictions comes while the number of COVID-19 cases has been increasing since the start of the year. The 9,161 cases in the first week of the year increased to 10,741 so far in the week February 4-10. Data for this most recent week may even still be incomplete because of delays in reporting. The group asked where the optimism that the coronavirus is contained is coming from.

IBON stressed that the administration needs to greatly improve its measures to contain COVID-19 instead of relying on its favored blunt instrument of protracted community quarantines. The group enumerated the measures needed as better testing, more aggressive contact tracing, selective quarantines of possible cases, and speedy isolation of confirmed cases. With the number of cases still increasing, easing restrictions without these measures in place risks COVID-19 spreading even faster.

At the same time, IBON added, shifting to MGCQ may not even spur the economy all that much because the government still refuses to spend on any real fiscal stimulus. The group stressed that significantly higher levels of government spending are needed to make up for the lockdown-driven collapse in consumption and investment. This is more so given the now record joblessness and widespread loss of incomes and savings.

Government first of all needs to contain the pandemic better, IBON said. On top of this, it simply has to spend more to help households and small businesses cope with record jobs and income losses and to recover from the economic shock, stressed the group.

The group pointed out how the record 9.5% contraction of the economy in 2020 was substantially due to how the Philippine government refused additional spending last year. In the first 11 months of 2020, its disbursements only increased by 11.6% which is not just below the originally programmed 13.6% increase for the year but even lower than the average 12.9% increase in spending over the period 2017-2019. 

IBON also highlighted how spending even slows this year with the Php4.5 trillion 2021 national budget just a 9.9% increase from the 2020 budget. As it is, the Philippine COVID-19 response is the smallest of the major countries of Southeast Asia at just 6.3% of GDP according to the Asian Development Bank (ADB).

IBON proposes the following to address people’s urgent needs and stimulate the economy:

  1. Php10,000 monthly emergency cash subsidies to 18 million poor and low-income families (poorest 75% of families) or Php10,000/month for up to three months or Php5,000 for six months. This amount comes to Php540 billion.
  2. Php100 emergency wage relief for workers (towards eventual implementation of a Php750 national minimum wage). Micro, small and medium enterprises (MSMEs) can be supported to give this for three months with a Php101 billion fund.
  3. Php40.5 billion cash-for-work programs for the unemployed.
  4. Php78 billion financial assistance (zero/low interest rate and collateral-free loans) for informal earners.
  5. Php200 billion in financial assistance (zero/low interest rate and collateral-free loans) prioritizing Filipino-owned and domestically-oriented MSMEs.
  6. Php220 billion in agricultural support to increase the productivity of farmers and fisherfolk.
  7. Php200-billion COVID-19 health response and Php113-billion distance education to ensure quality education.

The group also stressed that the government can finance these if it really wanted to. IBON identified a universe of at least Php3.9 trillion in funds from which realignments can be made, Php1 trillion in emergency bonds and other government securities, Php391.9 billion in immediate revenues from progressive taxes especially a wealth tax, and at least Php333 billion more from a land value tax. #

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

Wage hike necessary, overdue amid pandemic and high prices

The Duterte administration gave least number of wage hikes and lowest wage increases of any administration in past 35 years.

by IBON Media & Communications

Research group IBON said that, amid rising prices of basic commodities, minimum wage earners are suffering from how the Duterte administration has been giving the least number of wage hikes and lowest wage increases of the past six administrations in the post-Marcos era. This only made working class families even more vulnerable to the economic shocks triggered by the pandemic. Multiple strategies are needed to arrest the economic distress of poor and low-income households especially since the onset of the pandemic.

IBON noted how the real minimum wage, or the value of wages after adjusting for inflation, is worth 7.2% less today than at the start of the Duterte administration. (See Table) This does not even yet fully include the recent surge in prices of pork, fish, chicken and vegetables. IBON estimates that the real value of the National Capital Region (NCR) minimum wage has fallen to Php434.47 from Php468.06 in June 2016. This is the lowest real wage in over eight-in-a-half years or 103 months.

