Posts

Renegotiation of CA not enough without renouncing privatization –WPN

by Water for the People Network

The Water for the People Network (WPN) said that government should renounce water privatization and assert water as a human right whose provision should be under effective public control. This is the most important basis for terminating the concession agreements (CA) between the State and private water firms. The vital public utility should be returned to the public sector, WPN said, and not remain in the hands of profit-seeking water oligarchs.

President Duterte recently ordered the CAs between government and water firms Maynilad Water Systems Inc. and Manila Water Company to be renegotiated. Department of Justice (DOJ) Secretary Menardo Guevarra said that certain provisions of the water CAs are onerous and disadvantageous to both government and consumers. The DOJ began reviewing the CAs upon the instruction of President Duterte at the height of the water crisis during the first quarter of this year.

The onerous stipulations recorded by the DOJ include prohibition against State interference in rate-setting, indemnification for revenue losses due to this interference, and irregular extension of contracts by 15 years. These are issues that have been raised by water rights advocates, WPN said, in the more than two decades since water in Metro Manila was privatized.

“The WPN has long and repeatedly called for the scrapping of the CAs. The CAs are the very epitome of water privatization, which has failed to deliver promised cheaper, cleaner, and more secure water services,” WPN spokesperson Prof. Reggie Vallejos said. Water utilities have to deliver water as a human right, he stressed, and mere renegotiation of the CAs will not truly ensure public interest objectives over private profits.

“The government has not yet revealed its points for renegotiation but we doubt that these will be enough to uphold the public welfare if they are still within the failed water privatization framework and biased towards profitability for water oligarchs,” Vallejos said.

WPN recalled that water privatization has only resulted in more expensive water, with rates increasing seven-fold for Maynilad and ten-fold for Manila Water from the start of the concession in 1997 to the third quarter of 2019. The CA-directed rate rebasing every five years since privatization allowed firms to make profits by charging consumers increasing tariffs including, among others, for projects that fail to push through. WPN added that the CA gives government a key role in rate-setting (judging whether enumerated expenses were prudent and just in the interest of consumers), but nonetheless allows the companies to sue the State should its regulation affect their profit-making.

The water firms also face Supreme Court-imposed penalties for violating the Clean Water Act, with poor sewerage services performance versus targets as of 2018. Meanwhile, water service interruptions have been hounding Manila Water and Maynilad consumers since March 2019.

These problems bring us back to 1997, WPN said, when the Ramos administration invoked a national water crisis and handed over water sourcing, processing and distribution to the private sector. The huge socially-sensitive water utility was handed over to the Ayalas and Lopezes. The biggest water privatization until then was perfectly in tune with the Ramos government’s grand promotion of globalization policies including deregulating the oil industry and liberalizing Philippine agriculture, said the group.

Public sector water operations should be re-established in Metro Manila and the rest of the country as soon as possible, said Vallejos. “These should be returned to the public sector to ensure that profit-seeking does not get in the way of delivering cheap, clean, and secure water services to the public,” he said.

WPN cited the growing global trend of water remunicipalization reversing water privatization. This has already happened in over 231 cities in some 37 countries around the world for instance in Spain, Germany, Argentina, and even in France, home to water multinationals. The poor experience with water privatization is making governments choose public water sourcing and distribution over private control, the group said.

Government’s continued implementation of water privatization is seeing additional oligarchs taking over public control of water, said WPN. Specifically, these are big business interests close to Duterte, for instance, Manny Villar and Dennis Uy who are also in the water business through Prime Water Infrastructure Corp. and Udenna Water and Integrated Services, respectively. Prime Water has been striking joint venture agreements with local water districts in areas nationwide but undermining water services according to a Commission on Audit report, WPN observed.

Simply renegotiating the CAs to let more oligarchs keep profiting from the water business will not remove the ill effects of privatization on the public and may even make it worse, WPN said. Government must bravely decide to take control of the vital public utility and run it as a service rather than for profit, the group said. #

Agri sector slumps due to continuous government neglect

by IBON Media

Even prior to rice liberalization, the country has become increasingly dependent on food imports.”

Long-time government neglect and low prioritization has put the agriculture sector in a chronic crisis, said research group IBON.

The group said that this is in line with government’s advancement of neoliberal policies favoring local and foreign big business. The Duterte government continues this by giving minimal support to the agriculture sector.

