7/30/2011

Let there be fairness in the land


Thrust of anti-trust

By: Roberto F. de Ocampo
Philippine Daily Inquirer

About a month ago, Forbes magazine, in its annual listing of the world’s billionaires, indicated that the Philippines reached a milestone in 2011: doubling its number of billionaires from 5 in 2010 to 11 in 2011. Their combined wealth was a whopping $24.4 billion or an average of about $2.2 billion each. The magazine further disclosed that “the combined fortunes of the country’s 40 richest reached an all-time high of $34 billion, up from 2010’s $22 billion” (a 33 percent increase).

Shall we break the champagne? Is this grounds for a national celebration? You bet—for those in the magic circle of fortune, I suppose. After all, isn’t this evidence of the vibrancy of our democratic capitalist economic system? Isn’t this the epitome of entrepreneurial endeavor? Doesn’t this place our country above the ranks of the also-rans?

Maybe so, or maybe not quite. Most likely, the sense of jubilation amongst the rest of the 90 million or so of our people would be far more muted, to say the least. Consider for instance that the total wealth of the 11 billionaires is equivalent to about 13 percent of the Philippine GDP and that of the 40 richest nearly 20 percent. Consider also that the combined wealth of the 40 richest is equivalent to that of the combined wealth of about 20 million Filipinos or about 22 percent of the total population. Consider further that the average wealth of our billionaires, at $2.2 billion (P95 billion) is more than four times the total budget in 2011 for the Conditional Cash Transfer Program of P21 billion.

All this is mind-boggling of course. But this is not intended to be a rant against the super-rich. To some extent it is another way to present the ages old mantra about the Philippines: that a minuscule percentage of our people own and control more than the lion’s share of the nation’s wealth. Therein lies a major cause of why in spite of being the only Christian democracy in Asia, in spite of successive poverty-alleviation programs, in spite of breast-beating from time to time about increasing growth rates and improving credit ratings, the Holy Grail of inclusive growth remains elusive and the majority’s response to announcements of government after government of economic progress is usually, “Hindi namin ma-feel.”

There is no single magic bullet to redress this situation. The fact is that our socio-economic structure is severely lopsided, thus constituting the basic challenge of social transformation. A national vision of social transformation must start with the realization that the problem is a structural one. Solutions therefore require major structural change, not an upgrade of interior design or a repainting, as it were, of the economy’s faƧade.

Education is the usual antidote offered for this but there are some others that I believe worthy of equally serious consideration, which may have been either overlooked or whose impact toward social transformation may not seem apparent. One of them is the principle of leveling the playing field.

At a recent symposium on competitive policy organized by former President Fidel V. Ramos’ foundation, it was observed that our economy is “hampered by vested interests and inconsistent state policies. Competition is weak and weakening still. Monopolies and cartels dominate many sectors. Regulatory capture keeps down key services and even the World Bank describes the state as not effectively in the hands of the people since state policies and their implementation have tended to serve special interests more than the common good.” In short, our economy is anything but a level playing field. It is not enough for us to simply tout privatization and private sector led economy as elixirs to our economic woes in the face of a consistently weak public sector without putting firmly into place the basic operating principle underlying a truly democratic business environment, namely, competition. This could assume further strategic importance as the economy moves toward greater reliance on Public Private Partnership since without an effective competition policy in place, the already perceived ownership by a handful of an ever increasing number of vital industries and infrastructure may result in an even more lopsided socio-economic structure.

Attempts to level the playing field and bring about competition were successfully done in the past, notably in the breakup of monopolies in the telecommunication and inter-island shipping sectors. But the time has come to institutionalize a competitive framework rather than relying on sporadic exercises in enforcing competition. Such is the thrust of anti-trust legislation which is usually the centerpiece of competition policy in progressive states. Such is the thrust of anti-trust legislation (Senate Bill No. 1) filed by Senate President Juan Ponce Enrile.

It deserves prioritization by the administration and support by the business community. At this stage, business support would best come in the form of constructive scrutiny of the draft bill’s provisions as it makes its way to passage. This will help to ensure a balanced outcome for a landmark piece of legislation that moves the country toward true inclusive democracy characterized by greater business, entrepreneurial and job opportunity, the narrowing of the chasm between the rich and poor, and the rise of a far broader middle class, without casting bigness in business as bad and monopolistic by definition

Roberto F. de Ocampo is a former finance secretary and was Finance Minister of the Year in 1995, 1996 and 1997.

