According to the Institute for Economics and Peace, a global think-tank that measures economic well-being as well as social indices the Philippines ranked 114th among 144 rated along sixty or so benchmarks. On a scale of one to five, with five being the worst, we rated four on respect for human rights. On a similar scale measuring the level of violent crimes we also rated four. On the number of deaths resulting from internal conflict we rate twice as much as Angola.
For anyone who remembers fifth grade, one of the mantras taught was that the Philippines is endowed with a wealth of resources. On our western perimeter there is an oil artery that should provide us with indigenous fossil fuels. Along the edges of Bicol and Leyte we developed geothermal resources to degrees incomparable in this part of the world. Absent adequate domestic money, both require substantial foreign capital to develop but it is undeniable that there indeed was a time when we attracted capital in droves.
Add to the fifth grade lessons, based on an economist’s perspective, granting that a president does not lie on global television, the state of the nation’s economy must be sterling.
If true, Gloria Arroyo’s economics validates that our resources have indeed been parlayed into wealth. That wealth has also been equitably shared and distributed through economic competence.
Again, if true, Arroyo’s economy should be a far cry from what “shambles’ it inherited from the elected presidencies since the late Corazon Aquino’s, through Fidel Ramos’s and Joseph Estrada’s.
Never mind that in Estrada’s presidency the notorious pork barrel had been virtually eliminated (although eventually resurrected and then expanded under Arroyo). Never mind that in President Aquino’s transition from dictatorship to democracy institutional foundations were laid including the ratcheting up of trade that effectively reduced aggregate prices, increased productive supply and predicated both recovery and growth under President Ramos.
If Arroyo’s numbers were true, then those TV advertorials on the phenomenal growth of Arroyo’s GDP would be something a majority of Filipinos can easily relate to as each would have personal success stories to tell.
More important, if Arroyo’s GDP numbers were true, not only would the math of opposition economists be wrong but the perceptions of over eight out of ten who want Arroyo prosecuted must be self-delusional, downright wrong and baseless.
Perhaps, it is time to reintroduce the Angolan paradigm, one of the most popular comparative clichés on the utility of GDP as a measure of well-being and the importance of natural resources as a basis for wealth.
Angola’s principal resources are diamonds and oil. At purchasing power parity per capita, Angola’s per capita GDP is twice the Philippine’s. It is the second fastest growing economy in Africa and one of the fastest in the world. As China’s largest oil supplier, it is the beneficiary of a US$ 2 billion Chinese facility allowing relative independence from the IMF.
Rather than making a beeline to the U.S. embassy and there praying for employment in a recession-hit economy where unemployment is on the rise and the aging thumb-twiddle alone, shouldn’t Filipinos be trooping to Angola instead?
The reason we don’t is because the exploitation of resources and the traditional output indicators like GDP don’t mean much independent of social dimensions.
Angola’s life expectancy is 42 years. Its Gini-coefficient is 62. On a scale of one to five, with five being the worst, Angola’s rating on Human Rights violations is 3.5. One of every three children do not live to the age of five. Slums are everywhere and poverty is widespread. Angola is among the ten most corrupt.
Arraying ours along similar indices, we are not far off and sometimes worse. On a scale of 1 to 5, on political instability Angola is 2.6. Under Arroyo, ours is 2.8. On potentials for terrorist acts, Angola is 1, ours is 4.
The social and political indices validate popular perceptions as they debunk Arroyo’s economics. We should analyze comprehensively. The testimonies of the people on the streets on their destitution despite Arroyo’s sterling numbers and the mathematics of economists are more valid than any conjured by officials. Sans convoluting sophistry, they are eloquent. Heartfelt, they represent the aggregated measures of well-being from desperation to destitution, from joblessness to hunger and from sicknesses to death.
Popularity: 1% [?]
How long, do you suppose, until a spokesperson from the government (I’m guessing Mr. Remonde will get the detail) will point out how flawed this particular survey is?
I enjoy reading your posts. Facts and evidence hold my attention so much better than demagoguery. By the way, you wouldn’t happen to have a link to IEP report to which you refer?
Dear BenK,
Try http://www.visionofhumanity.org
When there you can choose which countries you want compared and then the site arrays the indices for you.
Dean
to Dean: You do know, of course that what you really said is that Arroyo-GDP-numbers can be correct without contradicting that life in Pinas remains hard. GDP is correlated to, but does not fully explain quality-of-life.
Nonetheless the GDP-numbers for Pinas explains why life in Pinas ain’t that sweet. GDP-per-capita Pinas : $3,300. Thailand : $8,500. [Canada : $39,300.] Conclusion : life in Thailand better. Life in Canada : much better. [ I used CIA-facts as source.]
