Monday, April 30, 2012

Why Juan remains dirt poor

People's Tonight
April 29, 2012

By Winston A. Marbella


When President Aquino took office in June 2010, the economy was growing at 7.6 percent. In his first full year as president, the gross domestic product (GDP)   contracted to 3.7 percent.  The official National Statistical and Coordination Board described the growth as “feeble.”  


The slump was caused by the administration’s decision to restrict spending until safeguards could be put in place as part of the government's high-profile antigraft campaign to free government contracts of corruption, explained Trade Sectretary Cesar Purisima.


Budget Secretary Florencio Abad admitted that  a  massive contraction in state infrastructure spending severely hurt growth in 2011.  Some P300 billion appropriated for capital projects remained largely untouched by the end of 2011 despite emergency efforts to incease spending to increase employment.


Falling asleep  

Confirming that growth was “held back by weak spending and external spending,” the World Bank’s Quarterly Update on the Philippine economy in March reported that an improvement of public finances and overall competitiveness would allow the economy to achieve rapid and sustained growth of above 5 percent for a long period of time.


Although the bank kept its 4.2-percent GDP forecast this year, it stressed that the Philippine economy had to sustain growth higher than 5 percent to improve the lives of the poor and catch up with its Southeast Asian neighbors. 


The Philippine Development Plan 2011-2016 is the country’s economic road map.  The National Economic and Development Authority says the plan aims  at “inclusive growth or growth that is shared by all and leaves no one behind.”


Inequality worsens  

The World Bank Philippine Quarterly Update (PQU) found that while “Philippine growth has been generally higher in the last decade, poverty, inequality and labor market outcomes have not improved much.”


The report notes that more than a quarter of the population lives below the official poverty threshold and half the population is vulnerable to poverty. The middle class remains small at about 15 percent of the population in which about a third resides or works abroad.


Inequality has worsened in the last decade and the quality of employment remains weaker relative to the country’s potential when compared to countries with similar development, the report says.


“Independent surveys consistently show hunger and self-rated poverty incidences,” the report says.  “Incidence remained stubbornly high at around 20 percent in recent years, reflecting structural weaknesses in the labor market…”


National Statistics Office data (2000-2009) show that while overseas remittances benefit all remittance-receiving households, the upper-income classes gain much more than the poorer ones. 

Unequal wealth

Further compounding the inequality effect of migration is its regional distribution. Most labor migrants originate in the country’s more developed regions, such as Central and Southern Luzon and Metro Manila. Thus, the bulk of remittances go to these richer regions while smaller shares reach the less developed ones, like Mindanao, Bicol, and Eastern Visayas. 


“No wonder why the country’s regional development remains lopsided,” writes Ernesto M. Pernia,  a research fellow of the Institute for Development and Econometric Analysis and a professor at the UP School of Economics.  


“In sum, it would seem that labor export cannot be relied upon as a policy for inclusive growth -- reducing poverty and inequality -- and fostering the country’s sustained long-run development. If it could, why has the economy just been muddling through over the past four decades?” he asks.


Nearing limit  

“In the future, as the global labor market demands higher professional and technical skills, and to the extent that -- rather, if -- our labor supply can respond, social inequality could well persist,” he says.


“Moreover, our human capital stock may be reaching its limits, what with our education/training systems slipping, not to mention the brain drain.” he continues. 


“There seems to be no alternative to resolutely implementing long-delayed reforms to fortify the health of the domestic economy and lessen its dependence on labor migration. Which, incidentally, is vulnerable to geopolitical vicissitudes, as reflected in the recent slower growth of remittances.” 


Added value 

“In the meantime that the country has little choice but to continue relying on global labor markets, such other service exports as tourism and BPOs should be promoted in terms of more speedily moving up the value chain,” he concludes.


The economic agenda certainly looks clear cut.  Now all that rgw government needs is to buckle down to work.  The coming local elections, regarded as a midterm scorecard for the government, should provide enough inducement for the administration to get moving.  But then again, it could also get easily distracted by the political campaign.


What do you think will happen?  That's right!  They need to focus on a cohesive vision, enlightened leadership, and resolute political will.  Otherwise, time to buy an electric cattle prod to zap their benign behinds.

Sunday, April 29, 2012

The Butterfly Effect


By Winston A. Marbella


In grade school, whenever our class started losing its concentration (which happened every other minute), teacher with the horn-rimmed eyeglasses (Mrs. Benitez, was it?) would whisk out her old reliable animal stories to make us regain our focus.

Her favorite book had big letters and colorful illustrations, but after several readings the stories began to lose their competitive edge against other distractions.  Distractions like a bird entering the classroom to peck at crumbs dropped from recess.  Or a  butterfly the colors of the rainbow on a dark and dreary rainy day.  (We would learn later, philosophically, of course, about the Butterfly Effect: that a butterfly flapping its wings in our classroom could actually whip up a storm in the Gulf of Mexico, in a manner of speaking.)

One story never lost its edge.  In fact, it would keep us riveted to our seats.  I guess it was because it did not have a happy ending, which could be boring to a class of smart alecks.  But I think it was really because it had a creepy character to it that made my hair stand.  It was the story of “The Scorpion and the Frog.”   (Just made my hair stand again, those creepy crawlies!)

The mists of time have dimmed the details, but here is how it goes, as best I can remember the frayed and yellowed pages of Mrs. Benitez’s storybook. 
Pain in the rain

One particularly rainy day, the waters began to rise on the island where lived a scorpion and a frog.  Natural enemies, they had achieved a sort of modus vivendi on the little island.  The scorpion had a poisonous bite, which made the frog wary.  And the scorpion was suspicious of the frog’s tongue, which could curl on prey in the blink of an eye.

As the waters continued to rise, the patch of ground where the two could perch grew smaller until they were within striking distance of each other.  The scorpion knew the frog could swim, so it provided an escape route in an emergency.  The scorpion decided to make peace.

“Froggie,” the scorpion said in its most appealing voice, “may I interest you in a proposal you cannot refuse?”

Curious, the frog replied, “And what is that?

“Well,” said the scorpion, “if you save me from drowning, I promise to help you catch prey if we both survive.”

Getting interested, the frog obliged the spider.  “Go on,” it said.