The Duterte administration was sparing with its wage hikes even before the pandemic. The NCR minimum wage was only increased twice, in September 2017 and November 2018, and by such small amounts that they did not even make up for inflation. When the lockdowns started in March 2020 the real value of the minimum wage was already 3.6% less than in June 2016 – this only deteriorated further to being 7.2% less today.

IBON pointed out that other administrations hiked wages six or seven times and that even the Estrada administration hiked wages twice in its short 2 ½ years in power. These resulted in the real minimum wage increasing by 2.7% (Arroyo) to as much as 54% (Cory Aquino) compared to the more or less continuous decline under the Duterte administration.

It has been more than two years or 27 months since the Duterte administration’s last wage hike to Php537 in November 2018, said IBON. This is the longest period without an increase since July 2004 under the Arroyo administration when the wage increase came after a dry spell of 29 months.

IBON noted that the current minimum wage is even further away from meeting the basic needs of workers’ families. The Php537 minimum wage in NCR is Php520 or 49% short of the Php1,057 family living wage or the amount a family of five needs for a decent living as of December 2020.

As it is, the December 2020 inflation rate of 3.5% is the highest in 21 months, mainly due to higher inflation in food and non-alcoholic beverages, health and transport. The prices of pork, ampalaya, sitao, cabbage, carrots, habitchuelas, tomato, potato and eggplant significantly went up from anywhere between Php40 to Php120 per kilo since December last year. Price increases were even worse for the poorest 30% of households nationwide with a 4.3% inflation rate.

IBON said that the Duterte administration needs to give much greater attention to alleviating widespread economic distress among poor and low-income families. The most urgent measure are new cash subsidies of Php10,000 monthly for at least 2-3 months especially while record unemployment and falling household incomes are not resolved. Price controls are also needed on the food items whose prices are soaring especially amid reports of alleged exploitative pricing by wholesale and retail traders.

The Duterte administration however also needs to go beyond short-term damage control, stressed IBON. The long-term solution to rising food prices is for meaningful government support for farmers and fisherfolk to increase agricultural productivity and output. Yet, IBON pointed out, the share of the national government budget for agriculture has been falling from 3.6% in 2019 to just some 3.2% in 2021.

IBON moreover stressed that a substantial wage hike remains just and necessary even amid the pandemic economic shock. The group said that it is incumbent on the government to come up with schemes to enable a wage hike that increases incomes of low-income households and which will also stimulate aggregate demand in the economy. Among others, this can include mandating higher wages while giving wage subsidies to micro, small and medium enterprises (MSMEs). Wage hikes are long overdue and it is unfair for the working classes to always be made to bear the burden of adjustment to economic crises. #

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

IBON debunks economic Cha-cha movers’ claims on FDI

Claims that changing the supposedly restrictive economic provisions of the 1987 Constitution and liberalizing foreign direct investment (FDI) into the country will help economic recovery and lead to development are unfounded. On the contrary, said research group IBON, further FDI liberalization will have long-term adverse impacts on national economic development.

In its Birdtalk semi-annual discussion of economic and political trends, IBON debunked three major myths about FDI and development.

First, increasing FDI is not in and of itself necessary for development. South Korea and Taiwan are the last newly-industrialized countries (NICs) to graduate to developed country status. They did this in the 1970s and 1980s with less FDI than the Philippines is getting today, according to data from the United Nations Conference on Trade and Development database (UNCTADStat).

The two NICs had growth rates averaging some 7-10% in the fifteen years between 1970-1984, especially on the back of rapid industrial development. (See Table) They did this with FDI inflows over that period averaging just 0.5% of gross domestic product (GDP) in the case of South Korea and just 0.4% in the case of Taiwan.

