Felixberto Baguyo, Jr. posted Wage Increase A Must where he stated that wages in the Philippines aren’t rising despite the rise in cost of living. He pointed the reason that the government did not want to incur additional cost to the investors – who are foreigners and are growing in population. He is correct, however that is not why my heart is heavy on this matter.

OFW population keeps rising. We work for foreigners, while the foreigners are invading us ecconomically and making use of our resources to further advance their economies. Basically what is happening is that the foreigners are taking advantage of the resources that our social studies teachers are praising that we have plenty of, while our own people are shipped outside the country to become slaves of other nations.

It’s really frustrating because we should be the ones to take advantage of our own resources, but what is the government doing? We are deprived of our own possession, instead they are offered to the our masters. We don’t realize it yet, but we really are being colonized. We are once again under the control of other nations.

Sapian Online (SOL) celebrates the New Year with an upgrade. The upgrade renews SOL’s commitment to reconnect Sapianons and, most importantly, affirm that Sapian is part and parcel of the global community.

Only a few New Years ago, the concept of globalization was a faint hum in the academe and Western capitals. Global concept for Sapian was no more than having relatives living or working overseas. And while we have been preoccupied with NPAs and lost commands, the miserable state of transportation and telecommunications made us feel that Sapian was too far removed from the world’s wars, political conflicts and religious extremism. Sapian’s potential physical exposure to a global crisis has been as rare and statistically remote as the fall of Skylab in July 1979. Likewise, the bottomless bounty of Sapian Bay and abundant produce on land cushioned Sapianons from the ill effects of economic downturns in the West. And the weather was a truly predictable cycle of monsoon rains with occasional surge to typhoons and dry summers with occasional drought spells. Gone were those days. (more…)

FEMOCRACY AND HOME ECONOMICS 5

A PLACE IN THE GLOBAL WORLD

The fact that women now choose to vigorously compete with men for high- paying jobs has serious consequences in western societies. Birth rates are well below replacement level which means that not enough workers are being born to replace the ageing population, causing a massive labour shortage - another harsh reality of the downside of femocracy.

More and more developed countries have no choice but re-evaluate their immigration policies to address the issues mentioned above.  Added to that is the constant realisation that they have to compete in today’s global market. While it is true that a lot of businesses move overseas to countries like China for their cheap labour; resourceful countries find ways to take advantage of the new economic landscape by creating new markets and opening up to new opportunities.

In a country like Australia for example,  the steel mining industry was abandoned a decade ago. Due to the lack of demand, the industry suffered and most mining towns were deserted. But now it’s different; the mining industry is in boom again due to increased demand from China. More than half of the materials used in building China’s Auditorium for the 2008 Olympics are made from mineral- rich “dirt” from Australia. China’s construction industry will continue to grow till the next decade, maybe more,  and Australia is cashing in on that. With the increased interest and growing debate on nuclear energy, the mining industry (uranium) can foresee big opportunities. There is now a big demand for labour in the rebuilding of mining towns. The housing, hospitality and entertainment industries are benefiting from it too.

Another case is the wool industry. Wool producing towns suffered due to lack of demand for wool. Again, China’s cheap labour and the use of cheaper synthetic materials decreased the demand for Australian wool from lucrative fashion industry. Sheep farming towns resembled ghost towns as young people moved somewhere else for better employment. But now there are some dramatic changes. Researchers found that there is a big market for goat meat in the U.S. for the Mexican communities there. The wool producing towns are open for business again although now they are part of Australia’s lucrative meat industry, their sheep paddocks are now being used to raise goats. And it doesn’t end there, with the health risk surrounding pork and sheep consumption, i.e. high cholesterol content causing obesity, diabetes, and heart problems, the industry can see bright lights in promoting beef, goat  and kangaroo meat in Europe, Asia and Arab countries.

In cases like these where it is not possible to move the industry overseas, the only resort for them is to bring the labour force into the country.

