PIDS in the News Archived (January 2015)

THE Philippine Institute for Development Studies (PIDS) and three other local think tanks were deemed among the best in the world and the region by the Think Tanks and Civil Societies Program (TTCSP) at the University of Pennsylvania.

In the 2014 Global Go To Think Tanks Report, PIDS remained the top social-policy think tank in Southeast Asia and 37th among the top 50 in the world. It was also ranked 69th among the top 80 international development think tanks"one notch higher than its ranking in 2013. Meanwhile, the institute is now part of the 55 top education-policy think tanks in the world at 33rd place.

Despite having only a handful of researchers compared to other better-endowed research institutes in the region and in the Philippines, PIDS has consistently made significant contribution and influence on Philippine development policy through its active and close collaboration with government agencies, academic and research institutions, and international organizations, PIDS President Gilberto Llanto said.

Other think tanks in Southeast Asia that made it to the list under these categories were Thailand Development Research Institute (TDRI); Singapore Institute of International Affairs (SIIA); Institute of Southeast Asian Studies (ISEAS), which is also in Singapore, and Malaysias Centre for Public Policy Studies; and Third World Network.

TDRI ranked 20th among the education-policy think tanks and 66th in the international development think tanks category; SIIA and Third World Network ranked 70th and 72nd, respectively, among the international development think tanks; while ISEAS ranked 41st among the social- policy think tanks.

Meanwhile, three other Filipino think tanks that were deemed among Southeast Asia and the Pacifics best were the Institute for Strategic and International Studies, ranked 22nd in the region; Institute for Strategic and Development Studies, 28th; and Asian Institute of Management Policy Center, 58th.

The top 5 think tanks in Southeast Asia and the Pacific for 2014 were the Australian Institute for International Affairs; Indonesias Centre for Strategic and International Studies; New Zealands Centre for Strategic Studies; SIIA; and Australias Lowy Institute for International Policy.

The Go To Think Tanks Index is a comprehensive ranking of the worlds top think tanks and has been described as the premier database and measure of world think tanks.

It aims to increase the profile, performance and impact of think tanks, and to create a transnational and interdisciplinary network of centers of public-policy excellence.

Think tanks are public-policy research analysis and engagement organizations that generate policy-oriented research, analysis, and advice on domestic and international issues, thereby enabling policy-makers and the public to make informed decisions about public policy.

For its latest rankings, 6,618 think tanks from 182 countries were invited or nominated to participate in the process.

Established in 1989, the TTCSP aims to acknowledge the important contributions and emerging global trends of think tanks worldwide. Often referred to as the think tanks think tank, the program maintains a database and network of more than 6,600 think tanks in 182 countries.//

Author: Cai Ordinario
Date: January 30, 2015
Source: Business Mirror

The Philippines could fail to fully enjoy the gains of its economic growth if the government does not adopt a strategic national urbanization blueprint and follow it through with strong implementation, a recent study showed.

In a discussion paper titled, Scrutinizing Urbanization Challenges in the Philippines through Infrastructure Lens, Philippine Institute for Development Studies (PIDS) senior research fellow Adoracion Navarro said that the status of the countrys urban planning and implementation is fragmented and lacks complementarity.

The study suggests that a coherent solution is not only found in promoting national coordination, but also in the opportunities and experiences of the countrys regional neighbors.

The study said that after the country achieved full independence in 1946, the National Urban Planning Commission was created, but local governments undermined its recommendations and regulatory powers.

This refractory pattern would continue and exacerbated by a failure in successive national administrations to strongly implement urban development plans, the discussion paper showed.

These failures led to the decentralization of responsibilities to specific agencies, it added.

Navarro notes that oftentimes, these agencies did more permitting and licensing, foregoing their power to craft strategic urban development plans with actual physical targets and that take into consideration circulation space, physical infrastructure, and connectivity or mobility in ever expanding urban areas.

The study also said that local government units (LGUs), though required by law to produce a Comprehensive Land Use Plan, are often trapped in their own problematic practices.

LGU infrastructure projects do not outlive administrations, it said.

The paper said that LGUs focus too much on residential or commercial plans, or are often too inward, failing to complement and capitalize on the opportunities of working with neighboring local communities.

According to the report, the percentage of Filipinos living in urban areas is expected by the UN to rise from its current 45.3 percent to 56.3 percent by 2030 and 65.6 percent by 2050.

The problem, cited by the World Bank in their East Asias Changing Urban Land Escape report, is that the rate of increase in urban land area does not match.

By 2010, 23 million Filipinos were living in urban areas, having grown at a 3.3 percent annual rate from the 17 million by the turn of the millennium. Meanwhile, the land area has only expanded annually at 2.2 percent.

For those in Metro Manila who personally deal with poor public infrastructure on a day-to-day basis, Navarro points out that the country has to invest smartly in its physical capital to be able to cope with such economic demand.

The Philippine ranks 98 out of 144 countries in overall quality of infrastructure, bested by nearly all of its ASEAN neighbors except Vietnam, Lao PDR, and Myanmar.

Navarro said the problem used to be the availability of resources.

But now, she said the country has more fiscal room to move. What stands in the way is a historical lack of political will, she said.

But prior to implementation, Navarro said there are issues to tackle when it comes to designing plans.

The National Urban and Housing Development Framework for 2009-2016, which was designed by the Urban Development Coordinating Council and PIDS, contains all the recommendations that address urban competitiveness, poverty reduction, ensuring housing affordability and delivery, among others.//

Author: Angela Celis
Date: January 30, 2015
Source: Malaya

A former top official of the World Bank said in a government-sponsored forum that massive open online courses (MOOCs) can be a good way to make education inclusive.

Speaking at a recent event organized by state think tank Philippine Institute for Development Studies (PIDS) in Makati City, former WB lead economist Marito Garcia noted that the escalating cost of tertiary education can deprive poor people from getting high-quality education, and later on, quality high-paying jobs.
MOOCs can reduce the cost of education since these courses are open, free of charge, affordable, and self-paced. You can also earn a certificate by taking MOOCs, Garcia explained.
However, since MOOCs are offered via the Web, Garcia stressed the importance of having a reliable broadband Internet connection and a computer or mobile device. Otherwise, MOOCs will only benefit the elites, he cautioned.
Nevertheless, a MOOC student does not have to be online at all times since lessons may be saved and downloaded in a USB stick, Garcia pointed out.
For the poor to be able to benefit from MOOCs, Garcia recommended for the government to try implementing a conditional MOOCs transfer that would complement the existing conditional cash transfer program.
For example, the government could partner with service local Internet providers in providing low-cost broadband Internet connection and with funding organizations like the World Bank and the Asian Development Bank in providing computers or tablets to beneficiaries under certain conditions.
MOOCs are a relatively new concept of providing education. By definition, MOOCs are offered online, free of charge, and may be accessed by massive numbers of people.
Courses are offered by top-performing universities from around the world such as Stanford University and Harvard University in the United States and the University of Tokyo and the National University of Singapore in Asia.
Topics range from physical and social sciences and finance to music, humanities, and information technology, among others.
Popular providers of MOOCs include Coursera, which was founded by Stanford University professors, eDx, which was established by the Massachusetts Institute of Technology and Harvard University, Udacity, and Khan Academy. These providers are considered models for delivering quality educational content through MOOCs.
In the Philippines, the University of the Philippines Open University (UPOU) has started offering MOOCs via its Massive Open Distance e-Learning (MODeL).
Currently, there are six free online courses in the MODeL for those who are interested to join the Business Process Management (BPM formerly BPO) industry.
Unlike in traditional learning institutions, the users and learners of MOOCs are a combination of professionals and students. In fact, most of the users of MOOCs already have their college degrees either bachelors, masters, or doctorate.
Development in MOOCs changes every month in terms of availability of learning platform. Many groups are now experimenting with blended MOOCs, which use a combination of online and face-to-face learning approaches.
According to Garcia, learners are more motivated to complete blended MOOCs compared to full online courses, where dropout rate is seen at 60 percent. Employers in the US also believe that hybrid MOOCs are more effective in training future workers than their full online counterparts.
Garcia also highlighted the big disconnect between graduate skills and market needs. He cited a World Economic Report article that says 72 percent of universities claim their graduates are ready to get a job.
However, only 42 percent of employers say otherwise. Usually, it takes six months for employers to train their graduates to make them ready for work.
Jobs are changing radically as experienced in the services sector. MOOCs could be a solution to this mismatch since universities and other education providers can develop customized MOOCs on sought-after jobs.//


Author:
Date: January 29, 2015
Source: Newsbytes Philippiens

One of the most welcomed consequences of Pope Francis visit to the country is that it made us more aware of a lingering problem that continues to beg for creative solutions. This is the plight of our street children as well as whose who have dropped out of school. The latest data from a study in 1998 shows that there were then about 1.5 million street children while a 2008 study shows that 1 out 6 school-age children is out of school.
This is so despite the fact that we have given the highest budgetary allocation to education and that both the Constitution and our Philippine development plan have put social justice at the center stage of the overall vision.
If indeed access to education and the welfare of our children are essential in attaining inclusive growth and in moving a large percentage of our population out of poverty, why have we lagged behind in achieving our targets?
A team of researchers from the Philippine Institute of Development Studies (PIDS) " Jose Ramon G. Albert, Francis Mark A. Quimba, Andre Philippe E. Ramos and Jocelyn P. Almeda, examined the 2008 and 2009 data from the National Statistics Office and came out with some of these findings: That among the poverty-related factors that explain reasons for leaving school include lack of parental support, need to contribute to family income, location where the child resides, and mothers education. Late entry into school because of overage is also a risk factor for non-completion. Families in rural areas are more vulnerable to income poverty, thus the higher incidence in rural areas.
Child labor is also an obstacle to the goals of Education for All, a global movement that aims at reaching every child in the world today. As the PIDS study shows, once children are engaged in economic activity, the propensity to participate in school gets lower. A 2008 study shows that 1.1million children between 5 and 15 years old are in child labor, and about 2/3 or 65.9% are unpaid family workers. Two in fivc or 41.8% work outside the home. Thus, policies must address this concern by providing added incentives for staying in school.
Across the regions, the Autonomous Region of Muslim Mindanao (ARMM), has the highest proportion of five-year old children who are not in school or 87.2%) and the highest share of the estimated 692 thousand pre-primary-aged out of school children. The ARMM has the biggest proportion of primary-aged children that are not in school or 21 %. The establishment of the Bangsamoro entity which will subsequently develop the educational needs of the region must address this serious human development concern.
Of the 6 million children who drop out, some start working on the streets., where they join other street children who become their second family. One of the most touching scenes during Pope Francis visit was when Ghyzelle, the 12-year old former street child asked the Pope a question which the latter was unable to answer " why some children are abandoned so that they become prostitutes or drug addicts. These children also become vulnerable to accidents, street fights, harassments from police, and various forms of sexual exploitation .
This time, no one, not even the Pope can answer Ghyzelles question. But we cannot continue to ignore it. It is not only because we who are blessed with more must need to share with those who have less. It is also because we need to save ourselves from becoming desensitized. Which is now happening to many who seem unaware of the many divides and inequities in our society today. Perhaps we should continue to ponder on the Ghyzelle question until we find some answers. My email is florangel.braid@gmail.com//

Author: Florangel Braid
Date: January 27, 2015
Source: Manila Bulletin

The actual number of seedlings planted through the National Greening Program (NGP) fell below the governments target in its first three years of implementation, according to a study released by state-owned think tank Philippine Institute for Development Studies (Pids).