In stark contrast, FDI inflows to the Philippines are over three-fold these and averaged 1.6% of GDP in 2005-2019 but with growth at an annual average of only 5.8 percent. In 1984, FDI inward stock was equivalent to just 1.7% of GDP in South Korea and 5% in Taiwan. In contrast, FDI inward stock in the Philippines was already as much as fourteen-fold that and equivalent to 23.1% of GDP in 2019.

These indicate that the two East Asian NICs rapidly developed during their break-out period in the 1970s and 1980s while having much less FDI than the Philippines today. South Korea and Taiwan are today still less reliant than the Philippines on FDI, in relative terms. Measured as share of GDP, FDI inward flows and stock to them are smaller than FDI to the Philippines over the period 2015-2019.

Second, FDI is not in and of itself sufficient for development. Despite hysterical claims that the Philippines is being left behind in the FDI race, FDI to the country has soared. FDI inward flows have increased over thirty-fold from an annual average of US$187 million (equivalent to 0.5% of GDP) in 1980-1984 to US$6.3 billion (2% GDP) in 2015-2019.

This includes manufacturing FDI tripling from an annual average of US$286 million in 2000-2004 to US$728 million in 2015-2019, according to data from the Bangko Sentral ng Pilipinas (BSP). Yet manufacturing’s share in GDP has actually fallen from 22.5% in 2000 to 18.6% in 2019, with the share of manufacturing to total employment also falling from 10% to 8.5% over the same period.

This includes US$8.3 in foreign investments by Intel, Hanjin and in the Malampaya project. Yet despite headline-grabbing billions of dollars in investments and exports and as much as around 35,000 in jobs created over decades in the country, the Philippines has still not developed any Filipino electronics, shipbuilding or natural gas industries.

Third, increased FDI may not even be immediately forthcoming while the constriction of the policy space for economic development is going to be foreclosed. Economic cha-cha proponents decry the Philippines supposedly having among the most restrictive FDI policy regimes in the world. Yet there does not in general appear to be any strong correlation between FDI restrictiveness and FDI inward flows.

Plotting FDI inward flows as a share of GDP against the FDI Restrictiveness Index of the Organization for Economic Cooperation and Development (OECD), both for 2019, does not even support the idea that less restrictive economies will receive more FDI. (See Chart) The uncertain effect on FDI flows is made more uncertain by how UNCTAD also reports FDI inflows generally falling even before the pandemic hit from US$2 trillion in 2015 (2.7% of GDP) to US$1.5 trillion in 2019 (1.8%).

On the other hand, removing the last remaining protections against FDI through economic Cha-cha will make the nationalist and pro-Filipino economic policies needed even more difficult to put in place. Potentially powerful Constitutional provisions to regulate foreign investment for development – as the currently developed countries have all done in their respective periods of break-out progress – will be lost.

IBON stressed that the economic arguments for lifting restrictions on foreign ownership in crucial areas of the economy – natural resources, land, public utilities, education, mass media and advertising, and any identified strategic enterprises – need to take much greater consideration of historical facts and the current global context.

The research group said that the economy’s development lies in using the protections in the Constitution to gain from foreign investment, not in taking away the protections and giving self-interested foreign investment free rein over the domestic economy. Foreign capital can contribute to development but IBON stressed that responsible government intervention and regulation is needed to create meaningful linkages and long-term benefits for the economy. #

Inflation highest in 21 months, NEDA warns of continuing increase

The country’s Inflation rate accelerated to 3.5% in December 2020, driven by the increase in the prices of food non-alcoholic beverages, transport, and restaurant and miscellaneous goods and services, the National Economic Development Authority (NEDA) reported Tuesday.

The inflation rate last month is higher than the 3.3% in November 2020 and the 2.5% in December 2019.

Among the sub-groups, prices of vegetables and meat significantly increased from the previous month, traced to lower production following the damage caused by previous typhoons, the NEDA said.

The increase in the prices of meat inched up for the third consecutive month owing to the decline in domestic swine production due to the African Swine Fever (ASF), the agency added.