There are so much rhetoric in the west about the plight of illegal immigrants and what to do with them, but unbeknown to ordinary folks, these immigrants are being used ( and abused) to help their economies. The United States for example have access to cheap labour from Mexico and other nationalities who risk their lives just to set foot in that country; illegal migrants’ labour is a billion dollar industry in the U.S. Rich European countries have access to cheap labour through the decendants of colonial Africa and Asia. They also have waves of illegal migrants from poorer southern European countries, Asia and africa. But Australia has none of that and does not have to resort to cheap labour to move on. 

Being an island continent, Australia successfully controlled the number of people entering the country. They can pick and choose whom they want to allow in, which is understandable as they want to maintain their high standard of living. But, in the 21st century, Australia realised that to be successfully favoured in the growing Asian market, they have to change their tune. Australia welcomed professional and skilled people, investors , brides, sponsored relatives to legally migrate but never opened its doors to contract workers until only very recently, just last year! Filipino workers were one of the nationalities they chose to come! That was just a trial and as far as I gathered through a reputable current affairs shows on television- “Sixty Minutes” and “A Current Affair”- their employers are very happy. “They are very hardworking, you can see the desire in their eyes; they just want the work;  I will have them anytime,” one of the employer enthused. I suspect that more and more job opportunities will be offered to Filipinos.

Already, there are calls in the media complaining that local labour will be disadvantaged as business owners given a choice will prefer cheap labour from other countries.  Politicians were quick to guarantee that contract workers will be given Australian minimum wages and they will not be subject to abuse. There are heated debates going on today whether opening the country to more contract workers is the way to go. The local labour movement are dead against it but big corporations like Mcdonalds expressed their desire to hire contract workers from the Philippines as opposed to hiring Australian teenagers who are supposed to be in college learning a trade or at universities.

There is no doubt that skills migration and opening the country to contract workers is the solution but to satisfy nationalistic concerns and queries both of the leading political parties came with a criteria as to what kind of people they should let in. The preferred factors are: skills and educational qualification, English language proficiency, ability to assimilate and acceptance of the Australian culture and values. Since Filipinos are known to have this desirable qualities, they should have no problem entering the country legally.   

This is a reflection of what is happening in the rest of the western world and  Non-English speaking developed countries. There is a labour shortage and they require skilled workers to keep going and compete. Labour exporting southern European countries like Italy, Greece and Spain hired Filipinas as domestic helpers decades ago while there where restrictive policies in western European destinations like Germany and France. Today, more and more Filipinos are hired in these countries with jobs not limited to domestic duties and with better workplace conditions. Thanks to the pioneers, Filipino nurses are in great demand in the US, and now Britain and Ireland too. I heard Filipinos are needed in Scandinavian countries too.

Filipinos, without a doubt, has a place in the global world. While people from poor countries have no choice but risk their lives in entering developed countries illegally, Filipinos are being offered jobs and are invited to enter countries legally. They have more choices of countries to go to and have access to different jobs. The only thing needed is for the Philippine government to do more in choosing the right countries, negotiate a fairer and secure deals for the overseas foreign workers (OFW) and actually do something to improve the process of training and hiring. The Philippine government should not send Filipinas to countries were women are treated like second class citizens, have no respect for individual rights and freedoms, or societies whose culture is very limiting.

Petropolitik, Sapian and China - Sixth in a Continuing Series

Another way to revisit the saga of Sapian, China and oil crisis is tracing the thread of Philippine petroleum deregulation. Fidel V. Ramos (FVR) pushed for the enactment of Republic Act 8180, the Downstream Oil Industry Deregulation Act of 1996, to promote a more competitive market and prices by allowing the entry of “small” oil players to the market monopolized by the so-called Big Three, namely, Pilipinas Shell Petroleum, Caltex Philippines Inc. and Petron Inc. This involves the removal of the government subsidy to oil prices, called the Oil Price Stabilization Fund, which provided a cushion to oil price increases. In 1999, a new oil deregulation law (RA 8479) was enacted to pave the way for the full deregulation of the oil industry.