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Behind every "Utak Wang-wang" is the spirit of selfishness. It commonly manifests in the form of corruption or other forms of abuse of power and/or authority. Unfair business practices are among its manifestations.

In contrast, the spirit of kindness is behind every mindset of fairness and every attitude of selflessness.

Therefore, don't be overcome by evil, but overcome evil with good. (Romans 12:21)

7/27/2011

Initial fruits of walking straightly on the right path


"Aquinomics": What difference has it made?

By: Cielito F. Habito
Philippine Daily Inquirer

In a recent Inquirer Briefing attended by business leaders and other movers and shakers, I was asked to speak on the state of the Philippine economy one year into the Aquino administration. I titled it “A Year Under ‘Aquinomics’,” prompting someone to ask me if there was something to “Aquinomics” beyond playing on the President’s name. Not that I can claim to be a spokesman for the President’s economic team; I am not, and am not aspiring to be one, nor seeking to be part of his government. (It was “the other yellow candidate” whom I supported in the last two presidential elections, after all.)

Addressing the question, “Aquinomics” cannot be likened to, say, “Reaganomics” of the 1980s, which was defined by a distinct economic philosophy known at the time as “supply side economics.” This had challenged traditional demand-side or “Keynesian” economics, which until then was the mainstream thinking in macroeconomics. More recently, we heard of “Thaksinomics” espoused by the former leader of Thailand, which appeared to be defined by his business-friendly yet pro-poor approach to running the Thai economy.

What defines “Aquinomics,” then? One description that comes to mind is “economics of business confidence,” as that has been the driver of the economy under Aquino’s leadership so far. Over the past four quarters, growth in private domestic investment has been consistently surging, based on the quarterly National Income Accounts. This investment surge comes after many years of relative stagnation. Cross-country data from the Asian Development Bank reveal that in 2002-2007, our annual growth in total investment—that is, putting public and private, and foreign and domestic investments together—averaged zero percent. In contrast, our neighbors posted positive investment growth ranging from 3 to 19 percent per year. For most of the past decade, then, our neighbors were leaving us behind in building even greater productive capacity in their respective economies.

What is remarkable about the investment growth we are seeing lately is that it comes in the face of a significant drop in foreign direct investments (FDI). Latest Bangko Sentral ng Pilipinas data report that actual net FDI inflows so far this year are 17 percent lower than in the same period last year, a steep drop by any standard. Similarly, latest data on foreign investment approvals by the different investment bodies taken together (namely the Board of Investments, Philippine Economic Zone Authority, Subic Bay Metropolitan Authority and Clark Development Corporation) report a 53 percent drop from last year. And yet, overall investment has jumped 37 percent, implying that domestic investments must have jumped by much more, far overcoming the foreign investment decline.

What makes it even more remarkable is that the public component of domestic investment (government construction) also suffered a deep decline of 37.3 percent. Again, private domestic investments must have zoomed so much that not even this steep fall prevented total investment from surging the way it did.

At face value, the drop in government spending appears to be a downside to the Aquino government’s performance. Data from the Department of Budget and Management (DBM) indicate that disbursements in the first four months of the year were P60.5 billion or 11.6 percent lower than in the same period last year. Some observers now fault the new administration for “underspending,” for indeed, not only has it spent less than it did last year, it has also spent even farther less than what had been programmed to be spent by this time. But before casting this government as inept and lacking absorptive capacity, one must remember that this year’s budget was still drawn up by the previous administration. And if the current government has been more prudent about spending the money, it could well be because they have found that they don’t have to spend as much as the former government would have, to accomplish as much.

And it seems they have. The Department of Public Works and Highways is one of the biggest “culprits” in the underspending. It turns out that the agency has made dramatic changes in the way public works projects are costed out, leading to substantial savings. For one thing, Public Works Secretary Rogelio Singson has significantly reduced allowable “indirect costs,” including contractors’ profit margins (and quite likely the so-called “bukol”), in public works projects. Coupled with a strict policy on transparent public bidding, the agency boasts of more than P2 billion in savings from 2,797 projects over the past year.

Another reason for the underspending is that much of the large lump sums allocated by the previous government to various departments remain unspent. These are substantial amounts that the previous leadership gave department secretaries the discretion to allocate and spend—and it’s not hard to imagine how much of it must have gone to less than responsible uses. If the current department secretaries are slow in spending such sums, it could be because their predecessors had over-provided them in the first place. The new administration intends to cut these “lump sums” to a bare minimum in the 2012 budget, the first budget they truly own.