NEDA said that country’s average inflation rate for 2020 is at 2.6%, higher than the 2.5% the previous year but within the 2% to 4% target range of the government.

Acting socioeconomic planning secretary Karl Kendrick Chua blamed the coronavirus pandemic and the string of calamities that hit the country for the increase.

“The imminent threat of natural calamities every year highlights the need for long-term solutions such as infrastructure investments that would improve flood control, water management and irrigation systems, reforestation, climate-resilient production and processing facilities, among others,” Chua said.

Chua warned that the ongoing La Niña weather phenomenon may continue to adversely affect the economy.

Inflation hardest for the poor

Research group IBON noted that the December 2020 inflation rate is the highest inflation in 21 months, and even higher for the poorest 30% of Filipino households at 4.3%.

IBON said that even Philippine Statistics Authority (PSA) data show that the December inflation rate is the highest since March 2019.

“The prices of food and non-alcoholic beverages rose the fastest at 4.8% last month from 4.3% in November 2020. Inflation in health and transport was also higher at 2.6% and 8.3%, respectively,” IBON reported.

“The higher December 2020 inflation figures underscore the urgency of giving poor and low-income families additional emergency cash subsidies. The faster increase in prices is all the more burdensome due to record joblessness and decreasing incomes amid the pandemic lockdown,” the group said.

IBON blamedthe government’s continuing failure to contain the pandemic it said resulted in more unemployed Filipinos today than at any time in the country’s history.

The group estimates unemployment in October 2020 at 5.8 million Filipinos — or two million more than the official 3.8 million count — or an unemployment rate of 12.7 percent. # (Raymund B. Villanueva)

Winds of democracy in the Philippines

By Sonny Africa

Delivered at the International People’s Research Network (IPRN) Webinar on “Building People’s Democracy” held on November 27, 2020

What struggles to build a democratic society truly fulfill the aspirations of the people? IBON will briefly share our experience in the Philippine context and look forward to discussions to enrich this from different perspectives. The winds of democracy are blowing strong here.

We can start by affirming the essential character of the Philippine state. It remains as it has always been – political and economic elites inextricably intertwined and using the powers of government to advance their narrow interests. But it may be useful to look at some major developments over the last four decades of neoliberal globalization. This may help clarify authoritarian trends seen today and also point to areas needing particular attention.

Globalization and democracy

The 1980s saw hype about the “end of history” and the supposed triumph of Western liberal democracy with its distinct blend of free markets and private property, civil liberties and human rights, and supposed political freedoms. (Even then, giant China was of course a conveniently disregarded outlier.) Since then, there has been an increase in pluralist electoral democracies enshrining the popular vote for choosing leaders – as in the Philippines upon the fall of the Marcos dictatorship in 1986. (Even Russia started choosing its president by popular vote in 1991.) There has also been a huge expansion in mass media and then the internet which, it was argued, strengthened liberal democracies by democratizing information.

In economic systems, free market policies of neoliberal globalization were promised to unleash economic potential, develop backward economies, and bring prosperity to all. In reality, we’re all familiar with how neoliberal globalization has resulted in greater exploitation, greater destruction of natural resources and the environment, and greater wealth and economic power in the hands of a few. Hundreds of millions or even billions of people exploited, abused and left behind made the rumble underfoot grow stronger as economic crises erupted and deepened.

Elites however twisted this dissatisfaction, went on an all-out disinformation offensive in mass media and the internet, and manipulated elections to rise to power as today’s populist authoritarianisms – the Philippines’ own Pres. Duterte is a case in point. In too many places around the world, demagogues of different degrees are elected and have risen to the top of falsely democratic political systems.

They mostly keep the forms of liberal democratic institutions in place – free elections, the branches of government, mass media, even civil society. But these are wielded self-interestedly, subverted in practice, and any portions particularly inconvenient are carved out. But they are fundamentally authoritarians and we see everywhere the growing use of state violence, against any and all opposition, to protect elite economic interests and to retain political power.