IBON said that declining share in gross domestic product and agricultural productivity per capita, increasing import dependence, rising trade deficit, and widespread rural poverty are signs that this crisis is worsening. 

The agriculture sector’s share in the economy has shrunk from over 40% in the 1960s to less than 10% in 2018.

Agricultural productivity per capita peaked at Php7,862 in 1981, declined, and then was in a period of recovery from 1999-2008.

But agricultural productivity per capita again fell to Php7,052 in 2018, noted the group.

IBON also said that the country has become increasingly dependent on food imports even before rice liberalization this year.

For instance, garlic imports made up only 1.1% of the country’s consumption in 1990, but this spiked to 90% in 2017. Import dependency ratio also increased significantly with coffee (-7.7% to 56%); beef (8.5% to 36%); tuna (3.7% to 17%); onion (-14.3% to 15%); potato (0% to 15%); and pork (0% to 13%) in the same period.

Meanwhile, rice import dependency ratio declined from 9% in 1990 to 5% in 2016. But this rose to 6.6% in 2017 and is expected to be higher due to the influx of rice imports under the Rice Liberalization Law.

The agriculture trade deficit has also increased by 30 times from US$287 million in 1994 to US$8 billion in 2018.

In the first quarter of this year, the agriculture trade deficit was a staggering US$2.1 billion, said the group.

IBON said widespread rural poverty is another indicator of agriculture in crisis.

Official figures show that the poverty incidence among farmers (34.3%) and fisherfolk (34%) is higher than the national average (21.6%).

IBON estimates that, if based on more reasonable standards of poverty measurement, at least 90%, if not all farmers and fisherfolk, are impoverished.

This chronic agriculture crisis is due to government’s chronically low prioritization of the agriculture sector, said IBON.

The group noted that from 1981 until 2020, the annual average share of agriculture and agrarian reform was only 4.1% of the national budget.

This low priority of agriculture is being continued under the Duterte administration.

The group said that the 3.5% share of agriculture in the proposed 2020 budget is the lowest since 2004 (3.3%).

Also, from 2017 to 2020, the annual average share of agriculture in the national budget was only 3.6% – the lowest since the Ramos administration (3.5%).

The average share of agriculture was higher under Estrada (4.4%), Arroyo (4.7%), and Aquino (4.2%).

IBON said that immediate steps government should take to arrest the agriculture crisis is to wipe off if not significantly reduce all forms of loans including amortization for awarded lands, and to substantially increase support and subsidies for the agriculture and agrarian reform sectors.

It should also suspend, and eventually repeal, policies like the Rice Liberalization Law, that are harming domestic production and farmers’ livelihoods.

But to truly strengthen domestic agriculture, government needs to implement long-term policies that prioritize rural development over big business interests. #

IBON launches alternative to failed govt econ agenda

by IBON Media

Research group IBON launched its campaign on People Economics to promote much-needed policy reforms that would really benefit the majority of Filipinos and engender genuine national development.

IBON held the forum “People Economics: May Magagawa!” at the College of Science Admin Auditorium, UP Diliman last October 10 to discuss why there is a need for and what the principles and policy outlines are of People Economics.

After four decades of neoliberal globalization and its market-driven policies, the group said that the country remains underdeveloped.

Many Filipinos are struggling with worsening poverty and jobs crisis, while only a wealthy few are benefiting. The global economic slowdown is not letting up, and in response several countries, especially the big capitalist powers, are becoming increasingly protectionist, the group said.

IBON said that People Economics is an alternative to government’s failed neoliberalism.

This draws from the policies and demands of the people’s movement, as well as IBON’s more than 41 years of experience in advocating for social and economic reforms.

The group said that it envisions a Philippines that can be transformed into a modern industrialized nation that is more equal, humane, and ecologically sustainable. It lays the foundation for a future where the Filipino people continuously change society for the better.

People economics is comprised of six pillars: Develop the countryside; Build Filipino industries; Protect the environment; Uphold people’s rights and welfare; Finance development; and Strive for sovereignty and independence.

IBON said that People Economics can be further articulated and enriched as an alternative to neoliberalism. The contributions of the progressive movement and other advocates for genuine change is needed to come up with the most concrete and comprehensive solutions to the country’s social and economic problems, the group said. #

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

IBON questions CITIRA job creation claims

by IBON Media

Research group IBON said the Department of Finance’s (DOF) claim of over a million jobs to be created by corporate income tax cuts under the proposed Corporate Income Tax and Incentives Rationalization Act (CITIRA) is imaginary.