“”When it is time to leave the island, will you allow me to ride on your back?”

“You must be crazy!” screamed the frog.  “What do you take me for, a dodo?”
Sting

“I promise to behave,” said the scorpion.  “If I bite you while you are swimming to shore, you will drown, and then I, too, will die. What will it profit me to do that?”

The frog thought for a while and, convinced the scorpion made sense, agreed.  “Let’s go!” it said.

Soon the frog was swimming with the scorpion perched on its back.  Then it felt a stinging bite, which soon began to numb its legs.  Then it realized what had happened.

“You idiot,” it told the scorpion.  “Now we will both die.”

“I know,” said the scorpion remorsefully.  “But I couldn’t help myself.  It is my nature.”


Lesson

I remember this story to this day because later on in college, I would major in English Literature and be fascinated continually by the staying power of a good story told well.

In my senior year, in fact, all my subjects were about literature, from Beowulf to the Arthurian legends, from the Greek tragedies to Shakespeare’s own, from mythology to the modern plays by Pinter and Wilde and Williams.

This endless fascination I owe as much to the classics as to great teacher who spun golden tales, like the writer A.G. Uranza, and the literary historian Antonio B. K. Joaquin, who found me recently in the Internet.  To them and countless others who taught me well, I owe much.


Hubris


I had occasion to leaf through the browned pages of old books recently when I wrote a piece on hubris, a concept that fascinated both the Greeks and Shakespeare.  The idea can be summarized in two sayings: “After the pride comes the fall” and “Whom the gods wish to destroy they first make mad.”

It amazes me endlessly that in one short word could be embedded the richness of such stories like Julius Caesar, or Hamlet---this concept of otherwise heroic men marching recklessly to their doom because of pride and insanity, or, more likely, both.

There is a third element to the word which further enriches its fascination: the idea that these heroic characters knew---or at least sensed---the impending doom that lay in their future.  But each threw caution to the wind and thus met his tragic fate recklessly.   Pride and madness and a fatal flaw: How can anyone be so unfortunate and betrayed by the gods?

Then I remembered the scorpion story and found my answer.  These tragic heroes of enormous proportions were really nothing more than overgrown frogs doomed to die by the bite.  Or foolish scorpions who can't help themselves.

But nothing beats the explanations offered by my classmates in grade school.  When teacher asked for  volunteer to explain the story, one raised his hand and jumped to his feet.

“Ma'am,” he said, “we should not let strangers hitch a ride with us!”

Another said: “We should all learn to swim!”

One became an engineer, specializing in building bridges  The other, a copy writer, crafting award-winning advertising.  Both are equally successful, but one is having more fun.

Saturday, April 28, 2012

That easy grace that comes (not so) naturally


By Winston A. Marbella

Veteran sports writers and editors have honed  through the years a natural built-in radar that enables them to assess, in the blink of an eye, whether a rookie has got what it takes to become a phenomenal athlete in the future.

Because we have a hard time describing it, we call it simply “star quality.”  We apply the term indiscriminately to rising actors and politicians, celebrities and artists.  We simply know, and the more discerning among us know it faster.  They become talent scouts, and they make tons of money spotting talent faster than ordinary mortals.

The future big talents have a natural easy grace to how they do their craft.  That is why we sometimes call them “the naturals.”  Scientists have found a way of identifying them, and scores of research papers have been written about them.

The remarkable finding is that what seems to come to them naturally did not happen naturally.  They had to sweat the small stuff, it seems, if we are to believe Malcolm Gladwell's bestseller.


Key to success 

In Outliers: The Story of Success, Gladwell (The Tipping Point, Blink, What the Dog Saw) explores a concept that has fascinated many authors: success. Gladwell supports his thesis with compelling stories of, for example, how Microsoft founder Bill Gates achieved phenomenal success, and how people with exceptional intelligence end up with vastly different fortunes. 

Gladwell repeatedly mentions the "10,000-Hour Rule"---that the key to phenomenal success is going at it for 10,000 hours, more or less, if you keep pushing yourself beyond your comfort zone.

Gladwell notes that "the biggest misconception about success is that we do it solely on our smarts, ambition, hustle and hard work."  Outliers are defined by Gladwell as exceptional people, especially those who are smart, rich, and successful, and those who operate at the extreme outer edge of what is statistically possible.


A hard day’s night

A recurring theme throughout the book is the 10,000-Hour Rule, based on a study by Anders Ericsson. Gladwell says that success requires enormous time, using The Beatles and Gates as examples.  

The Beatles performed live in Hamburg, Germany over 1,200 times in1960-64, more than 10,000 hours of experience.  "By the time they returned to England from Hamburg, Germany, they sounded like no one else.” 

For his part, Bill Gates logged 10,000-hours writing computer programs overnight at a high school computer in 1968 at the age of 13.

Without that access, Gates would still be "a highly intelligent, driven, charming person and a successful professional," but he might not be worth US$50 billion.
  
Just 10 years

The 10,000-Hour Rule, the key to success in any field, may daunt men of lesser stuff, but it is simply a matter of practicing a specific task that can be accomplished with 20 hours of work a week for 10 years, Gladwell says.  He also reveals that he himself took exactly 10 years to meet the 10,000-Hour Rule in his two previous journalism jobs.

Gladwell continually emphasizes that genius is not the most important thing in determining a person's success.  He notes that success "is not exceptional or mysterious. It is grounded in a web of advantages and inheritances, some deserved, some not, some earned.”

The idea that it takes about 10,000 hours of deliberate practice to really master a skill dates back to work done by Herb Simon in the 1970s and in later years by one of Simon’s postdoctoral students, Anders Ericsson. 

Think long-term

Their work evokes visions of a cinematic Mozart prodigiously caressing classical music out of a piano after years of practice.  Or of a temperamental Bobby Fischer smashing a chess set when he could not coax a brilliant move.

Great achievement is certainly not impossible without putting in 10,000 hours.  Perhaps this is even more common in the real world.  If one thinks of 10,000 hours of practice as some kind of long-term goal, it suddenly becomes less daunting and more achievable.

A more practical approach seems to set your sights on a goal that you enjoy working on, break it down into a set of skills where palpable progress becomes rewarding. 


