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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. #

Sin taxes, UHC to fund privatization of health services–IBON

Research group IBON said that government must allot a higher budget for public health services rather than fund private health providers through the Universal Health Care (UHC) Act.

Also known as Republic Act (RA) 11223, the UHC Act ostensibly aims to provide all Filipinos with promotive, preventive, curative, rehabilitative, and palliative health services “without causing financial hardship”, and prioritizes Filipinos who cannot afford such services.

The UHC would need Php257 billion in its first year of implementation.

The sin tax reform law on the other hand is allegedly intended to augment the funding gap of around Php62 billion in the first year alone.

But IBON observed that the UHC would use government funds to create supplementary coverage by private health care providers such as private health insurance and Health Maintenance Organizations (HMOs) as well as provide network-based licensing, contracting, and accreditation of health facilities.

This further privatizes health services, the group said.

The UHC, IBON explained, stipulates that Filipinos would automatically be enrolled in PhilHealth or the National Health Insurance Program (NHIP) either as a direct contributor who would pay premiums or as an indirect contributor.

Moreover, the NHIP would have an increase in membership rate by 0.5% annually to fund the UHC.

The group observed that this is not as socialized as it appears to be, as high-income individuals would contribute the same percentage of their salary as low-income earners.

Also, IBON noted, to ensure that basic accommodation services are met, UHC states that government hospitals would operate not less than 90% of their bed capacity as basic accommodation, not less than 70% for specialty hospitals, and not less than 10% for private hospitals.

However, IBON observed that hospital beds in the country are not enough to begin with.

The World Health Organization (WHO) recommends 20 beds per 10,000 population.

The Philippines has never reached the recommended ratio, the group said, and this indicator even worsened from 14.4 beds per 10,000 population in 1990 to only 9.9 beds per population in 2014.

The number of government hospitals even fell from 732 in 2011 to 423 in 2015.

Moreover, said IBON, the UHC assures that a National Health Human Resource Master Plan would be formulated to ensure the provision of health programs and services through a guaranteed permanent employment and competitive salary of all health professionals and health care workers.

Yet for every 10,000 population the country had only 0.3 government physician and 0.6 public health nurse in 2017.

Despite the scarcity of government health workers, data from the Philippine Overseas Employment Administration (POEA) show that the country has been exporting nurses for decades, which is worsening the brain drain of the health sector, observed IBON.

The Philippines deployed 19,551 nurses in 2016 or 53 nurses per day.

IBON emphasized that the UHC is the continuation of the privatization and commercialization of health services of previous administrations, from the Health Sector Reform Agenda of the Estrada administration, Fourmula One for Health of the Arroyo administration, and Aquino’s own UHC agenda.

These programs advance less government and more private role in healthcare, making provision of health services less direct and more insurance-driven thus prioritizing private profits over public health, said IBON

2019 midterm elections results: Harsher policies ahead

Administration-backed bets dominated the 2019 midterm elections especially in the Senate. The Duterte administration will certainly fast track its priority neoliberal policies as soon as the 18th Congress opens. It already used its super-majority in the 17th Congress to pass socioeconomic measures aggravating the country’s jobs crisis, poverty, and underdevelopment. More and harsher ones loom with many elected officials unlikely to favor any policy reversals from neoliberalism.

Questionable results

The electoral success of administration-backed candidates and party-list groups was controversial. The 2019 midterm elections were marred by massive vote-buying, widespread breakdown of voting machines, and suspicious delays in the transmission of results. The Duterte administration also visibly used public resources not just to support its preferred candidates but also to sabotage the campaigns of its opposition. Progressive candidates, party-list groups, and their supporters were subjected to particularly virulent attack.

Duterte-endorsed Hugpong ng Pagbabago (Faction for Change) candidates took nine of 12 senatorial slots: Cynthia Villar, richest senator and wife of the country’s richest oligarch; Taguig representative Pia Cayetano; reelectionist senator Sonny Angara, son of the late senator Ed Angara; reelectionist and former senate president Koko Pimentel, son of former senator Aquilino Pimentel; Special Assistant to the President Christopher “Bong” Go; former chief of police Ronald “Bato” dela Rosa; Imee Marcos, eldest daughter of ousted dictator Ferdinand Marcos; jailed plunderer former senator Ramon “Bong” Revilla; and former Metro Manila Development Authority (MMDA) chief and presidential political adviser Francis Tolentino.