In the study titled The National Greening Program: Hope for our balding forests, by Pids Senior Research Fellows Danilo C. Israel and Maria Diyina Gem Arbo, data showed that while the goal was to plant 600 million seedlings between 2011and 2013, the program was only able to plant 397.76 million during the period.

Specifically, the target was missed by 10.37 million seedlings in 2011, 74.4 million seedlings in 2012, and 117.45 million seedlings in 2013, indicating that the deficit in seedlings planted has been increasing during the period, the authors said.
Hence, based on reported seedlings planted and compared with data on areas planted, the NGP has performed less than adequately at the national level during the first three years of implementation, they added.

Further, the study stated that past evaluation reports by the Department of Environment and Natural Resources (DENR), as cited by the Commission on Audit (COA) in 2013, stated that there were no inspections made on the status of the planted seedlings under the program.

The COA, the Pids study said, lamented that the evaluation of the DENR on the NGP was focused solely on the number of hectares and seedlings planted.

Based on these reports, the COA said that while the desired survival rate of the seedlings is 85 percent, the actual survival rate of sampled seedlings in 2012 was only 61 percent.

This performance was below the desired survival rate of 85 percent. The COA recommended that the NGP should designate personnel, even on an ad hoc basis, to undertake inspection of the NGP sites to ensure that remedial actions are undertaken and the desired survival rate is attained, the authors said.

They recommended the need for the NGP to raise its replanting rate at the national and regional levels and for the DENR to report the survival rates of the planted seedlings.

The study also said replanting activities and other remedial measures must be conducted by the DENR to address low survival rates.

The authors said there is a need to make a complete report on the expenses made under the NGP to determine the efficiency of the program and promote transparency.//


Author: Cai Ordinario
Date: January 27, 2015
Source: Business Mirror

ANGELES CITY -- The City Government here has denied reports that it has been rounding up street children because of the ongoing Asia Pacific Economic Conference (Apec) meeting inside the Clark Freeport.

Mayor Edgardo Pamintuan described the report as "wrong and malicious."

"We have been doing this years before. It is our policy to rescue street children roaming the streets in line with the country's compliance to the Millennium Development Goals, the Local Government Code which explicitly states that 'it shall be a policy to protect and rehabilitate children gravely threatened or endangered by circumstances which affect or will affect their survival and normal development and over which they have no control', and other pertinent laws like the Special Protection of Children Against Child Abuse Act and the Juvenile Justice Welfare Act," said Pamintuan.

http://www.sunstar.com.ph/pampanga/local-news/2015/01/27/pamintuan-street-kids-rescue-not-apec-388860
The mayor said that the children roam the streets because they are hungry and some of them have resorted to begging to buy and sniff "rugby" or addictive solvent.

"This enabled them to forget hunger. We feed them, give them shelter and return them to their respective families. We also educate them and their parents. In some cases, we even file formal complaints against the parents in line with the Juvenile Welfare Act," he added.

The problem is nationwide with around 45,000 to 50,000 highly visible children on the streets, according to the Philippine Institute of Development Studies (PIDS) in their article titled "Proliferation of street children: a threat to the MDGs," said the mayor.
"We did this in 2011 when we noted hordes of Badjaos were roaming our streets who put up shanties along our river banks. After negotiating with them, they agreed to voluntarily demolish their makeshift houses built on the riverbed of Abacan in exchange for cash assistance to go back to their province. We will do it again and again and again for the welfare of our children and the people of the City of Angeles," he said.

He also lamented that after receiving financial assistance from the local government, many of the relocated Badjaos returned to the streets.

The City Government received complaints about street children who become aggressive and hostile if they were not given alms; resorting to spitting at people, snatching and other petty crimes.

In order to address this concern, the local government has partnered with NGOs, including the different Rotary Clubs in Angeles City, Kuliat Foundation and concerned business establishments to come up with a long-term and sustainable solution to rehabilitate and educate these children.

Pamintuan admitted that this is a complicated problem and there is no easy fix for it.

"There must be a concerted effort among all stakeholders to put available resources together, in order to assure that our children are not out in the street begging and being introduced to a life of criminality. They should be in school learning or with their fellow children playing and studying in a safe and secured environment," he said.//


Author: Reynaldo G. Navales
Date: January 27, 2015
Source: Sun Star Cebu

The government must pursue policy measures, including those that raise the quality of domestic demand imperative for constant upgrading, to enable the country to have a globally competitive services sector.
Ramonette Serafica, senior research fellow of state think-tank Philippine Institute for Development Studies (PIDS), identified other interdependent sets of policies that create national advantage in industry.

Serafica said these are policies to enhance a countrys position in the factors of production relevant to the industry, ensure the presence of supporting and related industries, and influence competitive behavior among firms.
Together, these actions if pursued will produce the environment where firms are able create and more importantly, sustain competitive advantage in services, she said in a research paper submitted to select entities, including The Daily Tribune.

With these policy actions, Serafica noted that the government itself becomes a source of national competitive advantage for all industries. Thus, as a source of competitive advantage, the need to upgrade and innovate must also apply to government, she said.

Serafica underscored the need for bureaucratic reform, including creating a dedicated agency for key sectors or policy areas, separating regulatory functions from development functions and strengthening regulatory capacities and resources.

How the bureaucracy is structured is important for effectiveness and efficiency. It must be reviewed in light of the national vision of creating globally competitive service industries, she added.//

Author: Ed Velasco
Date: January 25, 2015
Source: The Daily Tribune

The government must revisit the crop-insurance program being implemented by the Philippine Crop Insurance Corp. (PCIC), according to a study released by state-owned think tank Philippine Institute for Development Studies (Pids).

This was the main conclusion of the study, titled Review of Design and Implementation of the Agricultural Insurance Programs of the Philippine Crop Insurance Corporation, authored by Pids senior research fellow Celia Reyes and researchers Christian D. Mina, Reneli Ann B. Gloria and Sarah Joy P. Mercado.

The appropriateness of the product lines being offered need to be assessed, especially since life and accident insurance, are already being offered by the private sector, it added.

The study noted that apart from crop insurance, the PCIC also offers life and accident insurance for farmers and fishermen because of the clamor of these clients for such benefits.

Citing PCIC data, the study said the attached agency of the Department of Agriculture paid P1.19 million worth of death benefits in 2013. This is the highest since 2010, when death benefits reached P620,000.

The benefits extended are part of the PCICs long-term insurance plans, specifically the Agricultural Producers Protection Plan, which covers death of the insured due to accident, natural causes and murder or assault.

The study added that the other long-term insurance plans include the Loan Repayment Protection Plan (LRP2) and Accident and Dismemberment Security Scheme (ADS2).

The LRP2 guarantees the payment of the face value or the amount of the approved agricultural loan upon the death or total permanent disability of the insured borrower. The ADS2, meanwhile, covers death or dismemberment or disablement of the insured due to accident.

Further, the study said the amount of cover of the crop insurance extended by the PCIC must also be increased. It added that the amount should also cover production cost to help agricultural producers recover easily from shocks.

Pids said around 97.5 percent of rice-insurance policies of borrowing clients under the regular program have insurance cover less than the average production cost per hectare, which is roughly P40,000 based on the estimate of the Philippine Statistics Authority (PSA).

Also, a large proportion of corn-insurance policies cover less than the average cost of producing corn per hectare, which is around P25,000.

Premium rates, especially the market-based ones such as livestock, the risks covered, and the terms and conditions of term insurance should be carefully reviewed to make sure that these are still relevant in addressing the needs of agricultural producers, the study read.

Pids said the assessment of the amount of agriculture damage caused by typhoons, earthquakes, or other calamity must be done by competent and considerate adjusters so that farmers and fishermen will feel the benefit of the crop insurance.

It added that the PCIC must also communicate the assessment process properly to farmers and fishermen. An information campaign must also be conducted by the PCIC in collaboration with local government units and their partners.

The study recommended that the PCIC must provide and communicate detailed guidelines in beneficiary selection and qualification to regional offices to minimize and plug leakages in the program.

Beneficiary selection and the enrollment process are important specifically for the fully subsidized programs, given that the current budget allocation is not enough to satisfy the total amount for the premiums.

Proper targeting should be ensured to avoid channeling funds to unintended beneficiaries, it said.

The PCIC was created in June 1978 and was financed via the Agriculture Guarantee Fund (AGF). The AGF was transferred to the PCIC as part of the governments contribution to its capital.

