I was talking with some of the US Embassy officers during the Election Watch they hosted last Wednesday morning. They all agreed it isn't easy trying to figure out where our politics are headed. They admit they have been cracking their heads trying to make sense of developments the past few weeks. With more twists and turns than a good mystery novel, it is easy to be so wrong about where things will settle down.
Now that the markets are back to normal and the euphoria about an early resolution to our political crisis lost in a mist, we can sit down again and realize that we are still right where we started on the impeachment thing. That Congressman Ding-a-ling is back trying to block the impeachment process is a signal that you-know-who will fight it out every inch of the constitutional process.
I see a protracted struggle that will go beyond Christmas. Those silly Lakas officials who are dreaming of having Gloria in Malacanang by Christmas are well… dreaming. I see this deadlock going through January and February. In a worse case scenario, we may even be unable to resolve this political crisis until it is overtaken by the May election.
You-know-who will be forced to resign only if the economy and the National Treasury so deteriorate that he will not want to be there at the helm to bear the heavy burden of fixing things up. Or, if his good friend Chavit unleashes new and more damning revelations, like he had threatened to do.
If you are a corporate planning manager of a business entity whose survival depends on a stable investment environment (reasonable interest rates and forex rate), you may as well go play golf everyday for the first two quarters next year. The first quarter promises to be a mess. People will feel so insecure that they will not spend beyond the basic necessities. Since manufacturers have now started to cut down importation of raw materials, inventories may go down to such levels as to generate a rapid spiraling in the prices of basics.
I will be very surprised if anything happens in the matter of the so-called constitutional process called impeachment. A conviction is in any case, going to be very difficult to get. You-know-who's lawyers and allies in Congress will buy a lot of time inherent in the legalities of the process to make the whole thing academic. This will lead to a situation that is best described as a stalemate, with the contending forces for and against the administration getting increasingly frustrated.
In the meantime, the National Treasury will go hang. And because business conditions are bad, income tax collections will go down significantly. A new accounting standard that will be implemented this year which calls for the recognition of forex losses on the year such losses were incurred rather than at the end of the loan period will cut reportable profits further. That's bad news not just to the BIR but to investors in the stock market who will not be getting those dividends.
Things are pretty bleak and for the business sector, it is back to survival mode. There will be no winners in this political battle. Whoever finally ends up in Malacañang will preside over a really broken country. That's back to normal, so to speak.
I would like to react to your 11/03 article about the peso-dollar exchange rate and its relation to the remittances of our OCW’s by sharing my experience in Hong Kong as one of those small door-to-door courier service operators.
Before the peso devaluation, the average amount that a domestic helper (DH) would send to the Philippines is PHP10,000 which was about HKD3,000 then. Since all DH’s have free board and lodging, this leaves them with HKD500 to spend for their personal needs for the entire month (DH salaries were at HKD3,500).
Theoretically, if we had total peso remittances of PHP3,330,000 a month (about 330 clients), the Hong Kong dollar equivalent (which in effect, was our monthly sales) would be about HKD1,000,000.
After the devaluation, PHP10,000 was reduced to only HKD1,900. Since DH salaries were at HKD3,500, naturally we expected bigger peso remittances. To our surprise, 90 percent of our clients sent the same PHP10,000.
Therefore, all too suddenly, we were at the losing end because with the same number of clients and same volume of peso remittances, our PHP3,330,000 was only about HKD630,000, which meant an insurmountable 40 percent decrease in our sales. The sole beneficiary of the devaluation was the Hong Kong local retail industry because in a blink of an eye, the DH’s had purchasing power (from HKD500 to HKD1,600). Sadly, we were forced to close shop a few months thereafter, unable to make up for the huge plunge in monthly sales.
Now going back to your article, I, therefore, conclude that based on my experience, there is no doubt that with the further devaluation of the peso, overseas remittances will definitely decrease because Filipinos abroad send only what is needed by their families back home and not their entire income.
Put yourself in their shoes. If your family needs only PHP10,000 why would you send more? So that a husband can spend more for his other mistresses? Or for some relative to squander the money on meaningless expenses? You’d rather send only enough and save the rest for yourself, right?
Thank you for this opportunity to react and please keep up the good work.
*If we don’t succeed, we run the risk of failure.
*I have made good judgments in the past. I have made good judgments in the future.
*The future will be better tomorrow.
*I stand by all the misstatements that I’ve made. – to Sam Donaldson, 8/17/93
*A low voter turnout is an indication of fewer people going to the polls
*When I have been asked who caused the riots and the killing in LA, my answer has been direct and simple: Who is to blame for the riots? The rioters are to blame. Who is to blame for the killings? The killers are to blame.
*We are ready for any unforeseen event that may or may not occur.– 9/22/97
*Quite frankly, teachers are the only profession that teach our children.– 9/18/95
*It isn’t pollution that’s harming the environment. It’s the impurities in our air and water that are doing it.
(Boo Chanco's e-mail address is bchanco@bayantel.com.ph)