During World War II, many countries heavily regulated industries and nationalized critical industries (e.g., petroleum, coal mines, steel mills etc.) to provide maximum support and efficient use of resources for war efforts. After the war, many countries continued or expanded controls on industries to rebuild their war-ravaged economies, and well into the 70s. By the 80s, U.K. Prime Minister Margaret Thatcher - plagued by paralyzing strikes, mismanagement, and bankruptcy - started to privatize government companies. In economic circles, it was called Thatcherism. In the U.S., President Ronald Reagan tried to relax government control on businesses, called Reaganomics. Both trends lean toward Keynesian economics. A very influential 20th Century economist, John Maynard Keynes theorized that government should use its power sparingly at the macro-economic level to regulate (e.g., interest rates, use of reserves etc.) but let the private sector and market forces try to equalize itself. http://en.wikipedia.org/wiki/Keynesian_economics

Along these lines U.S. President Bill Clinton, FVR and other leaders promoted a book by David Osborne and Ted Gaebler, entitled, Reinventing Government: How the Entrepreneurial Spirit is Transforming the Public Sector. The authors looked into model governments efficiently run like corporations, with performance-based budget, partnership with the private sector, and people empowerment themes. It called for leveling of the playing field, deregulation, decentralization, devolution, and liberalization, in all aspects of government, politics and the economy. From Washington, to Europe, to Tokyo, a chorus of international organizations told Cory and FVR to pursue these goals. Hence, it was institutionalized in FVR’s Philippines 2000. http://govinfo.library.unt.edu/npr/index.htm

Under this philosophy, started by Cory but staunchly implemented by FVR, the bureaucracy worked double time to deregulate, decentralize, and devolve powers of governance. Among the first tangible result of these is the Local Government Code
- to the perpetual chagrin of my mother and Nono Varon’s parents (it’s a relief they are all in the United States now!) - that included the devolution of the Department of Health’s Rural Health Units (RHUs) to local government units. There were persistent rumors that RHUs will be renationalized, but early on I asked former Health Secretary Juan Flavier (now, Senator) and he told me to tell my mother to change career because it’s not going to happen. In theory, local governments should have more control over their local affairs and would be able to prioritize their policies and fine-tune their programs according to local needs.

Another example is today’s proliferation of cell phones. PLDT monopoly was broken by giving away franchises to any company able to install 5,000 lines, can apply for telephone franchise anywhere in the Philippines. Many leapfrogged with infinite cell lines, so you now have a galaxy of cell service providers. This also was true with Cable TV providers and a host of other telecommunications sub-sectors. Philippine Airlines franchise monopoly was also broken. Now, passengers are no longer at the mercy of PAL. Anyone who has a plane, compliant with all BOT regulations, could apply for an air franchise anywhere in the Philippines. Then you have BOT (Build-Operate-Transfer, Build-Transfer-Operate, Build-Own-Operate etc.) alphabet schemes, which allowed building of dozens of giga-wattage power plants by Hopewell Holdings, Enron, etc. worth billions of dollars. The caveat, contracts for 50 years for guaranteed power purchase by the National Power Corporation. This wiped out the brown outs overnight, particularly when power grids throughout the country have been interconnected. Then, you have your Skyway, North Luzon Expressway, MRT and many others. Under the general theme, base lands, like the Fort Bonifacio area, have been opened to joint ventures with the private sector.

For a moment, the Philippines was referred to as one of the Tiger Cubs of Asia.

Petropolitik, Sapian and China - Fifth in a Continuing Series

GATT/WTO tends to harness comparative advantage of countries. Our comparative advantage is to supply many of China’s fisheries and agro-industrial needs. Even with the perceived over-population in the urban centers, the Philippines still has wide open spaces and lands waiting to be used for agriculture. Nueva Ecija has some of the vast land reserves and produces some of the largest rice per capita.