The group said that the DOF is hyping job creation to justify implementation of regressive tax measures. CITIRA will increase corporate profits and executive pay without increasing jobs or even wages, IBON said.

The group recalled that the DOF repeatedly claimed that the Tax Reform for Acceleration and Inclusion (TRAIN) law would benefit “99%” of Filipinos or households when they were lobbying for this.

The DOF did so despite knowing, on the contrary, that the poorest 17.2 million Filipino families would eventually be burdened by additional consumption taxes especially after the smokescreen of temporary cash transfers, said IBON.

“The DOF is now claiming that CITIRA ‘will benefit more than 99% of companies’ and that the proposed corporate income tax (CIT) cuts will create 1.5 million jobs. There is no legitimate basis for such a claim,” said IBON executive director Sonny Africa.

“The DOF seeks to justify even more tax cuts for the rich following TRAIN’s reduction of personal income taxes (PIT),” Africa added.

“The DOF’s suddenly claiming that CITIRA will create jobs is suspicious,” Africa said.

He noted that there were no job generation estimates when the bill was first submitted to Congress in early 2018 as TRAIN Package 2, when it was passed by the House of Representatives (HOR) in September 2018 as the renamed Tax Reform for Attracting Better and High-Quality Opportunities (TRABAHO) bill, nor even at the first Senate hearing on it right after.

Africa recalled that DOF undersecretary Karl Chua said outright at the Senate hearing: “We do not see a job impact.”

Department of Labor and Employment (DOLE) director Dominique Tutay on the other hand answered pointedly: “Mayroon po [mawawalan ng trabaho].”

Africa said that it was only on October 17, 2018, that the DOF suddenly declared in a press release that the proposed law would create 1.4 million jobs.

He added: “The DOF’s job generation claim is unfounded speculation that has no theoretical or empirical basis.”

“The new jobs will supposedly come from businesses ‘reasonably’ spending half of their increased profits from the lower corporate income tax ‘in growing their businesses’ but companies already have enough profits as it is,” Africa said.

He cited DOF reports that large firms account for some three-fourths (75%) of corporate income tax collections.

Africa pointed out that the profits of the country’s Top 1000 biggest corporations have been growing some 12% annually in the past decade, and have more than tripled from Php415 billion in 2008 to Php1.33 trillion in 2017.

“Simplistically claiming that corporate tax cuts will magically create 1.5 million jobs is deceitful as the argument opportunistically ignores key economic realities,” said Africa.

He pointed out that global growth is slowing, trade is weakening, foreign investment flows are falling, and protectionism is growing, while Philippine economic growth has already slowed to its lowest in 17 quarters.

“It is more likely that CITIRA’s tax cuts will just go to increasing corporate profits and justify increasing already exorbitantly high executive pay. They will certainly not go to increasing wages because corporations have kept real wages flat for over a decade-and-a-half despite rising labor productivity,” concluded Africa. #

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

Duterte admin banning aid to hide human rights violations

by IBON Media

Research group IBON, a member of the multisectoral network AidWatch, said that the Duterte administration is stopping talks on new official development assistance (ODA) from 18 countries as part of its efforts to hide the worsening domestic human rights situation.

This includes Spain which is supporting the Commission on Human Rights (CHR).

The group said that the show of standing up against foreign intervention in the country is hollow because the administration continues to receive much more ‘aid’ from China and the United States (US) despite their much larger and more damaging intervention in the Philippines.

The administration issued a memorandum on August 27, 2019 directing the suspension of all negotiations and signing of loan and grant agreements with the 18 countries of the United Nations (UN) Human Rights Council that recently supported a resolution to investigate human rights violations in the country.

These include: Argentina, Australia, Austria, Bahamas, Bulgaria, Croatia, Czech Republic, Denmark, Fiji, Iceland, Italy, Mexico, Peru, Slovakia, Spain, Ukraine, United Kingdom, and Uruguay.

AidWatch, a network actively working with different government agencies and stakeholders on ODA issues, noted that as of the first quarter of 2019, the 18 countries combined account for only US$525 million or less than 3% of the Philippines’ active loans and grants.

This is because only three of the 18 countries have active ODA here — Australia (US$476 million), Italy (US$41 million) and Spain (US$8.1 million).

There is also just an additional US$414 million in the pipeline from Australia (US$82 million), Austria (US$177 million), and the UK (US$155 million).