An incremental Federer 

Think of yourself as a Roger Federer going through years of tennis practice but enjoying every minute of it.  A sizzling serve.  A cross-court volley that hits the baseline.  A drop shot that stops cold after a short bounce off the net.  

The more enjoyable and rewarding, the less awesome the task becomes and the less difficult it will be to put in the time that leads to expertise  Then ratchet up the challenge, stretching yourself to a higher level of performance, enjoying each new level you achieve.  Along the way, do not forget to stop and savor the view.

The journey is as enjoyable as the destination.  This way, even if you don’t reach your goal, you will still enjoy yourself.  

TV industry shakedown


Commentary: by Winston A. Marbella
BusinessWorldOnline
Posted on April 25, 2012 08:18:59 PM

A formal price offer still has to be worked out to bridge a P15-billion gap to swing the deal, but all major industry indicators -- dropping profits, shifting consumer markets, rising costs, expensive new technology, and cut-throat competition -- are conspiring to make Manny V. Pangilinan’s acquisition of television network GMA-7 inevitable, sooner or later, one way or the other, market analysts say.

Media mogul MVP, chair of the telecommunications conglomerate PLDT/Smart/Sun Cellular group, is looking at acquiring control of leading TV network GMA-7.

“The major and controlling shareholders have not yet received a price that is acceptable to them,” GMA Network president Gilberto Duavit, Jr. said in a statement responding to media reports

“We are presently not in serious negotiations with the PLDT group as we have not yet received an offer price that is acceptable to us,” Duavit said.

But he said the shareholders would welcome offers to buy them out at the right price. “That is not to say that (GMA 7) may not be sold, depending on the offer price,” Duavit said.

For weeks, the industry has been abuzz with reports that acquisition talks were under way. As with matters of this nature, it may all boil down to price. But one has to be extra-perceptive to read the nuanced signals correctly.

INDUSTRY INDICATORS

Major indicators foreshadow a shakedown in the television industry.
Technology is changing to high-definition, requiring massive capital spending. Industry profits are shrinking. The rules of the game are shifting.

The two major players, ABS-CBN and GMA 7, are suffering double-digit reductions in profits. Advertisers are cutting back spending.

An aggressive new kid on the block, TV 5, is challenging industry rules and rewriting tried-and-tested formulas.

Channel 5 is on the prowl for an acquisition. And there is a company ready to sell for the right price.

ASKING PRICE

Last week, media reports, quoting a source from Pangilinan’s Hong Kong-based First Pacific Co. Ltd., said the “asking price” for GMA 7 was between P45 billion and P51 billion -- an amount the Pangilinan group was said to be willing to pay.

Fresh reports later said the three families controlling GMA 7 were willing to sell the company for P60 billion.

At Thursday’s closing price of P9.22 per share at the Philippine Stock Exchange, a 100% stake in GMA Network was worth P31 billion, although it is customary for buyers to pay a premium for acquisitions that give them controlling stakes in the target companies.

At P45 billion, Pangilinan is willing to pay a premium of about 45% to GMA Network’s present market capitalization, while the controlling shareholders are seeking a premium of 87%.

The Pangilinan group has investments in several media companies and full ownership of television network TV5. The PLDT Beneficial Trust Fund, through subsidiary MediaQuest Holdings, also has minority interests in print media: BusinessWorld, Philippine Star and Philippine Daily Inquirer.

THE RIGHT PRICE

GMA-7 is controlled by the Duavit, Gozon and Jimenez families. The Gozon group, represented by GMA chairman Felipe L. Gozon, had admitted in the past that the company could be sold for “the right price.”

The sale of GMA-7 to the PLDT group nearly happened in 2001 with the signing of a memorandum of understanding. Duavit said agreements had been reached on the price for a majority stake of the firm, but the deal fell through because of issues encountered by the buyer not related to price.

But conditions could be right this time around.

INCOME DROP

GMA-7 recently announced its 2011 net income plummeted 39% to P1.72 billion from P2.82 billion in 2010 as advertisers cut back and operating costs rose.

“Our net income took a beating,” admitted Ronaldo P. Mastrili, GMA’s vice-president for finance. “We experienced the lowest net income level of the past five years in the 4th quarter of 2011.”

Advertising revenue dropped by 9% to P13.08 billion while operating costs jumped by 8% as GMA launched GMA News TV to blunt competitive inroads in news.

RATINGS GAME

Duavit said competitive pressures drove costs up:
“The spending was driven by the desire to win in the national ratings last year.”

GMA cited a 3.1-point lead in household audience share over rival ABS-CBN and a 18.6-point lead over newcomer TV5, according to media ratings firm Nielsen TV Audience Measurement.

ABS RISES

But despite posting lower profits, rival ABS-CBN has set a higher budget for expansion this year to diversify its revenue stream and ensure future growth.

Last week, it reported that net profits fell to P2.4 billion in 2011, down by 24% from P3 billion in 2010. Profits fell nearly a quarter in 2011 following an industry-wide drop in earnings from massive spending cuts by big advertisers, company officials reported.

This year the government plans to order television industry players to start broadcasting on digital frequencies and replace inefficient and unreliable analog technology.

Technology is changing, requiring more capital spending. Industry profits are shrinking. The rules of the game are shifting.

An industry shakedown looms. It is prudent for GMA-7 shareholders to seriously start a strategic review of their competitive position while the price is right.

The author is chief executive of a management think tank specializing in transforming social and economic issues into public policy and business strategy. E-mail: mibc2006@gmail.com.

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Story location: http://www.bworldonline.com/content.php?Section=Opinion&title=TV-industry-shakedown&id=50587

Friday, April 27, 2012

Networks shakedown rocks industry


By: Winston A. Marbella
Philippine Daily Inquirer
April 26, 2012 



MEDIA mogul Manuel V. Pangilinan, chairman of the telecommunications conglomerate PLDT/Smart/Sun, wants to acquire control of television network GMA 7.


A formal price offer still has to be worked out to bridge a P15-billion gap to swing the deal, but all major industry indicators—dropping profits, shifting consumer markets, rising costs, expensive new technology and cut-throat competition—are conspiring to make the buyout of GMA 7 inevitable, market analysts say.