Many winning party-list groups are either linked with or outrightly backed by the administration: the Sara Duterte-backed Anti-Crime and Terrorism Community Involvement and Support (ACT-CIS) party-list; Duterte ally Gloria Arroyo-backed AKO Bicol Political Party (AKB); richest multi-billionaire congressman Michael Romero’s One Patriotic Coalition of Marginalized Nationals (1 PACMAN); Ilocos Norte warlord Rudy Farinas’ Probinsyano Ako; and Duterte-endorsed Marino, whose nominees are Davao-based businessmen. Election watchdog Kontra Daya described these groups as ”dubious and making a mockery of the party-list system”.

Meanwhile, the Makabayan bloc of progressive party-list groups defied systematic state-sponsored attacks and vilification to take six seats in the 18th Congress, only one less than it got in the last elections. Bayan Muna (BM) obtained over 1.1 million votes to get three seats for the first time since 2007. Gabriela Women’s Party (GWP), ACT Teachers Party, and Kabataan Party-list all won one seat each. The last member of the bloc, Anakpawis, whose farmer- and worker-dominated machinery suffered violent attacks and killings however failed to retain its seat in the House of Representatives (HOR).

The systematic state-sponsored attacks on progressive candidates and groups to prevent them from being elected into government exposes the flawed democracy of Philippine elections. Military, police and local government officials vilified Leftist candidates, sabotaged their campaigns and political alliances, and attacked their party-list machinery. This is another manifestation of government’s intolerance of activists advocating for genuine change and raising public awareness on issues and proposing genuine solutions.

Looming sell-out and repression

The overwhelming number of winning candidates are from the same political parties, political families and elite interests behind the system of anti-people and anti-development laws in the country. They are likely to reprise or keep on with more of the same to the further detriment of the economy.

Among the exclusionary measures passed by the 17th Congress under the Duterte administration is the Tax Reform for Acceleration and Inclusion (TRAIN) law, which lowered personal income, estate, and donor taxes on the rich while burdening the poorest majority with higher consumption taxes. Another measure is the Rice Tariffication Law which liberalized rice trade, making the country over-reliant on a narrow global market for its staple food, amid still merely token production support for millions of rice farmers. There is also the extension of Martial Law in Mindanao, despite the Commission on Human Rights (CHR) already noting rampant human rights violations in the region.

Senate president Vicente Sotto III said that the Senate will take up amendments to the Public Services Act (PSA) and the Human Security Act (HSA) in the closing days of the 17th Congress until June. The amendments to the PSA open critical public utilities such as power, telecommunications, and transportation to excessive foreign ownership and control. This compromises national security and civil defense, on top of making vital public services expensive and inaccessible especially for lower income families.

Amendments to the HSA meanwhile threaten to further restrict civil liberties and human rights. As it is, the Duterte administration is already coming down hard on supposed drug personalities and alleged ‘terrorists’ and supporters in gross disregard of due process and the law. Critics fear that HSA amendments will only give the government freer hand to crack down on the political opposition and other perceived threats to its rule.

The electoral results will also likely embolden the Duterte administration to push for Charter change (Cha-cha) serving its narrow political agenda. Amendments to the 1987 Philippine Constitution focusing on federalism and full economic liberalization remains priority legislation for the Duterte government.

From the time of Fidel Ramos to the current administration, various efforts for Cha-cha were consistent in seeking to lift restrictions on foreign exploitation of natural resources and on foreign ownership of land, public utilities, education institutions, and mass media and advertising . The rationale is that attracting foreign investments will supposedly be the key for economic development.