===============
You have to admit GMA is a good speaker. She pats herself on the back for GDP-percent-growth, not the absolute numbers.
Plus you’ll notice GMA does not call attention to metrics that relate to corruption.
===============
GMA knows enough about politics, hence, the retreat from Iraq.
GMA knows enough about paying loans : hence, GDP.
I hope you are saying (‘cuz I will agree): the next Malacanang-resident should work harder with regards lining up GDP-growth, GDP-”absolutes” and gini (along with doing better than GMA on corruption-metrics) so that more Filipinos benefit.
I agree on the importance of the Mindanao-issue — which (to me) explains why on potentials for terrorist acts, Angola is 1, ours is 4.
Dear Up N Grad,
When I quote numbers, I’ve always quoted the NSDB data or NEDA. The numbers do not vary. What varioes is the choice of numbers to quote or the series against which numbers are compared. For example, Recto says that we grew in the first quarter and second quarters. Unfortunately we fell from the last quarters of 2008 which he does not look at because they are last year’s numbers.
And then when we look at numbers, we don’t adjust for seasonal diffrences. If we did, we would technically be in a recession. Again, perspective.
Yes, I agree with you that the next president should work harder on the social dimensions, the ones that we can feel.
Regards,
Dean
Reported GDP growth during the period under Arroyo is inconsistent with the decline in per capita energy consumption.
http://cvjugo.blogspot.com/2008/03/gdp-growth-and-missing-energy.html
Normally, the trend as people’s income increase, they consume more electricity (because they buy appliances or cars). Here in the Philippines, the opposite seems to be happening.
Dear CVJ,
Your observation hit our peculiarity right on the head.
If we look at the composition of household expenses, while electricity is huge in peso amounts, the perecentage of food still accounts for a substantial portion. Had there been some prioritizing in that breakdown, we might see that food (expensed on a spot basis and in cash)is prioritized over the light bill ( usually expensed on credit and after a short billing period).
The reported GDP growth was due to the increase in the services sector (lawyers, doctors, call center agents, etc.)whose increases are not necessarily electricity-related (except for airconditioning and lights for call ceneter agents who work at night). The electricity-guzzlers (manufacturing,industries that heat, cook and smelter, etc.)slowed down.
The breakdown of the GDP drivers is in the NSDB site. Our GDP growth driver is not as dependent on electricity save for cooling and lighting which, realtive to manufacturing, does not use as much megawatts.
Regards,
Dean
Thanks for your response. While our growth is driven by services, i don’t think this accounts for the negative correlation. The sector that exhibited the strongest negative correlation is the Transport Sector (table 3 in my blog entry that i linked to) which is strange unless we assume that engine efficiency offsets the increase in number of vehicles.
Every Administration blames the previous Administrations for its
own failures and incompetence. It is simply called in the corporate
world: “Covering Your Ass” or “Takip Puwit”.
We have all the potentials of being a developed nation. However, we
have put almost all our efforts in Politics. We have leaders who
are not only deceitful to us; but corrupt to the maximum degree.
We have people who are apathetic. We seem to have difficulties in electing the right leaders who truly care. We dont use our BEST JUDGEMENTs in electing these people. We got what we deserve.
Dear Haydn,
You said it. I agree 101%.
Dean
Actually, there are lots of Filipinos now in Angola and apparently are making good money according to one of my acquaintances that I met in the Filipino blogging world (jeri). Since a lot of high-paying jobs are oil and gas related (I am from Calgary), are our educational institutions providing additional training related to oil and gas production, reservoir engineering, production accounting, drilling etc. If we expand the offerings in our local schools, imagine the market that Filipinos could penetrate from Brunei to Norway to Africa not to mention Canada.
Rosa,
Are you advocating training Filipinos up for overseas markets, figuring that is their best hope?
Interesting . . .
Hope you are well.
I’m moving to Biliran September 1. Been there?
Joe
Joe,
I am not advocating training Fil. for overseas markets but since everyone in PI seem to dream to go abroad, why not make yourself more competitive so that you can get the higher paying job. I actually meet a lot of nurses who tells me now that they wish they have taken up engineering than nursing now that they are here because they (engineers) get paid two or three times the salary of a nurse with all the expensive training thrown in.
Hope you are ok too. Never been to Biliran but I stick with Northern Luzon especially Cagayan and Isabela which I think has still a lot of possibilities. I am looking at buying land for coffee cultivation but still not the right time but I have sent out feelers. Hope my investment in Vietnam pays off first. I have friends in Davao who are encouraging me to partner with them for coconut farming but still thinking about it. Hope will cross paths someday Joe.