Active grants and loans mostly go to education, disaster management, agrarian reform and peace-building projects.

Spain however also provides almost US$6 million in grants as institutional support for the CHR under the Project Go-Just Human Rights-CHR project.

This started in February 2016 and is due to end in December 2019.

Aid in the pipeline is meanwhile overwhelmingly for transport infrastructure especially bridges, the group noted.

The president’s memo says that the government is in the process of ‘assessing’ relations with these countries.

AidWatch said that this is clearly a signal not just to the 18 countries but to the international community that it will not take any criticism about its human rights record and indeed that the only narrative about the human rights situation it allows will be its own sanitized version.

The administration has already said that it will not cooperate with the UN on any such investigation and that it will block the entry of any UN special rapporteurs.

The group said that this is however clearly not a principled stand against foreign intervention but a self-serving stand to cover up massive and rising human rights violations stemming from its violent ‘war on drugs’ and repression of activists and political opposition.

The Duterte administration continues to accept US$365 million in active ODA from China and looking to as much as US$10.6 billion more despite its gross intrusiveness in the West Philippine Sea, said the group.

It is also accepting US$887 million in active ODA and US$276 million in military aid over 2016-2020 from the US despite Philippine territory being used as a US military outpost hosting troops, warplanes, war materiel, equipment and bases.

IBON said that notwithstanding the president’s swagger and rhetoric, the country is clearly still under the thrall of big foreign powers and still wanting genuinely independent foreign policy. #

Job creation volatile, mostly of poor quality work

by IBON Media

Research group IBON said that the recently reported job generation is mostly in poor quality work and confirms volatile labor market conditions rather than a strengthening economy.

The group made the statement after the recent release of seemingly favorable employment figures and warned against complacency.

The Philippine Statistics Authority (PSA) reported an increase in the number of employed by 2.3 million and an increase in the number of unemployed by 103,000 in July 2019 from the previous year.

The employment and unemployment rates stayed the same as last year at 94.6% and 5.4%, respectively.

IBON however said that the extreme volatility in the labor market since 2016, for instance, should temper overenthusiasm that the economy and the labor force situation is improving.

Millions of Filipinos are making do with poor quality work and hundreds of thousands more are in and out of work.

The group recalled that the reported 2.3 million additional employment in 2016 reversed to 664,000 net job losses in 2017.

In 2018, 2.4 million new jobs were reported generated in the January labor force survey round, measured year on year, but this reversed to 218,000 net job losses in the October round.

The situation remains as volatile so far this year, ranging from 387,000 net job losses in January 2019 to the recently reported 2.3 million job creation in July 2019.

This volatility indicates Filipinos struggling to find work where they can on a day-to-day basis rather than a strengthening economy creating steady jobs paying decent incomes, IBON stressed.

Looking at employed persons in terms of hours worked, 2.2 million or an overwhelming part of the net 2.3 million additional employed in July 2019 was actually just in part-time work of less than 40 hours.

This caused the share of part-time work in employment to markedly rise from 28.2% to 31.8 percent.

Looking at employed persons by class of worker, IBON pointed out that the biggest employment increases were actually in low-earning, insecure, and informal work, as well as in unpaid family work.

The number of self-employed without paid employees grew by 1.1 million and the number of unpaid family workers grew by 854,000.

Finally, IBON said that looking at the three biggest job-creating sectors also does not give confidence.

The sectors creating the most jobs included wholesale and retail trade which grew by 820,000, and accommodation and food service by 292,000.

These subsectors are notorious for high informality and uncertainty, the group said.

IBON noted the 716,000 increase in agricultural employment but pointed out that this is likely only momentary because agricultural employment is in long-term decline especially from lack of government support for the sector.

IBON also commented on the underemployment rate falling significantly from 17.2% in July 2018 to 13.9% in July 2019.

This is equivalent to the 7 million underemployed last year falling to just 6 million this year.

The group said that while falling underemployment is commonly used as a proxy for improving quality of work, the latter is not necessarily what is happening.

Underemployment refers to employed persons wanting additional hours of work in their present job, an additional job, or a new job with longer working hours.

IBON explained that the large drop in the underemployed is possibly only because workers are already working such long hours that they do not want additional hours in their present job, cannot take on an additional job, or cannot imagine a new job with even longer hours.

The breakdown of reported underemployed persons is not inconsistent with this, the group said.

