PIDS in the News Archived (April 2014)

Energy prices have hit the headlines. Consumers are not happy. The media is angry. The government is wrestling with long term policy challenges around competition, renewables and security of supply. I am, of course talking about the UK. But I could just as easily be talking about the Philippines. Energy challenges are tough. The right policy requires finding answers to the question " what is the full cost of energy?

There is the price that we as consumers are charged through our monthly energy bills. In the UK, we are acutely aware of the social price that is paid when consumers, particularly those who are vulnerable, pay a high proportion of their income in energy bills " known as fuel poverty. Britons need energy to keep warm. The Philippine Institute for Development Studies estimates that up to 16 million people in the Philippines have no access to electricity. Millions more want to switch on a light, charge a phone or power fans.

In the UK, we are tackling the problem of costs by addressing imperfections in the energy supply and distribution markets. By making it easier for consumers to switch suppliers, encouraging competition and welcoming foreign investment, we believe we can offer consumers a better deal. Our experience in Britain tells us that the nationality of our utility companies is immaterial. We benefit from global capital, technology and greater choice. Helping consumers become more energy efficient is another big part of the plan.

While consumers want cheap bills, investors require reasonable returns. Get this balance wrong and energy shortages are the result. The price of power outages and insufficient supply is paid by many. The social costs are high but the economic costs, reduced economic activity and jobs, are higher still. The most important factor is certainty: when investing for 20 to 30 years, energy companies need to know that the policy and regulatory environment will set prices that allow them to make a return on the capital they have risked.

Some argue that subsidies are the answer to keeping costs down. But the Philippines is ahead of the curve by not having open ended support mechanisms. Subsidies mean that the consumer pays the price twice, once through their bills and again through their taxes. Subsidies create perverse incentives that have very negative economic effects, especially in the developing world and disproportionately benefit richer members of society. Subsidies are unaffordable and become overtly political.

There are costs to the planet too. An over-reliance on fossil fuels, in particular coal, is one of the prime causes of global warming that is perhaps the greatest risk the Philippines faces. Typhoon Yolanda was a shocking example of the greater intensity of weather we now face. The cost of climate change, if it is not tackled by every single country, will be catastrophic. Gas is cleaner, even though it can require more upfront investment to put in place the necessary infrastructure. The Philippines has further potential in renewables including solar, biomass and geothermal sources.
There is no one solution to energy policy. Countries face difficult choices to balance the range of risks and opportunities. There are, however, some policy principles that can work for all of us. Competition and smart regulation is better at delivering energy at affordable prices than subsidies or monopolistic, public or private, enterprises. Short term price caps may appear attractive but there is a longer term price to be paid if investors are discouraged and capacity fails to keep up with demand. An even bigger cost will be to the environment if carbon emissions and wasteful use of energy increase on current trends.

Each country must find its own route to energy and climate security. Around the world, the public, governments and businesses need to weigh up the full cost of energy in search of solutions.

Author: Asif Ahmad
Date: April 24, 2014
Source: Philippine Star

MANILA, Philippines - European businessmen back the governments plan to conclude the scoping for the free trade agreement (FTA) between the European Union (EU) and the Philippines by the end of the year as an FTA would pave the way for more opportunities for both European and Philippine firms.

We fully support the move to get closer to an EU-Philippines FTA and are happy that DTI (Department of Trade and Industry) is moving forward decisively, European Chamber of Commerce of the Philippines vice president Henry Schumacher told The STAR yesterday.

The FTA will be good for Philippine and EU businesses and will widen the scope of cooperation and partnership between companies, especially SMEs (small and medium enterprises), he added.

Trade undersecretary Adrian Cristobal Jr. confirmed the government is aiming to conclude scoping exercise (for the EU-Philippines FTA) this year.

The DTI had earlier asked government think-tank Philippine Institute for Development Studies (PIDS) to come up with studies to determine how the country could benefit from the proposed FTA.

The DTI has conducted nationwide consultations with different stakeholders on the proposed deal.

Aside from having a bilateral agreement with the EU, the Philippines also wants to enter into an FTA with the European Free Trade Association (EFTA) which groups Iceland, Liechtenstein, Norway and Switzerland.

Cristobal said earlier the Philippines hopes to sign a declaration for economic cooperation with ministers of the EFTA by June.

The joint declaration would serve as basis to continue the discussions and eventual negotiations, if feasible, for an FTA.

Besides Europe, the Philippines is working on preparations for the Association of Southeast Asian Nations (ASEAN) Economic Community, negotiations of the Regional Comprehensive Economic Partnership which aims to consolidate all of ASEANs FTAs into one regional free trade network as well as the Trans-Pacific Partnership (TPP) agreement being negotiated by the US and 11 Pacific countries.

At present, the Philippines has free trade agreements with Japan and the ASEAN.

The country also has free trade deals through the ASEAN with China, Korea, India, Japan, Australia and New Zealand.

Author: Louella D. Desiderio
Date: April 23, 2014
Source: Philippine Star

Asia-Pacific is keen on making progress on regional cooperation, with economic integration within the 10 members of the Association of Southeast Asian Nations as a key milestone set for 2015.

Despite regional economies growing at breakneck pace, inequality gaps are hampering efforts to turn ASEAN into a single economic community " an ambitious move considering the enormous distance between ultra-modern Singapore and dirt-poor Myanmar, still emerging from the shadow of decades of military rule.

Read: Why a fully integrated ASEAN is not (yet) possible

But developing nations in Asia are telling donors they dont want handouts in the form of official development assistance grants and loans, but rather investments from the private sector to develop their economies in a sustainable way to reduce future dependence on foreign aid.

So what role can the international development community play in the continents future regional integration efforts, and in helping bridge the inequality gap?

Devex asked three experts during the launch of the Asian Development Banks Asian Economic Integration Monitor, a bi-annual review of Asias regional economic cooperation and integration covering the 48 regional members of the Manila-based institution.

We need more investment rather than donations, said Diwa Guinigundo, deputy governor of the Central Bank of the Philippines. [Donors] can play an important role but [they should] be conscious of the so-called spillover effects of their policies. Lets treat each other as partners.

While acknowledging that donor funds are crucial to finance investments in emerging markets like most of ASEANs member states, Guinigundo stressed that partnerships are more important than being recipients of donor grants in the context of pursuing inclusive development.

Dont marry for money

Gilbert Llanto, president of the Philippine Institute of Development Studies, explained how in the changing landscape of development finance, his country has evolved from being heavily dependent on ODA to relying much more on private capital " especially remittances " through successful reforms of the fiscal system.

That doesnt mean, though, that international financial institutions have become obsolete for developing nations like the Philippines.

I think the World Bank and especially ADB still have an important role, because they will be tapped to finance [projects for the] public good, like disaster risk management, Llanto said. Donors bring in technical expertise and capacity, and this is a win-win role, not a diminished [but rather] very strategic role.

Money is not the object, according to Federico Macaranas, a senior professor at the Asian Institute of Management, a prestigious Manila-based think tank.

If you marry for money, then its not a partnership. So why are poor countries always looked at as recipients of money? Because the banking community thinks its money that drives the world, he explained. The world is awash with money, yet money has not solved the problems of the world [because donors] dont engage the very people who have solutions to the problems of poverty.

Macaranas gave the example of the SARS epidemic that swept Asia in 2002-2003, which was not fixed by expensive Western pharmaceutical drugs but by local expertise that drew on indigenous remedies to contain the disease.

Why do we shun all this indigenous knowledge? The international development community knows it can learn from this, he said. Its not the educated engineers who know our conditions best, but the indigenous farmers who know many things in their local communities that matter more for the development community.

Its better to know more about what locals can offer, he said, rather than say here is money to construct a house [after Typhoon Haiyan] when all [the affected communities] wanted was boats to give them a livelihood that would give them independence to rebuild first their lives and then their homes.

Development partners must know intimately what the locals want, he concluded.

Author: Carlos Santamaria,
Date: April 22, 2014
Source: DevEx

With the growing threat of climate change-related disasters and risks, experts are urging Asian governments to create a regional fund to address disaster risk-reduction and management (DRRM) needs, and address the plight of the poor in the region.

At a news briefing after the launch of the Asian Economic Integration Monitor on Tuesday, Asian Development Bank (ADB) Office of Regional Economic Integration Head Iwan J. Azis said Asian countries should pool together their resources to create a fund that could be used specifically for disaster reduction or rehabilitation needs.

Azis said this fund could be formed outside of the Chiang Mai Initiative (CMI), which is a regional fund created through the Association of Southeast Asian Nations + 3 or Asean +3, which is composed of the 10 member Asean countries, China, Japan and South Korea). The CMI, on the other hand, was created as a response of these countries to the 1997 Asian financial crisis.

Basically, the principle is the pooling of resources. Because if you have N number of countries, for example, maybe the risk of natural disasters for each of those N number of countries differ, but if you pool the resources together, then that can function as a relatively ample size of disaster risk-reduction management and mitigation [mechanism], Azis said.

Azis added that while individual countries may each have funds created for disasters, it would still be better to pool these resources together to enable a greater amount of resources needed to respond to various types of disasters.

