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The anomaly of transport modernization (Part II)

by Rosario Guzman

Read the first part here:

Government’s misplaced scheme

In many instances, the solution to the complex transport problems of Metro Manila lies in the physics of the problem, in the same way that dealing with COVID-19 requires medical science. But the Duterte administration has simply picked up its pre-COVID proposal of “jeepney modernization” and used the pandemic to justify finally pushing for it, amid protestations by jeepney drivers and the adverse impact on millions of commuters.

The government is a signatory to the Bangkok Declaration on Sustainable Transport Goals (Bangkok 2020) on “environmentally-sustainable” transport policy. This is also in relation to the ADB’s Sustainable Transport Initiative that is ultimately premised on the continuation of “free market” and “inclusive” economic growth. The Duterte government’s accomplishment in fulfilling Bangkok 2020 rests on the jeepney modernization program. Ultimately, this is important for the Duterte administration to attract transport infrastructure investments as well as to push for the sale of brand new, imported, so-called environment-friendly, and modern jeepneys.

Through the Omnibus Franchising Guidelines (OFG) that the DOTr issued on 19 June 2017, the government is requiring the make of the body and engine of the traditional jeepney to be compliant with the requirements set by the Land Transportation Franchising and Regulatory Board (LTFRB). These requirements definitely prioritize electric jeepneys (e-jeep), while pushing away the traditional jeepneys which need to go through numerous hurdles to get licensed to operate. These hurdles include: upgrading combustion engines to comply with Euro IV and similar emissions standards; complying with the LTFRB-set age-limit of oldest vehicle part; refurbishing and rebuilding that should pass the type approval system test; and still finally going through the Land Transportation Office (LTO) for a roadworthiness test to get registration renewal.

Concerned automotive engineers, scientists and mechanics contest the need to phase out traditional jeepneys and argue that the government should support locally manufactured environmental solutions. They also question the availability of the parts of the imported modern jeepneys in case of repairs, unlike with the traditional jeepneys that can be replaced easily. They also claim that the body engineering of the modern jeepneys is not suited to Metro Manila’s narrow roads and more prone to accidents. Environmentalists have also criticized the government’s going electric or Euro IV as hypocritical when its own energy program is reliant on coal and other fossil fuels.

But the OFG just keeps on narrowing the chances for traditional jeepneys to survive. The OFG also requires a fleet size of 15 units for any type of PUV for six months for new routes, which prevents small operators from applying for new franchises. Actually, even medium-scale operators – if they exist – are constrained and marginalized under the modernization program. The modern jeepney costs about Php1.6 million to as high as Php2.5 million, which means that an operator needs at least Php24 million to get a franchise.

The DOTr has stated that the government is not phasing out jeepneys but simply modernizing. However, the government plays with words. The jeepney modernization program will ultimately kill the livelihoods of thousands of jeepney drivers and complete the corporate capture of the ‘last-mile’ resort of millions of Filipino commuters.

Still pushing for Build, Build, Build and foreign ownership

The Duterte administration is also not compromising its Build, Build, Build (BBB) infrastructure projects, despite their questionable viability even before COVID-19 struck and their diminishing relevance now. Of the 100 infrastructure flagship projects (IFPs) worth Php4.3 trillion, 73 are for transport and mobility. The government does not have plans to strengthen economic production so the projects will just end up reinforcing a service economy dependent on import-export trade, foreign investments and tourism. Much of the construction materials used are even imported rather than produced locally.

The transport sector is reflective of how the government has lost its capacity to govern and manage public services because of privatization. This raises questions therefore on government’s absorptive capacity for such a grand infrastructure program. Four years into the ambitious BBB, there are only two (2) completed and nine (9) ongoing projects to date. The Duterte administration has even increased the IFPs from 75 to 100 to make BBB “more feasible”. But it appears that only 38 projects will be finished by the end of its term.

The future of BBB in the time of COVID-19 is precarious. But like a beaten beast, the Duterte administration refuses to yield. The pandemic is posing serious challenges to the continuation of BBB, apart from the program’s innate weakness of simply being aimed at attracting foreign investments and momentarily stimulating a slowing economy.

The most obvious challenge for the construction industry is physical distancing because  masses of workers need to gather to finish a project. The IATF suspended construction at the start of the lockdown but later allowed it, while passing on to the construction companies the responsibility of ensuring that workers comply with health protocols.

The next challenge is how travel restrictions and physical distancing will certainly dampen transport, travel and tourism businesses, and foreign trade and investment for a long time. These are the sectors that BBB wishes to be relevant for – but they are less and less important for the economy’s survival in the time of COVID-19.

Another challenge is the commercial viability of the projects on which they are all premised. Instead of catering to genuine public service, the completed projects are designed to be run by private transport corporations who will collect user-fees for their profitability and sustainability. The most expensive BBB projects are mass commuter railways whose viability depends on expensive fares that will be beyond the reach of the majority of the poor and working people.