The number of those working 40 hours and over in a week, or the invisibly underemployed, fell by a huge 1.5 million from 3.7 million in July 2018 to 2.2 million in July 2019.

Those who worked less than 40 hours, or the, visibly underemployed, meanwhile, increased by 352,000, hence the net decrease of some 1.1 million total underemployed.

IBON said that while more employment is always desirable, government should ensure that jobs are decent and sustainable.

But as long as government neglects the development of domestic agriculture and industries to generate stable and quality work, the jobs crisis will continue to worsen, and Filipinos will keep grappling with poor job prospects. #

Scrap provincial bus ban, find pro-people solution to traffic–IBON

Government should find another way of decongesting Metro Manila’s major thoroughfare instead of aggravating the inconveniences of hundreds of thousands of provincial bus commuters, research group IBON said.

Commuters’ welfare should be the primary consideration of the Duterte administration in addressing transport woes but its approach should be comprehensive and regulation should cover private vehicles as well, said the group.

During a hearing conducted by the Senate Committee on Public Services, IBON supported calls to scrap the Metro Manila Development Authority (MMDA)’s Regulation Number 19-002, which aims to remove all provincial public utility bus (PUB) terminals from the entire length of EDSA in order to ease traffic.

That provincial buses are instead directed to load and unload in integrated terminals in Sta. Rosa, Laguna for PUBs coming from the south, in Paranaque for those with terminals in Pasay City, and in Valenzuela City for those coming from the north, is inconsiderate of hundreds of thousands of commuters who have to take the provincial bus regularly, the group said.

IBON said that the MMDA regulation nitpicks on provincial buses servicing a big number of commuters without addressing the fact that private cars make up most of daily EDSA traffic and pollution.

Based on MMDA and commuter network Move Metro Manila/ Komyut figures, IBON estimates that provincial buses move up to 425,000 commuters, while cars plying EDSA move at least 370,000.

Cars, however, comprise 65% of traffic and also contribute more to pollution and carbon dioxide emissions, noted the group.

Buses, meanwhile, 66% of which are provincial, take up only 3.5 percent.

Metro Manila’s transport system lacking a last-mile system makes relocating provincial bus terminals to limited spots more difficult for provincial bus commuters, IBON added.

Memo 19-002 adds another layer instead of simplifying the transportation process for commuters.

It not only aggravates their plight in combating traffic but even adds cost due to additional rides for example.

IBON said that in other countries, last-mile solutions include publicly available shuttle rides or bicycle infrastructure that ensure seamless mobility from a central hub or terminal to a passenger’s final destination.

IBON said that the bus ban also disregards how many ordinary passengers live in neighboring provinces but work in the National Capital Region (NCR) for lack of job opportunities elsewhere. 

Taking the train is no viable alternative because the country’s rail systems and interlinkage remain quite underdeveloped to say the least, said the group.

The public Philippine National Railways has not been restored to its full potential and only runs from Tondo to Laguna; the other public Light Rail Transit (LRT) systems operate only within Metro Manila.

The private Metro Rail Transit 3, meanwhile, traverses EDSA but only partially, and has a record of multiple breakdowns and mishaps due to inefficient management regardless of fare hikes.

Looming public utility jeep (PUJ) phaseout worsens the scenario and not only for provincial bus commuters, said IBON.

This is because PUJs currently play a proxy role in first mile and last mile functions, or in taking commuters to and from areas near central transport hubs.

IBON said that traffic solutions that are arbitrary and inimical to the public such as the bus ban should be rescinded. Instead, government should forge a pro-people solution to traffic woes that can start with conducting genuine consultations with affected sectors for all mass transport endeavors. 

The group added that congestion due to too many private cars can be checked, such as with a congestion tax, stricter street parking rules, and perhaps even curbing car ownership.

It may also be necessary, IBON said, to conduct an audit of road and rail safety including the accountability of corporations and agencies involved.

As with other public services, privatization and the user-fees policy should be stopped in mass transport, said the group.