The PCIC has been mandated to provide insurance protection to agricultural producers in the Philippines against losses of crops and non-crop agricultural assets due to natural calamities, pests and diseases, and other perils.//

Author: Cai Ordinario
Date: January 23, 2015
Source: Business Mirror

The Philippine Institute of Development Studies (PIDS) has urged the government and the private sector to work together to generate more investments in the food sector so as to increase the capacity to produce more food.
PIDS President Gilberto Llanto stressed the role of government in creating an enabling policy and regulatory environment to encourage investments from the private sector.
He described the various financing schemes for food production such as value chain financing, risk reduction instruments and delivery structures.
Rice and corn are the countrys staple crops and the main sources of income of the majority of small farmers. Rice self-sufficiency remains a contentious issue in the country. Three years ago, the government launched the Food Staples Sufficiency Program (FSSP) where food self-sufficiency is envisioned as a scenario where domestic requirements for food, seeds, processing, and feeds are met through local production.
Dr. Roehlano Briones, a PIDS senior research fellow, argued that rice self-sufficiency on the notion of zero importation is not feasible. The FSSP assumed a fixed per-capita consumption which is not possible given the ever-increasing population growth.
Briones analysis also indicated that the projected growth rates of palay production under the program are too ambitious to achieve based on historical trends. BrionHe stressed that what is needed is a pragmatic approach based on sound evidence.
The more crucial strategy to pursue, he said, is to expand the area harvested and to raise yield through irrigation, which is another problematic subject based on recent PIDS studies showing that many publicly funded irrigation systems are performing poorly due to their inappropriate design arising from incorrect technical and economic assumptions.
Self-sufficiency should be pursued with more realistic targets and more cost-effective support mechanisms to rice producers, such as research and development and extension activities to generate and spread new rice farm technologies, he added.
In the wake of national calamities that have gripped the country in recent years and months, food security is further put in peril. Typhoons, floods, and droughts have significant impact on food production.
Based on a study by Briones, PIDS research fellow, Dr. Danilo Israel said the total value of agricultural damage caused by natural calamities from 2000 to 2010 amounted to more than P100 million, with rice, corn and high-value crops receiving the most damage.
The figure excluded the damage to agricultural facilities, which was valued at P4.9 million and at P9.7 million for irrigation infrastructure. The study recommended site-specific support to farmers and provision of post-disaster emergency employment in affected communities aside from emergency food assistance.
Attaining sustainable growth of the agricultural sector is an efficient path to food security. Sustainable agriculture is also critical for increasing rural incomes and reducing poverty.
The persistent sluggishness of Philippine agriculture will further widen the gap between rural and urban incomes, and aggravate urban problems when rural people relocate to the cities to seek opportunities they cannot find in the countryside.//

Author: Edu Lopez
Date: January 22, 2015
Source: Manila Bulletin

The Philippine Institute of Development Studies (PIDS) has urged the government and the private sector to work together to generate more investments in the food sector so as to increase the capacity to produce more food.
PIDS President Gilberto Llanto stressed the role of government in creating an enabling policy and regulatory environment to encourage investments from the private sector.
He described the various financing schemes for food production such as value chain financing, risk reduction instruments and delivery structures.
Rice and corn are the countrys staple crops and the main sources of income of the majority of small farmers. Rice self-sufficiency remains a contentious issue in the country. Three years ago, the government launched the Food Staples Sufficiency Program (FSSP) where food self-sufficiency is envisioned as a scenario where domestic requirements for food, seeds, processing, and feeds are met through local production.
Dr. Roehlano Briones, a PIDS senior research fellow, argued that rice self-sufficiency on the notion of zero importation is not feasible. The FSSP assumed a fixed per-capita consumption which is not possible given the ever-increasing population growth.
Briones analysis also indicated that the projected growth rates of palay production under the program are too ambitious to achieve based on historical trends. BrionHe stressed that what is needed is a pragmatic approach based on sound evidence.
The more crucial strategy to pursue, he said, is to expand the area harvested and to raise yield through irrigation, which is another problematic subject based on recent PIDS studies showing that many publicly funded irrigation systems are performing poorly due to their inappropriate design arising from incorrect technical and economic assumptions.
Self-sufficiency should be pursued with more realistic targets and more cost-effective support mechanisms to rice producers, such as research and development and extension activities to generate and spread new rice farm technologies, he added.
In the wake of national calamities that have gripped the country in recent years and months, food security is further put in peril. Typhoons, floods, and droughts have significant impact on food production.
Based on a study by Briones, PIDS research fellow, Dr. Danilo Israel said the total value of agricultural damage caused by natural calamities from 2000 to 2010 amounted to more than P100 million, with rice, corn and high-value crops receiving the most damage.
The figure excluded the damage to agricultural facilities, which was valued at P4.9 million and at P9.7 million for irrigation infrastructure. The study recommended site-specific support to farmers and provision of post-disaster emergency employment in affected communities aside from emergency food assistance.
Attaining sustainable growth of the agricultural sector is an efficient path to food security. Sustainable agriculture is also critical for increasing rural incomes and reducing poverty.
The persistent sluggishness of Philippine agriculture will further widen the gap between rural and urban incomes, and aggravate urban problems when rural people relocate to the cities to seek opportunities they cannot find in the countryside.//

Author: Edu Lopez
Date: January 22, 2015
Source: Manila Bulletin

The Philippines should take advantage of its role as host of the Asia-Pacific Economic Cooperation (APEC) Summit this year by promoting its services sector and that of the region in the development of global value chains (GVCs), which now dominate global trade, a study by state think tank Philippine Institute for Development Studies (PIDS) said.
Global value chains are the series of activities around the world involved in the conception, production, distribution, usage and other activities that add value to a product.
In a policy note titled Why global value chains and services matter: Implications for APEC 2015, PIDS senior research fellow Ramonette Serafica describes how GVCs emerged as a trend in the region, with the paper evaluating the level of involvement of each individual economy through a participation index.
Given the Philippines` comparative advantage in `other business services` and in `computer and information services,` advancing regional cooperation in services value chains can further strengthen our export position in these activities, the PIDS study said.
The opportunities to increase and optimize GVC participation are plenty for APEC, it added.
The trend for APEC nations is to target GVCs and segments that are compatible with the advantages and development objectives of their individual economies.
The PIDS report said that depending on the GVC requirements, APEC member countries can design business facilitation measures and investment policies to encourage growth.
With the right measures, individual economies can help capitalize on these advantages and create new specializations, it said.
The paper calls for further analytical work on services GVCs.
There aren`t sufficient studies on the important role of services in GVCs and the potential for the region and the individual economies to benefit from the growth of services value chains, especially where small and medium enterprises, which are most engaged in GVCs, can better access them, it said.
The policy note recommends that studies be conducted on the following: input-output structure or the activities and segments in the service GVCs and the corresponding structure of companies that participate in each activity or segment.
It said geographic scope must be considered to understand the country-level positions within the chain; governance structure to understand the power dynamics that affect allocation and flow of resources within a chain; and the institutional framework to understand the global conditions and policies that affect each stage of a GVC.
The PIDS report explains that input from the recommended studies, research and analysis would help individual countries and the region to improve trade and investment policies, promote global services value chains growth, and ensure that individual economies capture the full benefits.
Risks to consider
GVC benefits are limited by the share of value added in the chain that a country is able to capture, it stated.
Moreover, there are environmental and socio-cultural effects. And countries that become increasingly embedded in GVCs grow increasingly vulnerable to external shocks.
The study said that expanding a countrys share of value added in the services GVC depends largely on the quality of infrastructure and efficient services markets.
APEC nations are collaborating to improve the transport sector, business services, telecommunications, and distribution channels, it noted.
Overall, the challenge is in creating the environment for GVCs to thrive in the Asia-Pacific region, it said.//

Author: Mayvelin U. Caraballo
Date: January 19, 2015
Source: Manila Times

The Philippines should take advantage of its role as host of the Asia-Pacific Economic Cooperation (APEC) Summit this year by promoting its services sector and that of the region in the development of global value chains (GVCs), which now dominate global trade, a study by state think tank Philippine Institute for Development Studies (PIDS) said.
Global value chains are the series of activities around the world involved in the conception, production, distribution, usage and other activities that add value to a product.
In a policy note titled Why global value chains and services matter: Implications for APEC 2015, PIDS senior research fellow Ramonette Serafica describes how GVCs emerged as a trend in the region, with the paper evaluating the level of involvement of each individual economy through a participation index.
Given the Philippines` comparative advantage in `other business services` and in `computer and information services,` advancing regional cooperation in services value chains can further strengthen our export position in these activities, the PIDS study said.
The opportunities to increase and optimize GVC participation are plenty for APEC, it added.
The trend for APEC nations is to target GVCs and segments that are compatible with the advantages and development objectives of their individual economies.
The PIDS report said that depending on the GVC requirements, APEC member countries can design business facilitation measures and investment policies to encourage growth.
With the right measures, individual economies can help capitalize on these advantages and create new specializations, it said.
The paper calls for further analytical work on services GVCs.
There aren`t sufficient studies on the important role of services in GVCs and the potential for the region and the individual economies to benefit from the growth of services value chains, especially where small and medium enterprises, which are most engaged in GVCs, can better access them, it said.
The policy note recommends that studies be conducted on the following: input-output structure or the activities and segments in the service GVCs and the corresponding structure of companies that participate in each activity or segment.
It said geographic scope must be considered to understand the country-level positions within the chain; governance structure to understand the power dynamics that affect allocation and flow of resources within a chain; and the institutional framework to understand the global conditions and policies that affect each stage of a GVC.
The PIDS report explains that input from the recommended studies, research and analysis would help individual countries and the region to improve trade and investment policies, promote global services value chains growth, and ensure that individual economies capture the full benefits.
Risks to consider
GVC benefits are limited by the share of value added in the chain that a country is able to capture, it stated.
Moreover, there are environmental and socio-cultural effects. And countries that become increasingly embedded in GVCs grow increasingly vulnerable to external shocks.
The study said that expanding a countrys share of value added in the services GVC depends largely on the quality of infrastructure and efficient services markets.
APEC nations are collaborating to improve the transport sector, business services, telecommunications, and distribution channels, it noted.
Overall, the challenge is in creating the environment for GVCs to thrive in the Asia-Pacific region, it said.//


Author: Mayvelin U. Caraballo,
Date: January 19, 2015
Source: Manila Times

RICE HAS BEEN an indispensable staple food on the plates of the majority of Filipinos and is crucial in providing employment to millions of farmers. Rice policy adopts protectionism as an instrument for food security and livelihood promotion, limiting the intensity of competition from foreign suppliers of the staple.

A study by the Philippine Institute for Development Studies (PIDS) on the state of competition in the staple foods sector zeroes in on the current issues being confronted by the consumers and producers of rice. It examines the policy implications of the lack of competition between domestic and foreign producers in the countrys rice market. Findings show that the restraint in competition has been ultimately detrimental to consumers; opening up the rice trade, together with targeted producer support, will confer tremendous benefits to the rice-consuming public while helping farmers transition to a more competitive regime.