But the greatest challenge is how BBB’s socially inappropriate orientation can be shifted to support the proper health response to COVID-19. The pandemic has revealed how weak our health system is – lacking facilities and equipment, lacking health personnel, and even lacking the means to transport health personnel. Not a few health frontliners have had fatal road accidents biking to work due to lack of transport support from the government. There is not even a single health infrastructure facility in the IFP lineup. The administration has made pronouncements that it would reorient BBB to respond to the health crisis but has yet to release a new IFP list.

Meanwhile, one priority legislation of the administration is the amendment of the Public Services Act (PSA). On March 10, just before the lockdown, the House of Representatives passed on final reading House Bill (HB) 78 to amend the PSA. It is now at the Senate for deliberation and approval. These amendments include narrowly defining public utilities to bypass Constitutional restrictions on foreign ownership. Sectors considered public services, transportation included, can be opened up to complete foreign ownership. This further undermines public interest and national development. The PSA amendments will pave the way for the full foreign ownership of the mass transport system and government’s eventual surrender to private transport and transport infrastructure corporations.

The right direction

The Duterte government can address the transport crisis in the time of COVID-19 and in fact can look at the pandemic as an opportunity to overhaul the system. The health protocols may be followed indeed if only the government recognizes and addresses the transport crisis in a scientific manner.

There should be a first-step long-term modal shift from road to rail. The government can start by upgrading and adding rolling stock and rails to the train system. The corporations and officials of government agencies who forged lopsided privatization contracts should be held liable for poor service including breakdowns and accidents. The Philippines is among the first countries in Asia to have an urban rail system and has a long history of government running rail transport systems. These assets can be nationalized again and returned to public control. Rail transport can then be central to urban planning as well as to the dispersal of economic activities to the rural areas.

An efficient rail transport system, not to mention fully linked and accessible, will be the basis of an equally efficient route rationalization plan for PUBs and PUVs. The government should seriously conduct its own study to identify where the mass of commuters can have the most optimal travel time, including number of stops, from their workplaces to their homes. This should also include designation of walkways and bike lanes. It should not rely on self-interested privatization stakeholders to make such studies.

For a route rationalization plan to be truly systematic, PUBs and PUVs along with rail should be publicly run. Government can start by organizing PUBs and PUVs into cooperatives rather than allowing only single or corporate proprietorship of large fleets. It can also incentivize cooperatives to improve their service and compliance. Then, government can move on to careful consolidation of fleets through joint ventures and eventual nationalization. Such crucial steps will finally make PUB and PUV modes more economical and fares more affordable.

The DOTr is proposing to introduce service contract arrangements with private transport operators for the “new normal”. It also aims to shift from the “boundary system” to daily fixed wage for drivers and conductors so they can have steady incomes regardless of reduced ridership. This sounds acceptable, especially if we consider that transport groups have long been clamoring for government to abolish the “boundary system” to avoid competition-driven stresses, road hazards, and transport unpredictability.

However, the DOTr proposal remains outside the vision of living wages for transport workers, promoting their welfare and strengthening their unions, subsidizing commuters and controlling fares, and diminishing competition among the private contractors with stronger public control. In short, the current proposal should be within the framework of nationalization, lest it end up being another privatization contract.

The proposal is welcome if it is not being done in the context of the government’s jeepney modernization program. The Duterte administration cannot even give sufficient social amelioration to displaced drivers and conductors during a pandemic.

Moreover, government should once and for all restrain the explosive private car sales that defies all public mass transport logic. These just give the automotive corporations maximum returns on their businesses.

Finally, the pandemic gives us the vast opportunity to rethink sustainable development perspectives. The need for agrarian development and national industrialization cannot be overemphasized. But the government can start with arresting the anarchic building of offices especially for business process outsourcing and online gambling, shopping malls, hotels and leisure structures, residential and private subdivisions, and condominiums. Metro Manila’s urban development Is geared to increasing real estate profits and the wealth of the country’s economic oligarchs at the expense of public mobility and welfare.

Government can start by planning an economy that genuinely addresses severe inequalities existing pre-COVID-19 that, without corrective steps, will persist even far beyond. #

Ang sinapit ng mga drayber

“Dati, kami ang kinakawayan. Ngayon, kami ang kumakaway [para mamalimos].”–Joel Caligayan, tsuper ng jeep biyaheng Rosario-Cubao

Govt jeepney ban has already cost drivers Php78,000

by IBON Media & Communications

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

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

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

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

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

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

Jeepneys, however, will still remain prohibited.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Government employees oppose ‘mass layoff circular’ amid pandemic

By Joseph Cuevas

Government employees raised alarms over a new budget circular instructing agencies to realign their budget for Covid-19 programs, saying the new measure is anti-labor and anti-poor.  