Rosa,
Coffee, eh? I looked at coffee from the growing side. I drink my two cups of brew daily, always a Philippine brand. It is always excellent. I know Nestles is actively seeking more growers and conducts free seminars to help people get started. When I get situated in Biliran, I will explore the altitudes and accessibility of the mountains for coffee farming.
I think coconut farming has its ups and downs. I don’t see many new farms going in, and in northern Mindanao a few years ago, farmers were suffering because of declining prices. I don’t know how it is today.
The hillsides here (Leyte) are covered with coconut trees. I have an in-law who wholesales coconut wine. It is basically an illegal backroom operation, heh. I rather like sipping the stuff myself, and muse as to the commercial prospects of a legal operation. I mentioned “labels” and he basically shrugged, preferring his untaxed, hidden way.
These days I do too much musing and not enough working. Such is the way of retirement. Ambition is a four-letter word.
I agree with your thoughts about people preparing themselves for the world market, as that is where career jobs exist. Here, you ride a trike or work in a factory or fish from a boat or wield a machete alongside the road. Career paths are largely non-existent, as upward mobility is blocked by friends of the boss.
A friend’s brother is an engineer in Canada, and indeed struck it rich. Great job, great training, housing allowance, paid expenses for travel. He generously supports his mother, brother, and sisters back home. I question where all the Hotel and Restaurant Management graduates will find work. The three hot college courses seem to be HRM, technology and nursing.
What is your Vietnam investment, if I might ask? I spent 366 days there a few years ago (yes, I was counting each one) in a non-investment role. Called artillery.
Joe
Dear Rosa,
We have very well-trained geothermal engineers, geologists and oilmen. Unfortunately, we cannot pay them well so they leave. What little geothermal facilities we have are being privatized. That might bring in foreign capital enough to afford paying competitive wages.
In the oil industry, Chevron just recently shut down its refinery. The only ones who have refinery operations are Shell and Petron. So the employment market is small and getting smaller. Most of the development in the oil sector is in the downstream oil industry. That’s tank farms, lubricant marketing, LPG marketing and gasoline stations.
You are right, we should train our people for the higher paying jobs and not just for call centers and business outsourcing.
The company I worked for (Ogden Energy) had excellent plant engineers who were later pirated by Indian energy companies. The engineers were not trained formally but learned their skills from apprenticeship programs. Had they formal degrees, then they might have been offered better wages.
Regards,
Dean
Given the constitutional provision on patrimony – and the limitations on foreign ownership – it might wind up being added to the portfolio of the either the tsinoys or the tisoys – which still means crappy pay – and more inefficiencies.
Dear BongV,
Galing ng insights mo. I agree with your misapprehensions. I’ve dealt with some power plants owners of the ethnic-nature you describe, who put off maintenance until their power plants become too expensive to fix.
One example are the twelve units of diesel engines that provide power to Asia Brewery in Laguna. Those twelve are French-made Pielstick power plants bought during the energy crisis. They should run forever had they been maintained properly. They weren’t. I beleive only two are operating now while the rest are being cannibalized for spare-parts.
Right now the Lopezez bought into some of the geothermals but they borrowed heavily to get in (PNOC-EDC). To mitigate the purchase front-end costs, they immediately went into an initial public offering to refininance their exposure with public equity. But the price at which the IPO was initially offered had an above average Price/Earnings multiple. Kaya mahal pa rin.
The tradeoff would have been priority dispatch whenever their geothermal plants are arrayed against the more expensive diesel and bunker-fired plants of the National Power Corporation.
In other words, the geothermals should be dispatched first before the more expensive fueled plants. That way they are somewhat assured that they will operate and thus sell. Unfortunaely, of the emergent fuel mix, geothermals only account for something like a 5th of total energy capacity in Luzon. Most of the baseload plants are still either coal-fired or hydroelectric. On the latter, when there are no rains or when the river, dam or lake water level is low, then there is very little head (the force that turns turbines) and the turbines do not produce as much.
Where generation is concerned, under EPIRA, there are NO ownership limitations. A generating company (like Ogden, Mirant, Enron, Mission Energy, etc.) can be 100% foreign-owned. The citizenship limitations are only on transmission (National transmission Grid)and distribution (Meralco, Visayas Electric and Davao Light and Power) utilities.
By the way, the foreigners have found a way around the constitutional provision of resource onwnership by differentiating between the subteranean geothermal fields and the wells and power plants on top. The distinction is in the Electric Power Industry Reform Act (EPIRA) contained in two vague provisions inserted during the bicameral committee deliberations. Thus, these provisions did not have the benefit of committee or plenary debates.
When they privatize to foreigners, they only go to the extent of purchasing the well and the facility above. The steamfields remain in the national patrimony. Of course, the underground steam is worthless unless they are extracted through the wells and pipes.
There are similar statutes in the Mining Act. That one had gone through extensive debate.