He also said the Asean + 3 recently created a task force on DRRM, which shows that leaders of these countries recognize the importance of instituting DRRM measures regionally. The decision to create a regional fund for DRRM and how this will be designed, however, still lies on the countries composing the regional group.

This is important, since all Asian countries are threatened by climate change-related disasters. The ADB Office of Regional Economic Integration report stated that the cost of natural disasters in recent years has exceeded the gross domestic product of countries.

Data showed that between 1991 and 2010, the average cost of disasters in the region amounted to only $36.4 billion a year. But in the 2011-to-2013 period, this cost more than doubled to $126.9 billion a year.

You may have a wonderful macroeconomic policy, wonderful trade policy but if a disaster struck, it can wipe out a big chunk of the accomplishment that we have. Again, this is an area where we recommend stronger cooperation, Azis said.

Meanwhile, Philippine Institute for Development Studies President Gilbert Llanto agreed but added that a regional fund could also be designed to act as a general safety net.

Llanto admitted that the upcoming Asean economic integration could lead to winners and losers. Instituting safety nets on a regional basis could help address this issue.

Im not aware of any social fund. What we are seeing now is infrastructure funds, financial safety net funds to protect the financial system but for, lets say, those who would find it very difficult to [cope with the demands of integration], a social fund, for lack of a name, maybe thats something that can be tossed just to address the problem of inclusive growth, Llanto said.

Llanto said the Philippines has a safety net for the poor, the Conditional Cash Transfer scheme. But this safety net is also not enough, and should be expanded or replicated if the government is really bent on addressing inequality in the country.

A social fund, which can be implemented regionally, could also help address the growing inequality in the region. Azis, in his presentation, said the gini coefficient"a measure of inequality"within Asian countries is rising.

Azis said inequality between countries is decreasing between 1990 and 2012. But, he noted, the inequality within countries is widening.

This is a challenge for Asia. Despite this resilience on economic trade and so forth, Asia is not doing well in terms of inequality. Almost everywhere, the inequality has been increasing. Again this is an area where we are all struggling how to continue improving in order to achieve higher welfare but, at the same time, we can share the prosperity more equally, Azis said.

The Asian Economic Integration Monitor is a semi-annual review of Asias regional economic cooperation and integration. It covers the 48 regional members of the ADB. The April 2014 issue includes Theme Chapter:
Insuring against Asias Natural Catastrophes.

Author: Cai U. Ordinario
Date: April 22, 2014
Source: BusinessMirror

The Philippines is among the developing Asian economies that will likely be affected by the expected slowdown in Japan this year, experts said.

In the April 2014 issue of the Asian Economic Integration Monitor, the Asian Development Bank (ADB) warned that the fiscal and monetary stimulus implemented in Japan could weaken its economy.

This slowdown is expected to spill over to Japans major trading partners in developing Asia, particularly the Philippines, Taiwan, China, Indonesia, Thailand, Malaysia and Vietnam.

In Japan market skepticism over the success of deep-seated reforms needed to back the fiscal and monetary stimulus already undertaken could fail to reinvigorate the economy. A slowdown in Japan could affect developing Asia through trade and financial channels, the ADB said.

The ADB added that bank lending and foreign direct investments (FDI) from Japan could also drop as a result of this slowdown.

Philippine Institute for Development Studies (PIDS) President Gilbert Llanto said this is the reason there is a need for the country to rebalance its economic growth. He said the Philippines needs to strengthen its domestic sectors to increase their share in the economy.

[This means] you just dont depend on export growth, but you really have to strengthen your domestic economy so that the growth drivers will also come from within. In the past, our own records show that when the government became very serious in infrastructure investments and also when manufacturing firms started to improve, to be re-strengthened, then the result was there was internal growth, Llanto said.

Still, its [slower Japanese economy] a risk, risk talaga yun. If you look at the trade data, our exposure to trade is relatively large. But then this should be balanced by growth of domestic demand, he added.

It can be noted that Japan is the Philippiness largest trading partner and source of official development assistance (ODA).

In terms of exports, Japan was the countrys largest market in February 2014. Exports to Japan, including Okinawa, accounted for 25.4 percent of the total amounting to $1.181 billion. In terms of imports, Japan was among the countrys top 10 sources in January 2014. It accounted for 6.2 percent of the total imports in that month. Imports from Japan in January 2014 amounted to $356.21 million. In terms of ODA, data obtained from the National Economic and Development Authority (Neda) showed that the Japan International Cooperation Agency (Jica) was the Philippiness biggest source of ODA loans in 2012.

ODA loans extended by Jica amounted to $3.261 billion covering 21 loans. This accounted for 37 percent of the countrys total loans portfolio.

In terms of ODA grants, Jica extended a total grant of $95.83 million to cover six projects. This accounted for 3.36 percent of the countrys total ODA grants.

The Manila-based multilateral development bank said as of the end of September 2013, Japans outstanding loans to Asia reached $391.8 billion.

In terms of FDI, the ADB said in 2012 alone, Japanese firms invested $235.6 billion in the region.

Author: Cai U. Ordinario
Date: April 22, 2014
Source: BusinessMirror

MANILA, Philippines - The Philippines should implement strong medium-term structural reforms to ensure growth, according to an expert in international business and investments during a seminar-forum at the Philippine Institute for Development Studies (PIDS).

The country outperformed other emerging markets in Asia in the first half of 2013, noted Dr. Dan Steinbock, research director for international business at the India, China, and America Institute in the United States, during the Pulong Saliksikan on Navigating in uncharted waters: Advanced and emerging economies after the US Feds tapering at the Romulo Hall of Neda sa Makati Building last Feb. 18.

However, natural calamities such as last years Super Typhoon Yolanda could derail the Philippines economic growth, highlighting the need for the government to adopt medium-term structural reforms.

The impact of Typhoon Yolanda prevented the economy from ending the year on a high note, Dr. Steinbock said. The typhoon did affect agricultural production, which will increase price pressures in near term, and upside risks to core inflation, which could be exacerbated by strong aid-related capital inflows.

The current account surplus is enough to support the peso, but does not necessarily ensure an upside in growth. There is a need for structural reforms to address issues on exports, regional maritime disputes, and natural disasters, Dr. Steinbock said.

Moreover, the country should sustain its momentum, he said. It is important to know where the country is headed to even after President Aquino ends his term in 2016, Dr. Steinbock said.
He lauded the countrys fiscal situation as shown by the decline in the debt-to-GDP ratio, but said it was important to know if the result of fiscal reforms was truly structural.

With an overwhelmingly young demographic profile, economic growth must be accompanied by job creation to address the countrys unemployment rate, he said.

The manufacturing sector should be a top priority for rapid industrialization, he added, noting Chinas refocusing on global manufacturing, which has vastly improved the Chinese economys growth potential.

Dr. Steinbock also lauded the Philippines initiative for public-private partnerships in infrastructure and public services development. However, more reforms are needed to boost foreign direct investments (FDIs) to the country, he said.

He pointed out that the Philippines share of FDI flows to gross fixed capital formation (GFCF) shrank to 5.6 percent in 2012 from 10.3 percent prior the 2008 crisis period. The country should have reforms favorable for FDIs, given the abundance of alternatives for foreign investors to invest in other Southeast Asian countries and elsewhere, he said.//

Author:
Date: April 21, 2014
Source: Philippine Star

The Philippines needs to sustain its rapid growth in order to get out of the middle-income trap where it has been stuck for decades, the Philippine Institute for Development Studies said.

In the latest issue of the Development Research News, PIDS President Gilberto Llanto and PIDS Senior Research Fellow Adoracion Navarro cited recent literature which suggest that the Philippines needs at least an annual GDP per capita growth of 4.7 percent in at most 28 years.

This will allow the Philippines to cross over to the next income level, PIDS said.

The cross-over time to transition to high middle-income status can be cut by more rapid structural transformation, the PIDS report said.

The literature cited by PIDS is titled, Tracking the Middle-Income Trap: What is It, Who is in It, and Why? authored by Jesus Felipe.

The PIDS document said, citing Felipes work, that the Philippines was classified as one of the countries that had fallen into the so-called middle-income trap.

Felipe et al. gauged that 28 years are the threshold number of years that countries spend in the lower-middle-income group before graduating to the next income group; for the upper-middle-income group, the threshold is 14 years, the PIDS report said.

The Philippines, which is considered a lower middle-income country, is said to have fallen into the trap because it has been in this income group for 34 years as of 2010, it added.

The PIDS paper said that while there has been a generally increasing trend in Philippine GDP per capita growth, it is still not enough.

The research paper said that going back from 2012, the average annual growth rate was only 0.97 percent in the past 30 years, only 2.3 percent in the last 20 years, and only 3.3 percent in the last 10 years.

How can the Philippines get out of the middle-income trap? The literature indicates that the most direct strategy is to accumulate productive capabilities and express them in a more diversified exports basket, and more complex products or those that require more capabilities, the PIDS research publication said.

Acquiring productive capabilities in more sophisticated products will require more vigorous efforts to address critical development constraints identified by recent Philippine literature: fiscal space, infrastructure, access to finance, investments in human capital, and governance and institutional frameworks, it added.