The same rationale is behind other bills considered important by Malacañang pending in Senate committees, such as the National Land Use Plan, supposed contractualization ban, and the Tax Reform for Attracting Better and Higher Quality Opportunities (TRABAHO). Aside from pushing PSA amendments, the National Economic and Development Authority (NEDA) reportedly also plans to recommend the following to the Legislative-Executive Development Advisory Council (LEDAC): sugar industry liberalization, creating a Department of Water, and exempting government’s line-itemized projects from the election ban.

All these seek to make it easier to do business and profit from public utilities, land and natural resources, and building infrastructure. The TRABAHO bill is also a misnomer because its real focus on lowering corporate taxes and rationalizing incentives may, if anything, actually even squeeze employment and workers’ salaries. Even the supposed law ending contractualization may end up being a smoke-screen that creates the conditions for legitimizing contractual arrangements rather than ending this.

Instead of bringing development, Cha-cha and the rest of the Duterte administration’s priority bills are likely to worsen the effects of the business-biased, neoliberal policies of the past decades. The economy today is characterized by shrinking agriculture and Filipino manufacturing, dismal jobs generation, and chronic poverty. This cannot be cured by further opening up to foreign capital and without the state more actively intervening in the economy for strategic industrial development, redistributing income and wealth, and providing needed social services.

Keeping watch

The executive, legislative, and judicial branches of government are overpopulated by administration allies or otherwise intimidated into passivity. The manufactured results of the midterm polls strengthens the hand of the Duterte administration and its elite supporters to implement self-serving economic and political measures at the expense of the Filipino public.

More than ever, the country’s patrimony and sovereignty and the people’s rights and welfare are at stake.

Also more than ever, the steadfast resistance of organized basic sectors is critical. The decades-strong social movement is the most reliable bulwark against the distortion of the economy to serve narrow elite interests. The progressives in Congress and their allies in government, down to the local level, can help push an alternative economic agenda. Domestic agriculture and Filipino industry can be developed, the environment protected, people’s welfare upheld, and economic independence attained. – With report from Casey Salamanca

WANTED: An Independent Senate

By Jose Lorenzo Lim

Midterm elections have always been crucial for any incumbent, as results will either affirm or reject the programs and policies so far of the ruling party. The 2019 midterm elections, however, appears to be different, as it happens at the heels of the Duterte administration’s implementation of harshest neoliberal economic policies and undermining democracy. The Duterte presidency has seemingly consolidated the Executive, Lower House and even the Judiciary under its influence, and the Senate could be the last stronghold of democratic processes.

After weeks of campaigning, the 2019 midterm elections is near. Candidates vying for senatorial posts have traveled around the country seeking to convince Filipinos to vote for them. It remains to be seen whether or not we will have a truly independent senate after the May 2019 elections.

Quick voters scan

Looking at data from the Commission on Elections (COMELEC) shows that there are 61,843,750 voters in the Philippines with an additional 1,822,173 registered overseas voters for the 2019 midterm elections.

A breakdown of the voters shows that Region IV-A has the highest number of voters with 14%, followed by Region III with 11%, and the National Capital Region (NCR) with 11.4 percent. The Cordillera Administrative Region (CAR) has the lowest number of voters with only 1.6% share of the total number of voters. The poorest regions also have a low number of voters. Both Region IX and the Autonomous Region in Muslim Mindanao (ARMM) only have 3.5% of the total number of voters.

For overseas voters, the Middle East and African regions have the highest number of voters with 48.7%, while the European region has the lowest share of voters with only 10.2 percent. 

While the huge number of voters does not automatically translate into voter turnout, in 2016 the country had an 84% voter turnout compared to 2013 with 77.3% and 2010 with 74.9 percent. Unsurprisingly, a high voter turnout can also be an indicator of dubious activities like flying voters.

Finding the right candidate

Instead of dancing around and telling rehearsed jokes repeatedly, what does IBON think candidates should stand for to deserve the Filipinos’ vote in the upcoming elections?

First, candidates should adhere to the advancement of socioeconomic strategies. Filipino industries should be protected and supported instead of allowing foreign companies to dominate the Philippine economy. An example is protecting and promoting the agriculture sector through production and price supports instead of flooding the market with imported agricultural goods, as is the rationale behind the Rice Tariffication Law, to lower inflation.