Aquinomics, then, might also stand for economics of fiscal responsibility—and the government now has a rare budget surplus to show for it. And while their underspending normally would have dragged the entire economy down, fortunately for them (and for us), the tremendous boost in private domestic investments that Aquinomics also brought about more than made up for the gap.

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Proverbs 2:1-15

My son, if you will receive my words, and store up my commandments within you; so as to turn your ear to wisdom, and apply your heart to understanding;

Yes, if you call out for discernment, and lift up your voice for understanding; if you seek her as silver, and search for her as for hidden treasures, then you will understand the fear of the Lord, and find the knowledge of God.

For the Lord gives wisdom. Out of his mouth comes knowledge and understanding. He lays up sound wisdom for the upright. He is a shield to those who walk in integrity; that he may guard the paths of justice, and preserve the way of his saints. Then you will understand righteousness and justice, equity and every good path.

For wisdom will enter into your heart. Knowledge will be pleasant to your soul. Discretion will watch over you. Understanding will keep you, to deliver you from the way of evil, from the men who speak perverse things; who forsake the paths of uprightness, to walk in the ways of darkness; who rejoice to do evil, and delight in the perverseness of evil; who are crooked in their ways, and wayward in their paths.

Behold, the fear of the Lord, that is wisdom; and to depart from evil is understanding. (Job 28:28)

The fear of the Lord is the instruction of wisdom; and before honor is humility. (Proverbs 15:33)

7/20/2011

Church eye-opener

Editorial
Philippine Daily Inquirer

Our mother Church has been deeply wounded by the controversies in the Philippine Charity Sweepstakes Office that have erupted in the past two weeks…. There is no doubt that everywhere in the Church there is great sorrow. We your pastors are one with you. As shepherds struggling to love you like Jesus the Good Shepherd, we are sorry for the pain and sadness that these events have brought upon you.” Thus the Catholic Bishops’ Conference of the Philippines apologized and expressed in a pastoral letter signed July 11 by its president, Bishop Nereo P. Odchimar, its “deep sorrow for the pain that the recent events have brought to you our beloved people.” The letter, to be sure, was issued in the context of the “surprising” revelations that at least seven bishops solicited and received from the PCSO expensive, luxurious Mitsubishi Pajeros – the logical insinuation of which was that these were for their personal use.

It turned out in the Senate hearing held a day or two after the letter’s issuance that the vehicles, though indeed bought with funds coming from the PCSO, were not Pajeros and, according to the bishops, were in fact used in conjunction with their dioceses’ various social action projects.

Unfortunately, lost in the Senate hearing may have been the most surprising, albeit very subtle, of all revelations: quite a number of Catholic dioceses and parishes, on their own, do not have the resources to effectively carry out their charities to the remote and, often, the poorest and most neglected villages in their sphere of service, thus the need to ask for external assistance.

In a sense, the “Pajero 7” controversy should be an eye-opener to both the Catholic hierarchy and the faithful. The poor dioceses do shock in a country that is virtually universally Catholic. In 2009, there were at least 91.8 million Filipinos and of that number, at least 63.06 million were Catholic. The Catholic Church in the Philippines is in a way a kingdom by itself, and every weekend sees millions of pesos flow into its coffers as offerings. But while churches in the other Christian denominations are taken care of and watched over by their mother churches and fellowships, Catholic dioceses and their leaders share no such bounty. In Catholic Philippines, the guiding principle is still generally “to each his own,” meaning, poor dioceses and parishes practically have to fend for themselves.

The Catholic Church “has more than sufficient resources to finance its charitable work without competing with countless indigent patients and legitimate charity beneficiaries,” Albay Rep. Edcel Lagman noted. Indeed, there are dioceses and parishes that are overflowing with donations and contributions, more than enough to keep the Catholic Church in the Philippines, as a whole, affluent. Yet there are impoverished dioceses where the clergy are practically “forced” to beg for scraps, never mind if the scraps come from the table of the politically powerful.

The example of Archbishop Emeritus Oscar Cruz, who said he was offered money from politicians twice, which he refused both times, is not only the ideal for a Church whose bedrock is its Christian, moral teachings; it is an imperative if the Church must insulate itself from politics and partisanship. This should now be more obvious to the bishops – after this recent controversy.

In fact, in the same pastoral letter, the CBCP also assured the Catholic faithful that it will “reexamine the manner of our collaboration with government agencies for purposes of helping the poor, making sure that pastoral sensibilities are respected and the highest ethical standards are observed. We shall examine our values in the light of our vocation to be disciples of Jesus Christ.”