Despite the risks ahead, the state-think tank expects the Philippine economy to expand by 6.6 percent this year, in line with the governments growth target of 6.5 to 7.5 percent.//

Author:
Date: April 21, 2014
Source: Malaya

Several research institutes are preparing to launch a prototype open-access warehouse of digital data to help increase the online accessibility of development research coming from the global South and boost their decision-making influence.

The Global Open Knowledge Hub is being developed by seven research bodies in the developing world, along with the UK-based research charity the Institute of Development Studies (IDS) and the US-based International Initiative for Impact Evaluation (3ie), to host their collections of thousands of development-related research documents and data sets.

The hub is all about making it easier for organisations [from developing nations] to share their content and to ensure that the knowledge pool is enriched, says Kelly Shephard, editorial manager with IDS. This, in turn, will enable otherwise unheard voices to contribute to global debates and decision-making.

The initiative is being designed to function as a back-end data store, similar to an institutional digital archive, but one that can host data from a number of institutions, according to Shephard.

Creating a platform for easy data sharing will help increase the use of research from member institutes, says Sheila Siar, director of research information at the Philippine Institute for Development Studies (PIDS), one of the projects founding organisations.

PIDS, like many research bodies in developing countries, has struggled to gain visibility for its research beyond regional development circles, says Siar.

The power imbalance today is not just that in developing countries we often have low access to capital and technology, but also low exposure in the international arena, she says. The development research that we produce is not sufficiently and effectively disseminated, so we dont have a strong voice in development discourse.

One existing global initiative to boost the influence of developing world research in international policymaking, GDNet, is part of the new hub initiative. Although GDNet is due to close in June, it plans to hand over its data sets and research summaries to the hub.

Research from the global South risks becoming less visible in an era of open knowledge, according to Tim Davies, research coordinator at the World Wide Web Foundation, which pushes for global open access to the web.

Its still really hard to find scholarship on Africa coming out of Africa, partly because the digital library systems and research infrastructures of universities, and other institutions havent had enough investment or the skills and technologies to do it effectively, he says.

Given that open access, by default, is a good way to go, we need to respond by building capacity with those who would find it difficult to participate in this web of data and online spaces, adds Davies.

While there are roughly 2,600 open-access repositories of academic information and data from research institutes globally " as listed on the Directory of Open Access Repositories " about half are in Europe and a fifth in North America.

The open-data world is currently dominated by big international organisations and by governments, says Shephard. The cost of entry to this world is quite high in terms of money and skills. Southern content is easily cut out in this scenario.
But successfully promoting the visibility of research from the developing world in an online environment will require more than simply uploading content, says Leslie Chan, director of Bioline International, a Brazil-based platform for the open-access distribution of journals from nearly 20 developing countries, Chan, who is also associate director of the Centre for Critical Development Studies, within the University of Toronto at Scarborough, Canada, warns that open-access developers must consider how to make content not just available, but also easy to find and repurpose.

A common mistake is to create a repository without making its content easily reusable, which makes it very limited, he says. There needs to be more attention paid to interoperability, meaning how are we going to make sure that the stuff that we put in our repository can be found and used by others?

The hub is still in its early stages " the first meeting of the partners was in January and the prototype repository is due to be launched within the coming months, according to Shephard.

The organisers are focusing on providing a wide range of content by engaging new partner institutes, says Shephard, although she acknowledges that an important factor is how content will be organised.

Ultimately, its organisers hope the hub will advance development goals by broadening the kinds of research materials that are available, according to Siar.

With open data, you can make more diverse kinds of knowledge available, which is essential for creating new ideas and innovation, she says. If development is monopolised by information coming from the North, then it stifles the process because policymakers and development planners will have a limited perspective, she adds.

As well as 3ie, GDNet, IDS and PIDS, the hub partners are: the Caribbean Community Climate Change Centre, Practical Action Latin America Regional Office, the Indira Gandhi Instithttp://dirp4.pids.gov.ph/webportal/news.php#ute of Development Research, Soul Beat Africa and the Secretariat of the Pacific Regional Environment Programme.//

Author:
Date: April 16, 2014
Source: Sci Dev Net

The Motor Vehicle Parts Manufacturers Association of the Philippines (MVPMAP) said investments in the automotive industry are being held back by the Department of Trade and Industrys slow action on the automotive industry roadmap.

MVPMAP president Ferdinand Raquelsantos said that numerous well-studied drafts have been crafted, submitted to and refined by the Philippine Institute for Development Studies (PIDS) and the Board of Investments in the last two years and yet, the BOIs target release of the roadmap on the first quarter of 2014 has come and gone.

The industry is now growing impatient, Raquelsantos said.

Raquelsatos said despite the fact that the auto industry as a whole is now experiencing increases in sales, some major investments have been put on hold pending the issuance of the roadmap.

He said the current growth forecast for manpower is for it to increase by 10 percent come 2016.

Investors want to see first what is in store for them in terms of fiscal and non-fiscal incentives before they pour in additional investments. The continued delay will not be good for us. We might lose this opportunity again and miss the boat again, Raquelsantos said.

He said the same sentiment was evident during the recent Electric Vehicle Summit. Foreign investors and their local EV partners were tentative in their decisions to invest in manufacturing facilities for electric vehicles in the country.

Just like them, we also want car assemblers to locally assemble more of their products here rather than bring them in in completely built-up (CBU) form. There are no value-added contents in terms of labor and materials in CBU importation. But no investment decisions are being made right now until the car assemblers and other potential foreign investors have seen the roadmap and determined the economic feasibility of local car assembly, Raquelsantos said.

Raquelsantos cited a missed opportunity in the Asian utility vehicle (AUV) when 14 years ago, the government imposed an increased excise tax on the model

He said this derailed the booming local AUV assembly and it never recovered. Our Asean neighbors grabbed this market segment from us and took the lead in producing these vehicles. They became the regional manufacturing hubs for these vehicles. Now, our production output is but a fraction of theirs.

He also cited the closure of the Ford assembly plant in Sta. Rosa and its subsequent relocation to Thailand as another example of a big loss to local parts makers.

We completely lost the Ford business to Thailand. We hate to see another car assembler leave or partially relocate some of his CKD assembly somewhere else. We hope we have learned our lessons from this bitter experience and learned them well.//

Author:
Date: April 15, 2014
Source: Malaya

With only a few weeks before Labor Day, militant labor group Kilusang Mayo Uno (KMU) pushed for the passage of a bill that seeks to increase workers wage.

KMU chairperson Elmer Labog said the passage of House Bill 257 or the P125 Wage Hike Bill will provide employees with the additional income to cope with the increasing commodity prices.

He issued the statement after alleging the government and some organizations are issuing studies and policies to demonize minimum wage.

Citing the Philippine Institute for Development Studies (PIDS), Labog said minimum wage rates in the country are hindering the growth of businesses.

He also included the Department of Labor and Employments (DoLE) Two-Tier Wage system, which he said reduced the minimum wage in Southern Tagalog where it was pilot-tested.

Less than a month before Labor Day, there should be talk right now of increasing the minimum wage. Instead, we are hearing vicious attacks against the minimum wage coming from the Aquino government and big capitalists groups, Labog said.

We vow to intensify our struggle for a significant wage hike, such as the P125 across-the-board wage hike nationwide that we have been clamoring for, he added.

DoLE earlier ruled out the possibility of the implementation of new wage hike in National Capital Region (NCR) on Labor Day.

Author: Samuel Medenilla
Date: April 04, 2014
Source: Manila Bulletin

LOOKING AT various studies related to the upcoming ASEAN 2015 integration, one would be struck by the amount of data compiled by our policy makers but at the same time disappointed at the seeming non-interest on their part on one particular set of numbers: the rise in teenage pregnancy and the seeming dissolution of the insitution of marriage.

Recent figures indicated that teenage pregnancy in this country rose by 70% in the past 10-year period (114,205 in 1999 to 195,662 in 2009). The 2010 figures show 206,574 such pregnancies, with more than half of that number of girls below 14 years of age. Data from the National Youth Commission show that the Philippines has the third highest number of teen pregnancies in Southeast Asia and among the highest in the ASEAN region and the only country where such a number is increasing.

Also disconcertingly, 13-14% of all registered marriages are among those below 20 years old. Meanwhile, there is also a rise in annulment cases. The number of annulled marriages has steadily increased in the past decade or so, with a daily average of 28 couples reportedly filing annulment cases (as per the records of the Office of the Solicitor General). In 2012 alone, it was reported that 10,528 annulment cases were filed, representing a 100% increase in just 10 years.

Why are these numbers important in relation to our economy? Because the basic economic unit and source of productivity are people.

As pointed out by Henry Potrykus and Patrick Fagan (in their study The Divorce Revolution Perpetually Reduces US Economic Growth: Divorce Removes a Fourth of Head-of-Household Productivity Growth, March 8, 2012): It is worth emphasizing that though economic production generally, and growth particularly involve three components, economic enterprise is a human activity. Human beings, by the measure of growth accounting, contribute over half of what is valuable to production. Only one third of growth may be attributed to non-human, physical capital. Domestic production is affected massively by the human components contribution.

Also, because it must be pointed out that despite the ASEAN integration being packaged as turning ASEAN into one big production base, the Philippines nevertheless is also hinging its strategy on expanding our services industry. But services require people. And people need to be educated and trained.