Candidates interested in genuinely effecting long-term reforms for the country’s production sectors should support genuine agrarian reform. The failure of the Comprehensive Agrarian Reform Program (CARP) to redistribute land to the tillers has only intensified landgrabbing and land use conversions for land market speculation. Department of Agrarian Reform (DAR) records show that as of January 2019, there were still 549,920 hectares that need to be acquired and distributed. From 1988 to 2016, meanwhile, 98,939 hectares of land were approved for conversion while 120,381 hectares were approved for exemption from land reform coverage–but this is a conservative count as the real extent of land conversion may be underreported. After CARP, majority of so-called agrarian reform beneficiaries still do not own the land awarded to them or are in the process of being dispossessed because they are failing to amortize.

Third, candidates should be upholding people’s rights and welfare. Candidates should be firm in ending contractualization. It is still very much in place: Employment data shows that in 2018, 8.5 million workers of private companies and 985,000 workers in government agencies are still non-regular workers.

Additionally, legislating a national minimum wage of Php750 should also be a major agenda. Raising the average daily basic pay (ADBP) of Php401 nationwide to Php750 will in turn add Php7,649 to employees’ monthly income and Php99,432 to their annual income (including 13thmonth pay). This will cost the 35,835 establishments nationwide just Php465 billion or only 21.5% out of their Php2.16 trillion in profits.

Moreover, Republic Act (RA) 10963 or the Tax Reform for Acceleration and Inclusion (TRAIN) law should be repealed instead of taking out taxes especially from petroleum products which are socially sensitive. TRAIN means less money in the pockets of 8 out of 10 Filipinos as only 5.5 million Filipino families benefit from lower personal income taxes (PIT) while the remaining 17.2 million poorest households do not benefit from PIT but all pay higher consumer taxes.

Candidates should also ensure that basic social services will be accessible to every Filipino. That is why there is a need to build more public schools and public hospitals aside from allotting higher budgets to education and health. But 2019 budget for the Department of Health (DOH) for instance was cut by 8.13% compared to last year.

Lastly, candidates should promote environmental sustainability. For example, a candidate should be firm to stop destructive large-scale mining, as this causes irreparable damage not only to the country’s natural resources but to many indigenous communities. Another part of this is encouraging rational consumption. Our resources are finite – what we produce and consume must only be within our needs. Candidates should also promote an environment-friendly agriculture and industry.

The public has heard the candidates’ stances on various pertinent issues such as the TRAIN Law, Rice Tarrification Law, contractualization, and jobless growth. Now the candidates should bear in mind that whatever promises they made during the campaign period would be remembered by the people, who will hold them accountable when they take their posts this June 2019.

The last stand

The new senate should carry out the task of defending the current constitution against the Duterte administration’s push for federalism, neoliberalism, and self-serving political goals. The most consistent is the intent to fully liberalize the Philippine economy for foreign investors.

Relatedly, pending proposed amendments to the Human Security Act (HSA) aim to prevent critics, thereby putting basic human rights and civil liberties in peril. The HSA could expedite terrorist tagging and linking and subsequent surveillance, arrests, and restricting of legitimate people’s movements. The new senate should stand against this creeping authoritarianism.

The Philippine Senate could be the last democratic institution for the government’s checks and balances, independent of and not beholden to the power ambitions of the presidency and expected to side with the people and defend whatever remains of Philippine democracy, people’s rights and welfare, and the country’s sovereignty.

With all these considered, the 2019 midterm elections could be one of the Filipinos’ last stands for freedom and democracy. Depending on how their favorite candidates have explained these to them, they can now vote wisely. #

Gov’t designed Kaliwa loan to favor China

The Kaliwa Dam loan agreement is designed to unduly favor Chinese interests over that of the Philippines.

IBON Foundation raised this concern in the wake of the release, upon public pressure, of this and other loan agreements.