“The major and controlling shareholders have not received a price that is acceptable to them,” GMA Network president Gilberto Duavit Jr. said in a statement responding to media reports.  “That is not to say that GMA 7 will not be sold, but at the moment we are presently not pursuing serious negotiations with the PLDT group because they have not offered us a price that is acceptable to our shareholders,” Duavit said.


For weeks, the industry has been abuzz with reports that acquisition talks were under way.  But price matters most, and one has to read the nuanced signals correctly.


Industry indicators


Major indicators foreshadow a shakedown in the television industry.
Technology is changing to high-definition, requiring massive capital input.  Industry profits are shrinking and the rules of the game are changing.


Two major players—ABS-CBN and GMA 7—are suffering double-digit percentage reductions in profits.  Advertisers are cutting back on spending.


An aggressive new kid on the block, TV 5, is challenging industry rules and rewriting tried-and-tested formulas.


Channel 5 is on the prowl for an acquisition.  And there is a company ready to sell for the right price.


Purported asking price


Last week, a source in Hong Kong-based First Pacific Co. Ltd., of which Pangilinan is CEO and Managing Director, said that the “asking price” for GMA 7 was between P45 billion and P51 billion—an amount the Pangilinan group was said to be willing to pay.


But latest reports said the three families controlling GMA 7 want P60 billion for the company.


The closing price of GMA 7 at the Philippine Stock Exchange on April 25 was P9.36.  A 100-percent stake in GMA 7 would cost over P31 billion, but it is customary for buyers to pay a premium for acquisitions that give them control of their targeted companies.


At P45 billion, Pangilinan is willing to pay a premium of about 48 percent to GMA Network’s present market capitalization, but the controlling shareholders seek a premium of 94 percent.


The Pangilinan group has investments in several media companies and full ownership of television network TV 5. The PLDT Beneficial Trust Fund, through its subsidiary Media Quest Holdings, also has minority interests in print media: BusinessWorld, Philippine Star and the Philippine Daily Inquirer.


The right price


GMA-7 is controlled by the Duavit, Gozon and Jimenez families. The Gozon group, represented by GMA chairman Felipe L. Gozon, had admitted in the past that the company could be sold for “the right price.”


The sale of GMA-7 to the PLDT group nearly happened in 2001 with the signing of a memorandum of understanding.  Duavit said agreements had been reached on the price for a majority stake of the firm, but the deal fell through because of issues encountered by the buyer that were not related to price.


But conditions could be right this time around.


Income drop


GMA 7 recently announced that its 2011 net income plummeted 39 % to P1.72 billion from P2.82 billion in 2010, as advertisers cut back and operating costs went up.


“Our net income took a beating,” admitted Ronaldo P. Mastrili, GMA 7 vice president of finance.  “We experienced the lowest net income level of the past 5 years in the 4th quarter of 2011.”


Advertising revenue dropped 9 percent to P13.08 billion, while operating costs junped 8 percent as 
GMA launched GMA News TV to blunt competitive inroads in news.


Ratings game


Duavit said competitive pressures drove costs up:
“The spending was driven by the desire to win in the national ratings last year.”
GMA 7 cited a 3.1-point lead in household audience share over rival ABS-CBN and an 18.6-point lead over newcomer TV 5, according to media ratings firm Nielsen TV Audience Measurement.


Duavit rejected suggestions to emulate TV 5 by pirating big talent to attract more advertisers.  “The norm was that the stars created the program and the network was measured in terms of who its stars were,” he said.


“We prefer to see it the other way around—that it’s the programs that make the stars and the network that creates the programs and the opportunities,” he said.


Spending cuts


GMA-7 plans to reduce programming costs and trim capital expenditure from nearly P896 million in 2011 to P650 million for 2012.


Two new stations are planned in the Ilocos and Bicol regions.  The rest of the funds will be to upgrade towards high definition programming.


Despite posting lower profits, rival ABS-CBN has set a higher budget for expansion this year to diversify its revenue stream and ensure future growth.


Last week, company officials reported that profits fell nearly a quarter in 2011, from a net of P3 billion in 2010 to P2.4 billion in 2011, following an industry-wide drop in earnings from massive spending cuts by big advertisers.


A one-time gain from the sale of a stake in Sky Cable Corp., coupled with the company’s more diversified revenue stream helped save ABS-CBN from a worse decline, officials said.


Uncertain outlook


The outlook for 2012, however, remains uncertain after an unusually erratic first three months of the year.


“In January ad minutes went down by double digits. In February we saw some signs of recovery, but last March we had an all-time high for that month,” ABS-CBN chief financial officer Ron Valdueza told reporters. “We hope to sustain this momentum the rest of the year.”


Valdueza said the company might benefit from the unofficial start of the midterm campaign season by the fourth quarter of this year, “but it probably wouldn’t be that much.”


He said the group’s capital expenditure would increase by at least 19 percent this year to P5 billion, with the bulk to be invested in the Internet and cable television business of its subsidiary, SkyCable.


Diversifying


To diversify its revenue stream, ABS-CBN last year launched a total of 16 films, six of which grossed more than P100 million each to reach “blockbuster” status by Philippine standards.   “Praybeyt Benjamin” grossed P342 million, making it the country’s biggest-selling movie.


This year the government plans to order television industry players to start broadcasting on digital frequencies and replace the existing inefficient and unreliable analog technology.


The National Telecommunications Commission is choosing between Japan’s Integrated Services Digital Broadcasting and the second-generation Digital Video Broadcasting platform from Europe.


This seismic shift in the industry’s business methods will benefit the big players at the expense of the smaller ones.  It looks prudent for GMA-7 to start preparing while the price is right.


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Story location: 
http://entertainment.inquirer.net/38013/networks-shakedown-rocks-industry

Thursday, April 26, 2012

'Money under the mattress'

People's Journal
April, 29, 2012

By Winston A. Marbella

In a study that begs for solutions, the Bangko Sentral ng Pilipinas (BSP) said a majority of Filipino households are not saving for the future.  As it released the results of its first Consumer Finance Survey, the central bank said only two out of 10 families maintain deposit accounts.

“The main reason cited by [around 93% of] households for the absence of a deposit account was they did not have enough money,” BSP Assistant Governor Ma. Almasara Cyd N. Tuaño-Amador told reporters at a briefing.