I could not describe our vast land resources without remembering Palayan City in Nueva Ecija. After the eruption of Mt. Pinatubo, a few thousand Aetas from Zambales have been relocated to a 200-acre strip that was a part of Fort Magsaysay military reservation. The project proponent and our hospitable host, the Fajardo family, was working to secure Cory’s proclamation to release the 200-acre strip from base reservations for aeatas and other poor families to live in and farm. The wife of then Palayan Mayor Rico Fajardo (later, a congressman), Leonora (later, the mayor replacing him), is from Mambusao. Their red-tile roofed white mansion “complex” - complete with a guard house that had a weapons arsenal, a power plant, a 6-room servants bungalow, and a “motor pool” garage - looks over hectares upon hectares of lands planted to rice, coffee and mango as far as the eyes can see. Half of the town was probably their tenants or servants. Despite that, I was amazed how down-to-earth a Mambusaonon Leonora Fajardo is - really nice; and we talked in Bisaya. She told me that Rico owned the defunct F&N Shipping Company; and she, having just arrived from Mambusao at that time, was vending lugaw in a well-attended carinderia near F&N’s gate in North Harbor. Coming to work every morning, Rico noticed the hardworking, business-oriented Tisay, so he started to have lugaw himself. Then they fell in love, got married, and he bought her Tasa de Oro as a gift, a famous American-owned restaurant in Escolta - when Escolta was still the Ayala Avenue. When we stayed in their house, their daughter, Lorelie, was then in high school; now, she is the youngest city mayor in the Philippines. Anyway, led by my former boss Cabinet Secretary Chito Sobrepena (now Metrobank Foundation President), together with then Col. Edgardo Aglipay (later CO/NCRDC and PNP Chief), I supported staff work to get Cory’s proclamation two years later. But even after the 200-hectare strip, Fort Magsaysay military reservation has still several thousand hectares that can be made into a productive agricultural enterprise.

We have most resources, except capital and political will, to organize successful agro-enterprises. The Philippines pioneered hybrid rice in Southeast Asia since the Green Revolution of the 60s. International Rice Research Institute (IRRI) in Los Banos, Laguna, which was initially funded by the Rockefeller Foundation and operated under the auspices of the United Nations, produced rice that Thailand, Vietnam and other neighboring countries now profitably export even to us. The University of the Philippines (UPLB), our agro-R&D center, has many developed agro-industrial technologies that are not applied in the field.

Anyway, to Filipinize rice research (e.g., to develop strains requiring less fertilizer, resistant to pests and drought, etc.), we organized our own Philippine Rice Research Institute (PhilRice) in Munoz, Nueva Ecija with multi-million dollar assistance from Japan International Cooperation Agency (JICA). I was part of Cory’s advance party to inaugurate PhilRice, so we planned a program that included a ground-breaking of a Technology Livelihood Resource Center (TLRC) project, a farmers’ cooperative rice post-harvest facility the size of NFA, in Cabiao, Nueva Ecija. I was the point-person in the Cabiao program - we decided that the stage be built in the middle of a ricefield and Cory’s helicopter would land just behind it. In the eve of Cory’s arrival, we noticed that the field was cracked and dry. So we asked local engineers to build a two-foot wide plywood walkway from the landing area to the stage. Workers worked late and woke up hardware stores in Cabanatuan. There was the walkway the next morning, stronger than the best Parola, Tondo, walkway Nang Novie Pajarillo-Macam, Manila Vice-Mayor Danny Lacuna and I walked on in one of Lacuna’s winning campaign sorties. Then Cory’s chopper and eight other helicopters landed. After the dust cleared, Cory got off, missed the plank by an inch and sprained her left foot. Major Bodet Honrado, Cory’s Aide-de-Camp whose roots is from Sapian, was furious. But we cannot be blamed for it - we did our plank. It was the pilot’s error for failing to get the chopper as close as possible; and the flight engineer neither got the stairs on the plank nor warned Cory about the gap. Anyway, the pained President went on with program, flew to Munoz and inaugurated PhilRice in a wheel chair. Her appointments have been cancelled for the next two days and she had to wear a cast for the next three weeks.