The National Food Authority (NFA) serves as the primary regulatory agency for the countrys main staple. Although the NFA seeks to promote food security and price stabilization, the outcome of its actions prove otherwise. These outcomes are directly attributed to its quantitative restrictions (QR) on rice importation, enforced by its statutory monopoly on rice importation.

The QR regime is uniquely applied for rice; due to the World Trade Organization Agreement, since 1995 the country has replaced QRs with tariffs for all other agricultural products -- a policy called tariffication. However, it applied for -- and obtained -- an exemption for rice. The exception is time-bound, ending initially in 2005, but extended by request of the Philippines to 2012, and again to 2017. The QR regime for rice has been programmed to support the goal of rice self-sufficiency, initially in 2013, now extended to 2016.

The exercise of the QR has elevated the domestic price above the world price of rice. Usually this has been accompanied with a stable domestic price of rice at the retail level, compared to the high volatility of the world price. There are some prominent exceptions, the price surge of 2013 being the most recent example. In this regard, the retail price of well-milled rice spiked to P32 in 2013 from P28 in the previous year. This amounts to an enormous 14% increase in the price of rice in just a year. Adding to this, 2013-2014 farmgate prices have also been relatively high, reaching a P20/kg level and above. This puts into question the competitiveness of the NFA procurement system and the viability of the existing import restrictions.

The price surge has been blamed on price manipulation by traders. However, this is mere scapegoating. The same study shows that the domestic marketing of rice is actually highly competitive. This is consistent with decades of studies of rice marketing, which have concluded likewise.

The real reason for the price increase is the shrinking import quota. The expectation is that domestic rice supply could expand sufficiently to meet domestic demand. Recent experience demonstrates that closing the supply-demand gap will require a higher domestic price -- an outcome detrimental to consumers, especially the poor and undernourished. Furthermore, interviews of key informants indicate that the little imports that are allowed, are cornered by a privileged few, who thereby make a killing out of the difference between domestic and world prices.

Protectionism in this case indisputably helps domestic producers, but harms consumers. An accepted method of comparing costs and benefits is economic surplus analysis, here implemented by a computer model of the rice market known as the Total Welfare Impact Simulator (TWIST).

TWIST is applied to the 2013 market in two alternative scenarios: first is free trade; second is increase in import quota back to 2011 levels. Opening up the sector through free trade will yield an economic benefit amounting to P138.5 billion. On the other hand, increasing the import quota would lead to about P25.2-billion increase in economic surplus.

Free trade is undeniably detrimental to farmers; the simulation shows that they will lose the equivalent of P34 billion. However the benefits to consumers is large, and net benefit to society is still large as mentioned above. Gradual reform can be implemented by converting the import quota into tariff protection, with a moderate level of tariff. This tarrification should be accompanied by producer support policies to avoid severe dislocation. Such policies are expected to strike a balance between the welfare of producers and those of consumers; in the end, the essence of food security is consistent access to affordable food.

Roehlano Briones and Lovely Ann Tolin are fellows from the Philippine Institute for Development Studies. This piece was adapted from CREW Diagnostic Country Report: Philippines, a study conducted by PIDS with financial and technical support from the Centre for Competition, Investment and Economic Regulation (CUTS-CIER), Jaipur, India.

Author:
Date: January 18, 2015
Source: BusinessWorld

REPLACING the quantitative restriction (QR) on rice with moderate tariffs will bring down rice prices significantly, as imports will increase ten-fold, according to a study released by state-owned think tank Philippine Institute for Development Studies (Pids).

In the study titled Competition Reform in the Philippine Rice Sector, Pids Senior Research Fellow Roehlano Briones and Consultant Beulah de la Pea said rice prices will decline to around P19.8 per kilogram.

Welfare analysis indicates that, in 2013, if quantitative restrictions were eliminated and rice imports were allowed to freely enter the country, rice imports would have increased ten-fold, bringing down the retail price of rice to P19.80 per kilogram from P33.08 per kilo, the authors said.

Under a free-trade scenario, the authors said, total rice imports would reach 4.2 million metric tons (MMT). The consequent increase in supply will also bring down wholesale prices to an average of P17.66 per kilo.

This would allow consumers to save a total of P178.07 billion. The study said, however, that this would cause producers to lose P33.99 billion and a P5.63-billion reduction in importers revenue.

Obviously, with repeal or relaxation of these restrictions, producer surplus must fall, to the detriment of farmers. One way to ease the burden of adjustment is to apply a moderate level of tariff, thereby striking a compromise between the benefits to consumers and the losses to producers, they said.

The authors believe that rationalizing the countrys rice importation policies are needed to protect not only rice producers or the farmers but also the public.

The study stated that the current restrictive importation policy of the country has made smuggling lucrative to the detriment of producers, consumers and other market participants.

Tariffication"involving liberalized importation of rice subject to payment of import duty"can still confer some protection on producers, while reducing the price of rice, stabilizing domestic supplies and prices, and deterring any attempt to control supplies to manipulate market prices, the authors said.

When the Philippines acceded to the World Trade Organization in 1995, the country agreed to convert quantitative restrictions (QRs) into equivalent tariffs. The QR has allowed the government to limit the volume of cheap rice that may enter the country.
However, the Philippines obtained a special treatment for rice up to 2005, allowing it to maintain its rice QR. To make up for the special treatment, the country conceded to a minimum market access, ranging from 30,000 tons in 1995 up to 224,000 tons in 2004.

Upon expiration of the special treatment in 2005, the authors said the country negotiated and obtained an extension of up to 2012.

The DA said the WTO has, again, allowed the Philippines to extend the QR for another five years, or until 2017.//

Author: Cai Ordinario
Date: January 15, 2015
Source: Business Mirror

The Philippines can continue to reinforce the importance of global value chains (GVCs) when the country hosts the Asia-Pacific Economic meeting this year, recommends a study released by state think tank Philippine Institute for Development Studies (PIDS).

The Policy Note, Why global value chains and services matter: Implication for APEC 2015, authored by PIDS Senior Research Fellow, Dr. Ramonette Serafica, depicts the aggregated GVC participation index of countries in the Asia-Pacific Region and demonstrates how GVCs dominate global trade.

Serafica also underlined the opportunities in undertaking further analytical work on services GVCs.

Global value chains are the sequence of activities around the world involved in the conception, production, distribution, usage, and other activities that add value to a product.

Serafica in her study highlights the benefits of GVCs for independent economies and the Asia-Pacific region and measures the extent of involvement of each individual economy through a participation index.

The opportunities to increase and optimize GVC participation are plenty for APEC, Serafica said.

The trend for APEC nations is to target GVCs and segments that are congruent with the advantages and development objectives of their individual economies. Depending on the GVC requirements, APEC member countries can design business facilitation measures and investment policies to encourage growth.

With the right measures, individual economies can help capitalize on these advantages and create new specializations.

Still there are risks to consider, Serafica said, adding that GVC benefits are limited by the share of value added in the chain that a country is able to capture.

Serafica also noted there are environmental and socio-cultural effects.

Countries that become increasingly embedded in GVCs grow increasingly vulnerable to external shocks, she said.

Expanding a countrys share of value added in the services GVC depend largely on the quality of infrastructure and efficient services markets. APEC nations are collaborating to improve the transport sector, business services, telecommunications, and distribution channels.

Overall, the challenge is in creating the environment for GVCs to thrive in the Asia-Pacific region.

Serafica recommends that as the APEC 2015 host, the Philippines should build on the work already started and expand opportunities by undertaking further analytical work that focuses on the case studies of regional services value chains.

There arent sufficient studies on the important role of services in GVCs and the potential for the region and the individual economies to benefit from the growth of services value chains, especially where small and medium enterprises, which are most engaged in GVCs, can better access them.

The policy note recommends that studies be conducted on the following: input-output structure or the activities and segments in a services GVC and the corresponding structure of companies that participate in each activity or segment; geographic scope to understand the country-level positions within the chain; governance structure to understand the power dynamics that affect allocation and flow of resources within a chain; and the institutional framework, to understand the global conditions and policies that affect each stage of the GVC.

The Philippines should also encourage the analysis of upgrading strategies undertaken by countries, regions and other economic stakeholders to move to higher-value activities in GVCs so as to increase the benefits captured.

Given the Philippines comparative advantage in other business services and in computer and information services, advancing regional cooperation in services value chains can further strengthen our export position in these activities, Serafica noted.

Overall, the input from the recommended studies, research and analysis would help individual countries and the region to improve trade and investment policies, promote global services value chains growth, and ensure that individual economies capture the full benefits. //


Author:
Date: January 13, 2015
Source: Malaya

The Philippines needs to implement a competition policy promoting the adoption of sectoral approaches, particularly those which more relevant to the bus transport sector in an effort to address market inefficiencies.

A study released by the Philippine Institute for Development Studies (PIDS) said transport market inefficiencies manifest in too many operators and buses and indiscipline in the road, adding to traffic congestion problems in the Metro.
The fragmented nature of both the sectors regulatory and supply side impedes synchronization among stakeholders and incurs huge costs to industry operators and the riding public, it said.

To squarely address these problems, the study said the countrys competition reform must consider industry specific issues.

It cited the numerous operators and the limited network of roads that result in traffic congestion.

The challenge for the regulator is to come up with a way to maximize social welfare (availability of affordable mode of transportation at a timely manner) through a mode of contracting (allocating routes) that is self-regulating, i.e., incentive compatible such that operators deploy the optimal number of buses given the needs of the metropolis, it added.

Citing another study, the PIDS said the scope of competition policy currently being consolidated in the country encompasses prohibitions on anti-competitive practices, removal of investment restrictions, trade liberalization, and competent regulation.

The way forward should optimize the trade-off between social costs and benefits of policy augmentation, execution, and enforcement, it further said.
The study stressed that due consideration should be given to the welfare of industry operators, the common worker including drivers and conductors and the general commuting public.//

Author: Ed Velasco
Date: January 13, 2015
Source: The Daily Tribune

The Philippines should push for wider participation of countries belonging to the Asia-Pacific Economic Cooperation or Apec in global value chains to foster trade and investment growth in the region, according to state-run think tank Philippine Institute for Development Studies (PIDS).

In a statement issued Monday, PIDS said the Philippines can continue to reinforce the importance of global value chains as it hosts this years Apec Summit.