In an online press conference Tuesday, June 9, the Confederation for Unity, Recognition and Advancement of Government Employees (COURAGE) said Department of Budget and Management (DBM) National Budget Circular (NBC) No. 580 would only result in mass layoffs and budget cuts to programs and services for the people.

The new DBM measure, dubbed the Adoption of Economy Measures in Government Due to the Emergency Health Situation, was issued last April 12.

It derives legal basis from Republic Act No. 11469 or the Bayanihan Act of 2020 that gave emergency powers to President Duterte to raise and realign  funds for government’s efforts against Covid-19.

Section 4.3 of the circular orders the discontinuance of hiring of job orders except those considered as frontliners during the ongoing state of public health emergency, COURAGE said.

The National Housing Authority (NHA) initially released a memorandum effecting the circular but, after a dialogue with union members, issued an addendum assuring that no workers would be affected.

COURAGE also said government agencies are realigning or have already realigned their work and financial plans to comply with the circular, sacrificing many social service programs and poverty alleviation plans.

Among such programs may include the Kapit-Bisig Laban sa Kahirapan (KALAHI) and Sustainable Livelihood Program (SLP) program of the Department of Social Welfare and Development (DSWD), COURAGE revealed.

COURAGE national president Santiago Dasmariñas Jr. said as many as 600,000 government employees all over the country, especially job-order and contractual employees, are worried.

Dasmariñas said COURAGE wrote DBM Secretary Wendel Angel Avisado last April 29 to express opposition to the circular, particularly DBM’s plans to reduce or remove funds for government employees’ wages.

“The COS, JO workers, and the like, need their wages now, more than ever, in this time of pandemic caused by the COVID-19. And it will be an injustice if the budget intended for their wages shall be SLASHED and cut which will result to their eventual termination from work,” COURAGE’s letter states. #

Official unemployment figures understate historic jobs crisis

by IBON Media & Communications

IBON said that the unemployment crisis is actually even worse than official figures show.

The group estimates that the real unemployment rate is likely around 22% and the real number of unemployed around 14 million.

The 20.4 million real unemployed and underemployed today is the worst crisis of mass unemployment in the country’s history.

The Philippine Statistics Authority (PSA) reported 7.3 million unemployed and 6.4 million underemployed in April 2020.

As it is, this is the worst government-recorded unemployment (7.3 million) and combined unemployment and underemployment (13.7 million) in the country’s history.

IBON pointed out, however, that the technical definition of unemployment does not count as much as 4.1 million Filipinos who did not formally enter the labor force because of the ECQ and another 2.6 million that the revised unemployment definition since April 2005 stopped counting.

The drastic drop in the labor force participation rate (LFPR) to 55.6% is most of all due to the ECQ, said the group.

The jobless Filipinos who did not enter the labor force will not be counted as unemployed because the technical definition of unemployed requires them to be in the labor force to begin with.

If the LFPR had stayed the same at 61.3% in April 2019, there would be an additional 4.1 million in the labor force.

The methodology for counting the unemployed was revised in April 2005. Since then, jobless Filipinos who did not look for work in the last six months or are unable to immediately take up work are no longer considered unemployed and removed from the labor force.

This lowered officially reported unemployed Filipinos and stopped comparability with data from previous years.

The revised unemployment definition tends to underestimate the magnitude of unemployment by 35% and the unemployment rate by 3.3 percentage points.

An initial correction for this would mean an additional 2.6 million jobless Filipinos who should be counted as unemployed according to the previous definition, said the group.

IBON said that it is important to see historical trends in the country’s unemployment situation to get an accurate picture of the long-term implications of economic policies. Having data that is comparable over time will give a much clearer indication of the structural economic changes the economy is undergoing which will enable better policymaking. #

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

Why make the poor pay for COVID-19 response?

By Sonny Africa

There’s more than enough money for all the COVID-19 response we need – the Duterte administration just has to take the side of the people and stop being so scared of the rich.

The Philippines is in the middle of its worst public health and economic crisis in decades, possibly even in its history. The social, economic and health measures needed to deal with this are undoubtedly expensive. But are they unaffordable?

Hangin

The government seems to think so. The president famously said that the government does not have enough money to respond – “hangin lang iyan,” he lamented.

The rest of the Inter-Agency Task Force for the Management of Emerging Infectious Diseases haven’t been as blunt but they’ve been acting that way. The social welfare department has, in effect, been rationing already stingy cash aid with unduly strict requirements. The health department isn’t testing, tracing, isolating and treating as much people as they should for want of resources.

The finance department is at the helm of the government’s economic team. It is voting with its feet – its Philippine Program for Recovery with Equity and Solidarity (PH-PROGRESO) and stimulus plans don’t give income support for tens of millions of cash-strapped families beyond the lockdown.