Connect that with the recent presentation at National Economic and Development Authority and Philippine Institute for Development Studies (NEDA PIDS) (Jobs, Expansion, and Development; by Paqueo, Orbeta, Lanzona, and Dulay; April 3, 2013) which talked about the positive correlation of open unemployment with income and education. More tellingly, they spoke of the fact that income of households headed by high school graduates is more than double that of households with only elementary education. In short, the rate of return to investment in education is relatively high.

Or put another way: the longer you stay in school, the higher your income and the greater the productivity, which then leads to overall national economic gain. But how can kids stay in school longer if they cant control their hormones (urged on by a sexed up media) and keep getting pregnant?

Thusly, of the almost 3 million Filipinos currently unemployed, 48.2% are within the 15-24 age group, with 29.9% those 25-34 years old. Most of them are high school graduates.

The governments solution is to pour condoms on them, which isnt a solution at all. Its like throwing band-aids at an accident-prone person but not teaching that person how to avoid accidents.

Its common sense that is no longer common. As Tara Culp-Ressler writes (Teen Pregnancy Negatively Impacts The National Economy, June 8, 2012), albeit in the US setting, Because teenage pregnancy deters increased education, it leads to significant amounts of lost earnings, which negatively effect the economy as a whole.

In any event, the foregoing has to be understood within this context: at present, Filipinos 30 years old and below comprise around 70% of the population (with those below 14 years at 35%, with the median age at 22.9 years old). Those 65 years old comprise only about 4.1%.

Where our young go, literally so will our country.

And it takes no stretch of the imagination to connect the rise in teenage marriages to the rise in annulments. In which event, Potrykus and Fagan had this to say (albeit about marriage, divorce, and the economy): Marriage is a causal agent of economic growth. It constitutes one third to one fourth of the human capital contribution of household heads to macroeconomic growth. The total contribution of human capital to growth of domestic product in turn is large, being of equal proportion to the other two contributing factors: size of the labor pool and physical capital. Divorce removes this agent of economic growth.

The point of all this is: economics is not just about numbers and graphs. In the end, its about people. If we dont care for our people well, molding their character properly and inculcating in them proper virtues, then all that economic planning is useless.

Author: Jemy Gatdula
Date: April 10, 2014
Source: BusinessWorld

MANILA, Philippines"Auto parts manufacturers have warned the government that a further delay in the release of the proposed automotive roadmap will deter the entry of new vehicle assembly and parts production investments into the country, amid a market where imports are increasingly slashing the share of locally manufactured units.
Numerous well-studied drafts have been crafted, submitted to and refined by the Philippine Institute for Development Studies (PIDS) and the Board of Investments (BOI) during the last two years. And yet, the BOIs target release of the roadmap on the first quarter of 2014 has come and gone. The industry is now growing impatient, Motor Vehicle Parts Manufacturers Association of the Philippines Inc. (MVPMAP) president Ferdinand I. Raquelsantos pointed out in a statement over the weekend.
While local vehicle sales have been increasing during the past few years, this has not redounded to domestic assemblers, as the share of imported vehicles has also grown vis--vis units assembled in the country.
An industry source told the Inquirer that of the over 210,000 vehicles sold in 2013, only 38 percent were assembled here, while the rest were imported mainly from Japan, South Korea and Thailand. Last years share of locally assembled units was lower than the 41 percent it had in 2012.
The low tariff being slapped on vehicles from within Asean and free trade partners like Japan has made it cheaper to just import completely built-up (CBU) units than assemble completely knocked down (CKD) components. For instance, American carmaker Ford last year pulled the plug on its Philippine manufacturing operations and instead made Thailand"considered Aseans Detroit"its production base in the region.
In Asean, the Philippines lags behind Thailand, Indonesia, Malaysia and even Vietnam in automotive output.
It does not help that some major investments have been put on hold pending the issuance of the roadmap, according to MVPMAP.
Investors want to see first what is in store for them in terms of fiscal and nonfiscal incentives before they pour in additional investments. The continued delay will not be good for us. We might lose this opportunity again and miss the boat again, Raquelsantos explained.
The industry executive cited that, during the recent Electric Vehicle Summit, foreign investors as well as their local partners said that they were tentative in their decisions to invest in manufacturing facilities for electric vehicles in the country.
Just like them, we also want car assemblers to locally assemble more of their products here rather than bring them in in CBU form. There are no value-added contents in terms of labor and materials in CBU importation. But no investment decisions are being made right now until the car assemblers and other potential foreign investors have seen the roadmap and determined the economic feasibility of local car assembly, he said.//

Author: Ben O. de Vera
Date: April 14, 2014
Source: Philippine Daily Inquirer

The national government has a lot of catching up to do in terms of revenue generation, as the Philippines revenue collection effort is considered as one of the lowest among Asean countries, this according to a report published by the Philippine Institute for Development Studies.

The state-think tanks latest Development Research News authored by PIDS President Gilberto Llanto and Senior Research Fellow Adoracion Navarro said that the revenues collected by the government in 2013 as a percentage of the countrys gross domestic product (GDP) is still below the amount generated by its peers in the Southeast Asian region.

The government collected P1.716 trillion in 2013, which was equivalent to 14.8 percent of GDP. The amount generated fell below the P1.746 trillion program by 1.7 percent.

The average revenue-to-GDP ratio in the ASEAN excluding Brunei Darussalam (which has a ratio skewed by its large petroleum revenues) was 18.6 percent in 2012, The research paper said.

The Philippines revenue generation effort is second from the bottom in ranking, it added.

The countrys revenue effort in 2012 was 14.52 percent. Cambodia was the only country which fell below the Philippines with a revenue-to-GDP ratio of 14.48 percent.

The PIDS publication mentioned that the Department of Finance aims to generate revenues equivalent to 18 percent of GDP by the end of President Benigno Aquino IIIs term by 2016.

It added that the Bureau of Internal Revenues efforts to increase tax collections, which include the Run After Tax Evaders program, are in the right direction.

However, these programs will be more effective if the present administration would be able to prosecute, with as much zeal as in the cases against professionals and celebrities, the big cases that had escaped the arm of the tax man, the document said.

The administration appears to have the political will to prosecute big cases, expose sophisticated tax evasion modes to the public, and serve tax-evasion-deterrent examples to big-time offenders, it added.

For this year, the Aquino administration has a revenue program of P2.018 trillion, equivalent to 15.5 percent of GDP.//


Author:
Date: April 14, 2014
Source: Malaya

It has been two years in the making and yet, there is still no end in sight for the much-awaited local auto industry roadmap as proposed by the Board of Investments (BOI).
Motor Vehicle Parts Manufacturers Association of the Philippines (MVPMAP) President Ferdinand Raquelsantos said that numerous well-studied drafts have been crafted, submitted to and refined by the Philippine Institute for Development Studies (PIDS) and the BOI during the last two years.
And yet, the BOIs target release of the roadmap on the first quarter of 2014 has come and gone. The industry is now growing impatient.
He explained that despite the fact that the auto industry as a whole is now experiencing increases in sales, some major investments have been put on hold pending the issuance of the roadmap. As it is, the current growth forecast for manpower is for it to increase by 10% come 2016. Investors want to see first what is in store for them in terms of fiscal and non-fiscal incentives before they pour in additional investments. The continued delay will not be good for us. We might lose this opportunity again and miss the boat again, he said.
The same sentiment was evident during the recent Electric Vehicle Summit. Foreign investors and their local EV partners were tentative in their decisions to invest in manufacturing facilities for electric vehicles in the country.
Just like them, we also want car assemblers to locally assemble more of their products here rather than bring them in in completely built up (CBU) form. There are no value-added contents in terms of labor and materials in CBU importation. But no investment decisions are being made right now until the car assemblers and other potential foreign investors have seen the roadmap and determined the economic feasibility of local car assembly, Raquelsantos said.
Fourteen years ago, he said, the government imposed an increased excise tax on the Asian Utility Vehicle (AUV). This derailed the booming local AUV assembly and it never recovered. Our Asean neighbors grabbed this market segment from us and took the lead in producing these vehicles. They became the regional manufacturing hubs for these vehicles. Now, our production output is but a fraction of theirs.
He also cited another example. The closure of the Ford assembly plant in Sta. Rosa and its subsequent relocation to Thailand was a big loss to local parts makers. We completely lost the Ford business to Thailand. We hate to see another car assembler leave or partially relocate some of his CKD assembly somewhere else. We hope we have learned our lessons from this bitter experience and learned them well, he said. (Bernie Cahiles-Magkilat)

Author:
Date: April 12, 2014
Source: Philippine Daily Inquirer

THE Kilusang Mayo Uno (KMU) is up in arms over what they believe is an effort by businessmen and the Aquino administration to move for the lowering of the minimum wage rates in the country by blaming it for the number of unemployed in the country.
In a statement, the labor group assailed the Philippine Institute of Development Studies (PIDS) for coming up with a report that says the presence of the minimum wage should be blamed for the worsening unemployment rate in the country.

"The PIDS is acting in the interest of, if not in direct cahoots with, the Aquino government and big capitalists. Its so-called research is not objective, but a weapon in the capitalists' brutal class war against workers," said KMU Chairman Elmer Labog.
"We are revolted by the PIDS's attack on the minimum wage," he said.