These processes have played out in the Philippines as elsewhere. In our specific circumstances, how do we build a democratic society?

People, most of all

The most critical foundation remains people’s organizations with a vision of a democratic society. The Philippines is fortunate to have a long-standing core of this in the mass movement built up over decades. These include the country’s largest organizations of politicized peasants, formal and informal workers, youth and students, women, indigenous people, teachers and academics, and more.

The mass movement combines concrete struggles on immediate concerns with constant education work on systemic issues. Concrete struggles and constant education are both essential to build solid core constituencies for genuinely transformative change for the better.

These organizations are at the forefront of challenging anti-people social and economic policies and countering neoliberal globalization. They are also an army that reaches out not just to their direct constituencies and networks but also communicates to the widest number of people through mass media, social media, and other internet platforms.

They are supplemented by tactical formations and alliances on urgent issues to more immediately reach out to and mobilize the wider public. For instance, the steady assault of the regime on accustomed liberal democratic institutions creates wide opportunity for this. The attacks on senators, congressional representatives, the Supreme Court chief justice, the Ombudsman, the Commission on Human Rights (CHR), major broadcast and internet media outfits, civil society, activists and others have stirred wide outrage. This scattered dissent needs to be brought together.

Progressives in government

At the same time, people’s organizations have enough strength and flexibility to also directly engage in traditional elite-dominated governance through elected parliamentarians such as via the party-list system in Congress. Progressive party-list groups have always been among the frontrunners in Congressional elections and already form a solid pro-people bloc in the House of Representatives.

While fully part of the traditional institutionalized political system, progressive parliamentarians remain solidly grounded in people’s organizations and are relentless in challenging the boundaries of the country’s so-called democracy. As real representatives of and from the people, their legislative measures and political work are consistently biased for the people. They seek to deliver concrete benefits while consistently seeking to weaken the economic power and fight the political abuses of self-serving elites.

Through their visible public service, they enable the general public to see that more democratic economic and political policies are possible. But they are also the beachhead of democracy in the authoritarian Duterte government for launching attacks from within. They are valuable for reaching out to other progressives and potential allies within the government, and for organizing efforts to push for democratic changes in the centers of reactionary politics.

Research matters

The superstructures of power are defended not just by sheer violence but by the hegemony of self-serving and reactionary knowledge. We of course give special attention to the invisible power of ideas, values and beliefs in reproducing capitalism and today’s worsening authoritarianism. Among the most important ways to challenge this is with solid research from the perspective of and upholding the aspirations of the people for social justice, equity, and a decent life for all.

The struggle of ideas is one of the most urgent realms of political struggle. Solid research and tenacious advocacy are vital to overcome the dominance of ruling class ideas and values. More and more people must unlearn that oppression is just to be accepted and that the only improvement in our material conditions is what ruling elites will allow.

Solid research is vital to support the campaigns of people’s organizations and of progressives in government. For instance, research on economic issues reveals what changes decades of imperialist globalization have wrought as well as confirms what remains the same. And we know that ideas are meaningless if not transformed into a political force so these need to be formed with or by the mass movement and then taken up by it.

Solid research is vital to credibly challenge anti-people policies and to articulate our new ideas and visions for a more just and democratic society. We challenge capitalism not just because it is exploitative and oppressive but also because it isn’t immutable, can be replaced, and should be replaced. We look to the socialist alternative not just because we imagine it as just, humane and liberating, but also because it is possible and can already start to be built. Research makes our critique potent and also makes our alternative real.

Research is about ideas and we are today facing a deluge. What does it take to be dynamic in the digital age with its endless tsunami of trivialities and information? It isn’t enough that our analysis is correct and that we are credible – to communicate today we have to be real-time, interactive, and nimble with text, photos, graphics, audio, video and animation. And while we will continue to distribute our research, we also have to be ever more accessible not just conceptually but also literally. More than ever, people constantly seek information with a mere click of their finger or a swipe of their thumb.