Unfortunately, strangely affirming the importance Karl Marx gives to the economic base of society, the economic managers are too decisive. The finance department is also in charge of revenue generation. If it says there isn’t any money, then the rest of government won’t have any money. Which explains where the president’s hangin comment came from.

But is there really no money to be had?

The plan

But before looking into that, a more basic question – how much does the government really need? Four months into the pandemic, it’s still not actually very clear. PH-PROGRESO is presumably the national government’s plan but this doesn’t include what must also be considerable efforts at the local government level.

The four-pillar PH-PROGRESO also has to be interpreted carefully because the finance department adds up actual spending, loans and guarantees, foregone revenue, financing, and additional liquidity to come up with an impressive looking grand total of Php1.74 trillion.

As it is, it looks like there’s only Php506 billion in actual spending. This includes Php321.6 billion in emergency support, Php133.7 billion in loan and credit guarantees, and Php50.7 billion for health measures.

The balance of Php1.24 trillion is actually composed of tax cuts and other foregone revenues (Php142.8 billion), liquidity released into the system by central bank measures (Php233 billion), and financing mostly from new debt (Php861.8 billion). Put another way, the government doesn’t actually need to raise funds for all these items accounting for 71% of the ‘grand’ total.

So where to get that Php506 billion that will actually be spent?

The Php861.8 billion in new financing of PH-PROGRESO – Php436.9 billion from official development assistance (ODA) and Php419.4 billion from government bonds – is presumably a source.

But the program also mentions up to Php673 billion freed up from existing budget items and so not really needing new financing or revenue sources. This is from the 2019 and 2020 national budgets, off-budget items from government-owned and controlled corporations and government financial institutions, and private sector contributions as well as from “financial sector, monetary policy, regulatory relief”. In his last weekly report to Congress, the president cited raising Php257 billion already from discontinued, abandoned, reprogrammed, reallocated and realigned items in the 2019 and 2020 budgets.

Looked at in this way, it appears that the government has come up with a reasonably prudent plan.

Poor pay for meager response

But appearances can be deceiving. There are two problems here.

The first is that the planned Php506 billion in actual spending falls far short of being a sufficient response. The COVID-19 response needs to be much more comprehensive and ambitious. The combined cost of the range of health measures, emergency relief, income support, and enterprise support needed is likely more in the order of Php1.5-2 trillion.

Clearly, the perceived lack of funds is a major binding constraint to the broader response that is really needed and, indeed, even just a larger COVID-19 response than at present. This self-imposed limitation gravely undermines the public health response, risks undue infections and deaths, and will mean socioeconomic difficulties on a massive scale.

Which leads to the second problem. Meager as the response is, the poor are paying for it more than they should – through debt and higher taxes – while the rich are paying much less than they can.

Most of the Php861.8 billion in financing of PH-PROGRESO is actually new and additional debt that will be paid for from taxes. Only a tiny Php404 million of this financing are grants and the rest are ODA loans and government bonds. The government has already been reported as seeking US$5.7 billion in foreign loans for its COVID-19 response. To date, the finance department reports US$4.9 billion in COVID-related foreign debt.

The taxes to pay for this debt are disproportionately borne by the poor with their low incomes. Especially after the Tax Reform for Acceleration and Inclusion (TRAIN) Package 1 of 2017, the country’s tax system is more regressive and consumption tax-oriented than it has ever been.

The self-imposed debt trap even to so-called development agencies and friendly governments is glaring. The Duterte administration is programmed to pay US$1.7 billion in debt service to multilateral and bilateral agencies – especially the World Bank and Asian Development Bank – this year. These are also the very agencies it has borrowed an additional US$2.5 billion from to respond to COVID-19.

Taxing consumption

The government is also quick to tax consumption including of the poor. Consumption taxes are inherently regressive in being paid the same by everyone regardless of how poor or rich they are – as opposed to direct taxation of income and wealth which is more progressive.

The administration has already hiked tariffs on imported oil products by 10% to raise funds for dealing with the pandemic. The planning agency, headed by a former finance department official, is already proposing higher consumption taxes that will add to the burden of poor and middle class families.

This includes a digital economy value-added tax proposal which adds a Php50 billion tax burden on online consumers over 2021-2023, higher taxes on sweetened drinks and junk food adding a Php22.7 billion burden, and a higher Motor Vehicle Road Users’ Tax adding a Php40 billion burden.

Increasing taxes on low-income families amid a recession would be perplexing if the insensitivity of the Duterte administration and its economic managers when it comes to taxes were not already well-established. They are only being hugely opportunistic in exploiting the COVID-19 crisis to push their long-standing TRAIN agenda of raising consumption taxes on poor and low-income groups while reducing taxes on the rich.

It’s all a bizarre repeat of TRAIN where the poor are made to pay more so the rich can pay less. This time around, amid the COVID-19 crisis, the rich will benefit from the biggest corporate tax break in Philippine history.