A PIDS policy note titled Why global value chains and services matter: Implication for Apec 2015, authored by senior research fellow Ramonette B. Serafica and published last December, noted that the opportunities to increase and optimize global value chain participation are plenty for Apec member-economies.

A global value chain is defined by the PIDS paper as the sequence of activities around the world involved in the conception, production, distribution, usage, and other activities that add value to a product.

The trend for Apec nations is to target global value chains and segments that are congruent with the advantages and development objectives of their individual economies. Depending on the global value chain requirements, Apec member-countries can design business facilitation measures and investment policies to encourage growth, PIDS said.

In the case of the Philippines, it should lead the way in enjoining its Apec peers to move to higher-value activities in global value chains"specifically services, in order to increase the benefits captured by such, according to PIDS.

Building on the 2014 initiatives that involve services in goods global value chains, the Philippines during its Apec chairmanship can focus on services value chains. According to experts, global services value chains are not as well understood as goods value chains, Serafica said in the policy note.

Given the Philippines comparative advantage in other business services and in computer and information services, advancing regional cooperation in services value chains can further strengthen our export position in these activities, Serafica added.

To facilitate wider participation in services global value chains among Apec members, the regional grouping should push for improved infrastructure across individual economies, PIDS said.

Expanding a countrys share of value added in the services global value chain depend largely on the quality of infrastructure and efficient services markets. Apec nations are collaborating to improve the transport sector, business services, telecommunications, and distribution channels, PIDS noted.

While increased participation in global value chains could present economic advantages as well as generate new specializations for Apec member-economies, PIDS warned that there are also risks to be wary about.

For one, global value chain benefits are limited by the share of value-added in the chain that a country is able to capture, the think tank said.

Also, there are environmental and socio-cultural effects as countries that become increasingly embedded in global value chains grow increasingly vulnerable to external shocks, it added.

According to PIDS, this policy note was commissioned by the Department of Foreign Affairs as part of the countrys hosting of this years Apec activities.

The main objective of the project is to provide the analytical framework that will form part of the basis for the substantive priorities the Philippines will push for as Apec host-economy in 2015, it said.//

Author: Ben O. de Vera
Date: January 13, 2015
Source: Philippine Daily Inquirer

The International Chamber of Commerce decision upholding the rate adjustment proposal of Maynilad Water Services has stirred a hornets nest, so to speak, with some groups vilifying the water concessionaire and calling the move another cross that would burden consumers. Lost in the din however is the fact that Maynilad " despite a two-year delay in the adjusted rates, has signified willingness to stagger the collection until 2018, or payment by installment to mitigate the impact to costumers, said Maynilad chief finance officer Randolph Estrellado.

Many could still remember how, prior to the privatization of the operations of MWSS, many areas such as Paraaque and Pateros had to buy their water from vendors via delivery trucks (many of them looking dirty and rusty) at very high rates, while others sourced water from deep wells that also required electricity to operate. According to a report made by the Philippine Institute for Development Studies in 1996, the year prior to the privatization, over 80 percent of households buying vended water were actually buying MWSS water indirectly for washing, bathing and other needs and also spending thousands for mineral water.

In any case, the rebasing would enable Maynilad to implement further modernization that includes sewerage coverage expansions and improvement of water pressure in households " which ultimately spells better service and supply of potable water for Metro Manila residents serviced by the concessionaire.//

Author: Babe G. Romualdez
Date: January 13, 2015
Source: Philippine Star

THE PHILIPPINES hosting of Asia-Pacific Economic Cooperation (APEC) events could be used to highlight the growing importance of business and information services in global value chains, thereby advancing the countrys position in these areas, a government think tank said in a policy note.'

The Philippine Institute for Development Studies (PIDS) in its policy note entitled Why global value chains and services matter: Implication for APEC 2015, the think tank said the country could play to its strengths at APEC.

Given the Philippines comparative advantage in other business services and in computer and information services, advancing regional cooperation in services value chains can further strengthen our export position in these activities, PIDS said.

PIDS likewise suggested undertaking analytical work to deepen the understanding of services of value chains.

This can involve case studies of existing services value chains in the region.

The results from the analytical work will complement measures of GVC (global value chains) participation at the aggregate level and provide insights and lessons for individual companies in creating or joining GVCs in services.

Global value chains, PIDS said, are the sequence of activities around the world involved in the conception, production, distribution, usage, and other activities that add value to a product.

GVCs contribute to gross domestic product (GDP) growth, provide employment, and create opportunities for technology dissemination, skills building and industrial upgrading, PIDS said.

Risks, however, could include a limited GDP contribution of GVCs if countries capture only a small share of the value added created in the chain and/or if they remain locked in relatively low-value added activities. --

Author: Mikhail Franz E. Flores
Date: January 12, 2015
Source: BusinessWorld

The Philippine Institute of Development Studies (PIDS) has stressed the need to implement a competition policy promoting the adoption of sectoral approaches, particularly those more relevant to the bus transport sector in an effort to address market inefficiencies.
A PIDS study revealed that transport market inefficiencies manifest in too many operators and buses and indiscipline in the road, adding to traffic congestion problems in the Metro.
The fragmented nature of both the sector`s regulatory and supply side impedes synchronization among stakeholders and incurs huge costs to industry operators and the riding public, the study said.
To squarely address these problems, the study has recommended that the countrys competition reform must consider industry specific issues, citing the numerous operators and the limited network of roads that result in traffic congestion.
The challenge for the regulator is to come up with a way to maximize social welfare " availability of affordable mode of transportation at a timely manner " through a mode of allocating routes that is self-regulating, incentive compatible such that operators deploy the optimal number of buses given the needs of the metropolis.
Citing another study, the PIDS said the scope of competition policy currently being consolidated in the country encompasses prohibitions on anti-competitive practices, removal of investment restrictions, trade liberalization, and competent regulation.
The way forward should optimize the trade-off between social costs and benefits of policy augmentation, execution, and enforcement, the study said.
The study stressed that due consideration should be given to the welfare of industry operators, the common worker including drivers and conductors, and the general commuting public.//

Author: Edu Lopez
Date: January 12, 2015
Source: Philippine Daily Inquirer

State think tank Philippine Institute for Development Studies said Monday the country should push for the discussion of global value chains during the Asia-Pacific Economic 2015 summit which Manila will host.
Global value chains are the sequence of activities around the world involved in the conception, production, distribution, usage and other activities that add value to a product.

PIDS senior research fellow Ramonette Serafica said in a study the Philippines, as the Apec 2015 host, should build on the work already started and expand opportunities by undertaking further analytical work that focuses on the case studies of regional services value chains.

There arent sufficient studies on the important role of services in global value chains and the potential for the region and the individual economies to benefit from the growth of services value chains, especially where small and medium enterprises, which are most engaged in global value chains, can better access them, she said.

Given the Philippines comparative advantage in other business services and in computer and information services, advancing regional cooperation in services value chains can further strengthen our export position in these activities, Serafica said.
Serafica said the trend for Apec nations was to target global value chains and segments that were congruent with the advantages and development objectives of their individual economies.

Depending on the global value chains requirements, Apec member countries can design business facilitation measures and investment policies to encourage growth, she said.

Serafica said with the right measures, individual economies could help capitalize on these advantages and create new specializations. While the overall outlook remaining optimistic, she said there were also risks in the developing the global value chain.

The benefits are limited by the share of value added in the chain that a country is able to capture, she said.
Serafica said expanding a countrys share of value added in the services global value chain depended largely on the quality of infrastructure and efficient services markets. Apec nations are collaborating to improve the transport sector, business services, telecommunications and distribution channels.//

Author: Jennifer Ambanta
Date: January 12, 2015
Source: Manila Standard Today

The Philippines and other member nations of Asia-Pacific Economic Cooperation (Apec) can work cooperatively in implementing measures to develop human resources which play a crucial role in economic growth.
Tereso Tullao Jr., Christopher James Cabuay and Daniel Hofilea, consultants of state think-tank Philippine Institute for Development Studies (PIDS), said investing in education can boost a countrys human capital. From the Apec perspective, education and human resource development are important in pursuing the goals of the organization and in narrowing the income gaps among its member-economies, they said in a policy paper emailed to select entities, including The Daily Tribune.

In addition, the authors said the expansion of connectivity among Apec member-economies can be facilitated and translated into connectivity in trade in services, including cross-border education.

They particularly proposed an inter-university cooperation among Apec members related to the establishment and maintenance of academic exchanges among the leading universities in each economy.

Synchronization of the academic calendar, standardization of course offerings, and measures of accreditation and recognition should also be pursued to facilitate academic exchanges, the paper said.

In line with this, it underscored the need to create an academic exchange visa for students and professors similar to the Apec business visa.

The paper also underscored the need for cooperation and technical assistance through sharing of modern equipment and technologies, teacher training in technical and vocational skills, and accreditation and qualification measures in technical competency given the economic and technological gaps among Apec member-economies.

Further, there is a need to exchange best practices in addressing the problems of unemployment and talent mismatch as well as the migration of human resources.

Human capital development is being proposed as a major thrust and theme in the 2015 Apec Meeting in Manila.

With this theme, there is a need to have high-level discussion on developing the 21st century workforce because it is a key to the development of competitive industries and the promotion of inclusive growth, the paper further said.//

Author:
Date: January 09, 2015
Source: The Daily Tribune

The Philippines needs to implement a competition policy promoting the adoption of sectoral approaches, particularly those more relevant to the bus transport sector in an effort to address market inefficiencies. A study released by the Philippine Institute for Development Studies (PIDS) said transport market inefficiencies manifest in too many operators and buses and indiscipline in the road, adding to traffic congestion problems in the Metro.
The fragmented nature of both the sector`s regulatory and supply side impedes synchronization among stakeholders and incurs huge costs to industry operators and the riding public, it said. To squarely address these problems, the study said the countrys competition reform must consider industry specific issues. It cited the numerous operators and the limited network of roads that result in traffic congestion. The challenge for the regulator is to come up with a way to maximize social welfare (availability of affordable mode of transportation at a timely manner) through a mode of contracting (allocating routes) that is self-regulating, i.e., incentive compatible such that operators deploy the optimal number of buses given the needs of the metropolis, it added.
Citing another study, the PIDS said the scope of competition policy currently being consolidated in the country encompasses prohibitions on anti-competitive practices, removal of investment restrictions, trade liberalization, and competent regulation. The way forward should optimize the trade-off between social costs and benefits of policy augmentation, execution, and enforcement, it further said. The study stressed that due consideration should be given to the welfare of industry operators, the common worker including drivers and conductors, and the general commuting public.//

Author:
Date: January 12, 2015
Source: Malaya

The government should come up with a comprehensive housing program covering development, infrastructure, and environment in order to address the countrys housing needs, according to the Philippine Institute for Development Studies (PIDS).

