New anti-terror law threatens press freedom: Philippines

The International Federation of Journalists (IFJ) is concerned about the effect a new anti-terrorism law will have on press freedom in the Philippines.

NUJP condemns shooting of Bacolod station manager

The National Union of Journalists of the Philippines (NUJP) condemns the attempt on the life of RGMA-Bacolod station manager and NUJP member Ferdinand 'Bambi' Yngson in Sagay City on Wednesday morning, July 25.

We urge authorities to get to the bottom of this case and speedily prosecute the arrested suspect and, if any, all others who may be involved in the attack on Yngson instead of dismissing it, as Sagay Philippine National Police chief William Senoron initially did, as the offshoot of personal animosity.

The suspect, Romeo Corbo, is a deputized agent of the Land Transportation Office in Sagay. Yngson's wife said before the attack, he had been commenting on alleged corruption in that office.

Again, we urge Pres Gloria Macaoagal-Arroyo to issue a categorical order to end all attacks on journalists and to get the perpetrators whoever they may be.

Only this will signal that her administration pays more than lip service to press freedom.
The bloodshed has gone on long enough!

Reference:
Jose Torres Jr., NUJP chair
July 25, 2007

ARROYO’S STATE OF THE NATION 2007: A LEGACY OF ECONOMIC DECAY

In the face of its glaring failures, the Arroyo government continues to pursue the very same bankrupt economi c p olicies that caused these in the first place

By Sonny Africa

IBON Features– Undoubtedly, President Gloria Macapagal-Arroyo will use her State of the Nation Address (SONA) to hype her achievements. Arroyo would likely claim that her greatest achievement and her legacy is to set the Philippines well along the road to progress and prosperity. To buttress her claims she will certainly roll out the familiar rosy economic indicators that she has consistently used to try and silence her critics: the fastest quarterly growth rate in nearly two decades, stock market indices soaring to all time highs, record international reserves, the “strengthening” of the peso and steady increases in foreign investment.

However, these claims would not hold up to even the most cursory scrutiny. The scores of homeless people living on the streets and sidewalks of Manila testify to widespread poverty and joblessness despite Malacañang’s claims that poverty has decreased. The more than 3,000 Filipinos who leave the country every day to seek work abroad belie the government’s claim that it has generated more than 800,000 jobs a year since it came into office in 2001.

Yet, even in the face of its glaring failures, the Arroyo government continues to pursue the very same bankrupt economi c p olicies that caused these in the first place. In fact, it promises to pursue these policies even more aggressively and apply them to more areas of the economy.

Behind ‘Economic Growth’

One of the key economic indicators that the Arroyo government undoubtedly will be hyping is the continuous economic growth it has experienced. According to Palace Secretary Ricardo Saludo, the country has enjoyed twenty-five consecutive quarters of Gross Domestic Product (GDP) growth, with GDP hitting 6.9% in the first quarter of 2007, supposedly the highest in seventeen years.

But the GDP merely tracks the continued erosion of the country’s productive sectors. The share of the manufacturing sector has been steadily falling, from 25.7% of total domestic output in 1980 to 23% last year. Over the same period, agriculture fell from 25% of GDP to 14 percent.

Even if the economic growth could be taken at face value, it remains meaningless to the millions of poor Filipinos for whom its benefits have not “trickled down”. IBON estimates that some 65 million Filipinos or around 80% of the total population struggle to survive on the equivalent of P96 or less per day. This is substantially larger than the Arroyo government’s official poverty incidence figure of 24 million Filipinos.

Increased growth has also not reduced the gross income inequalities that continue to haunt the country. In 2000, the poorest 30% of families (some 3.8 million) accounted for almost 8% of total family income, while the richest 10% (1.3 million families) accounted for 38.4 percent. By 2003, inequality had barely softened, with the poorest 30% (now nearly five million families) accounting for 8.5% while the richest 10% (1.6 million families) accounted for 36.3 percent.

Meanwhile, the richest Filipinos continued to get richer. The wealth of the country’s three richest individuals/ families (Henry Sy, Lucio Tan and Jaime Zobel de Ayala and family) grew in real terms from P177.4 billion in 2001 to P261.5 billion last year.