TRAIN Package 2, comically renamed Tax Reform for Attracting Better and High-Quality Opportunities (TRABAHO) bill, soberly renamed the Corporate Income Tax and Incentives Reform Act (CITIRA), and now opportunistically renamed the Corporate Recovery and Tax Incentives for Enterprises Act (CREATE), is being primed for rapid legislative passage. The Duterte administration is giving up Php667 billion in potential COVID-19 response funds to boost corporate profits.

Tax the rich

So where can funds for the comprehensive COVID-19 response needed come from? From the very same sources that funding for national development should come from – the accumulated wealth and income of the rich.

The pandemic has seen the ideas of solidarity, unity and compassion raised repeatedly. Beyond spontaneous acts of charity, paying higher taxes is putting money where your mouth is.

In our population of 108 million, an estimated 596 Filipinos each have wealth of some Php2.5 billion pesos or more. This includes the 50 richest Filipinos whose combined wealth of around Php4.1 trillion is, by IBON’s estimates, more than what the poorest 71 million Filipinos own combined.

There’s no reasonable argument that taxing their wealth above Php1 billion will adversely affect their well-being and welfare. A wealth tax of 1% on wealth above Php1 billion, another 2% above Php2 billion, and another 3% above Php3 billion will raise Php236.7 billion annually from these 50 richest alone. They are not going to be spending this anyway versus the huge social, economic and health returns from using this for COVID-19 response.

Other tax measures can also be considered. A two-tiered corporate income tax scheme with higher taxes on large firms and lower taxes on micro, small and medium enterprises can be designed to generate about Php70 billion annually. Similarly, a personal income tax scheme with higher taxes on just the richest 2.5% of Filipino families can raise about Php127 billion annually.

These are illustrative figures for now but the Duterte administration can come up with more precise figures if it was so inclined. There are technical challenges but these are not insurmountable and no reason not to try.

A wealth tax, higher taxes on large corporations, and higher taxes on the richest Filipinos are the most rational sources of revenues for COVID-19 response and development.

Does Congress have the political will for these? Sadly, our senators and representatives, looking to the 2022 elections already, are the biggest political won’t. #

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

To give or not to give SAP tranche 2

by Xandra Liza C. Bisenio

How many mothers have been forced to leave their little ones at home, walk far, and stand in long lines for ayuda only to go home empty-handed? How many senior citizens and persons with disability (PWD), despite their frailty and limits, still tried to get support but in vain?

What can government say to people asking: “Paano na kami, ano nang kakainin namin sa sunod? Kung ano-ano nang ginagawa sa itlog – nilalaga, sinisigang, inaadobo.”, or “Itinutulog na lang ng mga anak ko ang agahan at tanghalian, kasi pang-isang kain na lang ang meron kami.” There are countless, grimmer accounts of such despair.

As of May 16, exactly two months after Luzon and some parts of the country were put under a lockdown to contain COVID-19, the official count of beneficiaries that have not received the first tranche of social amelioration was still quite a number – 811,193 families or some 4 million people. Even if everyone gets served eventually, the point is that millions of Filipinos were made to wait that long for the much-needed aid to come. Yet the Duterte administration dilly-dallies about distributing the second tranche of the social amelioration program (SAP), as if it is an option to give or not to give.

Those who are in modified enhanced community quarantine (MECQ) areas unarguably need continued support from government. The lockdown has caused two months of difficulty in terms of jobs, livelihood and incomes.

But the over 13 million families who now fall in the category of general community quarantine (GCQ) also still need continued support. They were also under lockdown for six to eight weeks and, at best, only got a small amount of support under the first tranche. Moreover, data as of the exact second month of the lockdown showed that there were even 659,850 households in GCQ areas who have actually not yet received their first tranche. This included 189,467 households in the new GCQ areas.

There should be no question that the second tranche needs to be distributed not just in the remaining MECQ areas but in the GCQ areas as well.

Bayanihan is explicit about it

The SAP targets 17.7 million beneficiaries. The National Capital Region, Region III except Aurora and Tarlac, Laguna, Mandaue City and Cebu City are under MECQ until the end of the month, covering about 4 million beneficiaries. Erstwhile ECQ areas Benguet, Pangasinan, CALABARZON except Laguna, Ilo-ilo, Cebu, Davao City and Bacolod City now join the rest of the country under GCQ – bringing the number of SAP beneficiaries in GCQ areas up to 13.7 million.

The usual economic activities can resume in GCQ areas. There are still minimum health requirements such as physical distancing, frequent handwashing, and bodily protection because the battle against the coronavirus continues. MECQ areas meanwhile maintain restrictions on mobility outside the home, as well as on non-essential activities.