To note, the PIDS is a non-stock, non-profit government corporation that has a mandate to help government planners and policy-makers in formulation of national programs by providing comprehensive and integrated research materials.

Earlier this month, the PIDS came out with a report saying the minimum wage requirement actually prevents people from finding jobs despite being willing to work below the basic pay.

"Generally, (minimum wage is) not only unhelpful but highly detrimental to the welfare of the common man and the disadvantaged," the PIDS report said.

"Allowing firms to hire low skilled and poor workers, who want to voluntarily opt out of the mandatory minimum wage norm, recognizing that it hurts rather than helps them, ensure, though, that workers' acceptance of the offers is voluntary and well informed," the PIDS report added.

Minimum wage is defined under the Wage Rationalization Act as the lowest wage rate fixed by law that an employer can pay his workers.

The KMU said they will never allow efforts to have the minimum wage lowered than it already is.

"The minimum wage in the country is already at poverty and starvation levels and cannot be blamed for unemployment and poverty. It should be increased, not cut," said Labog.

To note, the KMU is pushing for the passage of House Bill 257 or the P125 Wage Hike Bill, seeks a P125 across-the-board wage hike nationwide. (HDT/Sunnex)

Author:
Date: April 12, 2014
Source: Sun Star Cebu

THE Philippines needs to invest more in human capital to seize employment opportunities for young population offered by next year's Asean economic integration.
In a report, government think tank Philippine Institute for Development Studies (PIDS) said the country will benefit from increased intraregional trade in goods and services as well as enhanced mobility of people that the integration implies.
"Our skilled professionals and even the unskilled ones which could be in demand in other Asean countries, they are going to benefit from enhanced mobility of labor within Asean," said PIDS senior research fellow Adoracion Navarro in a forum.
"We think that we should view this as an opportunity particularly because we are signing the MRA (mutual recognition agreements) and we think that we are ready for it," she added.
The PIDS also underscored the need for the Philippines to pay serious attention to other behind-the-border domestic issues such as upgrading and modernizing infrastructure, improving domestic resource mobilization and reforming the judicial system.
"These are things that we need to do anyway with or without Asean economic community 2015," Navarro added.
The state think tank said both border and behind-the-border issues should be addressed in order for the country to take full advantage of a larger and more dynamic market for goods, services and capital.
Ronald Mendoza, executive director of the AIM Policy Center, earlier said that continuing the human capital investments over the next 25 years is a challenge for the country.
"This will be the backbone of our long term competitiveness. We believe that if you look where the sources of growth, where the sources of comparative advantage for the country, it is in our young people," he said in an economic briefing. (Philexport)//

Author:
Date: April 08, 2014
Source: Sun Star Cebu

Pumalag ang ilang labor groups sa pag-aaral ng Philippine Institute for Development Studies na nagsasabing nakakasama lang ang pag-oobliga sa mga employer na magpasahod ng minimum wage. Giit nila: Kung walang minimum wage, wala nang proteksyon ang mga manggagawa.

Author: Jasmin Romero
Date: April 05, 2014
Source: ABS-CBNnews.com

Imbes na makabuti, lalo raw nakakasama sa mga karaniwang manggagawa ang pagkakaroon ng minimum wage. Ito ang lumabas sa pag-aaral ng Philippine Institute for Development Studies

Author: Jasmin Romero
Date: April 04, 2014
Source: ABS-CBNnews.com

MANILA - The Philippine economy is likely to grow at the lower end of the government target for this year, according to a state-run think tank.

In a briefing, Philippine Institute for Development Studies (PIDS) research fellow Adoracion Navarro said gross domestic product (GDP) growth would come in at 6.6 percent, slower than last year's 7.2 percent expansion and at the lower end of the government's 6.5-7.5 percent target range for 2014.

"Even with the likely increase in domestic interest rates due to the monetary tightening of the BSP and the end of the US' quantitative easing, there is still sufficient slack in investments and wide room for productivity improvements," Navarro said.

The US Federal Reserve last December began tapering its monthly bond-buying, the third tranche of its so-called quantitative easing (QE) meant to shore up the recovery of the world's largest economy.

The Bangko Sentral ng Pilipinas (BSP) last week hiked banks' reserve requirement by a percentage point, bringing the ratio to 19 percent -- a move seen to siphon off P60 billion in liquidity, which has been increasing at a record pace since late last year.

Navarro said the impact of capital formation in 2013 would start to be felt this year.

"Investments as a domestic driver of growth will thus remain significant. Construction is likely to accelerate due to post-disaster reconstruction efforts, more aggressive infrastructure investments, and the start of some public-private partnership projects," she said.

Despite this, Navarro said the damage sustained by agriculture would dampen the sector's economic contribution this year.

"The minimal contribution of the agricultural sector to value added growth in 2013 is projected to persist in 2014 because of low productivity and investments in that sector," she said.

According to PIDS, inflation would pick up to four percent, just below the mid-point of the BSP full-year target range of 3-5 percent. Fueling price increases would be food and electricity.

"The depreciation of the peso could also push overall inflation up through its impact on imported inputs," Navarro said, adding that the PIDS forecast however remains within the BSP target.

PIDS said the peso's weakness is expected to continue to average at P45 for every dollar this year.

"The peso-dollar exchange rate will continue to be influenced by the tapering of the US monetary expansion. But its impact is expected to be moderate as investors have likely incorporated this expectation in advance into their investment decisions," Navarro said.

"This increased competitiveness of the peso will have positive impacts on the exports sector," she added.//

Author: Rain Castro
Date: April 03, 2014
Source: Interksyon TV5

Cebu City, Cebu " Despite efforts to position the Philippines as a preferred medical tourism destination in Asia, the country still lags behind other neighboring ASEAN countries in the regional medical tourism market, an industry stakeholder said.

Oscar Picazo, senior research consultant for health of state think-tank Philippine Institute for Development Studies (PIDS), underscores in a policy note that the Philippine medical tourism continues to get a miniscule share of the medical tourism market even if it offers better prices in surgical procedures than its Asian competitors.

According to a PIDS statement, Picazo said the Philippines is among the top 15 medical tourism destinations in 2010. The country is ranked 11th on medical tourism which has 80,000 medical tourists but tails behind Thailand (1st), Singapore (2nd), and Malaysia (5th).

Thailand has the topnotch position among the medical tourism destinations, with a total of 1.2 million medical tourists in 2010. Singapore meanwhile logged 600,000 and Malaysia with 350,000 medical tourists in the same year.

To improve the countrys status, Picazo recommends the establishment of a coordinating body (council or board) among offices and agencies involved in the medical tourism industry. A marketing campaign for the 21 premier hospitals included under the Philippine Medical Tourism Program (PMTP) must also be crafted and implemented.//

Author: Malou M. Mozo
Date: April 04, 2014
Source: Manila Bulletin

KMU chair Elmer Labog said the labor group is intensifying efforts to push for an immediate wage increase.

Less than a month before Labor Day, there should be talk right now of increasing the minimum wage. Instead, workers are hearing vicious attacks against the minimum wage from the Aquino government and big capitalists groups, Labog said.

He also criticized the Philippine Institute for Development Studies (PIDS) for claiming that the minimum wage is denying people jobs and pushing up poverty.

PIDS is trying to ignore the fact that labor costs now amount to only a small section of overall production costs, and that what makes doing business more difficult for employers, especially small Filipino businessmen, are high power and water costs, rampant smuggling and trade liberalization, and high taxes and government kickbacks, he noted.

Labog said the government is only trying to make it appear that the minimum wage is now a cause of poverty. But the current minimum wage levels in the country could already be called poverty wages or starvation wages.
Labog said the KMU would vigorously protest attempts by the Aquino government to allow big capitalists to avoid implementing the minimum wage.

We vow to intensify our struggle for a significant wage hike, such as the P125 across-the-board wage hike nationwide that we have been clamoring for, he added.

But the Department of Labor and Employment has already ruled out the possibility of the government announcing a wage hike on Labor Day.//

Author: Mayen Jaymalin
Date: April 05, 2014
Source: Philippine Star

With only a few weeks before Labor Day, a militant labor group is now pushing for the passage of a bill, which will grant workers with a significant wage hike. Kilusang Mayo Uno (KMU) chairperson Elmer Labog said the passage of House Bill 257 or the P125 Wage Hike Bill will provide employees with the additional income to cope with rising prices. He issued the statement after alleging that the government and some organizations are issuing studies and policies to demonize the minimum wage. The labor leader cited a statement from Philippine Institute for Development Studies, which claims that minimum wage rates in the country are hindering the growth of businesses in the country.//

Author:
Date: April 05, 2014
Source: Manila Bulletin

With a 600-million strong population which is twice that of the United States, more than 3,000 public listed companies and a gross domestic product (GDP) growing faster than the global average, it is a given that the Asean region is a force to be reckoned with and offers much growth potential.

Prof Kishore Mahbubani puts it well when he says that overall the Asean glass may be half full but it is going to become more full in the days to come.

Asean moves like a crab ... it takes two steps forward, one step backwards, one step sideways ... and if you watch it in slow motion, you wont know where it is going, says Kishore, dean and professor in the practice of public policy from the Lee Kuan Yew School of Public Policy at the National University of Singapore.