That was quite obvious.

The remaining 7% claimed they did not need a bank or cash account, could not manage an account, the minimum balance requirement was too high, or they did not like dealing with banks or other financial institutions.

The survey was conducted from November 2009 to January 2010 and covered 10,520 households in Metro Manila and the Ilocos, Central Visayas and the Davao regions.

That eight out of 10 Filipino households were “unbanked” or not part of the formal financial system meant many did not have the means of weathering economic shocks or unexpected events.

Get cracking.  It also meant that the BSP, which has made “financial inclusion” an advocacy, has its work cut out for it, officials said.

“The BSP should continue to work towards a more inclusive financial system, one that reaches out to... those who are excluded or unbanked,” central bank Governor Amando M. Tetangco, Jr. said during the briefing.

He added that the BSP should continue educating households on the advantages of entrusting savings to financial institutions and investing in various financial instruments.

'Under the mattress'.  BSP Deputy Governor Nestor A. Espenilla, Jr., in a text message, stressed the importance of having a deposit account.

“Bottom line, people should be saving if they can. And saving in banks is a better option for an individual than keeping money under the mattress,” he said.

“Money saved in banks also help the economy when these are recycled through loans to productive activities.”

Looks like a job cut out for the central bank's communications consultants.  Another cut-and-paste job waiting for them is to help the Cabinet's economic team, which includes the central bank Governor, figure out an economic road map that makes sense.

'Feeble' growth.  When President Aquino took office in June 2010, the economy was growing at 7.6 percent. In his first full year as president, the gross domestic product (GDP)   contracted to 3.7 percent.  The official National Statistical and Coordination Board described the growth as “feeble.”  

What happened?  Remember the old adage, “The road to hell is paved with good intentions?”

The slump was caused by the administration’s decision to restrict spending until safeguards could be put in place as part of the government's high-profile anti graft campaign to free government contracts of corruption, explained Trade Secretary Cesar Purisima.

Budget Secretary Florencio Abad admitted that  a  massive contraction in state infrastructure spending severely hurt growth in 2011.  Some P300 billion appropriated for capital projects remained largely untouched.

Minimum growth.  Confirming that growth was “held back by weak spending and external spending,” the World Bank’s Quarterly Update on the Philippine economy in March reported that an improvement of public finances and overall competitiveness would allow the economy to achieve rapid and sustained growth of above 5 percent for a long period of time.

Although the bank kept its 4.2-percent GDP forecast this year, the bank said the Philippine economy had to sustain growth higher than 5 percent to improve the lives of the poor and catch up with its Southeast Asian neighbors. 

Shrinking middle class.  The World Bank Philippine Quarterly Update (PQU) found that while “Philippine growth has been generally higher in the last decade, poverty, inequality and labor market outcomes have not improved much.”

The report notes that more than a quarter of the population lives below the official poverty threshold and half the population is vulnerable to poverty. The middle class remains small at about 15 percent of the population in which about a third resides or works abroad.

National Statistics Office data (2000-2009) show that while overseas remittances benefit all remittance-receiving households, the upper-income classes gain much more than the poorer ones. 
 
Writes Ernesto M. Pernia,  a research fellow of the Institute for Development and Econometric Analysis and a professor at the UP School of Economics:  “There seems to be no alternative to resolutely implementing long-delayed reforms to fortify the health of the domestic economy and lessen its dependence on labor migration.” 

The economic agenda certainly looks cut out for the Cabinet.  But they need vision, leadership, political will---and a road map to the future.  Who will give them that?  Or can they do it themselves?  Choose. And act.

Wednesday, April 25, 2012

Pacman & Koko, Erap & Jojo


By Winston A. Marbella


I am having delicious, delirious thoughts at midday, and I hope it is just the summer heat and not the early onset of Alzeimer's (in the worst-of-both-worlds scenario, it could be both!).


Manny Pacquiao goes up to Baguio to start his high-altitude training for his next fight, which could be his last because he says God told him in a dream to stop boxing.  His mother, Dionisia, had told him the same thing three fights ago, but he had begged for just a few more.


In case you have not noticed, Manny has been a changed man since he seriously took up Bible study.  He has stopped gambling, he has disposed of all his fighting cocks, and –yes! – he has stopped womanizing, too, although he insists those were just rumors.


On his first day in training, he found himself catching his breath. He stopped in the middle of a jogging regimen to do some stretching.  Next day, he tackled a different road course.  But the pollution from the trucks stopped him dead in his tracks.  He laughed it off.


UNA first  

Manny has just taken his oath as a member of UNA, the alliance of Vice President Jojo Binay and former President Joseph Estrada for the off-year elections next year.  He got pummeled for this daring political move, but he had no less than Sen. Aquilino (Koko) Pimentel III take the cudgels for him.


Koko is president of the PDP-Laban, the VP's party, which coalesced with Erap's Partida ng Masang Pilipino (PMP) to form the blockbuster UNA (United Nationalist Alliance).  UNA has formed a power-packed senatorial team for the 2013 elections, and it is easily evolving as the party to beat, stealing the thunder from the ruling administration's Liberal Party.


Judging by the way UNA has attracted the political heavyweights in preparation for Binay's announced presidential run in 2016, it would seem that the lame-duck presidency of President Aquino has begun prematurely.   


The President has taken pains to correct mis-impressions that all is not well between him and his Vice President.  On the way to an official function at the Cultural Center Complex, the President for the first time dropped by Binay's office at the lavishly renovated Coconut Palace.  The President remarked its grand ballroom could rival Malacanang's main lobby.


No matters of state were discussed, according to both camps.  Clearly, it was simply a photo opportunity to show all was well on the front lines.  That meant all is not well. The mountain just went to Muhammad.


Flanking move  

Erap, meantime, is doing the diversionary flanking movement.  To celebrate his 75th birthday, he went on feeding frenzies in the poorest sectors of Manila, including the rough neighborhood of Tondo, where he was born and filmed the movie that made him famous, “Asiong Salonga.”


“Mayor! Mayor!”, the adoring crowd cheered, fueling his mayoralty ambitions, which he reluctantly denies.  But he would not mind being mayor of Manila when Binay occupies Malacanang in 2016, Erap says, because Malacanang is in the city of Manila.