Malacañang initially announced that only MECQ areas will get the second tranche of social amelioration. Soon after, the president gave orders to not just give it all 18 million families but to actually add 5 million more, earning him additional popularity points. Yet is this really something for the president to give or not give according to how generous he is feeling?

The Bayanihan to Heal as One Law or Republic Act 11469 is actually clear. Section 4 (c) of explicitly states that the government shall “Provide an emergency subsidy to around eighteen (18) million low income households: Provided, That the subsidy shall amount to a minimum of Five thousand pesos (P5,000.00) to a maximum of Eight thousand pesos (P8,000.00) a month for two (2) months.”

Making the people wait

At the onset of the Bayanihan law, the government promised Php250 billion for social amelioration and health response. It acknowledged the huge task of strengthening the country’s health system to contain the coronavirus and to save lives. It also recognized that the lockdown would result in widespread displacement of jobs and disruption of livelihoods, badly hitting the majority of the country’s low-income households.

Two months later, there is still no consensus among scientists and medical professionals on whether or not the pandemic curve is flattening. The number of confirmed cases continues to rise, now exceeding 12,700, and also deaths at over 830 already. Our health workers and frontliners are holding the line as best as they can. But they are also the first to take the brunt amid a private sector-dominated health system that is itself ailing from a gross lack of equipment, facilities, infrastructure and manpower to  deal with the pandemic.

The government owes the health sector a grand boost, in the same way that it owes the people in the GCQ areas the second tranche of SAP.

To what end

Is the administration’s dilly-dallying part of a script where, to be able to give help to now 23 million SAP beneficiaries, the government will now be forced to sell public assets to fund social amelioration? Who is buying – China?

Time and again, Malacañang has said that it doesn’t have enough funds, and that it’s only thanks to the president’s prudence that the government has found money to spend. Still, resources are limited so the people have to wait. Or even sacrifice – social welfare secretary Rolando Bautista even once said that not receiving the second tranche is perhaps actually in the spirit of Bayanihan, in freeing up resources for others.

Yet there are funds that can be tapped without the government selling off its assets. IBON estimates a universe of Php3 trillion worth of funds that can be explored and tapped. This includes: realigning Build, Build, Build and confidential and intelligence funds; realigning debt service payments by pushing for a debt moratorium, restructuring or even cancellation; and raising new revenues from issuing COVID-19 solidarity bonds and higher income taxes and wealth taxes on the super-rich.

This would indeed mean a big shift for the Duterte administration whose economic managers already have their minds set on a recovery program that pushes instead of thwarts those business-biased measures, for example, big-ticket infrastructure, tied debts, lower corporate income taxes, and tax incentives for investors. But there should be no second thoughts either about doing everything necessary to help the people survive the crisis.

Some Metro Manila local government units (LGUs) did not make people trapped in the lockdown wait for too long. They defied the apparent limitations of the bureaucracy by tapping internal funds to distribute assistance to their constituents early in the ECQ. They combined technology and people’s volunteerism to deliver help as expediently as they could.

The people have been at the center of these LGUs’ emergency relief operations. This does not seem to be the case with the Duterte administration or even its predecessors. Because, if they were, why is our health system still at a loss with COVID-19? Why can’t the government drop everything to make sure that all vulnerable households get the first and second tranche of social amelioration immediately?

Why are more hapless citizens arrested than are tested? Also, why are relief volunteers, community leaders, mobile kitchens, and even journalists – who are merely trying to fill in gaps in emergency assistance – being harassed, arrested, or even killed by law enforcers?

The huge health and economic crisis that the country is facing now can only be hurdled, humanely and effectively, if the people were heeded and not hindered from actively participating. #

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Xandra heads IBON’s Media and Communications Department. She loves to write songs, listen to her panganay’s music and play chess with her bunso on the side.

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

Financial strength, development weakness

By Sonny Africa

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

Resilient and the best?

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

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

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

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

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

Financially strong for whom?

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

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

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

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

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

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

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

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

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

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

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

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

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

Why can’t food self-sufficiency be our new normal?

by Rosario Guzman

From the outset of the Duterte government’s military lockdown as its response to the spread of the coronavirus, it has directed the continuous flow of food commodities, along with medicines and other essentials. Food is inarguably essential to people’s survival during a pandemic and in its socioeconomic aftermath.

Government’s response however has fallen short in ensuring food production and supply. In fact, the military and authorities have controlled even the movements of the direct producers, both in tending their farms and selling their produce to the markets. Even activist volunteers who endeavored to bridge the farmers’ produce to urban consumers and to deliver relief goods to the farming families were detained and accused of violating quarantine rules and inciting to sedition.

The thing is, government has erased “food self-sufficiency” from its agricultural planning principles, now totally unheard of in the Philippine Development Plan 2017-2022. It has instead focused on “economic opportunities” anchored on “market orientation”. The country’s lack of food self-sufficiency has made government’s coping with crises such as COVID-19 utterly chaotic.  It is the economy’s sinkhole that will make us fall deeper into a COVID-aggravated economic crisis.