Democracy in progress

Finally, we all know the value of seeing that oppressive structures can be changed and that what is accepted as ‘normal’ can be replaced. In the Philippines, the most radical flank and most direct challenge to the oppressive status quo are the scattered but growing sites of democratic governance in the countryside. In many rural areas across the country, communities are undertaking examples of how local political and economic democracy can be interlinked to benefit the majority people and not a few elites. These are areas where landlords, agri-business, and mining corporations do not dominate and where people’s organizations have taken control of their communities and their lives. They push the envelope of our democratic struggles.

On a historical scale, there’s no doubt that the world is changing for the better. There’s too much creativity, energy and bravery committed to that for it to be otherwise. Perhaps in fits and starts, or with setbacks big and small – but, still, we’re inexorably moving forward on the back of millions of steps and struggles every day around the world. #

Surviving surgery in the middle of COVID-19

by Jose Lorenzo Lim

COVID-19 has struck the country’s healthcare system in a major way. The system became too overloaded that healthcare workers in August sought a two-week return to modified enhanced community quarantine (MECQ). Government has since been touting that the country’s active COVID cases are going down and that the healthcare system is unloading. But what was it like having a family member who needed minor life-changing surgery amid this pandemic?

Hospital 1

The night that we decided to take my grandmother to the hospital was when she nearly fainted, was feeling weak, and had a low heartbeat. It was already the second time that this happened. It was a night filled with questions – where do we take her? Is it COVID-19 free? Are they going to accept us? These were the things running through our heads when we decided to take her to our trusted family hospital (Hospital 1). There, even with the growing number of patients, there was an available slot in the intensive care unit (ICU) where they stabilized her. 

My grandmother’s cardiologist said that she needed a pacemaker to stabilize her heartbeat and bring it back to a normal level from 40 beats per minute to around 60 beats per minute. Pacemaker surgery would cost around Php250,000 for a single-chamber pacemaker alone. This does not yet include the professional fees of the doctors that would operate on my grandmother. Prices vary depending on the type of pacemaker – if it’s dual or single chamber, and if it can pass through a magnetic resonance imaging (MRI) machine. Additionally, payment would only be on a cash basis for the pacemaker.

My grandmother decided not to have the surgery and to just go home. She believed that the surgery was costly and not worth it given that she was already old.

Hospital 2

Just a few days after, she had another episode and nearly fainted again. This fell on the month of August when Metro Manila was put back on MECQ. We went back to Hospital 1, luckily was able to get another private room, and planned to have my grandmother get her surgery. Financially, it would cost around Php350,000 for the whole pacemaker operation which would have to be done at another hospital since Hospital 1 doesn’t have the facilities for this type of surgery. Before a surgery could take place, my grandmother had to get an RT-PCR swab test. Since she had to be operated on quickly, we had no choice but to avail of a Php12,000 test at the big hospital nearby (Hospital 2) that would show a result in 24 hours.

Hospital 3

My grandmother tested negative for COVID-19 with Hospital 2’s swab test. A negative result is said to have a validity period of only one week. On the day of her transfer to a medical center and hospital (Hospital 3) for the surgery, we paid Hospital 1 around Php100,000 for the doctor’s fee, private room, and medicines. We decided it was best that she have her surgery since the cost of her one-week hospitalization was like getting a pacemaker already. When we reached Hospital 3, they looked at her charts and found a problem. First, her doctor wasn’t really an affiliate at Hospital 3, and second, her chest x-ray showed some white particulates which is said to be an indication of COVID-19. Hospital 3 gave us two choices, either go home and treat the particulates or have a Php12,000 CT-Scan to check if it really is liquid in the lungs.

We took a gamble and went for the Php12,000 CT-Scan that does not have a senior citizen discount. They confirmed it was liquid in her lungs which could be indicative of COVID-19. We were stunned since she had already tested negative. We had no choice but to get her home, isolate her, find other options and rest.

