Saturday, May 28, 2005

Comments on Prof. Ylagan's Hocking the Future

Comments on Hocking the Future By Amelia H.C. Ylagan (week of May 9-13, 2005,
Hola Nilo, as always, your comments are insightful. I totally agree with you, especially if I was in government or business. With a huge foreign/domestic debt and a bloated bureaucracy, government has no funds for anything else, particularly infrastructure development, education, social services, and defense. Indeed, raising capital is expensive whether for government or business activities (how the heck will we be able to buy a house without help from our families/relatives?).

My comments though were geared more to a strategic framework of governance. Correct me if I am wrong, but your starting point is that you are wearing the shoes of a government official. If so, then the starting point is: Government has no money, so it needs to raise funds creatively.

But what if you were wearing the shoes of business or civil society? Then the framework of analysis be: Should we prioritize solving the process inefficiencies of graft and corruption in society and hopefully benefit by: a) generating savings/ revenues from better tax and fees collections; b) renewed confidence in government leading to investments, grants, loans, etc.?

I have no answers to these chicken or egg questions (especially since I don’t want to be in government’s shoes at present--but that is escaping the problem). Also, are we discussing from different perspectives, me from a social science perspective and you from a financial and operational point of view? How do we combine both or other perspectives?

Is the ability of businessmen to discount market difficulties and distortions in their operations different when it comes to (political) governance? It is just that government has no credibility in asking everyone to pitch in under their direction despite graft and corruption at all levels of government. It might be too much to ask without meaningful reform (what with good people consecutively resigning from government).

In a way, I was asking Prof. Ylagan, what happens if the citizenry starts to discount the pervasiveness of government in our lives? Our parents sort of did that during Marcos’ time. But what if it is done on an even wider scale that parallels what Gen. Almonte wrote earlier this year (on using the market)? The presence of a large number of NGOs and the size of the underground economy doing what government should be doing, I think, are indicators of this. Social (or environmental) movements grow in proportion to the negative effects of globalization, poverty, bad governance, environmental impacts, etc.

On the part of the Overseas Filipino Workers (OFWs-take note Ed…), I wrote earlier that they are organizing on their own and trying to be self-sufficient in all possible areas. What does this mean? Are their earnings better utilized this way rather than going to government during the present time? What kind of social movement is it shaping up to be? I’ve attached below, from just one OFW e-group, the number of their related e-groups. Are the number and diversity signs of strength or weakness? Anyone into organizational network analysis will find this veeeeery intriguing (baka Frieda can do her dissertation on this). Even for entrepreneurs out there, this phenomenon raises intriguing possibilities.

FOR ONLINE BAYANIHAN and DAMAYAN at Global Filipinos in Information Technology (Fil-IT):

1. RuralComp - a mass computer literacy -
2. Database of the Future -
3. Tulong Pinoy Movement - the cyber NGO -
4. Bridging OFWs worldwide -
5. Vote for OFW Airlines -
6. Help my Hometown -
7. Lazaga Elem School - Pangasinan -
8. San Isidro Parish - Lipa-Batangas -
9. OFW Business / Investment Groups
10. OFW Monorail -
11. OFW Airlines -
12. OFW Transport Group -
13. OFW Business Center Group -
14. OFW Credit Card Company -
15. OFW Public Utilities -
16. OFW Marine Investments / Microfinancing -
17. OFW Telecom -
18. OFW Wellness Center -
19. OFW Subway / Railway -
20. OFW-AFRRIE - Agricultural-Forest-Residential-Resort-Industrial Estate Model –
What models are being formed here? How is the Filipino diaspora different from the Jewish, Irish, Gypsie, Chinese, Asian, etc. diasporas of different historial eras (an article by Perry Diaz partly answers this)? I tell you, when it comes to civil society innovations, the Philippines is a global leader.


Hecks,One big problem for any start-up company or an emerging market like the Philippines, is the availability of cheap funds. We don't have that luxury due to our very leveraged situation and very low revenue base. This holds true for the thousands of SMEs in the country that provides a major source of employment for our country. Without funds to invest whether you are government or an SME, one's potential growth is limited.In that sense, we don't have a choice but to widen our ability to generate more revenues. One could label "graft and corruption" as a process inefficiency if government were a private undertaking. Some process improvements take time and any improvement on corruption will take some time.What the government has in the short term is the ability to create immediate impact on the revenue side. The tax base is just too narrow to support the needs of a growing population. A tax effort of 12.5% of GDP won't cut it.There remains many avenues albeit unpopular ones:1) Tax on text- not inflationary at all- original estimates were at Php5-6B. Anti-poor- not at all. Text used to be free but telcos started charging and yet they've seen a exponential rise in usage.2) Income tax on OFW's. Previously, Filipinos working abroad, paid between 1-6% income taxes until someone changed it. Some symbolic income tax will go a long way in increasing the tax base. Woe to the Philippine based employees who pay between 6-32% of their very depreciated peso earnings.Nation-building calls for everyone to pitch in.Hope things are going well for you and Tammy.Best regards.