Yet, eight weeks into the military lockdown, while it continues to wrestle with its insufficient health response, the Duterte government is talking of a “new normal” in agriculture. A closer look at the plan, however, reveals it to be a bunch of old habits that have hampered Philippine agriculture from achieving even the most basic goal of food security, much more self-sufficiency.

Pre-COVID crisis

Only eight weeks ago, the country’s “normal” agriculture was having its worst crisis in decades. The sector lost 1.4 million jobs in 2017-2019, the highest number in a three-year period in the last two decades. Its average annual growth rate of 2.1% in the same period is also lower than the 3.5% average in the last 70 years. The sector has also reached its smallest share in history at just 7.8% of the country’s gross domestic product.

In the first quarter of 2020, agriculture posted a 1.2% decline in output, finally collapsing after a momentary recovery from a decline in 2016 and a three-year slowdown thereafter.

Neoliberal policies that government has recklessly implemented are the culprit in agriculture’s near demise. Starting off with the evasion of free land distribution to tillers and rampant land conversions to favor finance capital, government has oriented agriculture towards commercialization, high value cash crops, inorganic chemicals dependency, paid-for irrigation, imported machinery, and trade liberalization. Agriculture is not a government priority, which is putting it mildly when the figures clearly manifest state neglect. The 3.5% average share of agriculture and agrarian reform in the 2017-2020 budgets is the lowest in two decades. In 2018, the Duterte administration delivered the coup de grace with the liberalization of rice imports.

Landowners and merchants have exploited this “normal” – that is the classic story why our food frontliners are the most destitute and hungry in Philippine society. And like adding insult to injury, the government points to farmers’ lack of capacity and technology (and interest to carry on) as the reason why food self-sufficiency is not feasible.

Government gross neglect

Then, COVID-19 happened. Government agencies could not even provide a full picture of our food buffer stocks. The Philippine Statistics Authority has stopped updating the rice inventory, for instance. This showed that, as of March 1, our rice stocks were enough for only 65 days, quite below the 90-day buffer. Vietnam’s announcement that it would implement a rice export ban added to Filipinos’ anxieties – Vietnam accounts for about 38% of Philippine rice imports.

A day before the declaration of a lockdown, euphemized as ‘enhanced community quarantine’ (ECQ), the Department of Agriculture (DA) made assurances that there was enough food for everyone in Metro Manila. The stocks of rice, vegetables and root crops, poultry and meat products, fish, and eggs were sufficient. It took time before some local government units started distributing relief foods, and even then mostly unhealthy canned sardines.

Farming has been disrupted. IBON estimates about 2.5 million farmers, farm workers and fisherfolk economically dislocated by the ECQ. The ECQ guidelines specifically allow establishments engaged in food production and trade but are painfully quiet about the farmers. Farmers’ organizations have said it succinctly – there is no work from home for them. They are subsistence farmers who will go hungry if they are not allowed to farm.

The Duterte government’s COVID response for agriculture under the Bayanihan to Heal as One Act is to provide Php5,000 cash assistance each to only 591,246 beneficiaries under the Financial Subsidy to Rice Farmers (FSRF). But as of 28 April 2020, seven weeks into the lockdown, the Duterte government has served only 266,284 rice farmers.

Farming families may have been given cash assistance through the social amelioration program of the Department of Social Welfare and Development (DSWD), which even then has only served 57% of its target 18 million beneficiaries as of 1 May 2020.

Granting that the rice farmers have indeed received subsidies, IBON estimates these to be equivalent to only Php80-119 per day over 49 days of lockdown, or less than one-fourth of the already low official poverty line of Php353 per day for a family of five.

Government’s meager and much-delayed response to the pandemic is pushing the poor and vulnerable farmers and fisherfolk deeper into poverty and hunger, which gets more and more morally unacceptable at this point in our crisis.

Photo by Lito Ocampo

Neoliberal inertia

The DA is among the first agencies to talk of a new normal. We should rethink and restructure our policies and practices, said DA secretary William Dar. But the DA’s emphasis on the continuation of neoliberalism especially under a global economy that is about to plunge into a grave depression cannot be missed. The Duterte government cannot fake a new normal narrative when its transition plan remains neoliberal.

The budget priority for the DA to transition to its “new normal” remains for cash assistance instead of production support. This is under the Rice Farmers Financial Assistance (RFFA), which is in line with the implementation of the Duterte administration’s rice liberalization law. The RFFA targets to provide Php5,000 to rice farmers who are tilling 0.5-2 hectares. The FSRF is in addition to RFFA and is packaged as the COVID-19 response, which targets rice farmers who are tilling one hectare and below. The total target beneficiaries of both packages are 1.2 million rice farmers nationwide, but there are 2.5 million rice farmers in the country who are definitely dislocated by rice liberalization.