In its transport policy study titled “Mass Transport System in Metro Manila and the Quest for Sustainability”, IBON said that government’s direction should be to craft a sustainable mass transport system: It should be efficient – meaning shortest travel time, shortest possible distance, and least changes in transport mode. It should be reliable, where expected travel time is actual travel time, and unnecessary waiting is minimized. It should be accessible – meaning infrastructure is easy to access, and affordable as well as considerate of the specific needs of various sectors. It should be safe to prevent harm and ensure pedestrian-friendly conditions. It must also be environmentally sound using clean and energy-efficient fuels and promoting non-motorized transport such as cycling and walking. #

President’s SONA in denial of slowing growth and fundamental economic crisis

by IBON Media

In his fourth State of the Nation Address (SONA), President Duterte did not admit that the economy is on a slowdown and that the country’s production sectors are deteriorating. Instead, the President harped on deceptive, business-biased policy proposals that at the very least do not address the basic problems of the economy, and at worse, may aggravate economic woes. Government should build policies upon an honest recognition of the country’s real situation.

Slackening economy ignored

Nowhere in the President’s SONA was it mentioned that the country’s economy has been slowing from 7.1% growth of gross domestic product (GDP) in the third quarter of 2016 to 5.6% in the first quarter of 2019. Growth fell rapidly even after a momentary increase to 7.2% in the third quarter of 2017. This slowdown was happening long before the 2019 national budget impasse and the election ban on infrastructure spending and despite record levels of foreign investment reaching US$9.8 billion in 2018.

It would have been important for the President to note this and admit that the slowdown is due to reliance on unsustainable, external sources of growth: Slowing overseas remittances (average growth rate fell from 15.5% annually in 2002-2008 to 3.7% in 2017-2018) and a slowing business process outsourcing (BPO) sector (average growth rate fell from 43% annually in 2005-2009 to only 2.7% in 2017-2018) that impacted on real estate, renting, and business activities. Household spending, export of services (including BPOs), capital formation (including construction), and government spending also slackened.

This points to the urgency of developing sustainable long-term drivers of growth pertaining to more vibrant agriculture, dynamic Filipino industry, and equitable distribution of economic gains. In his SONA, however, the President, though acknowledging the need to boost agriculture and jobs, stuck to the same type of market-oriented measures that perpetrate underdevelopment and backwardness.

Hampering agriculture

Pres. Duterte vowed to continue investing in agriculture programs to increase the income and productivity of small farmers and fisherfolk. In particular, he said that government will ensure the full implementation of the Rice Tariffication Law’s Rice Competitiveness Enhancement Fund (RCEF) to safeguard the livelihood of small farmers.

But the RCEF amount of Php10 billion annually for six years, which government claims will fund farm inputs and operations, is dismally low compared to Vietnam and Thailand agriculture subsidies. Hugely the funds will be used to purchase commercial equipment, seeds, and services for distribution to local government units and certified farmers organizations. RCEF is prone to patronage politics and might marginalize rather than benefit farmers. Peasant groups also fear that the removal of restrictions on rice importation will displace over 2 million rice farmers and imperil the local rice industry with the influx of imported rice.

By sourcing the Philippine staple from a volatile world market and allowing unlimited albeit tariffied rice importation, rice tariffication threatens farmers’ livelihoods and the country’s food security. It does not address the current state of shrinking agriculture. The sector lost over a million jobs from 2016-2018, and barely grew at 0.8% in 2018 and in the first quarter of 2019. Its 8.2% share of GDP in the first quarter of 2019 is its smallest ever share of the economy, yet 2019 budget allocation to agriculture was reduced by Php3.4 billion from an already low Php50.7 billion in 2018 to just Php47.3 billion in 2019.

Instead of pushing rice liberalization, which will benefit rice importers and private traders more than local rice farmers and rice-eating Filipinos, the government should preserve its mandate to procure a minimum of 25% of local produce to sell at a reasonable price that will influence market rice prices to be affordable. There should also be a genuinely distributive and free land reform program to liberate farmers from having to amortize awarded land, and substantial agriculture support and subsidies from domestic industries that will truly aid in raising productivity and incomes instead of burdening the sector with conditional support and mounting debts.

Stifling Filipino industries

The President also did not address a manufacturing sector that appears to be stalling. Manufacturing growth was just 4.9% in 2018 – the slowest since 2012 – and slowed further to 4.6% in the first quarter of 2019. The sector remains shallow and mostly disconnected from the local economy due to being foreign-dominated and capital-intensive in export enclaves. As a result, employment generation has been relatively weak. Manufacturing employment increased by just 221,000 or 6.5% between 2016 and 2018, with even a contraction of 101,000 reported in April 2019, according to official labor force data.