“It would be good,” he said. “ I could easily bring to his attention all the problems of Manila, particularly housing.”


Urban renewal 

“It’s sad because Manila is the capital city. It’s supposed to be a showcase city. It needs urban renewal,” he said.


Those are not the words of a man who is not running for anything.  In fact, he already feels comfortable with the job.  He will not feel diminished, he says. being mayor of Manila after being President. After all, he started his political career as mayor of San Juan, where he resides.


The rough-and-tumble neighborhood of Tondo offers a “sentimental value” to Estrada. It was the setting of his first starring role in “Asiong Salonga,” which catapulted his movie career.   


The 2013 mayoralty race would pit him against Mayor Alfredo Lim, a tough-talking, crime-busting former policeman known as Manila’s “Dirty Harry,” the Clint Eastwood film.


Underdog syndrome 
 
“I’m more used to uphill battles.  I prefer to be an underdog. It’s more challenging,” Estrada said, already looking forward to what could be the toughest political battle of his life, a fight he continues to deny to this day.


But more than anything else, he is a movie actor, and he knows what makes for a good script.  The suspense has to build, scene by scene, till the climax almost happens as a will of God.


Which brings our summer dreams back to Manny Pacquiao.  Pacman, Jojo, Erap and Koko are cut from the same cloth.  They have a common quality that makes them endearing.  


Call it audacious pugnacity.  Or pugnacious audacity.  Your choice.  Either way is nice.  


(The author is chief executive of a management think tank that transforms social and political issues into public policy and business strategy. E-mail mibc2006@gmail.com.)

Tuesday, April 24, 2012

The last of the red hot Latin lovers


By Winston A. Marbella


Banking on his world-class reputation as the last of the red hot Latin lovers, former President Joseph Estrada offered himself as a consultant to bachelor President Benigno Simeon Cojuanco Aquino III.


The offer came during Estrada’s 75th birthday bash last week which was attended by supporters, friends and family, including his wife, former Sen. Dr. Luisa “Loi” Ejercito, his 12 children with six different women and about two dozen grandchildren.


“I’m opening myself to be your adviser in your love life,” Estrada told Mr. Aquino, prompting guffaws from the guests, among them Vice President Jejomar Binay, Senate President Juan Ponce Enrile and House Speaker Feliciano Belmonte Jr.


Amused

“That is, in case you need a consultant for your many love lives. I will be able to help you, Mr. President,”  jested Estrada.


Aquino appeared amused at the offer. He  came with his sisters Ballsy Aquino-Cruz and Pinky Aquino-Abellada and stayed for about four hours.


Mr. Aquino’s love life has been exposed to public scrutiny since he won the presidency two years ago.  The public religiously followed news about his relationship and eventual beakup with Valenzuela, Bulacan Councilor Shalani Soledad (now the wife of Pasig Rep. Roman Romulo), and his dates with, among them, stylist Liz Uy and television host Grace Lee.


Mr. Aquino took Mr. Estrada's offer for what it is: a 75th birthday bash braggadocio. There are better things to learn from Mr. Estrada.  Like how to govern, for example.  Seriously.


 'Greatest good'
 
As part of a week-long celebration of his birthday, Mr. Estrada invited friends at the Enderun Colleges to the launching of a book, Ito and Pilipino: A Tribute to Joseph Ejercito Estrada.  The book was written, compiled and edited by Margaux Salcedo, Estrada’s official spokesperson.


The contributors to the compendium are a diverse group -- former Malaysian deputy prime minister Anwar Ibrahim, President Aquino III, Vice-President Binay, Congressman Manny Pacquiao, businessmen, media people, former showbiz colleagues, former Cabinet members, classmates and others.  His Budget Secretary, University of the Philippines economics professor Ben Dokno, was one of them.  Below are excerpts:  


“Estrada embraced utilitarianism, in the tradition of philosopher Jeremy Bentham (1748-1832) and economist John Stuart Mill (1806-1873). The core of his governance style is 'maximizing the general happiness by calculating the greatest good for the greatest number.'

Asian crisis

“Estrada assumed the presidency at the height of the Asian financial crises. But he quickly restored growth. He did his own version of a fiscal stimulus without fanfare. He increased spending in public infrastructure, education and health. 


“In order to perk up spending in the countryside, he ordered the release of the internal revenue allotment (IRA) that were withheld by Mr. Ramos during the first half of 1998, at the height of the Asian financial crises.  As a result, economic growth was restored in 1999 and 2000.


“Government expenditure is the primary policy instrument used by government to direct the economy to a path of growth and development.


“Mr. Estrada put his money where his priorities were -- in social expenditure. Per pupil spending for education, in real terms, was the highest during Mr. Estrada’s term, compared to other post-EDSA 1 presidents, showing his strong commitment to basic education. Real per capita comprehensive (national and local) spending for health was also the highest during the same period.


Modernizing president 

“Estrada understood the need to modernize the bureaucracy. He understood that in order to strengthen the fiscal position of the government, it has to raise taxes, prioritize spending, and improve the way public services are delivered.


“Budget priorities were on the right track. The focus was on social services (education, health, social welfare and low-cost housing) and public infrastructure.


“Reforms in government were in full blast when the impeachment trial started....The procurement reform law was hailed as one of the best pieces of legislation on the subject in the world. Estrada deserves the credit for this landmark legislation.


E-Commerce law

“In his desire to modernize the Philippine bureaucracy, Estrada pushed for the passage of the E-commerce law. The Philippines became only the third country in Southeast Asia with legislation to promote and protect electronic transactions.


“During his truncated term, President Estrada has shown some indications of where this country could have been had he been allowed to finish his term.... But then again, we’ll never know,” Mr. Diokno concluded wistfully.

It will do Mr. Aquino no harm if he follows in the footsteps of Mt. Estrada.  Just forget the love guru part.  Gurrrrrrrrrru!

Monday, April 23, 2012

Gut issues will decide 2013 polls

People's Journal
April 24.2012

By Winston A. Marbella


Gut issues, not politics, will decide the 2013 midterm elections, if we go by what people are feeling these days.


Seven of every 10 adult Filipinos last March considered controlling escalating prices the most urgent national issue.  For this they gave the Aquino administration its lowest public approval rating, a Pulse Asia survey said.