If the Church must follow through on this pledge and its leaders must lead themselves away from temptation, it is high time that it spread its wealth equally among its 85 ecclesiastical territories and 2,762 parishes in the country. Only thus can the Catholic Church in the Philippines truly become a kingdom of faith for the people, assuredly free from the influence of materialistic politics.

Read also: Do away with "Inappropriate Exchange of Generosity" by The Windchime

7/17/2011

Raising Tax Payment of the Self-Employed?!


Labor center assails DOF’s plan to increase self-employed taxes

By Noel Sales Barcelona
CBCP News Online

Militant labor center, Kilusang Mayo Uno (KMU) assailed the Department of Finance’s (DOF) plan to increase the tax payment of workers, under self-employed and professional categories in order to beef up government funds.

Joselito “Ka Lito” Ustarez, vice chair of the KMU said in a statement that the DOF, particularly the Bureau of Internal Revenue (BIR) should go after tax evaders and large corporations, and not after the measly income of individuals.

“It is simply callous and opportunistic for the Aquino government to tax poor vendors, jeepney barkers, sari-sari store owners, and others in similar employment status. Callous because it shows a lack of understanding that they only raise a meager income. Opportunistic because it aims to raise tax collection from people it hardly supports,” said Ustarez.

Finance Secretary Cesar Purisima estimates P340 billion additional income for the government if the tax of professionals and self-employed be increased by a certain percentage as the latest Labor Force Survey shows that 30.4 percent of the employed employees are under self-employed category. For the Finance Secretary, it is an opportune time to tap this portion of the labor force as a new source of income.

However, Ustarez sees this move as an evidence of the incapability of the Benigno C. Aquino III government to create measures in improving its tax collection. He also criticized the bachelor president of being pro-rich, instead of pro-poor as the Chief Executive had approved the waving of the P64 billion unpaid taxes by the Team Energy Japan Corp. and the Aboitiz Power Corporation that are supposedly to go to the Quezon Provincial Government’s chest. This was done last January, revealed Ustarez.

“Purisima is also boasting that his fiscal team encountered a case last year with liabilities as high as P25 billion,” said Ustarez.

Ustarez advised the government that to be able to increase tax collections, it should waive the tax holidays given to big companies and conglomerates, run after tax evaders and tax foreign investors.

“Our self-employed kababayans barely earn a living through informal jobs because the government failed to provide them decent work,” Ustarez reminded Purisima.

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Then shall stand up in his estate a raiser of taxes... (Daniel 11:20).

7/13/2011

Do Away With "Inappropriate Exchange of Generosity"

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The government as a State of people, and the Church as God's people are the two sides of the coin of humanity. They are both established and instituted by God himself.

But while the leaderships of secular governments have their own mandates from the people to fulfill, the Church's leaderships have their Great Commission from the Lord to carry out. Wherever and whenever the different paths of these two types of leaderships cross, let the following verse provide wisdom:

"Render to Caesar the things that are Caesar's, and to God the things that are God's." (Mark 12:17)

And as the Church leaderships pursue the course of their path in the direction that is in accordance with the Church's mission, may the following verse keep them consistent on their track:

"No man, being a soldier to God, entangles himself with secular affairs: that he may be able to sanctify himself to Him to whom he has dedicated himself in service. Therefore for this reason you must endure hardship, as a good soldier of Christ." (2 Timothy 2:3-4)

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People of God: It is our obligation to support the Church and provide for Her needs. When we neglect this solemn obligation, the other side of the coin of humanity could (or would) fill the vacuum and slowly the moral authority of the Church could be held hostage by some debt of gratitude that might develop in the inappropriate exchange of generosity.

Instead of sowing your seeds in the field of gambling, why not prove the faithfulness of God by sowing your seeds in the Lord's field? Here is a practical challenge from God to anyone:

"Bring the whole tithe into the store-house, that there may be food in my house, and test me now in this,” says the Lord, “if I will not open you the windows of heaven, and pour you out a blessing, that there shall not be room enough for." (Malachi 3:10)

It's yet two years since I started to actually took this challenge from God, and to my delightful and thankful amazement, God is faithful with his promise! True tithing is honoring God with the tenth part of the whole blessing of your material substance in a regular periodic manner (I do it monthly). For Catholics, it is hard for most of us to do tithing because we have not practiced it aggressively. But when I decided to myself that I will honor the Lord with my tithe, I prayed this simple prayer: "Lord, like the others, I also wanted to honor you with the tenth of the blessings you give me regularly, help me do this."

There are no poor church congregations, there are only poor faith in taking God's promise.