Metro Manila private water concessionaire Manila Water Company, Inc. and the Metropolitan Waterworks and Sewerage Systems (MWSS) have long insisted on building the Kaliwa Dam and on a Chinese loan for this.

The Department of Finance (DOF) seized on the recent disruption of water services, which IBON estimates to have affected at least 6.1 million Filipinos or 80% of the total 7.1 million population covered by the Manila Water service area, to further justify the project and the loan.

IBON executive director Sonny Africa however warned that the Kaliwa loan agreement signed last year during the visit of Chinese president Xi Jinping is unduly biased for China and against the Philippines.

“Countries give official development aid (ODA) not out of charity but always to advance their foreign policy and self-interest,” Africa said.

“The Chinese loans negotiated by the Duterte administration are suspiciously disadvantageous for the Philippines,” he added.

IBON said that the practice of tied aid where loans are spent on the creditor country’s goods and services is unfortunately the norm in bilateral ODA.

In the Kaliwa loan deal, for instance, the proceeds will pay for Chinese contractors and controversially even Chinese workers. China has a record of charging relatively high interest rates and for instance charges the highest nominal interest rates among all of the Philippines’ bilateral donors.

The group however pointed out that the Kaliwa loan deal goes far beyond these and creates conditions for a debt trap.

This starts with the agreement’s Article 7 which makes it too easy for China to declare that the loan is in default and to subsequently declare “all the principal of and accrued interest… immediately due and payable”.

The loan for instance can apparently consider the Philippines in default if payment is more than thirty (30) days overdue, if the Philippines defaults even on other loans not in any way connected to the Kaliwa loan or project, or if “in the opinion of the Lender [there is] a material deterioration of the financial conditions of the Borrower”.

There are no such provisions in the other Japan and Korean loans that the DOF recently released.

Moreover, IBON said, the loan is explicitly governed by and construed in accordance with the laws of China (Article 8.4) and any disputes will be settled in the Hong Kong International Arbitration Centre (Article 8.5).

The arbitration rules of the HKIAC are however biased for China such as in the choice of arbiters and especially if Chinese law is made the agreement’s governing law.

IBON said the country is being set up to potentially give up natural and strategic resources.

In the agreement’s Article 8.1, the country “waives any immunity on the grounds of sovereignty or otherwise for itself or its property in connection with any arbitration proceeding” on assets within the territory of the Philippines unless prohibited by law.

IBON stressed that this provision is dangerous especially given the current administration’s predisposition to wield the law haphazardly for narrow ends.

“China rationally seeks to advance its self-interest as much as possible,” Africa said, “but it is suspicious that the Philippine government is giving so much to China and so badly failing to protect the country’s interest.”

He also pointed out: “China is not just any lender and is aggressive in asserting its global agenda even at the expense of human rights, environmental protection, and feeding corruption in debtor governments.”

The Kaliwa Dam project does not even yet have an updated feasibility study, environmental clearance, or the free, prior and informed consent (FPIC) of the communities.

IBON pointed out that the Duterte administration is seeking as much as US$14.4 billion for 23 infrastructure projects under its Build, Build, Build program.

“China has already been implicated in a few controversial debts gone bad where governments were pressured to give up control over strategic assets like ports,” Africa said.

“As it is, China’s actions in the mineral- and marine- rich West Philippine Sea islands and destruction of the rich marine biodiversity with reclamation activities shows that it is unconcerned about Philippine sovereignty and our interests,” he added.

Africa said: “The Duterte administration made a big show of supposedly independent foreign policy at the start of its term — it can start now by taking bold measures to modify or terminate these disadvantageous agreements.” #

Govt should be transparent, release 9 signed foreign loan agreements — IBON

Research group IBON said the Duterte administration should immediately release to the public all nine foreign loan agreements it has already signed for infrastructure projects, especially for the upcoming Kaliwa Dam project with China.

The group raised concerns of government’s transparency since it has denied IBON’s previous requests for copies of the loan agreements.  

The government has an obligation to disclose these contracts as a matter of public interest and protecting the country’s sovereignty, the group said.