In a recent note, PIDS noted that decent living spaces continue to be a critical issue among the poor especially in urban areas.

Many of them resort to informal or illegal housing, living in shanties, occupying other peoples land, or squatting in the most unsanitary places unimaginable such as riverbanks, streets, and bridges, it said.

Inequalities in shelter deprivation and access to basic services are most evident particularly in cities where wealth and poverty exist in close proximity, it added, noting that Metro Manila alone is home to more than 4 million slum dwellers threatened by adverse congestion, substandard housing, and deteriorating environment.

The deplorable condition of Metro Manilas slum areas led to its inhabitants to suffer various sickness due to location and the limited infrastructure available.

Effective town and shelter planning and urban infrastructure for people in underserved areas and informal settlements are thus critical first steps to their development, PIDS said.

Relocating informal settlers and victims of natural and human-induced disasters to safer areas is a critical challenge in the housing sector, it added.

The PIDS also said the adverse impacts of climate change has made the relocation of families living in danger zones more urgent.

Natural disasters induce further relocation to cities that can increase informal settlements.

Despite the governments resettlement projects since the 1970s, which through the National Housing Authority (NHA) has made housing a key program for the low-income sector, PIDS said the effort remains wanting.

An evaluation of the NHA resettlement programs between 2003 and 2011 conducted by PIDS senior research fellow Marife Ballesteros and senior research specialist Jasmine Egana showed that in-city projects, despite their higher costs compared to off-city projects, are more cost effective, it said.

In-city housing has higher long-term benefits given better chances of finding employment and more income-generating opportunities, according to the think tank.

The availability of land for relocation projects, however, is a crucial problem. For resettlement programs to be effective, land for socialized housing has to be made available by local governments or the national government especially in urban areas like Metro Manila, PIDS said.

PIDS emphasized the need to study the feasibility of vertical development in in-city housing and for the NHA to improve the production process for incremental housing.

PIDS noted that in 2011, the government released P50 billion to the newly formed National Informal Settlement Upgrading System Program for informal settlers living in perilous areas in Metro Manila. Two years later, two major policy reforms were adopted due to the slow pace of its implementation.

First is the NHA Enhanced Resettlement Package that increases the maximum cost of socialized housing units for off-city and in-city resettlements in order to build bigger and more disaster-resilient houses.

Second is the expansion of the financing program of the Socialized Housing Finance Corporation to include high-density housing (HDH). The HDH addresses the problem of limited land for socialized housing in urban areas by accommodating more families per unit of land which also promotes building of better houses and improved access to basic facilities and infrastructure.

Despite these policy changes, the overall policy intervention remains wanting, PIDS said.

The Philippines lacks a national policy on shelter development that integrates infrastructure, housing, and environmental concerns. The current approach to shelter is primarily on a per project basis instead of a city-wide shelter development. The absence of a city-wide approach creates difficulties for the national government and LGUs to address the housing problem on scale, PIDS also said quoting Ballesteros.//

Author: Albert Castro
Date: January 08, 2015
Source: Malaya

IF the national government will cut bus trips along Edsas super corridor from Magallanes to East Avenue by 20 percent, this would result in a P19.86 billion worth of benefit in a span of only six years.
This was among the key findings of the study released by state-owned think tank Philippine Institute for Development Studies (PIDS), titled Diagnostic Report on the Bus Transport Sector, authored by PIDS Supervising Research Specialist Sonny Domingo, Research Fellow II Roehlano Briones and Consultant Debbie Gundaya.
By doing so, the authors estimated that this will yield a net present value of P13.2 billion in the medium term, or three years, and P19.86 billion in the long term, or six years.
An effective decongestion policy that will lead to a decrease in bus trips by at least 20 percent within the Edsa super corridor, while still sufficiently servicing existing passenger demands, will yield substantial returns in the medium and long term, the authors said.
Based on the results of the study, the authors said the annual cost due to congestion was estimated at P5.51 billion.
This is composed of P4.57 billion in foregone wages of passengers and bus operators cost of P939.21 million.
The authors noted that the cost brought about by congestion is five times higher than the cost on the part of the bus operator.
Results showed that the value of time wasted due to traffic congestion is immense. Reducing bus trips eases congestion and permits faster travel time on average; buses can also achieve faster turnover, hence, passengers can expect equal availability of bus service, the authors said.
To ease congestion, the authors said there is a need to limit the number of buses and/or operators in the franchised routes. This will allow for more effective monitoring and compliance.
Further, they said there is a need to target the totality of vehicles using the routes, particularly private automobiles that constitute the bigger number of road users.
The authors also stressed that maximizing the benefits of these measures require proper and strict enforcement of these policy changes, as well as existing traffic and transport policy, particularly on franchise agreements.
The study stressed that in the 1992 liberalization policy for the transport sector, there is a moratorium on franchise issuance as indicated in the 2000 to 2003 directives; a 15-year age requirement for vehicles; and the regulated fare-setting for all public-utility vehicles.
Industry accommodations have allowed new operators to bypass the moratorium directive, while selective enforcement [or non enforcement in this case] has allowed older buses to service the public, the study stated.
The study stated that Metro Manila is inhabited by around 12 million people at 191 persons per hectare.
It added that based on 2010 figures, there are two million vehicles plying the streets. These vehicles share 1,000 kilometers of road infrastructure spread across 16 cities and 1 municipality.
There are several modes of public transportation in Metro Manila. These include buses that ply major thoroughfares such as EDSA; Jeepneys that ply the mega citys secondary roads; AUVs that have fixed routes of no more than 15 kilometers; and tricycles and pedicabs that seat only one to three people at short distances in residential areas and arterial roads.//


Author: Cai Ordinario
Date: January 07, 2015
Source: Business Mirror

With the onset of 2015, we have begun our habit of making New Years Resolutions, and of wondering about what is in store for the rest of the New Year. The Social Weather Stations (SWS)reported last month that seven out of ten Filipinos expected a happy Christmas, which, by far, appears to the best outlook ever of the yuletide season in an entire decade.
Media organizations have also started to interview soothsayers to give their take on what the stars are suggesting for 2015. International organizations and think tanks such as the Philippine Institute for Development Studies (PIDS) will also soon release their respective outlooks on socio-economic conditions.

This coming January 29th, the Philippine Statistics Authority (PSA) will release estimates of the fourth quarter economic performance, as well as for the whole of 2014. Growth in the Gross Domestic Product (GDP), and the major sectors, namely Agriculture, Industry and Services, provide concrete evidence of what is to come for the economy, since the past carries information about where the future is likely to be.

While GDP is not a perfect measure of economic performance, it continues to be the most widely trusted economic indicator being the value of goods and services produced in an economy. Of course, other statistics including a Gross National Happiness Index, and multidimensional measures of progress, are being proposed but only GDP has undergone as much rigor, with the UN advocating for countries to follow the System of National Accounts (SNA), especially the latest 2008 SNA, which the PSA has adopted.

Last November, when the PSA released statistics on the third quarter economic performance, several were disappointed that the third quarter performance was lower than what they expected, on account of negative growth (-2.7%) in agriculture and a slowdown in the growth of services (5.4%), compared to the previous year (7.7%).

Some also pointed to poor governments spending, on account of the declaration of the unconstitutionality of the Priority Development Assistance Fund (PDAF) and the Disbursement Acceleration Program (DAP). While public administration and defense output, and government final consumption expenditures considerably slowed down (see Figure 1), attributing the slowdown of the economy to the PDAF and DAP issue is far too simplistic. Government contributes only about 10.5% of total spending, and 4.7% of total output in the entire economy.

Figure 1. Growth (in Constant 2000 prices) of Public Administration and Defense (PAD) and Government
Final Consumption Expenditure (GFCE): 2009Q1 to 2014Q3 Source: National Income Accounts, PSA
It must be remembered that 2013 was an election year, so election spending contributed to a high base for 2013.

Everyone should recognize that a 5.3-percent growth for the third quarter is still quite impressive. Many economies in Europe have not seen positive growth for quite a while. And what is remarkable is that the Philippine economy has been having robust growth through the period when the global economy faced many challenges.
Right direction

There is reason to expect sustained growth in 2015, with election spending starting even in 2015 (as 2016 involves the presidency). Government spending will help though it matters what government will spend on. The decision to keep on increasing spending for infrastructures is a step in the right direction, as this will spur more investments and jobs.

In a previous article on Rappler, I showed that the employment structure is shifting, with more employment being created outside of agriculture and with the share of vulnerable employment decreasing. As far as the economy is concerned, while personal consumption still continues to be the bulk of spending, from 2000 to 2014, Figure 2 shows that the ratio of household final consumption expenditure to total gross domestic expenditure (GDE) has been decreasing (although fourth quarters tend to be upticks in recent years). Investment (as measured by fixed capital to GDE) is also on the rise, especially in recent years.

The quality of economy growth thus appears to be healthy. Of course, it will take several more years, perhaps two more honest presidents, for economic growth to be sustained and ultimately result in substantial poverty reduction. We ought to be concerned about choosing for president in 2016 someone who isnt corrupt since as I pointed out that corruption harms development.

Figure 2. Ratios of Fixed Capital and Household Final Consumption Expenditure to Gross Domestic Expenditures
(GDE) in Constant 2000 Prices: 2000Q1 to 2014Q3 Source: National Income Accounts, PSA

Figure 2. Ratios of Fixed Capital and Household Final Consumption Expenditure to Gross Domestic Expenditures (GDE) in Constant 2000 Prices: 2000Q1 to 2014Q3

Source: National Income Accounts, PSA

But rather than look too far into the future, let us try predicting the immediate future.

Statistical models can provide insights into relationships in the data that allow us to generate scientific forecasts of future events, especially in the short term, provided that past trends and other patterns found in data continue. These models are not full proof, as Nassim Nicholas Taleb cautions notably in his book The Black Swan, but statistical models, for whatever imperfections they have, allow us to get a taste of what may likely result, plus or minus some degree of uncertainty.