The next day, we called her former cardiologist from Hospital 1 again. He just apologized and advised us to take her back to Hospital 1 because at her age she needed medical attention. My grandmother returned to Hospital 1 but was told that all COVID-19 isolation rooms were full. The accounting department told my dad that her only choice was to go to a tent that would cost around Php100,000 for a three-day stay inclusive of doctors’ fees. Of course, my grandmother chose to come home and continued her isolation.

Hospital 4

Luckily, we knew someone from another medical center (Hospital 4), a public hospital. Through connections, we were put in the emergency room. The plan was to get my grandmother to test negative for COVID-19 and find her a new cardiologist so she could be operated on. If she tested positive for COVID-19, then she would be admitted to the COVID-19 ward of Hospital 4. It was like going through a limbo of uncertainty.  While waiting for the result, my grandmother and father stayed at the emergency room and were transferred two days later to the COVID-19 isolation ward once a room was available. Eventually, my grandmother tested negative for COVID-19.

Of course, Hospital 4 did not have any private rooms so she had no choice but to go to the ICU where she met her new cardiologist who was affiliated with yet another medical center (Hospital 5). They quoted around Php500,000 for the whole operation with a single-chamber pacemaker.  We immediately agreed and scheduled the operation with the doctor. We left Hospital 4 with a total bill of around P10,000 which was reduced due to PhilHealth and a senior citizen discount.

Hospital 5

The transfer from Hospital 4 to Hospital 5 was smooth since there was proper coordination between the two hospitals. Of course, before being operated on, my grandmother had to undergo her third and hopefully last swab test. After getting her swab test, she was transferred to the COVID-19 isolation room and got her result in 24 hours. The test cost around Php2,500, which was way less than at Hospital 2.

After her negative result, her new cardiologist immediately decided to push through with the operation. The operation was successful. However, there were no private wards available and she ended up at the ICU again. After two days, she was discharged from the hospital and allowed to go home.

Health neglect

The experience of going back and forth to various hospitals was hell. This is what patients who need surgery are going through. If you have symptoms of cough or colds, then you are immediately tagged as a COVID-19 suspect and would have to go through anxieties on top of being sick. If you don’t have money, you won’t be fixed. We were very fortunate enough to have my aunt, uncle, and other family members to financially support us through this.

A family of five living under minimum wage wouldn’t be able to afford getting a pacemaker. While I do understand that each hospital has its own set of protocols, the additional cost of swab tests is really hard especially if you don’t have enough money. I can’t imagine the number of patients who have to delay their life-saving surgery due to the overcrowding at hospitals and the burden of producing money for the operation itself. I would even call it criminal negligence on the government’s part for not immediately addressing the COVID-19 situation of patients who need surgery.

PhilHealth and a senior citizen discount really helped to lower my grandmother’s hospital expenses, but then again the situation at Hospital 4 was that they didn’t have the facilities to carry out pacemaker surgery. The government should invest in our public hospitals so that they are able to do these minor surgeries. Patients are forced to go to private hospitals just to get a pacemaker implanted. We were shocked at the Php10,000 bill of Hospital 4 and I think that if government invests funds in our healthcare system then more patients would be able to access and afford life-saving operations.

In the end, its priorities will still depend on government’s political will or lack of it. The government could invest in social services, especially health, instead of allotting Php19 billion to fund a deceptive and destructive National Task Force to End Local Communism and Armed Conflict (NTF-ELCAC). The latter, which has been on a spree of terrorist-tagging activists and progressive personalities and institutions, appears to still be the government’s priority even while COVID-19, typhoon relief operations, and even the economic downturn, warrant much urgent and greater attention. #

Jose Lorenzo Lim 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.