Regards,
Dean
Dean,
It is tough to get foreign capital in, when one has to go through contortions and back channels – just to be able to do business in a chimeric murky policy environment.
Was in charge of WAN network administration of two diesel power barges (or floating power plants – as the locals call it) – one in Nasipit and the other one in Maco – a Danish-Japanese consortium.
I am not privy to the equity structure of said company as it did not interest me to find out then. As an independent power producer under a BOT scheme – the consortium generated the power – BUT – they can only sell the power to NAPOCOR – who in turn slaps on a margin. NPC then resells the power to the local utilities. With NAPOCOR acting as middleman – and guarantor of payments to the IPP – one can make an educated guess that the cost of electricity will not be cheap – after all the executives were driving Mercedes Benz Mussos – imported direct from Europe.
The local electrical engineers were getting paid local rates – and they were doing the jobs of their counterparts – who were easily making three four times than they were. The local engineers figured out how much they can get “out there” than “here” and asked to be transferred overseas to have parity.
Still goes back to constitutional provisions against foreign capital owning majority shares or even 100% ownership.
Can’t have the cake and eat it too.. Change the charter – or it’s more of the same – including the bozos and the game of musical chairs in Congress , Malacañang.
If one takes into account the FDI which could have gone to the Philippines instead of neighboring ASEAN countries – it is a good indicator of the The Cost of Doing Nothing to Remove the Protectionist Provisions in the 1987 Constitution.
Contortions and rallies against Charter Change sure ensures that The Cost of Doing Nothing to Remove the Protectionist Provisions in the 1987 Constitution will remain on an upward trend.
Sooner or later somethings gotta give – it wouldn’t be the foreign investors who will just take the business elsewehere. Shape up or keep on sinking.
Mr. Dean,
what is the solution, long term, for our country’s economy? we have all these number and figures, what is the proper way to go ahead? that is the question and that is the missing answer
Dear Roland,
Sorry. Hindi ko rin alam ang sagot diyan. May halong pulitika and pag-dapa natin habang tumatakbo. Mahina ‘yata ako sa pag-analisa kapag may pulitika na ang situwasyon.
We did some things right from Aquino’s time to Ramos. And then we gambled with our democracy when we felt comfortable by electing a popular leader over a competent one. There’s nothing wrong with that. The U.S. does it. But then they are resilient economy-wise. We, on the other hand, are resilient, patience-wise. I guess we should avoid becoming comfortable. Or stop being patient.
Regards,
Dean
Dean,
Now if I wrote other mainstream columns, I would ask permission to quote your second paragraph. Nicely put.
A little less patience would help a lot.
Write a “self help” book. Entitle it “The Impatient Filipino”.
Joe
Dear BongV,
Dear partner in the IPP business. You are so right. The barges, being either oil or diesel-fired were used mainly to balance the grid or simply for peaking capacities. Thus, they usually had a take or pay arrangement because they were not dispatched as regularly as the baseload plants were. To make up and to keep their revenues consistent, there was a minimum economic offtake (MEOT) which at times were as much as 85% of nominal capacity.
Add Napocor’s margins to the MEOT and you are so right about the electrons from those barges being expensive. Unfortunately, in islands like Mindoro and in Bohol, these barges were very important and provided baseload power. So one can imagine that a fishing and agricultural economt such as Mindoro and Bohol having to pay for electricity at relatively higher rates than we do in Manila. Kaawa-awa naman sila.
Wala pang reliability. When the typhoons came, the barges were floated to a deeper part of the port and thus were disconnected from the grid. Not only were the islands hit by storms, they didn’t even have power during times of crisis.
One of those barge operations you mentioned was run by a Tsinoy named Sunny Sun. He had exclusive contracts with some of the most prolific tariffs. He ran his operation from a small office in Paco where he shared official quarters with an employment agency. I wrote about this once (dwelling mostly on the undercapitalization of his company)and I was hurriedly hauled off to a congressional oversight hearing where my articles were used.
Regards,
Dean
Dean:
Having said that, and seeing how immersed you are in the energy sector.
Perhaps if you can blog about the state of affairs on alternative energy initiatives going on in the Philippines. Am aware there is a Spanish-funded program in Batanes involving solar energy – http://sgp.undp.org/web/projects/4077/batanes_alternative_energy_and_enhancement_project_luzon.html
Are you privy to the roll-out costs of such a project? Will the Philippine government consider rolling it out in the various rural communities? What are the regulations involved? Say, if I go into a joint venture with a foreign investor who obviously wants controlling stocks – will I be able to do so? Or will the franchises handed out to the local utilities prevent me from operating my own solar energy charging stations? How about installation of home based energy generation systems? Will I get reimbursed if I have excess power that I can pump into the grid?