But if you slice it decade by decade, for each decade, Asean is far ahead after every 10 years - thats the magic of Asean.

And thats they way I see it moving ahead.

Kishore was giving his views on the Asean economy as one of the guest speakers at a panel discussion held in conjunction with the Invest Asean 2014 conference organised by Maybank Kim Eng in Singapore recently.

He says inter-Asean trade has remained at 25% (of total Asean trade with the world) since decades ago but the difference is this.

Total Asean trade with the world was roughly US$400bil (RM1.31 trillion) in 1990, so 25% of that was US$100bil, now it is around US$2.2 trillion, so 25% of that is over US$500bil which means it has gone up five times eventhough it has remained at 25%.

This shows inter-Asean trade has grown significantly and will continue to grow in terms of volume, Kishore opines.

Stronger CLMV nations

Citing data from reports, he says the amount of trade of CLMV countries (made of Cambodia, Laos, Myanmar and Vietnam) with the other Asean countries has grown faster than the original six Asean countries with each other, which suggest that they have become more integrated into Asean relatively speaking, to their positions. The original six are Malaysia, Singapore, Indonesia, the Philippines, Brunei and Thailand.

While Cambodia and Laos are small and vulnerable, Vietnam has gone through a bad patch and is coming out of it and Myanmar, if the political situation resolves itself, is by far the most resource-rich country in South-East Asia, Kishore, points out.

Indeed, many companies have taken advantage of this and have been looking at Myanmar to invest in , calling it the last frontier.

But many have also been discouraged as its rich natural resource environment coupled with a young vibrant population is accompanied by poor financial, legal and infrastructure systems.

In his report released in conjunction with the conference, Maybank Investment Banks chief economist Suhaimi Ilias points out as a whole Asean possesses ample resources to catalyse and sustain its growth and development.

It has the human resources with its huge population, natural resources that range from agriculture, plantation, oil and gas as well as minerals and readily accessible financial resources" namely the large pool of domestic savings, he notes.

While some argue that the difference in economic levels among the 10 countries is a challenge in creating a common marketplace for the region, Suhaimi opines that diversity, rather than being a hindrance actually creates opportunities for its members to complement each other via specialisation, instead of competing with each other.

By 2015, the Asean Economic Community or better known as the AEC, which will incorporate a single market and production base for all Asean countries is supposed to come into force.

Former secretary-general of the United Nations Conference on Trade and Development Dr Supachai Panitchpakdi feels the AEC has to move quickly into Asean and that priority should not be given to the Trans-Pacific Partnership (TPP) instead.

Im saying this with a lot of criticism from the Westerners because they would like the TPP to emerge so that they can maintain a stake in the Pacific region.

The TPP is a free-trade agreement currently being negotiated between 12 countries namely Australia, Brunei, Chile, Malaysia, New Zealand, Peru, Singapore, US, Vietnam, Japan, Canada and Mexico.

We have to be Asean-centric.

We used to be Japan and US-centric, now we are China-centric, we need to be Asean-centric, Supachai reiterates.

Chinas position

In the same panel discussion, the issue of Chinas position in Asean was also brought up.

Asean for China is very much on top of the agenda, according to Supachai, also a key speaker in the panel discussion.

China, he says has a lot of issues - there is a lot of inequality there but they dont want political issues to cloud over economic issues.

Supachai, who is also a former banker and ex-Thai deputy prime minister says China wants economic development in Asean and Asia as a whole to help it maintain its pace of economic growth because the country, he says simply cannot afford to grow less than 7% a year.

Malaysia is Chinas number one trading partner among Asean countries and its sixth largest globally.

Kishore offers an explanation on why China is courting the Asean region.

Lets be clear about why this is happening, he says.

The Chinese have shrewdly calculated for geopolitical reasons that the day might come when the United States might launch a containment policy against China.

This is conceivable ... so in a pre-emptive strike, against an American containment policy, China has decided to make all its neighbours dependant on trade with it, thats the reason why Asean-China trade is shooting through the roof.

Founder of North Yard Economics, Daniel Altman in his talk at the conference entitled, Setting the Stage for Asean, notes matter-of-factly that China is a major partner for Asean but not the only one.

Key challenges

Altman highlights some of the key issues that some Asean countries may face over the next three to five years, which include financing constraints, especially those at the early stages of financial development.

Economic integration within the AEC will be challenging, the American economist says but it will be worthwhile.

Services and labour migration are often sticking points.

Datuk Paul Low, Minister in the Prime Ministers Department who was also part of the discussions touched on the area of governance and sustainable development.

If you want to rationalise your fiscal policy then you must rationalise your governance as well, he says.

The challenge is for governments to bridge the gap between urban and rural, the rich and poor and to see that opportunities are available for all.

I think this is the challenge that every single government must face even more so for the governments that come from the socialist type of system.

The challenge is also for governments to bring into the less developed nations a system of governance that encourages sustainable growth.

Invest Asean 2014 saw the participation of representatives from 17 countries including companies with a total of close to US$135bil market capitalisation and funds totalling more than US$14 trillion in assets under managament.

A believer in the Asean story itself, Maybank Kim Eng, which is the investment banking arm of Malayan Banking Bhd (Maybank), is present in six Asean markets and has a combined sales force of 1,800 to service these markets.

It has more than 170 touchpoints in the six markets.

Maybank completed the acquitision of Singapore-based Maybank Kim Eng in 2011, giving the former an immediate platform for investment banking activities in the region.//

Author: Yvonne Tan
Date: April 05, 2014
Source: The Star Online, Malaysia

QUEZON CITY, April 5 (PIA)- The Philippines needs to explore other alternatives that would lead to an expansion in secure jobs with decent wages among the Filipinos.

This was the key message in the recently held seminar-forum conducted by the Philippine Institute for Development Studies (PIDS) on the PIDS Economic Monitor held yesterday (April 4) at the PIDS headquarters in Makati City.

With the theme The Jobs Challenge: Choosing between the Beaten Path and Its Alternative, the forum discussed the macroeconomic trends in the country and in developing Asian countries, important policy updates in key economic sectors, and the proposed 12-point agenda"referred to as the Jobs Expansion and Development Initiative (JEDI) for poverty reduction.

With more emphasis on the JEDI which seeks to expand gainful jobs through the acceleration of labor intensive production, to improve investment in education and other human capital development, and to sustain total productivity gains; the forum underscored the necessity of taking a different development path, and explore other approaches to get a better chance at reducing poverty.

Seminar speakers Dr. Vicente Paqueo and Dr. Aniceto Orbeta, PIDS Visiting Research Fellow and PIDS Senior Research Fellow, respectively, discussed the deleterious impact of minimum wage being implemented in the country on income and poverty status of households, particularly those coming from the marginalized sectors.

The talk also tackled the current labor regulations and practices as costly, inconvenient, with long conflict resolution processes; (this is aside from) the tripartism, inadequate representation of the poor, disadvantaged, and unorganized labor, as well as confusing regulations in labor practices.

The seminar-forum addresses that aspiration for secure jobs with decent wages is well-recognized; however, it also challenges the concept of minimum wages and other labor regulations which are of existence in the country today. The recommendation: To leave the beaten track and try new approaches.

This is where the JEDI, with its 12-point program was discussed by Dr. Orbeta, which as he explained would re-balance current labor laws and practice to expand gainful jobs and minimize unintended consequences that are detrimental to the poor, the young, the women, the less educated and the unorganized workers.

Among the labor reforms included in the JEDI are:

1. Simplifying labor dispute resolution processes to cut the time, cost, inconvenience, and uncertainty involved usually spent in labor dialogues;

2. Making the rules on hiring and firing more flexible, and leaving the firms and workers to negotiate and work out agreements that are mutually beneficial;

3. Instituting measures that would minimize the imposition of labor regulations and practices detrimental to and discriminatory against the poor and the other disadvantaged population;

4. Allowing firms to hire low skilled and poor workers who want to voluntarily opt out of the mandatory minimum wage norm, though, it should be ensured that the workers acceptance of the offers is voluntary and well informed;

5. Adapting and experimenting with a Singaporean style scheme providing income supplement to targeted ultra poor workers to close the gap between market wage and decent wage norm;

6. Transforming the consultation process from a tripartite into a quadripartite system that would give the poor, unemployed, underemployed, and self-employed direct representation in the determination of labor regulations and policies;

7. Encouraging labor unions to focus on raising the competencies and productivity of workers as a means to achieving decent wages;

8. Lengthening from six months to two years the compulsory regularization of young workers to expand their learning experience and build their skills on the job;

9. Ensuring quality implementation of the K-12 reform; undertaking institutional reform of TESDA; and pursuing ongoing CHED initiatives aimed at improving access to quality higher education and the production of good research;

10. Implementing the extension of demand-side education assistance of Pantawid Pamilya to high school students and complimenting it with policies and programs that facilitate on-the-job training and employment in private enterprises;

11. Promoting research and development activities; and

12. Facilitating the emergence of well-organized coalition for stakeholders devoted to finding and promoting approaches that effectively advance the interest of the poor workers now being excluded from gainful job opportunities.

The JEDI, in a nutshell, puts premium on alternative solutions such as better education, increased labor intensive manufacturing, and greater opportunities for training on the job to reduce poverty from a labor standpoint.