Petropolitik, Sapian and China - Fourth in a Continuing Series

Cory and Ramos Cabinet deliberations on GATT/WTO involved many economic concepts that Ms. Flores laid the foundations for. GATT/WTO was discussed on my first attendance in a Cory Cabinet Meeting, and Jose Concepcion (JoeCon), former Trade and Industry Sectary in Cory Cabinet, owner of Condura, Cosmos Bottling, General Milling, etc., tripped on my right foot and almost crashed on former Defense Secretary Renato De Villa. I was terrified, my first Cabinet and I caused an accident. But people I sat next to assured me that it was not my fault - Lucille Peralta (now Ortille, and Director General of the Cabinet Coordinating Committee on Housing and Urban Planning), also from Roxas City, and Mary Ann Z. Fernandez (now Assistant Commissioner of Civil Service Commission) told me JoeCon was looking up on screen while briskly walking down the hall.  Corridor of power is always cramped, so seats around the Cabinet Meetings are always crowded. Seating was arranged in two rings - the inner circle which is the president and cabinet members, and the outer circle composed of lesser bishops and acolytes like myself. State Dining Room is cold and dark when giant Swarovski chandeliers are dimmed for PowerPoints. Only Imelda’s sconces would light the old rose velvet carpet while people seated on the outer circle would obstruct most steps of the way. Talk about cordon sanitaire.

Anyway, this was not the case in the brightly lit and well-appointed National Economic Development Authority (NEDA) Board Room in Pasig, thanks to Toto “Tayho” Guijaro. The president and Cabinet also convene as Joint Cabinet-NEDA Board a few times a year to update the National Development Plan, and they meet in Pasig once in a while. In NEDA sa Pasig, I always see Toto Tayho because he does the electro-systems for NEDA Board Sub-Committee on Human Resources and NEDA Board/Cabinet that I both attend. I’m sure, Toto Tayho, bombarded by economics everyday, would remember the lectures of Ms. Flores. Our batch was the first to graduate under the nationalized high school. Unfortunately, it was the last batch Ms. Flores would teach. That very next school year, she moved to then Panay State Polytechnic College (PSPC). Lucky them.

Further exploration on China’s economic boom needs us to look into just a little bit of GATT and history. Ms. Flores taught us that Industrial Revolution, which started in Britain between late 1700s and early 1800s, was characterized by increased production due to mechanization (e.g., steam engines - factories and railways). Mechanization allowed mass production that created surplus products. Countries needed to sell surplus products to other countries (dumping). But other countries have the same industries and were creating the same products. So, each country tried to protect its domestic industries, and a period called Protectionist Era ensued. Nations established trade barriers, raised import taxes and tariffs, to make it very difficult to import and export outside of national boundaries. Trade wars ensued - dumping of surpluses to, or raising tariffs against unfriendly nations. Countries like Britain, U.S. and France (Allied) were lucky. Their colonies acted both as exclusive markets for their surpluses and source of cheap raw materials. Other industrializing countries like Japan, Italy and Germany (Axis) did not have colonies. Axis powers had to either have colonies or just fade away. Many summed up World War II as an attempt by Axis powers to re-divide the world and gain colonies for themselves. At that time, China was an agrarian economy trying to survive its own Cultural Revolution.

In 1944, GATT, a trade treaty involving many nations, was established. Its purpose was to facilitate free trade by encouraging member-nations to reduce tariffs and remove trade barriers. This would avoid trade wars and the need to maintain colonies (i.e., the Philippines was then allowed to become independent). Under GATT, each one had a list of sectors, industries or specific products they want to open to international competition. Taxes for those specified sectors or products are either lowered significantly or removed altogether. Since then, GATT worked on the sidelines until the emergence of European Community in the late ’80s. At that time, trade blocs, treaties involving many nations, in many regions of the world started to proliferate. By early 90s, there were APEC, Uruguayan Round, NAFTA, AFTA, BIMP/EAGA and dozens others. Trade blocs reminded some economists of Protectionist Era.

Therefore, GATT had to be reinvented. This time, it would have to include China. The world could not wait to sell 1.3 billion more bottles and cans of Coca-Cola and McDonald’s burgers.  And China itself, wary of being alone after the downfall of USSR and its Eastern European allies, and tempted by outward forces of its modernizing economy, had to jump into the bandwagon. Western companies, led by American investors, raced their way to China to manufacture everything from slippers to ICs. This proliferated the market with too much China products and created higher demands for petroleum.