Duterte gov’t fails to meet its human rights obligations amid the pandemic

by IBON Media & Communications

The Philippine government is a signatory to the International Covenant on Economic, Social and Cultural Rights (ICESCR). The covenant obliges the government to take measures to prevent or at least mitigate the impact of the pandemic. Its gross failure to do so is leading to unprecedented but preventable suffering for millions of Filipinos.

The country’s poorest and most marginalized are being left behind by the COVID-19 response of the Duterte administration. On the other hand, wealthy creditors are protected and large corporations including foreign investors are getting their profits boosted.

COVID-19 spreading

The Duterte administration’s inability to contain COVID-19 is the clearest sign of its failure to address the pandemic. In Southeast Asia, Vietnam and Thailand show that an effective government response is possible. Yet the Philippines, adjusting for population size, has the second most number of COVID cases next to small city-state Singapore, and the most number of deaths.

The Philippines has over 4,000 cases per million population (more than double the regional average of around 2,000), and nearly 80 deaths per million population (more than triple the regional average of 26). This is despite the longest and harshest lockdowns and quarantine measures in the region.

Emergency aid falling

The government’s refusal to give meaningful aid is causing unparalleled suffering. The latest labor force survey reported 3.8 million unemployed Filipinos and an unemployment rate of 8.7% in October. IBON however estimates the real number to be at least 5.8 million, with an unemployment rate of 12.7%, if those who were forced out of the labor force by the pandemic or discouraged by the obvious lack of work are also counted. Earlier, private opinion surveys already reported 7.6 million families going hungry.

At least 12-13 million Filipino families, or the poorest half of the population, are facing economic distress because of the pandemic and the worst economic collapse in the country’s history. The administration’s Bayanihan 2 however gives emergency aid to at most around 3.3 million families, who are even getting just half as much cash subsidies as supposedly given under Bayanihan 1.

This is because the economic managers refuse to spend on emergency aid for poor and vulnerable families and only allowed a token Php22.8 billion under Bayanihan 2. This is a far cry from the Php238 billion in aid under Bayanihan 1 which has already been used up by beneficiary households. It is even worse in the proposed 2021 national government budget where pandemic-related aid falls to just Php9.9 billion.

As it is, with only nine days left in the effectivity of Bayanihan 2, the social welfare department has only given one-time emergency subsidies to a mere 64,839 beneficiaries at an average of just Php6,720 per family. The labor department meanwhile has only given CAMP support to around 350,000 workers.

The Duterte administration’s so-called emergency assistance is so small that it is just a token measure to give the illusion of responding. Tens of millions of Filipinos are not getting any help causing millions to go hungry and sink deeper into poverty.

Corporate profits rising

The government is also making inequality worse. While millions of poor families are neglected, large corporations including foreign firms are going to get hundreds of billions of pesos in additional profits over the coming years from big corporate income tax cuts.

Disregarding the critical need for revenues to respond to the pandemic, the economic managers pushed their Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act and even dishonestly presented this as a COVID-19 stimulus. This is a willful violation of the obligation to mobilize the necessary resources for responding to serious health and economic distress from COVID-19.

Rights being violated

The proposed 2021 budget also violates human rights. The state has an obligation to devote the maximum available resources to combat COVID-19 and the economic crisis in the most equitable manner.

However, the 2021 budget fails to allocate resources in a way that prioritizes the public health crisis and the economic burdens the poor are facing. The proposed 2021 budget spends less on health and on emergency aid than in 2020. On the other hand, the budgets for infrastructure, military and police, and debt servicing all increase. Next year’s budget does not protect poor and vulnerable groups nor mitigate the impact of the pandemic on them.

The Duterte administration’s contempt for human rights is complete. It violates civil and political rights with its systematic political repression and killings of activists and alleged drug offenders. With its neglectful pandemic response, it also violates the social and economic rights of tens of millions of Filipinos. The country is even further away from the full and equal enjoyment of the social and economic rights enshrined in the ICESCR and even in the 1987 Philippine Constitution. #

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