Government response such as the strengthening of social protection programs which would provide a direct and temporary income subsidy was also recommended as such an approach would be both efficient and equitable as it conforms to the general principle of public economics that a public good should be financed by general tax revenues, according to the PIDS report.

Meanwhile, Asian Development Bank (ADB) Senior Economist Dr. Akiko Terada-Hagiwara presented the growth forecast for Developing Asia for 2014 and 2015, which is seen to have a positive trend in the said years. Projected growth rate is 6.2 per cent in 2014, and 6.4 per cent in 2015, respectively.

This increase is complemented by the increase in the growth rate of advanced economies such as the United States, Japan, and Europe, whose growth rate is projected at 1.9 per cent for 2014 and 2.2 per cent for 2015.

Dr. Hagiwara also said that inflation rate will remain under check at 3.7 per cent in 2014.

She recommends that Asia, though the individual countrys government, has yet to spend more on equity-promoting programs such as in education, healthcare, and social protection so as to lessen the inequality gap.

PIDS Senior Research Fellow Dr. Adoracion Navarro said that the Philippines will experience a lower GDP rate in 2014, though despite the risk of higher interest rates, there is still sufficient slack in investments and wide room for productivity improvements, she said.

GDP rate in 2014 is projected at 6.6 per cent, from 7.2 per cent in 2013.

Dr. Adoracion reported that policies and institutional reforms such as good governance and anti-corruption initiatives have resulted in a strong macroeconomic framework that has provided stability and investor confidence, and has primed the economy for sustained growth.

She ended by saying that bolder efforts must be exerted in increasing infrastructure investments, expanding the industrial base, introducing a competition policy framework, reforming regulatory institutions, and addressing labor market issue"all of which to lead the country to achieve the goal of inclusive growth. (RJB/AKG-PIA-NCR/PIDS)
- See more at: http://news.pia.gov.ph/index.php?article=281396597174#sthash.fVaB4luX.6xb0jC1w.dpuf//

Author: Alfred Kristoffer A. Guiang,
Date: April 05, 2014
Source: PIA

MANILA, Philippines - Some Filipinos are now willing to work below minimum wage as long as they can earn money.

Based on the law, workers should be given minimum wage to ensure a decent standard of living for them and their families.

However, a study by the Philippine Institute for Development Studies showed that a higher minimum wage actually worsens poverty.

"Generally, (minimum wage is) not only unhelpful but highly detrimental to the welfare of the common man and the disadvantaged," the report stated.

The PIDS report, Labor Policy Analysis for Jobs Expansion and Development, was written by Vicente Paqueo, Aniceto Orbeta, Leonardo Lanzona and Dean Dulay.

"Based on the findings, Because there's a minimum wage, it prevents that kind of arrangement to happen," Dr. Leonardo Lanzona of PIDS, one of the report's authors, said.

The study says instead of uplifting the lives of poor families, minimum wage actually prevents them from finding a job, leading to a lower household income.

Experts suggest companies should be allowed to hire low-skilled workers and give them lesser pay so they can provide jobs to more people in need.

"Allowing firms to hire low skilled and poor workers who want to voluntarily opt out of the mandatory minimum wage norm, recognizing that it hurts rather than helps them; ensure, though, that workers' acceptance of the offers is voluntary and well informed," the report said.

The Employers Confederation of the Philippines agrees with this, noting that the bigger problem is not low wages but the lack of jobs.

"Kailangan balansehin ang kapakanan ng mga mangagawa para magbigyan sila ng wastong sweldo. Pero wag naman masyadong mataas para hindi na maging competitive ang mga negosyo," Ernie Cecilia, co-chair of the technical working group on technical and social policy issues at ECOP, said.

But the National Wags and Productivity Commission is apprehensive about the study's findings.

"The government performs a very delicate act of balancing the needs of workers and requirements of business and industry for expansion and growth. Both are equally important to economic development," Patricia Hornilla, deputy executive director of the commission, said.

The study is now being evaluated by the National Economic and Development Authority to determine if it should be recommended to Congress. - from a report by Jasmin Romero, ABS-CBN News

Author: Jasmin Romero
Date: April 04, 2014
Source: ABS-CBNnews.com

ECONOMIC GROWTH could hit 6.6% this year, the Philippine Institute for Development Studies (PIDS) estimates, with construction to get a boost from post-disaster rehabilitation efforts.
Growth in construction due to post-disaster reconstruction and the start of some public-private partnership projects will drive gross domestic product (GDP) expansion, PIDS senior research fellow Adoracion M. Navarro told a seminar at the state think tanks office in Makati City yesterday.

She added that capital formation, which grew by 18.2% in 2013, will have a lag effect, while a weak peso -- forecast at P45 to a dollar this year -- will boost exports.

Even if interest rates are rising, Ms. Navarro said, there is still a big slack in investments and a wide room for productivity improvements.

In particular, while the real estate sector -- a growth driver last year -- will be affected by higher borrowing rates, there is a large unmet demand for housing, especially in the low-income and middle-income markets.

PIDS growth estimate is near the low end of the governments 6.5-7.5% target and the International Monetary Funds and the Asian Development Banks respective 6.5% and 6.4% forecasts,

The country notched 7.2% growth in 2013, higher than the 6.8% achieved in 2012 and topping the official 6-7% goal, despite an earthquake and a super typhoon that hit the Visayas in the latter part of the year.

Drivers on the production side were industry and services with manufacturing, construction, financial intermediation and real estate posting higher output. On the expenditure side, growth continued to be propped up by household spending, boosted by government spending and capital formation.

Both public and private sector economists have crowed about how the Philippines has begun tracking a higher growth path but unemployment remains high, averaging 7.3% last year.

The projected 6.6% GDP growth is in line with the governments target of rapid and sustained growth, Ms. Navarro and Gilberto M. Llanto, PIDS president, said in a paper they co-wrote that was distributed during yesterdays seminar.

The challenge of making this growth more inclusive should be addressed urgently.

The two called for more infrastructure investments, an expansion in the industrial base, a competition policy framework, the reform of regulatory agencies and labor market reforms.

Mr. Llanto, for his part, told the seminar that the Philippines remained in a sweet spot, especially with liquidity abundant and remittances continuing to flow in from abroad.

It is a matter of igniting the investment spirits, he said.

Mr. Llanto added that policy makers should look into policies that would cut unemployment -- those that promote labor-ntensive industries, for example.

Unemployment remains high. This is not good but something can be worked out, he said. -- Judy T. Gulane

Author: Judy T. Gulane
Date: April 03, 2014
Source: BusinessWorld

THE Philippine Institute for Development Studies (PIDS) is pushing for a comprehensive review and amendment of the Philippine Cabotage Law to bring in competition in the local shipping industry to lower shipping costs.

PIDS president Gilberto Llanto and PIDS senior research fellow Adoracion Navarro believe that revisions to the Philippine Cabotage Law would bring down domestic shipping costs.

A well-planned review and lifting of cabotage restrictions, Llanto and Navarro said, would help bring down domestic shipping rates in the country.

Under the present Cabotage Law, only domestic shipping lines could serve domestic routes. Our present Cabotage Law only follows the Constitution that reserves certain businesses that can be owned only by Filipinos. According to PIDS, this has resulted in high Cabotage rates.

The absence of competition has resulted in the high cost of transporting raw materials to manufacturing sites, finished products and agricultural goods to various destinations, and imported products to distribution areas, thereby increasing operational costs that are passed on to consumers as high prices study. The authors point out that the lifting of cabotage restrictions is timely because of the planned Association of Southeast Asian Nations (Asean) Single Shipping Market.

PIDS cited a study of the Joint Foreign Chambers of Commerce in the Philippines (JFCCP), which showed the high cost of domestic shipping compared with the cost of shipping via foreign transshipment.

It is cheaper to send a container from Manila to Cagayan de Oro via Hong Kong or Kaohsiung (in Taiwan ) than to simply transport the cargo directly from Manila to Cagayan de Oro, according to the JFCCP.

A 40-footer container shipped from Manila to Cagayan de Oro, costs $1,860, which is a lot more expensive than foreign transshipment via Hong Kong $1,144 and via Kaohsiung $1,044. A local trader could save approximately 43 percent in shipping costs via transshipment to Kaohsiung than by directly availing of domestic shipping services.

The aging domestic fleet of the maritime transport industry is also a cause for concern.

Domestic vessels for cargo in 2007 were generally 20 years old. Moreover, average age of passenger vessels in 2012 is higher compared to the average age of five to 10 years old in the late 1990s, it added.

Even though the Philippines is the worlds fifth largest ship building country, domestic shipping lines continue to use smaller and even older vessels in transporting cargo, which are uncompetitive compared to those used by their foreign counterpartsthe small capacity of cargo vessels implies longer transit and more turnaround times in ports, resulting in higher shipping costs.

For comparison, the study notes that the domestic shipping is dominated by vessels that have a capacity of 200 to 300 twenty-foot equivalent units (TEUs) compared with those of foreign container ships that can carry as many as 5,000 TEUs.

Thus, the need for the Maritime Transport Authority to examine very closely the likely effects of the removal of cabotage restriction on domestic shipping, trade, and movement of passengers and cargo.