Speculation

The Arroyo government also continues to hype the peso’s all time highs and the booming stock market. But when looked at in an overall regional context, the seven-year high of the peso and the all-time high of the stock exchange are not even particularly impressive. They merely reflect an overall trend of appreciating currencies and exuberant stock markets.

A look at the trend from 2001 shows that Asian currencies, in general, have been appreciating against the US dollar especially since the middle of 2006. The US economy is heavily weighed down by its historic budget and trade deficits as well as by the wars it is unable to win in Afghanistan and Iraq . It is also widely expected to experience an economic slowdown this year.

Asia has also been receiving markedly higher inflows of speculative investment, many of which are going to the region’s stock markets, with the trend again being especially marked since the middle of last year. During the first quarter of the year, some US$2.8 billion or 78% of gross foreign portfolio inflows into the country went to the Philippine Stock Exchange. These inflows were equivalent to nearly half of gross inflows in the whole of 2006 and two-thirds of gross inflows in 2005.

The Philippines is also one of Southeast Asia ’s laggards in terms of economi c p erformance. Philippine economic growth of 5.3% last year was the third worst in Southeast Asia and even less than the ASEAN average of 5.8 percent. The country has the worst unemployment and is the fifth poorest country in terms of GDP per capita and national poverty rates. Although comparisons of this sort are problematic because of differing methodologies and measures, it should at least serve as a wake-up call for the administration.

Fiscal Hype

Another achievement that would surely be hyped in the SONA is how Arroyo succeeded in arresting the country’s fiscal crisis through “reforms” such as the implementation of the reformed value-added tax (RVAT). But the country remains vulnerable to another financial crisis, which could explode at any time.

The budget deficit has indeed gone down from the historic high it reached it 2002 when it peaked at 5.4% of GDP. Last year it was at 1.1% of GDP. But the deficit was addressed not through improved revenues or dealing with runaway debt service payments; instead, government cut spending on vital social services such as education, heath, and housing, whose combined share in the national budget fell to 15.6% in 2007 to 19.7% in 2001.

Meanwhile, the Arroyo administration is making the most debt payments of any administration in the country’s history. Foreign and domestic debt ate up a historic 87.3% of revenues and 14% of GDP in 2006. Total debt service last year on foreign and domestic debt was a colossal P854.4 billion in 2006. And public debt continues to increase, hitting P3.9 trillion as of March 2007. National government debt was 65% of GDP in 2006.

Although the RVAT netted P76.9 billion in 2006 and P18.7 billion in the first quarter of 2007, it was not enough to make up for revenue losses from trade liberalization, corporate tax evasion and corruption. The government’s tariff reduction program has resulted in import duties as a share of total revenues falling to 19% in 2006 from 36% in 1993.

Meanwhile, corporate tax evasion may cost the government some P54 billion in lost revenues annually (according to a 1998-2002 survey by the National Tax Research Center ) and some P146 billion may have been lost to corruption in the 2007 national budget (based on the 13% estimate of the 2001 budget by the United Nations). This means that as much as P200 billion may be lost this year due to corruption and tax evasion.

In fact, government recently reported that its half-year deficit had already reached P41 billion or 65% of the year-end target of P63 billion. Its only hope now of achieving its deficit target is the privatization of some of its remaining assets, such as its stakes in San Miguel Corp. and the Manila Electric Co. (Meralco), which could fetch as much as P105 billion. But this represents a one-time boost in revenues. Thus, higher taxes on the scale of the RVAT are likely inevitable despite government denials.

Unsound fundamentals

The Philippines ’ weak productive sectors are ultimately what underpin its financial vulnerability. Its declining agriculture and manufacturing sectors result in chronic trade deficits because the country is dependent on imported inputs and finished products, while having a limited capacity to export genuinely Philippine-made goods. This in turn increases the dependence on foreign sources of financing and capital. The local economy thus becomes unduly sensitive to the fluctuations of global markets.

The country’s problems are essentially due to liberalization policies enacted under an economic globalization framework. These policies have eroded incomes and destroyed livelihoods, undermined domesti c p roductive sectors and created the conditions for financial crisis. Trade liberalization destroys local agriculture and manufacturing while reducing tariff revenues. Liberal investment regimes have given generous incentives to foreign corporations while reducing the benefits to the domestic economy to nothing.