The nine foreign loan agreements signed by the government include the Chico River Pump Irrigation and New Centennial Water Source-Kaliwa Dam with China; Pasig-Marikina River Channel Improvement, Cavite Industrial Area Flood Management, Metro Manila Subway, and North-South Railway with Japan; Panguil Bay Bridge; and the new Cebu International Container Port with Korea.

IBON research head Rosario Bella Guzman said that there is lack of transparency of government offices to disclose loan agreements signed by the government. 

IBON wrote a letter to the Department of Finance (DOF) in June 2018 requesting copies of the loan agreement for the Chico River Pump Irrigation Project.

The DOF responded that the contract has a confidentiality clause and that the agency is not allowed to disclose details of the contract to any third party.

Loan agreements should be disclosed since the projects are public infrastructure which are supposed to be serving public interest, said Guzman.

The Chico River Pump Irrigation Project, with the provisions that could be disadvantageous to the country, may become the gold standard of other loan agreements, Guzman added.

Guzman said that the contracts for other Chinese loans such as the one for the New Centennial Water Source-Kaliwa Dam Project would follow the template of onerous provisions found in the Chico River Pump Irrigation Project.

The loan agreement for the Kaliwa Dam which was signed in November 2018 is yet to be made public and IBON has yet to receive a copy of the loan agreement it requested from concerned offices.

Guzman added that the Php12.2-billion Kaliwa Dam will be 85 percent funded by China official development assistance (ODA), in other words, debt that will be paid for by the public in the future.

“China loans are one-sided and impose onerous conditions, which could result in the Philippines virtually giving up its sovereignty,” said Guzman.

IBON previously raised questions on the Chico River Pump Irrigation loan agreement being governed by China laws, and that any arbitration or suit shall be heard at the China International Economic and Trade Arbitration Court (CIETAC).

“Natural resources, including water, are the subject of these loan agreements, which makes it more problematic if conditions are lopsided in favor of foreign governments, creditors and investors,” Guzman added.

Instead of prioritizing the attraction of one-sided foreign investments and loans for its infrastructure program, the government should put national interest and public welfare first over local and foreign big business interests.

Government can start by subjecting the loan agreements it is signing to public scrutiny and declining those that are not mutually beneficial and do not contribute to the country’s domestic economic development, IBON concluded. #

Second year of slowing growth a wake-up call – IBON

Research group IBON said that the second year of slowing growth under the Duterte administration should be enough to jolt it out of its complacency and denial. The downturn in the last two years and the poor prospects in the year to come should be a wake-up call to start to undertake the difficult but necessary reforms for genuinely inclusive growth and national development.

The Philippine Statistics Authority (PSA) reported a 6.2 percent annual growth in the country’s gross domestic product (GDP) for 2018, lower than government’s revised growth target of 6.5-6.9 percent for the year.

Government cited slowing agriculture and high inflation as among the main factors pulling back growth, while the main drivers were growth in construction, and trade and repair of motor vehicles, motorcycles, personal and household goods.

“Growth is slowing most of all because of the economy’s unsound fundamentals in backward agriculture and shallow industry,” said Sonny Africa, IBON executive director.

The agriculture sector registered just 0.8 percent growth in 2018 from 4 percent in 2017.

This is the sector’s worst performance since its contraction in 2016.

Yet, Africa said, the administration seems to have little interest in reversing this trend.

For example, the Php49.3 billion agriculture department budget for 2019 proposed by Congress is Php1.4 billion less than the Php50.7 billion in 2018 (in equivalent cash-based terms).

Africa also noted that manufacturing growth slowed to 4.9 percent in 2018 from 8.4 percent the year before, which is the slowest since the 4.7 percent growth in 2011.

He said that this is due to weaker demand in domestic consumption and weaker exports amid the global economic slowdown. Manufacturing also remains shallow in being low value-added, foreign-dominated, and dependent on foreign capital and technology.

Africa pointed out that recent rapid growth has instead relied on external short-term factors that are fading. Yet remittances are slowing, exports are falling, and interest rates are rising. The real estate and consumer spending booms are also petering out.