An examination of outputs of subsectors comprising the major sectors of the economy (see Figure 3) using statistical models suggests that the fourth quarter performance of the entire agriculture sector will bounce up from last quarters negative 2.7% to positive growth. My best guess would be around 1.2% for the sector, but Ruby and Seniang may temper this down a bit, with the industry and services sectors likely to grow 8.3% and near 6.0 %, respectively in the fourth quarter to yield a fourth quarter GDP growth of 6.2%, and thus making full year economic growth at 5.9%. While this is much lower than the low end of the governments target growth of 6.5% to 7.5%, it is still a very good growth figure.

Figure 3. Output of Major Sectors in the Philippine Economy (in Constant 2000 Prices): 2000Q1 to 2014Q3
Source: National Income Accounts, PSA
Very likely, my fearless forecast will be off, but by how much, we shall see when the PSA releases the actual GDP figures for 2014. Danish Physicist Niels Bohr (1885-1962) warned about the perils of forecasting: Prediction is very difficult, especially if it's about the future. Even St. Augustine of Hippo in De Genesi ad Litteram (Book II, xviii, 37) counsels against believing in soothsayers and numerologists: The good Christian should beware of mathematicians, and all those who make empty prophecies. The danger already exists that the mathematicians have made a covenant with the devil to darken the spirit and to confine man in the bonds of Hell."
So, why bother making a forecast?
When I headed the NSCB, which was then tasked with producing the GDP, I kept pointing out that the NSCB was not in the business of forecasting. If I gave forecasts and they would be inaccurate, my office would lose credibility, and if the forecasts would be accurate, the NSCB would be accused of making the forecast come true. Now that the NSCB has been consolidated with other agencies into the PSA, and I am no longer responsible for official statistics production, I offer my insights (and predictions) to the public for whatever purposes they serve.

Every time I see numbers, I see much more but of course, there is danger that I may be seeing more to the numbers than what the numbers are really saying. After all, there is truth to what my English teacher Manny Leviste regularly told me and his countless students: everyone is entitled to his own WRONG opinion!!! - Rappler.com

Dr. Jose Ramon "Toots" Albert is a professional statistician who has written on poverty measurement, education statistics, agricultural statistics, climate change, macro prudential monitoring, survey design, data mining, and statistical analysis of missing data. He is a Senior Research Fellow of the governments think tank Philippine Institute for Development Studies, and the president of the countrys professional society of data producers, users and analysts, the Philippine Statistical Association, Inc. for 2014-2015.


Author:
Date: January 07, 2015
Source: Rappler

The Philippines and other member nations of Asia-Pacific Economic Cooperation (APEC) can work cooperatively in implementing measures to develop human resources which play a crucial role in the economic growth.

Tereso Tullao Jr., Christopher James Cabuay and Daniel Hofilea, consultants of state think-tank Philippine Institute for Development Studies (PIDS), said investing in education can boost a countrys human capital.

From the APEC perspective, education and human resource development are important in pursuing the goals of the organization and in narrowing the income gaps among its member-economies, they said in a Policy Notes. In addition, the authors said the expansion of connectivity among APEC member-economies can be facilitated and translated into connectivity in trade in services, including cross-border education.

They particularly proposed an inter-university cooperation among APEC members related to the establishment and maintenance of academic exchanges among the leading universities in each economy. Synchronization of the academic calendar,
standardization of course offerings, and measures of accreditation and recognition should also be pursued to facilitate academic exchanges, the paper said. In line with this, it underscored the need to create an academic exchange visa for students and professors similar to the APEC business visa.

The paper also underscored the need for cooperation and technical assistance through sharing of modern equipment and technologies, teacher training in technical and vocational skills, and accreditation and qualification measures in technical competency given the economic and technological gaps among APEC member-economies.


Author:
Date: January 07, 2015
Source: Malaya

Economic ideology, not hard evidence fuels debate over govt role

Last of two parts

The impact of government spending on the economy is a subject for intense debate among competing schools of thought in economics. Governments and most analysts take the Keynesian point of view that government spending has a significant positive effect. This is disputed, however, by the classical liberalist point of view defended by Austrian economist Friedrich Hayek (a perspective known as the Austrian school of economic thought) that increasing government spending actually retards growth.

The reason the debate continues along ideological lines is that, as was discussed in Part One of this analysis, the best data and methodology for solving the question with hard evidence unavoidably requires too many assumptions. The latest economic input-output table, for example, was published in 2006, and whether the economic relations among the 240 individual sectors it covers are still the same now is uncertain.

A 1998 study recently cited to support the argument for reducing government spending"and conversely, increasing privatization"found that above a threshold of about 15 percent for the proportion of government spending to GDP, increasing that proportion by 10 percent would result in a one percent drop in GDP growth. In addition, a 10 percent increase in the ratio of spending to GDP was found to reduce private investment by 1.6 percent.

The case against spending

The study (The scope of government and the wealth of nations, by James Gwartney, Randall Holcombe, and Robert Lawson) covered the OECD nations and concluded that beyond the spending required for core functions of the government, government spending had a negative relationship with GDP growth. The estimate of a 15 percent spending-to-GDP ratio as a threshold above which additional spending would have a negative effect represents the highest percentage for that ratio among the 23 economies studied.

What the study identifies is a correlation; it does not necessarily answer the basic question of whether growth follows spending (the Keynesian view) or vice versa. And there is a high degree of subjective judgment involved in the analysis, which the authors acknowledge in an indirect way by describing their definition of core government functions as generous.

Even giving the accuracy of the categorization of expenditures the benefit of the doubt, there is no certainty the same parameters could be applied to non-OECD economies; a recent (December 15) Forbes article citing the study as evidence supporting a shrinking government perspective even acknowledged that by pointing out differences in spending profiles between the advanced economies in the study and the rest of the world.

Another recent study, published in 2009 in the European Journal of Economic and Political Studies, suggests those differences matter enough to at least cast doubt on the generality of the spending follows growth perspective. The study compared Nigerias government spending and national income between 1970 and 2005, and found a clear correlation between higher spending and income growth, although the degree could vary according to application.

Not how much, but what

PIDS Dr. Ramon Albert agreed that the application of government spending rather than its magnitude is probably a stronger determinant of what effect increasing government spending would have on the wider economy. What they spend on would certainly matter, Albert said, giving as an example the findings of a 1960s-era study (An Inter-Industry Study of the 1961 Philippine Economy, by Tito Mijares and Vicente Valdepeas) which suggested that every peso spent on housing had a multiplier effect of two times.

The economy, however, has changed considerably since then, Albert added, Clearly, infrastructure spending has a big effect, so the plan to slowly increase spending rates to that of our neighbors is a step in the right direction.
However, the effects of some investments, such as the sometimes controversial Conditional Cash Transfer (CCT) program, might not be felt for years to come. I daresay that [the governments] investments in the CCT to help high school student beneficiaries will also have its effects, but these will be measured only about five years from now when these children join the labor market with better educational attainments, as has been the case in South America, Albert explained.

Whether that happens or not is something that will only be known in hindsight, which obviously presents a challenge for policymakers who do not have very effective predictive tools at their disposal. Inevitably there must be a considerable amount of judgment applied to government spending decisions, something that most observers would agree has had mixed results.
In the long run, it is really the private sector that should take the lead in investments, Albert concluded. That will make the economys growth sustainable.//


Author: Ben D. Kritza
Date: January 05, 2015
Source: Manila Times

First of two parts

IN the wake of the lower-than-expected economic growth in the third quarter of 2014, the contribution of government spending to the economy has become the focus for analysts and policymakers. Retracting 2.9 percent year-on-year in the third quarter, government spending, or rather the lack of it, was blamed for slowing growth, a problem that seems to have continued in the fourth quarter.

As has been pointed out in several reports, the slowdown in GDP growth in the latter half of 2014 certainly appears to have been much broader than can attributed to shrinking government expenditures, but government spending does have an impact on the economy. Government spending is about 10 percent of the entire economys output, Dr. Jose Ramon G. Albert, senior research fellow at the Philippine Institute for Development Studies (PIDS) pointed out, So increased government spending will certainly have an effect.

Optimistic estimates

Dr. Albert, who is probably one of the countrys foremost experts in handling socioeconomic statistics, suggested that the real impact of increasing government spending could only be reliably estimated after a deeper analysis of economic inputs and outputs. The implied uncertainty, however, has not stopped some analysts from making optimistic estimates of the growth dividend of improved spending.

In a report released just before the end of the year, Citi Research estimated that increased spending for the Typhoon Yolanda reconstruction program would increase economic output by 2.2 percent over the next three years. In a mid-year report, the Center for Business and Economic Research at the University of Nevada at Las Vegas took an even rosier view, pegging 2015 growth at 8.4 percent. Moodys Analytics, on the other hand, took a glass-half-empty perspective in its year end assessment of the Philippine economy; having earlier forecast a moderate 6.5 percent annual growth rate in 2015, in its latest credit outlook the agency warned the governments real GDP growth target of 7 percent to 8 percent for 2015 will be difficult to achieve if budget release and use are not improved.

The general impression is that the Aquino Administrations handling of the budget, which is assumed must improve in 2015, will add something between half a percent and 2 percent to the GDP growth rate this year due to increased spending. A cursory analysis of the available data, however, suggests that not only is a significant increase in spending unlikely, any increase is likely to have far less of an impact on the overall economy than anticipated.

Inconsistent historical performance

Since 1999, the proportion of GDP attributable to government spending has fallen within a relatively narrow range, from a high of just over 12 percent to a low of 9.3 percent. The long-term average over the past 15 years has been 10.26 percent; spending by the Aquino Administration has been just slightly higher than that at 10.3 percent. The biggest increase in spending so far during the second Aquino era, a 15-percent acceleration which occurred in 2012, budged the proportion of government consumption to total GDP by less than one percent, from 9.85 percent in 2011 to 10.65 percent in 2012 (chart 1).
The year-to-year change in government spending has been erratic although it has generally trended upward (chart 2). Changes in spending, however, do not always correspond with a similar movement in GDP. In 2003 for example, the Arroyo Administration increased the growth of spending by nearly 7.5 percent, and the GDP growth rate accelerated as well, from 3.65 percent in 2002 to nearly 5 percent in 2003. The next year, by contrast, the rate of spending growth slowed again, but GDP growth soared to 6.7 percent.