Negative implications for Sapian: First, China has drawn in foreign investments that would have otherwise been invested in the Philippines that, directly, either employ some Sapianons, or benefit Sapianon businessmen, or indirectly, bring in money into the domestic economy and trickle down to Sapian in form of taxes or increased buying power/demand for Sapian fishery products. Second, flood the Philippine market with cheaper Chinese goods, competing with our local industries - especially with GATT - losing our fledging manufacturing businesses and jobs. Third, highly industrialized China makes it more influential in geopolitics to the detriment of our security, including losing our claim to the disputed, natural gas rich 200-mile EEZ off Palawan. Fourth, China is developing backbone industries like steel, chemicals, etc., is reckless with environment and could upset South Asian environmental health (e.g., nuclear waste, industrial dust, acid rain, etc.). Fifth and most importantly, China, consuming more oil, offsets supply equilibrium, creating shortage, increasing prices, and causing more instability in volatile Middle East (e.g., giving Saddam rockets, bribing Iran with $70 billion, and possibly, some bits of nuclear technology). Increased prices slow down the Philippine economy, as it pays more power bills, lower Peso value because more dollar is paid for oil imports, less tax collections because of lowered profits, less foreign investments because of less anticipation of profits, and so on.   

On the positive side for Sapian: First, abundance of made in China products, as said earlier, makes it easier for us to buy products that used to be difficult and expensive to acquire. Second, China would attempt to expand its political and economic clout among its neighbors and invest in the Philippines, such as in agro-industry. This should be our last opportunity to dove-tail on global trade. Third, since the continued affluence of China’s economy is dependent on its goodwill, it would not do much to offset South Asia security - although the 200-mile EEZ is now irretrievably lost.

Petropolitik, Sapian and China - Second in a Continuing Series

Everywhere we go today, we see a proliferation of products made in China; from the simplest plastic implements to some of the most complex microprocessors.

To explain China’s voracious demand for energy, lets examine its recent economic growth. Since 2000, China’s exports tripled to over $593 trillion. Government statistics report an employment rate of nearly 97%. This industrial progress over a short period of time is unprecedented in history even in the magnitude of post World War II reconstruction. A recent report indicates that of the world’s 50 worst polluted cities (i.e., most industrially active), the top 20 are in China.

China’s great industrial transformation has put so much stress on global oil supply and distribution. China, Japan, and a dozen other countries, including the Philippines, compete over limited petroleum distribution capacity in the Far East. In 2000, China’s oil consumption was about 4 million barrels everyday, and oil price then was less than $22/barrel. Today, China’s consumption has grown to over 7 million everyday - or about 1/3 of the total world oil demand. China is now the second largest oil consumer (after the U.S.), and third largest importer (after U.S. and Japan). China will add 5 million cars every year starting this year. A comparison, the Philippine oil consumption is merely 312,000 barrels per day.

Supply is increasing in arithmetical rate while demand increase in geometric proportion. Saudi Arabia is frantically pumping its wells double time to stabilize prices. But China’s growing demand and cold cash would quickly absorb the buffer supply. OPEC members, in cohort with oil cartels, seem to enjoy the world attention to volatile Middle East and ripples by Venezuela and Bolivia that even an isolated kidnapping in Nigeria would bring them billions in windfall income.

But China could not live on oil alone. It also needs food to feed its army of factory workers and emerging industrialists Since we missed economic take off many times, we may have been destined to be the food producers. In fact, we have our comparative advantages over China. One of them, their coastline is only 14,500 kilometers - we have 36,000. Reason why China permanently encroach into our 200-mile Exclusive Economic Zone.

A few weeks ago, my former boss, Demetrio Ignacio, now Undersecretary of Department of Environment and Natural Resources (DENR), participated in a signing ceremony for an agreement with Fuhua Agricultural Group of China. Fuhua is investing $5 billion for a food industrial park and in planting one million hectares of hybrid corn in Camarines Sur, Lanao del Norte, Isabela, Occidental Mindoro, Tarlac and Nueva Ecija. http://www.newsflash.org/2004/02/be/be003383.htm

We need more export-oriented agro-industrial projects like this. It’s the only way to offset our widening trade deficit and to brace up for the oil crisis that is yet to come. Oil situation would worsen by the day as high gas prices would cause inflation. But who knows, inflation, among other adverse economic implications like higher interest rates and minimum wages, would increase production cost in developed countries. The recourse would be to move factories to countries with cheaper labor, as long as they are not very corrupt, has political stability, uninterrupted electricity, and guarantee no labor strikes.