Growth in overseas remittances slowed from 5.0 percent in 2016 to 4.3 percent in 2017 to just 3.1 percent in the first 10 months of 2018, said Africa.

Exports growth increased from 11.6 percent in 2016 to 19.5 percent in 2017, but then fell to 11.5 percent in 2018.

Meanwhile, the benchmark overnight reverse repurchase (RRP) rate rose steeply from 3.0 percent in 2017 to 4.8 percent by end-2018, reversing the decade-long general decline in interest rates.

Africa also said that household consumption spending markedly slowed from 7.1 percent growth in 2016 and 5.9 percent in 2017 to just 5.6 percent in 2018.

The real estate boom is also tapering with 2016 growth of 8.9 percent in real estate, renting and business activities declining to 7.4 perent in 2017 and falling further to just 4.8 percent in 2018.

“Rising government spending and its infrastructure offensive haven’t been enough to offset the reliance on waning external factors,” said Africa. “The administration’s efforts to stimulate growth to its 7-8 percent target with even more spending, are not going to be enough amid high disguised unemployment, low incomes, and the global slowdown this year.”

Global GDP growth is estimated to slow from 3.1 percent in 2018 to 3.0 percent this year.

“The Duterte administration needs to stop downplaying slowing growth and hyping that this as still among the fastest in the region and the world because the growth is becoming more jobless than ever,” Africa said.”

The number of employed only increased by 162,000 from 41 million in 2016 to 41.2 million in 2018, according to data from the Philippine Statistics Authority (PSA).

Average annual job creation was then only 81,000 in the period 2017-2018, which is the lowest level of job creation among post-Marcos administrations.

Africa said that government continues to ignore telltale signs of an economic downturn and deceive Filipinos with its rosy picture of the economy.

He said that the sooner the administration admits the failure of its neoliberal policies, the sooner measures that will spur domestic industries and benefit the Filipino people can be implemented. #

2018 inflation highest in 10 years amid slowing growth — IBON

Inflation for 2018 is more than double the Duterte administration’s original inflation target for the year and the highest in a decade, research group IBON said.

Along with slowing economic growth, this further points to the failure of government’s economic managers to rein in consumer prices and of its neoliberal policies, such as the Tax Reform for Acceleration and Inclusion (TRAIN), which continue to burden the poorest Filipino families, said the group.

The reported annual average inflation rate rose to 5.2 percent in 2018 from 2.9 percent in 2017 and 1.6 percent in 2016.

IBON noted that this is much higher than the government’s original annual inflation projection of two to four percent for 2018 and the highest since the 8.2 percent rate in 2008.

Aside from missing its inflation target, the government is also facing an economic slowdown.

The economic growth target for 2018 has already been adjusted downwards from 7-8 percent to 6.5-6.9 percent.

The gross domestic product growth rate already slowed to 6.3 percent in the first three quarters of 2018 from 6.7 percent in 2017 and 6.9 percent in 2016.

Inflation eased last December to 5.1 percent but the poorest half of the population still saw their real income erode by anywhere from Php3,300 to Php7,300 from the high inflation throughout 2018.

Rising prices always spell more difficulty for the poor especially amid low or even stagnant incomes, IBON said.

The Duterte administration should also not be too quick to take credit for the lower year-end inflation, IBON added.

The biggest factor easing inflation is not anything the government has done but rather falling global oil prices from increased supply amid a global economic downturn.

On the contrary, the Duterte administration’s insistence on TRAIN’s second tranche of fuel excise taxes adds inflationary pressure, the group said.

The economic managers will fallaciously claim that relatively slower inflation in the first few months of 2019 proves that TRAIN and the additional fuel excise taxes are not inflationary, IBON said.

Such dismissiveness of how TRAIN makes consumer goods and services more expensive however only affirms the government’s insensitivity to the plight of the Filipino people, especially the poor.

IBON said that poor Filipino families worst affected by last year’s high prices will continue to carry the burden of these into the new year if government does not take genuine measures to curb inflation and arrest a faltering economy.

The government can start with repealing TRAIN and implementing a progressive tax system. #