The same somewhat contradictory pattern was repeated between 2005 and 2007, and in 2009, the year the most serious effects of the global financial crisis were felt here, a sharp increase in spending failed to stimulate the economy; the economy still grew, but only at 1.15 percent, three percent slower than in 2008. Likewise, in 2013 the growth of government spending slowed sharply from 15.5 percent to 7.7 percent as political scandals erupted, but the overall economy moderately increased its growth pace from 6.8 percent to 7.2 percent.

Missing data

How government spending affects the entire economy can be simulated by analyzing the economic input-output tables, according to PIDS Albert; that was the methodology used by Citi Research in developing its recent estimate of the expected impact of Yolanda reconstruction spending.

Analyzing an input-output table " which is a form of what-if analysis " is relatively straightforward. The problem is that the most recent data available is nearly ten years old; the last time an input-output table was created was in 2006. That is because collecting the data to build an input-output table is a herculean task; the current I-O table for the Philippine economy comprises 240 separate economic sectors, for each of which accurate data on consumption and production must be gathered.

Appreciation of the difficulties in producing an I-O table notwithstanding, any forecasts based on dated data will have some degree of uncertainty. The economy has undoubtedly changed since 2006, but to determine in what ways and by how much would require a new I-O table; otherwise, the best any analysis can provide is an educated guess. For example, Citi Research based its calculations on a multiplier of 1.65; in other words, each peso of government spending would result in P1.65 of total economic output. According to the 2006 I-O table, the multiplier of government spending across the entire economy at that time was 1.56, of which 1.09 was secondary government spending (meaning that every peso of spending in one part of the government requires P1.09 in output from the rest of the government).

That suggests that a realistic multiplier might be closer to 0.49 " the difference between government and rest of the economy inputs to meet government spending demand, plus a small margin of about five percent to account for growth since 2006. In that case, the P57 billion in extra reconstruction spending each year that Citi Research forecast to result in P94.3 billion in additional income would instead produce a more modest P27.9 billion, adding just 0.22 percent to GDP growth annually, or about 0.66 percent over the three-year window studied by Citi.

Just as the assumption that government spending boosts the overall economy seems to be based on less than compelling evidence, the opposing view is likewise very debatable, as we will discover in part two of this special report on Tuesday.//


Author: Ben D. Kritza
Date: January 04, 2015
Source: Manila Times

The Philippines needs to undertake measures to make the manufacturing sector more competitive and increase the productivity in the agriculture sector in an effort to promote inclusive growth and reduce poverty.

A study released by government think tank Philippine Institute for Development Studies (PIDS) indicated that the manufacturing sector provides employment opportunities for the poor and also offers relatively higher wages compared with agriculture, which is the major employer of chronic poor workers.

However, expected high productivity employment opportunities from the manufacturing sector were not fully realized due to some bottlenecks in the sector. This partly explains the persistence of poverty in the Philippines, it said.

The PIDS study underscored the need to increase the demand for less-educated workers to absorb the significant number of less-educated workers among the poor.

Regional economic integration that leads to regional production networks resulting in a more dynamic manufacturing sector can be a source of that increased demand, it noted.

Likewise, it said investments have to be made to increase the access of the poor to quality education so that they can take advantage of employment opportunities that are not available to most of the poor right now.

Alongside an industrial policy that aims to develop local firms, an earlier study also suggested that the government must carry out some measures that would improve the investment climate in the country and increase the participation of local firms in higher segments of the industry value chain.

However, it recognized that the manufacturing sector employs only 8.3 percent of the total workforce, of which 23 percent are less educated.

It is thus unlikely that the manufacturing sector can quickly absorb all the excess labor in the agriculture sector, where 74 percent of the chronic poor workers are currently employed.

If the government aims to reduce poverty more quickly, it is equally important to increase productivity also in the agriculture sector, the study said.//

Author:
Date: January 05, 2015
Source: The Daily Tribune

MANILA " The Philippines needs to undertake measures to make the manufacturing sector more competitive and increase the productivity in the agriculture sector in an effort to promote inclusive growth and reduce poverty.

A study released by government think tank Philippine Institute for Development Studies (PIDS) indicated that the manufacturing sector provides employment opportunities for the poor and also offers relatively higher wages compared with agriculture, which is the major employer of chronic poor workers.

However, expected high productivity employment opportunities from the manufacturing sector were not fully realized due to some bottlenecks in the sector. This partly explains the persistence of poverty in the Philippines, it said.

The PIDS study underscored the need to increase the demand for less-educated workers to absorb the significant number of less-educated workers among the poor.

Regional economic integration that leads to regional production networks resulting in a more dynamic manufacturing sector can be a source of that increased demand, it noted.

Likewise, it said investments have to be made to increase the access of the poor to quality education so that they can take advantage of employment opportunities that are not available to most of the poor right now.

Alongside an industrial policy that aims to develop local firms, an earlier study also suggested that the government must carry out some measures that would improve the investment climate in the country and increase the participation of local firms in higher segments of the industry value chain.

However, it recognized that the manufacturing sector employs only 8.3 percent of the total workforce, of which 23 percent are less educated.

It is thus unlikely that the manufacturing sector can quickly absorb all the excess labor in the agriculture sector, where 74 percent of the chronic poor workers are currently employed.

If the government aims to reduce poverty more quickly, it is equally important to increase productivity also in the agriculture sector, the study said. (PNA)

Author: Leslie D. Venzon
Date: January 03, 2015
Source: Zambo Times

Think tank study points to lack of strategy, underspending

Scholars of government think tank Philippine Institute for Development Studies (PIDS) said in a study the country is lagging behind its Asean (Association of Southeast Asian Nations) neighbors in infrastructure development due to underspending and a lack of strategy.
Last years growth has been curtailed by the governments inability to use available funds for infrastructure, the Philippine country report by the PIDS said.
The PIDS research fellows said in the report the government must have an infrastructure financing strategy that not only focuses on funding but on the means of facilitating the way projects are identified, designed, proposed, reviewed, and implemented.
In the report contained in the book published by the Economic Institute for Asean and East Asia (ERIA) titled Financing Asean Connectivity, PIDS President Gilberto Llanto and Senior Research Fellow Adoracion Navarro identified the challenges and provided policy recommendations.
Low infra-to-GDP ratio
The authors said challenges to Philippine infrastructure development include underinvestment, pointing out that infrastructure spending as a share of gross domestic product (GDP) averaged only 1.40 percent to 2.09 percent in 2008 to 2012.

At the same time, Llanto and Navarro added that the governments dependence on official development assistance as source of financing for infrastructure projects has been on a decline over recent years.

The result, the country has lagged behind most of its Asean neighbors in upgrading the quality of its infrastructure, they said.
Project delays
The authors also noted some delays in the implementation of public-private partnership (PPP) projects in the Philippines mainly because government units lack the capacity to ensure project quality-at-entry and efficiency in the processing of PPPs.

In addition, they said the PPP law is inadequate in dealing with competition and implementation problems.

Despite these obstacles, the authors gave a positive outlook for the Philippine governments fiscal health, as well as the opportunities presented by new sources for financing infrastructure projects.

However, they noted that it is not really the availability of financial resources that is primarily restraining infrastructure development in the Philippines but the pace at which investments are being pursued.

In the regional context, the Financing Asean Connectivity report said the PPP mechanism is one way to build infrastructure in the region, especially in member-states where public funds are insufficient to finance infrastructure development.
Asean Masterplan
The book, which is authored by 13 Asean scholars and experts, stressed the important role of the PPP in achieving the objectives of the Master Plan on Asean Connectivity.

Asean has a goal to create an economic community from 2015. To achieve this goal, connectivity among the member-states needs to be given due importance, they said.

In 2010, the regional block adopted the Master Plan on Asean Connectivity (MPAC), which looked at physical, institutional, and people-to-people connectivity. However, there are certain obstacles that are unique to each member-state when it comes to financing infrastructure projects.

The report highlighted the different levels in Asean member-states of infrastructure policy, financing method and financial capacity.

For example, it said the PPP program has been significantly developed and used in Malaysia, Indonesia, Thailand, and the Philippines and recently, in Singapore.

Meanwhile, it said Cambodia and Vietnam have not yet formalized the PPP although private sector participation has become increasingly important in infrastructure development in these countries.

Laos and Myanmar have potential, although they are facing multiple challenges that range from a lack of fiscal resources to a lack of fiscal sustainability. Meanwhile, the PPP still takes a less significant role in Brunei, which has abundant public financial resources to build infrastructure, it added.//

Author: Mayvelin U. Caraballo,
Date: January 01, 2015
Source: Manila Times

The Philippine Institute of Development Studies (PIDS) is batting for the amendment of the economic provisions of the Constitution in order to seize the investment opportunities offered by next years ASEAN Economic Community (AEC).
The country needs to be competitive in order to take advantage of the growing marketplace of opportunities, especially for small and medium enterprises (SME), said Claudette Malana of PIDS.

Under the AEC, Malana said market access opportunities for Filipino firms can expand as they can sell to 600 million people in the booming region and own majority of their ASEAN operations. This also means giving the same opportunity to ASEAN investors, said Malana.

Citing another study, Malana said ASEAN companies including Filipino firms can own 100 percent of companies in other ASEAN countries and should be able to own at least 70 percent of services companies under an integrated regional market.
Malana said while the Philippines continues to show strong potential for further growth, the economy is also characterized by Constitutional restrictions.

These include limits to foreign equity in the exploration, development and utilization of natural resources; public utilities, build-operate-transfer projects and operation of deep-sea commercial vessels.
To sustain the growth of the Philippine economy, these restrictions need to be examined and amended, as they have constrained foreign direct investments (FDIs), Malana said.

Manala said the regional experience indicates that where countries have relaxed restrictions, FDIs have increased, providing significant economic benefits to the receiving country.
Countries that have relaxed foreign ownership restrictions have enhanced their competitiveness and achieved a higher trajectory of economic growth.
For the country to catch up and compete with its neighbors in the high-growth regions of East Asia and Southeast Asia, it is crucial to amend the economic provisions that have caused binding constraints to the growth and productivity of the economy, she added.//

Author: Edu Lopez
Date: January 02, 2015
Source: Manila Bulletin