Prices of goods and services have gone up as a result of rising of fuel prices, while the minimum wage remained the sane.

The survey, conducted from Feb. 26 to March 9, also found that the least urgent of the issues the administration must address included “ensuring a fair trial for Supreme Court Chief Justice Renato Corona” (13 percent) and “running after former and current government officials accused of graft and corruption” (12 percent).  This includes former President Gloria Macapagal Arroyo, who remains in detention for graft charges.


Urgent issues

The nationwide survey asked 1,200 respondents in face-to-face interviews to pick the most urgent from a list of 13 national issues provided by Pulse Asia. The survey also asked respondents to rate the administration’s performance on 11 issues.


The administration got the lowest approval rating on “controlling inflation,” with 28 percent approving its performance with 40 percent disapproving, resulting in a net approval rating (approval minus disapproval) of minus 12.


Controlling inflation was a concern of the majority of respondents across all geographic areas (64 percent to 74 percent) and socioeconomic classes (66 percent to 71 percent).

Wages, jobs, poverty

Other most urgent national concerns that the Aquino administration should address include: wage increase (62 percent), fighting corruption (53 percent), job creation (53 percent) and poverty reduction (52 percent).


Fighting corruption was deemed urgent by those in Metro Manila and Luzon outside Manila (52 percent to 57 percent) and socioeconomic classes ABC and D (53 percent to 56 percent), according to Pulse Asia.


Wage increase was a majority concern across all geographic areas (59 to 67 percent) and socioeconomic classes (55 percent to 64 percent).


Job creation was a majority concern in all socioeconomic classes (52 percent to 54 percent) and nearly all areas (53 percent to 58 percent) except Mindanao (46 percent).


Poverty reduction was identified as urgent by majorities in Metro Manila, the Visayas and Mindanao (51 percent to 55 percent) and classes D and E (52 percent to 53 percent).


Emerging issue

The higher cost of electricity and the continuing power outages will exact a heavy toll on the political chances of President Aquino’s candidates in the 2013  elections in Mindanao, a lawmaker said.


Maguindanao Rep. Simeon Datumanong said support for the administration’s candidates will be put to a severe test in Mindanao given the ongoing power shortage and the prospects for higher rates there.


At the recent energy summit in Davao City, President Aquino warned Mindanao’s residents they would have to pay more for their electricity or continue suffering blackouts. He also dismissed widespread opposition to a government plan to sell the Agus-Palangui hydroelectric plants despite public fears that would drive up power costs.


10 million voters


A Fourth of the population lives in Mindanao, and it  had 10 million voters in 2010.


Agham Party-list Rep. Angelo Palmones said as customers paid their monthly electric bills, they would not forget the sufferings inflicted on them by the Aquino administration.


“I have talked to several Mindanao officials and business leader. The sentiment is common: Why do we have to vote for candidates who insist on giving Mindanao a bleak future?” Palmones warned.


Who will answer?

House Deputy Minority Leader and Zambales Rep. Milagros Magsaysay said electricity was a politically sensitive issue and could determine the outcome of the elections in Mindanao in 2013.


Magsaysay said the government’s inefficient handling of the Mindanao power crisis could spell strategic political setbacks for the administration.


“If you do not address the issue raised by the people, then you will be the one to answer for that in the 2013 elections,” Magsaysay said.


Payback time


Bayan Muna Rep. Teddy Casiño warned the Aquino administration that the 2013 polls would be payback time for its failure to provide clean and inexpensive power to the island.


“The President was not only insensitive but dead wrong in giving the people of Mindanao only two choices, which is to pay higher rates or live in darkness,” Casiño said.


Former Surigao congressman Robert Ace Barbers, Nacionalista Party spokesman, said  the government should be able to provide the people of Mindanao “more choices rather than increasing the power cost.”


Clearly, the people of Mindanao are in for a long, hot summer in darkness, a summer that may well last till the elections in May next year – and beyond.  And the handwriting on the wall says, so will the rest of the country.

Sunday, April 22, 2012

Why OFWs can't save the economy

People's Journal & People's Tonight
April 23, 2012

By Winston A. Marbella


“The Philippines has a robust service sector which is a pillar of the economy, but the country needs to develop an equally robust industrial sector to create more job opportunities,” ADB senior country economist Norio Usui said during the launch of the ADB's “Taking the Right Road to Inclusive Growth” report.

'Mr. Usui pointed out that the country’s focus on electronics had led to “exports vulnerability.”

“We must remember that last year the country has experienced sharp drop in exports,” he said.  “People say that it was because of the global crisis but then if you check all your neighbors, other countries maintained their exports growth...”

Wrong focus.  Mincing no words, he said: “You concentrate too much on electronics, then you face these difficulties... The point is you need to diversify.”

A stronger industrial base, said Mr. Usui, means the Philippine economy can “walk on two legs of industry and modern services.”

The report said policy reforms should be undertaken to address existing challenges that include the under-provision of basic infrastructure, weak governance and an unfavorable perception of the country’s business environment.


Investments needed.  As if on cue, the International Monetary Fund (IMF) said investments from both the public and private sectors are needed for an improvement in the Philippines’ growth potential.


“[A] key element to raising potential growth is basically strengthening investment, both infrastructure investment by the public sector, and also improving the business climate so that private investment strengthens,” said Abdul de Guia Abiad, deputy division chief of the IMF’s Research Department, in a teleconference from Washington D.C.  


Potential growth refers to an economy’s capacity to expand and for the Philippines, based on 2000-2009 results, this has been pegged by the IMF at 4.6%.  The outlook remains below the government’s 5-6% target.  For next year, the IMF sees growth accelerating to 4.7%.


What happened?  When President Aquino took office in June 2010, the economy was growing at 7.6 percent. In his first full year as president, the gross domestic product (GDP)   contracted to 3.7 percent.  The official National Statistical and Coordination Board described the growth as “feeble.”  


What happened?  Remember the old adage, “The road to hell is paved with good intentions?”


The slump was caused by the administration’s decision to restrict spending until safeguards could be put in place as part of the government's high-profile anti graft campaign to free government contracts of corruption, explained Trade Secretary Cesar Purisima.