Instead, he praised the Tax Reform for Acceleration and Inclusion (TRAIN) for helping fund government programs, and pressed for the enactment of the Tax Reform for Attracting Higher and Better Opportunities (TRABAHO) to energize micro, small and medium enterprises (MSME’s) and generate more than a million jobs.

But TRABAHO is a misnomer because its focus is not on creating the stable jobs that Filipinos need, but on lowering corporate taxes and rationalizing incentives. It in fact adds to the regressiveness of TRAIN, which relieves the rich of personal, estate and donor taxes, by increasing corporate profits and the wealth, income, and property of the rich. On the other hand, government will make up for the resulting losses in tax revenues through indirect levies which tax consumption – including by mostly low-wage workers and low-income Filipino families – regardless of their lack of wealth, income and property.

The President’s recommending TRABAHO for MSMEs in his speech diverts from MSMEs’ being mostly in the service sector wherein jobs are usually temporary and low-paying: the top five MSME industries are wholesale and retail trade, repair of motor vehicles and motorcycles, accommodation and food service activities, manufacturing, service activities, and financial and insurance activities. The manufacturing sector would potentially be a generator of stable jobs, however contractualization is rampant. The transnational corporations-dominated sector has even seen Filipino workers suffer poor working conditions and stifled labor rights.

Not only do Filipinos need more jobs, the people need quality jobs. But behind the hype of improved employment are signs of a persistent jobs crisis that no corporate-biased policy intends to cure: over 11 million of the combined unemployed and underemployed, and almost 28 million of the employed being in informal, non-regular, or agency-hired work.

(Malacañang photo)

Reorient the economy

Filipino firms must instead be built, sourcing materials from a robust agriculture, and building across consumer, light to heavy industries that will supply the people’s and the nation’s needs. This removes the need to rely on – or be limited to – commercial sources. This will also certainly improve production, stimulate job generation, increase working Filipinos’ incomes, and enliven economic activity both in the rural and urban areas.

All these mean that the government should thwart its business bias so that the country’s economic direction can be refocused to truly prioritize the people’s well-being and national development. This has not been the course of the Duterte administration as evidenced by the neoliberal policies highlighted in his SONA such as rice tariffication and TRABAHO. #

Prices still higher now than since start of Duterte admin

Research group IBON said that while June inflation has slowed, the prices of basic food items are still higher, especially when compared to prices at the start of the Duterte administration. The wages and incomes of many Filipinos are unable to keep up with the high prices.

The group said that food prices will continue to increase as long as government neglects Philippine agriculture and the country becomes further dependent on imports.

The Philippine Statistics Authority (PSA) reported that nationwide inflation slowed to 2.7% in June 2019 from 3.2% the previous month.

Inflation in the National Capital Region (NCR) eased to 3.0% from 3.4%, and inflation in areas outside of NCR fell to 2.6% from 3.1%, during the same period.

IBON executive director Sonny Africa said however that this lower inflation is not being felt by the public.

He said that food is still generally more expensive than in the same time last year, and especially compared to July 2016 at the start of the Duterte administration.

For instance, in Metro Manila, between the first week of July 2018 and the same period in July 2019, rice is slightly cheaper but fish, chicken and many vegetables are much more expensive, Africa said.

According to the PSA, the prevailing retail price of commercial well milled rice in the first week of July 2019 was Php44 per kilogram (/kg), which is only one peso cheaper than the Php45/kg in the first week of July 2018.

The cost of fish like bangus and tilapia meanwhile was much higher, increasing by Php10 and Php20, respectively.

Retail prices for whole chicken, carrots, and potatoes also rose by Php10, Php40, and Php20.

Africa said that NCR food prices are much more expensive now compared to prices during the first week of July 2016, at the start of the Duterte government.

Commercial well milled rice is higher by Php4.00/kg; bangus by Php20; tilapia by Php10; galunggong by Php20; whole chicken by Php20; ampalaya by Php20; carrots by Php30; habitchuelas by Php20; tomato by Php30; potato by Php10; and eggplant by Php20.

But the wages and incomes of ordinary Filipinos are not enough to cope with these higher prices, he said.

IBON estimates that the family living wage (FLW) needed to meet basic needs is PHP1,008 for a family of five and Php1,210 for a family of six in the NCR as of June 2019.

But the NCR nominal minimum wage of Php537 is not enough with wage gaps of Php471 and Php673, respectively.

Africa said that food prices will keep rising and be unnecessarily expensive as long as government continues to neglect the country’s agriculture sector.