Several developed countries have moved toward a more liberal cabotage regime. In New Zealand , for example, 21 vessels were engaged in coastwise trade in 2000, 19 of which were flying foreign flags.

Policymakers should seriously review and consider lifting cabotage restrictions, but in a phased-in and well-planned approach.

Fears of foreign players immediately dominating the local shipping industry may be unfounded. The lack of familiarity with domestic markets may not allow foreign shipping companies to do business in all sectors of coastwise trade.

The need for market adjustments by foreign competitors interested in engaging in coastwise transport will also give domestic shipping operators ample time to modernize their fleet and operations to be more competitive, the study said.

Competition provides a credible threat to those who refuse to modernize and maintain efficient operation, Llanto and Navarro observe in their study.//


Author: Ducky Paredes
Date: April 02, 2014
Source: Malaya

SINGAPORE -- Both the public and private sectors have to address certain challenges to maximize the Association of Southeast Asian Nations (ASEAN) investment potential in light of next years planned economic integration.

Speakers during the Invest ASEAN 2014 Conference held at The Fullerton Hotel acknowledged the regions vast potential and urged global investors to take advantage of opportunities.

The commissioning of the ASEAN economic community will put us in a prime position but there is still much more to do before the 2015 deadline, said Datuk Abdul Farid Alias, Maybank Group president and chief executive, during the Maybank Kim Eng-organized conference.

He noted the need for closer coordination among ASEAN members the Philippines, Brunei, Cambodia, Indonesia, Malaysia, Thailand, Singapore, Myanmar, Vietnam and Laos.

Our aim is to enhance awareness and understanding of the investment potential in the region. With Maybank Kim Eng achieving ASEANs highest market trade value in 2013, we believe we are in a unique position to inspire global investors with distinctive ideas and insights to realize greater value from investing here, Mr. Alias claimed.

But in order to utilize the regions potential, speakers during the forum cited challenges that have to be addressed ahead of next years integration.

Datuk Paul Low Seng Kuan of the Malaysian Prime Ministers Department said governance had a critical role to play as it would address demand for inclusive wealth distribution and the issue of corruption.

I think there is a realization that something has to be done. If you are trying to rationalize the economy, we dont only rationalize the fiscal policy, we rationalize governance as well to bridge the gap between the rural and the urban, and the rich and the poor, Mr. Low said.

Kishore Mahbubani, dean and professor in the Practice of Public Policy in the National University of Singapore, said the biggest issue was whether political leaders had the requisite will.

[W]e need good governance so that we can pull in whatever reforms are necessary. With good political and economic structure, we can have a system that can sustain itself, he said.

Good corporate governance is also necessary to bring in investors to the ASEAN region, speakers said.

If we get the trust of investors, rest assured we will see a lot more investors coming along the way. Transparency and openness will always be more attractive to investors in the region, said Magnus Bocker, Singapore Exchange chief executive officer.

He also cited the need to invest in infrastructure, healthcare, energy, sanitation, transportation and telecommunications which would require the help of the private sector.

Supachai Panitchpakdi, former World Trade Organization secretary general, said ASEAN countries also needed to have basic social transformation.

Mr. Panitchpakdi noted that countries have to do better with regard to social protection, tariff reduction, intellectual copyright protection and the resolution of disputes.

Daniel Altman, founder of North Yard Economics, expressed optimism in achieving the ASEAN economic development story with the help of human capital and infrastructure.

The next generations of workers will be quite different. They will have better access to technology, there will be increase in productivity and eventually, increase in income, Mr. Altman said.

The need for infrastructure was reiterated by Josef T. Yap, former president of the Philippine Institute of Development Studies.

Mr. Yap said the vision for the ASEAN Economic Community must be made more feasible and economical by focusing on practical measures that will improve physical connectivity.

In the Philippines, we have embarked on this public-private partnership program with the hope to accelerate infrastructure development in gearing up for ASEAN integration, Mr. Yap noted.//

Author: Claire-Ann C. Feliciano,
Date: April 01, 2014
Source: BusinessWorld

The Philippines should implement strong medium-term structural reforms to ensure growth even during a very destructive calamities, according to an expert in international business and investments.

In a seminar-forum at the Philippine Institute for Development Studies (PIDS), Dr. Dan Steinbock said nations that have adopted strong medium term structural reforms tend to outgrow even the most brutal calamities.

In the Philippines, the lack of preparation for such natural event caused the national government and several provinces to literally fall on its feet right after typhoon Yolanda slammed Region VIII provinces last Nov. 8, 2013.

Steinbock, research director for international business at the India, China, and American Institute in the United States, said it is not yet too late for the Philippines to adopt measures that will make it more prepared in case a similar destructive calamity occurs anywhere in the country.

The impact of typhoon Haiyan prevented the economy from ending the year on a high note, Steinbock said. The typhoon did affect agricultural production, which will increase price pressures in near term, and upside risks to core inflation, which could be exacerbated by strong aid-related capital inflows, he added. Moreover, the country should sustain its momentum, he said. It is important to know where the country is headed to even after President Aquino ends his term in 2016, Steinbock said.

He lauded the countrys fiscal situation as shown by the decline in the debt-to-GDP ratio, but said it was important to know if the result of fiscal reforms was truly structural.

With an overwhelmingly young demographic profile, economic growth must be accompanied by job creation to address the countrys unemployment rate, he said.

The manufacturing sector should be a top priority for rapid industrialization, he added, noting Chinas refocusing on global manufacturing, which has vastly improved the Chinese economys growth potential.

Steinbock also lauded the Philippines initiative for public-private partnerships in infrastructure and public services development.
However, more reforms are needed to boost foreign direct investments (FDIs) to the country, he said.

He pointed out that the Philippines share of FDI flows to gross fixed capital formation fell to 5.6 percent in 2012 from 10.3 percent prior the 2008 crisis period.

The country should have reforms favorable for FDIs, given the abundance of alternatives for foreign investors to invest in other Southeast Asian countries and elsewhere, he said.//

Author: Ed Velasco
Date: April 01, 2014
Source: The Daily Tribune

High local shipping costs may be attributed to the absence of competition in the local shipping industry, thus the need for a comprehensive review and amendment of the Philippine cabotage law, according to a recent study by the Philippine Institute for Development Studies (PIDS).

Authored by Drs. Gilberto Llanto, PIDS president, and Adoracion Navarro, senior research fellow, the study argued for a well-planned review and lifting of cabotage restrictions to bring down the high cost of domestic shipping rates in the country.

Under the present cabotage law, only domestic shipping lines can serve domestic routes. The absence of competition has resulted in high cost of transporting raw materials to manufacturing sites, finished products and agricultural goods to various destinations, and imported products to distribution areas, thereby increasing operational costs that are passed on to consumers as high prices, the study noted.

The study recommended a serious review of lifting cabotage restrictions, especially in the light of the planned Association of Southeast Asian Nations (ASEAN) Single Shipping Market.

It cited a study of the Joint Foreign Chambers of Commerce in the Philippines (JFCCP), which showed the high cost of domestic shipping compared with the cost of shipping via foreign transshipment.

It is cheaper to send a container from Manila to Cagayan de Oro via Hong Kong or Kaohsiung in Taiwan than to simply transport the cargo directly from Manila to Cagayan de Oro.

A 40-footer container domestic shipping, from Manila to Cagayan de Oro, costs USD 1,860, which is a lot expensive than foreign transshipment via Hong Kong (USD 1,144) and via Kaohsiung (USD 1,044).

A local trader could save approximately 43 percent in shipping costs via trans-shipment to Kaohsiung than by directly availing of domestic shipping services.

The ageing domestic fleet of the maritime transport industry is also a cause for concern. Domestic vessels for cargo in 2007 were generally 20 years old. Moreover, average age of passenger vessels in 2012 is higher compared to the average age of 5 to 10 years old in the late 1990s.

Even though the Philippines is the worlds fifth largest ship building country, domestic shipping lines continue to use smaller and even older vessels in transporting cargo, which are uncompetitive compared to those used by their foreign counterparts, the small capacity of cargo vessels implies longer transit and more turnaround times in ports, resulting in higher shipping costs.

For comparison, the study cited that the domestic shipping is dominated by vessels that have a capacity of 200-300 twenty-foot equivalent units (TEUs) compared with those of foreign container ships that can carry as much as 5,000 TEUs.

It underscored the need for the Maritime Transport Authority to examine very closely the likely effects of the removal of cabotage restriction on domestic shipping, trade, and movement of passengers and cargo.

Several developed countries have moved toward a more liberal cabotage regime. In New Zealand, for example, 21 vessels were engaged in coastwise trade in 2000, 19 of which were flying foreign flags.

Policymakers should seriously review and consider lifting cabotage restrictions, but in a phased-in and well-planned approach, the study pointed out.

The study said that fears of foreign players immediately dominating the local shipping industry may be unfounded. The lack of familiarity with domestic markets may not allow foreign shipping companies to do business in all sectors of coastwise trade.

The need for market adjustments by foreign competitors interested in engaging in coastwise transport will also give domestic shipping operators ample time to modernize their fleet and operations to be more competitive. Competition provides a credible threat to those who refuse to modernize and maintain efficient operation, the study added.

Author: Edu Lopez
Date: April 01, 2014
Source: Manila Bulletin