The program priority is a food resiliency action plan that is aimed at an unhampered flow of food and agri-fishery products. It is anchored on the aforementioned cash assistance as consumption stimulus and market links such as the Kadiwa program, market satellites and market on wheels. In short, it is anchored on trade, again not so much on strengthening farmers’ production. The plan is also about popularizing urban and backyard gardening, which is overly focusing on individual consumers to go on survival mode instead of improving the production and conditions of farming communities in the real spirit of bayanihan.

The DA has proposed to implement nationwide the “Ahon Lahat, Pagkaing Sapat (ALPAS) Laban sa Covid-19” or what it dubs as Plant, Plant, Plant program to “increase the country’s food adequacy level”, with an approved Php31-billion supplemental budget. But this will be done by intensifying the use of quality seeds, inputs, modern technologies – which have been proven from experience to only add to the farmers’ debt burdens. The DA unfortunately has perennially acted as a marketing agent and endorsed the sale of seeds, inputs and farm machinery of big agribusiness to Filipino farmers, while it has shunned the promotion of agroecological practices.

The Duterte government still emphasizes that in order for agri-fishery to grow and cope with emergencies such as pandemics, the sector needs to attract more investments and resources and partner with the private sector. And there we are back on the neoliberal road.

Photo by RB Villanueva

Build the momentum

Surely, food self-sufficiency can be our new normal. But first in the face of a pandemic, farmers need fast and sufficient relief assistance, both for their daily needs and health services and as production subsidy. In the same manner that urban consumers should be relieved of paying their bills during COVID-19, farmers should have been long ago condoned of their mounting debts from unpayable land amortizations, loans from unscrupulous traders, and even from availing of government lending programs. Then, farmers and fisherfolk should be allowed to go to their farms and on fishing trips and deliver their produce to the markets.

But in the long-term, food self-sufficiency is about the assertion of an entire range of human rights. The state should recognize the right to food, the right to produce food, the right to till the land, and to have control of the land that farmers have been tilling for generations. Farmers have the right to choose their own production system, so as not to be dictated by the whims of the market and made vulnerable to market vagaries. We can envision an agriculture that is moving away from the profit-oriented concept of value chain that disregards the small producers and their environment, and move towards sustainable farming practices.

In the end, we can build the momentum for food self-sufficiency only from the farmers’ struggle and movement for genuine agrarian reform. And that should be our new normal. #

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

After 7 weeks of lockdown: Meager cash aid puts households below official poverty line

by IBON Media & Communications

Research group IBON said that 97% of 11.4 million served beneficiaries are barely surviving the lockdown with cash aid that is way below the official poverty line.

Meanwhile, 37% of 18 million low-income households are still waiting to receive social amelioration after seven weeks of enhanced community quarantine (ECQ).

The group said that, already so late in the game, the government urgently needs to pick up its pace if it really intends to aid millions of struggling Filipino families.

Based on Pres. Duterte’s latest report to Congress, IBON said that the administration’s response to the COVID-19 pandemic has dragged on for too long and is still insufficient, pushing many vulnerable households into deeper poverty.

A total of 11.4 million beneficiaries were reported to have been given social amelioration from various government agency programs.

Of this, IBON estimates that 11 million or 97% of served beneficiaries have received emergency subsidies equivalent to just Php80-119 per day over 49 days of lockdown.

This is as little as just one-fourth (23%) of the very low official poverty line of about Php353 per day for a family of five.

These include 4Ps beneficiaries (3.8 million) that got only Php89 per day of cash aid; non-4Ps beneficiaries (6.4 million) with Php119/day, DOLE-CAMP workers (522,855) with Php102/day; and TUPAD informal workers (254,071) with just Php80/day.

PUV/TNVS drivers and overseas workers supposedly received relatively higher support of some Php8,000 and Php10,000 respectively. However, these are also still below the official poverty line of Php10,727 monthly on average nationwide.

Meanwhile, there are still millions of households that have not received promised emergency subsidies for more than a month-and-a-half. If just 11.4 million beneficiaries were given assistance, this means that 6.6 million or 37% of the targeted 18 million low-income families still have not gotten anything.

IBON said that government’s laggard and militaristic response to the pandemic has left millions of Filipino families struggling to meet their basic needs. Emergency subsidies during the lockdown are not enough.

The government should ensure that all families needing assistance are given sufficient support not just to recover from the devastating impact of the COVID-19 lockdown but also to survive the economic crisis that has set in. #

4Ps – Pantawid Pamilyang Pilipino Program; DOLE – Department of Labor and Employment; CAMP – COVID-19 Adjustment Measures Program; TUPAD – Tulong Panghanapbuhay sa Ating Disadvantaged/Displaced Workers program; PUV – public utility vehicle; TNVS – transport network vehicle services.

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