He noted that the budget for agriculture continues to shrink, with the Department of Agriculture (DA) budget cut by Php3.4 billion in 2019 and of the National Irrigation Administration (NIA) by about Php5.6 billion.

The country’s increasing dependence on food imports because of policies like the Rice Tariffication Law will only worsen the country’s agriculture crisis, Africa said.

Rice liberalization will not necessarily ensure a cheap and stable supply of rice while harming the livelihoods and incomes of Filipino rice farmers.

Increased rice imports may have been behind the falling farmgate price of palay which significantly dropped from Php21.36/kg last year to Php17.91 this year.

Rather than rely on rice imports, domestic rice production should be made more efficient and productive to make this cheaper, said Africa.

Africa said that lowering food prices through more developed domestic agriculture is essential for lower inflation.

He also said that low inflation will be more meaningful for the public if they have higher incomes to begin with.

The government can give relief to Filipino families struggling with high food prices not just by continuing to provide affordable NFA rice but also by substantially increasing wages and salaries. #

Duterte administration being dishonest about economic ‘gains’

Research group IBON said that the Duterte administration is being dishonest in its recent pronouncements about high growth, reducing unemployment, and reducing poverty. The group said that the government is taking liberties with statistics as part of its propaganda campaign that President Duterte is keeping his promise of real change.

In its pre-State of the Nation Address (SONA) forum, the Department of Finance (DOF) hailed the Duterte administration for its achievements during its first three years in terms of “rapid economic expansion”, “the lowest [unemployment] in 40 years”, “alleviating poverty”, and Tax Reform for Acceleration and Inclusion (TRAIN) law “benefiting 99 percent of taxpayers”.

According to IBON executive director Sonny Africa however, growth has actually been slowing since the start of the Duterte administration. Philippine Statistics Authority (PSA) data show that gross domestic product (GDP) growth has been slowing in the 11 quarters since the start of the Duterte administration from 7.1% in the third quarter of 2016 to 5.6% in the first quarter of 2019. There was a momentary increase to 7.2% in the third quarter of 2017 but growth fell rapidly after this. IBON also pointed out that the growth was slowing even before the budget impasse and election ban on infrastructure spending.

Africa added that the economic managers are being deceitful in claiming that the 5.1% unemployment rate in April 2019 is the lowest unemployment in four decades. He pointed out that the DOF is well aware that the change in the official definition of unemployment in 2005 drastically reduced the reported unemployment rate and number of unemployed which makes the April 2019 figure incomparable with the 25 years of data before 2005.

On the contrary, IBON said, computing according to the original definition of unemployment for comparability would show that the real unemployment rate in 2018 is 10.1% and the real number of unemployed is 4.6 million. These are much worse than the already high 9.0% unemployment rate and 4 million unemployed in 2016, again computed according to the original definition. In contrast, officially released figures for 2018 were a grossly underreported 5.3% and 2.3 million, respectively.

The high unemployment is a direct result of how only an annual average of 81,000 new jobs have been created since the start of the Duterte administration, from 41 million employed in 2016 to 41.2 million in 2018. This is the worst job generation in the post-Marcos period.

Poverty statistics meanwhile show seemingly less poor Filipinos only because of government’s very low poverty threshold, said Africa. The government’s Php69.50 daily per capita poverty threshold and only Php48.60 subsistence or food threshold in the first semester of 2018 are absurdly low and not conceivably enough to meet decent minimum standards for food, shelter, transportation, health care, and education, stressed Africa. He said that this leads to a gross underestimation of the real number of poor Filipinos.

Finally, Africa clarified that it is very deceitful to claim that TRAIN benefited 99% of taxpayers. The Duterte administration wants to make it appear that 99% of Filipinos benefited from TRAIN but the truth is that only 5.5 million personal income taxpayers with tax cuts out of 23 million Filipino families gain from TRAIN. The poorest 17.2 million or eight out of 10 Filipino families will pay TRAIN’s higher consumption taxes but without any personal income tax gains to offset these. The government is trying to distract the public from how a disproportionate part of TRAIN revenues come from the poorest majority of Filipinos due to additional levies on consumption goods including petroleum products and sugar-sweetened beverages, said Africa.

IBON warned the public to be more discerning about the government claims and not to take these at face value. Yet the country can only start to take steps to real solutions when there is more candor and honesty, rather than self-serving propaganda, about the real problems the economy and the people face. #