Pres. Arroyo, a staunch believer in so-called free market economics and was instrumental in the country’s membership to the World Trade Organization, will likely continue her adherence to neoliberal policies, which will reinforce the country’s structural inequities and weaknesses.

For example, she will undoubtedly continue to pursue liberalization through the various WTO agreements and free-trade agreements such as the Japan-Philippine Economic Partnership Agreement (JPEPA) and liberalization of the mining sector and privatization of the power generation and transmission sector in order to further encourage foreign investment. And then there is the removal of economic sovereignty provisions in the Constitution through Charter change.

With these policies, it is clear that Arroyo’s legacy will not be that of a prosperous Philippines but rather an economy that is ripe for another bout of financial and fiscal crisis. IBON Features

RP REGRESSING DEEPER TO THIRD WORLD STATUS –IBON

Contrary to Arroyo’s grandiose vision of the country becoming a First World country by 2010, the situation of Filipinos is actually sinking deeper into Third World status, according to independent think-tank IBON Foundation.

IBON research head Sonny Africa said that the local economy is not developing but rather deteriorating in a way that hits the poorest majority the most. “The country is experiencing historic joblessness, widespread poverty and deepening inequality,” he said.

The official reported unemployment rate has stood at over 11% since 2001 in the only period of such sustained high unemployment in the country’s history. In 2006 this translated to 11.6 million Filipinos either jobless or if employed, still seeking more work.

If jobs are created at all, Africa said, these are low-quality. Of the net one million increase in jobs recorded in the April 2007 Labor Force Survey, over two-thirds are in unpaid family work and in domestic household help. Meanwhile, employment in manufacturing continues to erode as it lost 105,000 jobs from the year before.

Poverty is also becoming increasingly widespread, he added. Some 65 million Filipinos or 80% of the population daily attempt to survive on the equivalent of P96 or less a day. Income inequalities have also not lessened despite government claims of continuous economic growth. Using the latest Family Income and Expenditure Survey, the income of the richest 10% of families is 21 times that of the poorest ten percent. The net worth of the country’s 10 richest individuals and families in 2006 was equivalent to the combined income of the country’s poorest 9.8 million households composed of some 49 million Filipinos.

Notwithstanding government hype of growth and development, the country will continue its economic decline in the remaining years of the Arroyo presidency, Africa said. It may even once again tip into financial turmoil especially if there are adverse developments in the global economy.

Reference: Mr Sonny Africa (IBON research head)

July 22, 2007

BALLOONING BUDGET GAP UNDERLINES FLAWS IN ARROYO’S ECONOMIC POLICIES

The steadily growing budget deficit highlights the flaws of Arroyo's so-called economic reforms, particularly the implementation of the reformed value-added tax and its continued adherence to liberalization policies, according to independent think-tank IBON Foundation.

The Department of Finance recently reported that the government had incurred a P41 billion budget deficit in the first half of the year, representing 65% of the P63 billion ceiling set by Finance officials for the entire year. The above-target deficit was attributed to lower than expected tax revenues.

The worsening fiscal situation underlines how revenue losses from trade liberalization, corporate tax evasion and intractable corruption have outpaced revenues from the RVAT, said IBON research head Sonny Africa.

He pointed out that as a result of government's tariff reduction program, import duties as a share of total public revenues have fallen to 19% in 2006 from 36% in 1993. The RVAT generated P76.9 billion in revenues in 2006 and P18.7 billion in the first quarter of the year.

Africa added that a study by the National Tax Research Center showed that between 1998 and 2002, corporate tax evasion resulted in an average of P54 billion in unpaid taxes during the period studied. Further, the United Nations estimated that in 2001 corrupt officials pocketed 13% of the national budget, or some P100 billion. If this percentage was applied to the 2007 budget, then as much as P146 billion could have been lost to corruption. This means that at least P200 billion may have been lost that could have been channelled towards vital social services such as health and education.

More than the mentioned losses due to liberalization is the debt payments policy. In fact, the Arroyo government is making the most debt payments of any government in the country's history. Total debt service for 2006 was P854 billion even as the national government debt hit P3.9 trillion as of March 2007.

Reference: Mr Sonny Africa (IBON research head)
July 20, 2007