May 23, 2005

Thanks for the article Hocking the Future. Sorry I couldn’t reply right away. I was away last week for a U.S.-Mexico border environment conference in Baja California, Mexico, which was very interesting. my comments on your article are the following:

I agree mostly with you comments. The government’s trial balloon announcement smacks though of desperation. It seems like they are now willing to go after the family’s jewels or the children’s trust fund, so to speak. After allowing our U.S and Ivy League-trained technocrats to borrow like there was no tomorrow, they are scraping the bottom for novel ideas.

Novel ideas though should be equated with the need to address issues of graft and corruption in the BIR, BOC, DPWH, etc. Tax evasion/leakage/ exemption and the theft of government funds need to be addressed by government. Until bold reforms are initiated, our fiscal problems will linger.

With bold reforms in this sector, will come the energy, courage, and determination to address the issue of selective debt repudiation of Marcos-era debts and the aggressive renegotiation of the lopsided IPP contracts. Justice Puno has laid the legal conceptual framework for debt cancellation, especially for the BNPP.

But you know all of this already. What I want to stress though or ask is whether you sense a widening disconnect between the government/politicians on one side and the populace/civil society on the other side?

I am part of a handful of expatriate e-groups and the discussions increasingly speak of initiatives that discount the participation of government. There are initiatives and online discussions on OFW banking facilities, airlines (yes, they want to put up their own airline), countryside development projects, TV (pilot projects in existence), IT projects, job placements, health, education, etc. OFWs are organizing. They have the training, experience, and they are networking on a global scale.

OFWs as a social movement, I think, is occurring. Government and the Manila elite look at OFWs as na├»ve and immature people that can be manipulated and exploited. While there are many cases of exploitation, I am willing to bet that the best and brightest from the OFW world will get together and will organize to defend and promote their interests, even if this is against the government’s priorities.

When Jaime Zobel de Ayala gave that speech on the need to look at OFWs as a resource of the country, the government should not take it to mean that they can use OFW remittances to fund their corrupt and incompetent management of national affairs. OFWs have a sense of what they want to do with their earnings and letting the government use it is not one of them. They went abroad precisely to avoid interacting with government (they voted with their feet). To exploit their remittances is not only unjust, it is an insult to the sacrifices of OFWs.

This is not the way for government to be innovative. Rather it should be innovative in instituting bold reforms and limiting the pervasive influence of vested interests without leading to instability and violent class conflict. A third way of political economy is what is in order for the Philippines.

It is the task of Philippine intelligentsia, civil society, people’s organizations, citizens, government, politicians, and all concerned to develop this third way.
All the best.

1 comment:

rbt said...

“Process inefficiency”??? Does that mean the Marcoses are just “inefficient workers” too??? I guess Nilo is correct in that aspect once we compare them to the Enron’s and Worldcom’s of today. Kidding aside, I would think that any move on the government to correct revenue deficiencies that are short-term in nature will always be contentious. The public’s patience is wearing thin and like any efficient market, these measures success/failure will be a reflection of what the market can bear. The gov’t underestimates the intelligence of the public and they take their patience as a sign of acceptance. Only when it boils over do they feign fear and servitude in the pulling back of certain policies (nat’l ID, text tax etc).

Erap tested this theory to a certain extent and evidently, GMA’s economic “skills” (she keeps on testing the market with her idiotic measures) are being put to test in her attempt to gloss over her inefficiency to control graft and corruption, even within her own family!!! Her smug son/governor, who cannot articulate his dinosaur speed brain, is a prime example of her lack of discipline and ability to discipline. She should have just spanked him in the first place when he was a kid and then maybe, just maybe, he wouldn’t have grown up to be the village idiot.

It isn’t that government has “no money”, it’s a matter of appropriation and keeping the leaks down to an acceptable and tolerable level. If gov’t was a private company, imagine if you were CEO/GM, would the following budget be acceptable to you?

1) Approx. 20% of your total expenses will go to representation expenses (= pork barrels + assorted graft & corruption)

2) Another 25% will go to security (= our super advanced military)

3) 15% for salaries (= efficient gov’t employees)

4) 10% to training/seminars (= elections etc)

5) 20% for building improvements (non-stop asphalting of roads)

6) 5% for the clinic (duque’s new playground)

7) 5% miscellaneous (other budget items)

May not be entirely accurate, but you get the picture. Within those allocation itself, the appropriations are grossly inequitable, spending +PHP5 million on paving stones for the military camp is justified by the chief of staff while the soldiers languish on PHP5000 or so a month. Go figure.

At the end of the day, we need a leader with balls, lots of it, who will make the decisions that are needed. Put the money where the people need it most. Education (we’re no longer perceived as one of the best English speaking countries in the world), health (population explosion is killing us – 2.6% per annum puts us slightly behind India – we’re freaking rabbits!!!) and infrastructure (Thailand attracts over 10 million tourists a year! We have better beaches! We just don’t have the wherewithal to provide decent guides etc for tourism to catch on here). Just imagine how much the country would benefit if we had tourism growth of 20% a year! That’s only 400,000 people spending an average of 300 dollars in our economy!!! That’s a 120 million dollars going DIRECTLY into the economy!! At least in that area, there is less opportunity for leaks in the form of graft and corruption.

Oh well, I’ve said my peace. Kailangan daw ni Hecky ng response. Puro Nilo Hecky dialogue lang daw.