Budget Secretary Florencio Abad admitted that a  massive contraction in state infrastructure spending severely hurt growth in 2011.  Some P300 billion appropriated for capital projects remained largely untouched.


Minimum growth.  Confirming that growth was “held back by weak spending and external spending,” the World Bank’s Quarterly Update on the Philippine economy in March reported that an improvement of public finances and overall competitiveness would allow the economy to achieve rapid and sustained growth of above 5 percent for a long period of time.


Although the bank kept its 4.2-percent GDP forecast this year, it said the Philippine economy had to sustain growth higher than 5 percent to improve the lives of the poor and catch up with its Southeast Asian neighbors. 


Shrinking middle class.  The World Bank Philippine Quarterly Update (PQU) found that while “Philippine growth has been generally higher in the last decade, poverty, inequality and labor market outcomes have not improved much.”


The report notes that more than a quarter of the population lives below the official poverty threshold and half the population is vulnerable to poverty. The middle class remains small at about 15 percent of the population in which about a third resides or works abroad.


Inequality has worsened in the last decade and the quality of employment remains weaker relative to the country’s potential when compared to countries with similar development, the report says.


Lopsided development.  National Statistics Office data (2000-2009) show that while overseas remittances benefit all remittance-receiving households, the upper-income classes gain much more than the poorer ones. 


Further compounding the inequality effect of migration is its regional distribution. Most labor migrants originate in the country’s more developed regions, such as Central and Southern Luzon and Metro Manila. Thus, the bulk of remittances go to these richer regions while smaller shares reach the less developed ones, like Mindanao, Bicol, and Eastern Visayas. 


“No wonder why the country’s regional development remains lopsided,” writes Ernesto M. Pernia,  a research fellow of the Institute for Development and Econometric Analysis and a professor at the UP School of Economics.  


Which means that for all the herculean efforts of our OFWs, they alone and their labor of love won't save the economy.


The job certainly looks cut out for the Cabinet's economic managers.  Now all they need is a road map, leadership, political will---and an electric cattle prod to zap their posteriors.

Saturday, April 21, 2012

Sound of silence in Mindanao

People's Journal & People's Tonight
April 22. 2012

By Winston A. Marbella


In the 60s hit tune “The Sound of Silence,” the poet of song, Paul Simon, crafted these memorable lines: 


People talking without speaking/
People hearing without listening.


Those eight words basically describe the current discussions on the power crisis in Mindanao.  Many people are talking.  But not one is listening.  Listen to this report from the Inquirer correspondents in Davao City:


Mindanao governors have reiterated their stance against the national government’s plan to sell power facilities to private firms as a way to solve the energy crisis on the island.


During the Mindanao Power Summit last Friday, Davao del Norte Governor Rodolfo del Rosario, president of the Confederation of Provincial Governors, City Mayors and Municipal Mayors League Presidents (Confed), conveyed to the President the group’s stance against privatization of the Agus and Pulangi hydro-power complex.


Del Rosario even asked the President to certify as urgent amendments to the Energy and Power Industry Reform Act (Epira), but the President hardly listened when he told the summit that years of Mindanao’s cheap power were over.


On Monday, Aquino said he would be willing to have more dialogues with stakeholders in Mindanao’s power industry, but also hinted that privatization of the plants would be the best solution to the problem.


On Tuesday, the governors insisted on their positions – no to privatization, and a review of the Epira law.


Surigao del Sur Governor Johnny Pimentel said that instead of selling the power plants, government should rehabilitate them.


“It would be better for us stakeholders just to rehabilitate our power generation assets than privatize them,” Pimentel said.


Agusan del Sur Gov. Eddiebong Plaza said he feared that giving up government control and regulation over the plants would lead to unreasonable increase in power costs.


“My apprehension is that privatization might lead to unreasonable power pricing and result in monopoly,” Plaza said.


Agusan del Norte Gov. Erlpe John Amante said privatization would mean higher power costs that would work to the disadvantage of Mindanao’s ability to attract the much-needed investments.


“Privatizing the power plants, which currently provide us cheaper source of power, would lose Mindanao’s advantage to attract more investments because power cost would surely increase in that event,” Amante said.


South Cotabato Gov. Arthur Pingoy, on the other hand, said people would suffer the high cost of electricity if these power plants were privatized.


“We already passed a resolution for our position. Definitely, once these are sold to private companies, electricity cost will increase,” Pingoy said.


North Cotabato Gov. Lala Taliño-Mendoza expressed the hope the President would listen to them eventually.


“We wish he (Aquino) would take a second look at our resolution,” Mendoza said.


Davao del Sur Gov. Douglas Cagas agreed, saying: “He already heard the sentiments of the people of Mindanao during the summit. Although he has the power to exercise as President, he must also review our resolution.”


Del Rosario on Friday said the National Power Corp. (Napocor) should rescind the Operational Management Agreement (OMA) with the Power Sector Assets and Liabilities Management Corp. (PSALM), which required Napocor to remit all its gross receipts to the latter, including those coming from the Agus and Pulangui hydropower complex.


“Let’s shatter the myth that the Napocor and the Agus-Pulangi complex are a losing proposition,” Del Rosario said, even as he laid down the nine-year annual income of the government power generation firm, which posted an annual gross generation average of P36.9 billion, with an average profit margin of P73.2 billion.


The Davao del Norte governor added that the present situation would only turn from bad to worse should the government sell these power plants to private energy firms.


“It is bad enough as it is. It will be intolerable once it is surrendered to the private sector,” he said.


Del Rosario also called on the reclassification of the power generation sector as “utilities” and place caps on these firms’ profits. He said some independent power producers (IPPs) have earned up to 50 percent return on rate base, “which is too much.”


“Just a one-centavo-per-kilowatt-hour increase imposed nationally translates into a P670-million annual income,” said the governor, adding President Aquino should now appoint a Mindanao consumer group representative to the Energy Regulatory Commission.


Misamis Oriental Gov. Oscar Moreno said the Power Summit in Davao City opened the discussion between the government, the electric cooperatives and the stakeholders. “We should pursue the discussion, that is the best we can do,” Moreno said.


Paul Simon continued:


But my words like silent raindrops fell/
And echoed in the wells of silence.