Government must be more than cautious

The government, news reports say, is maintaining a cautious outlook on the economy, as it admitted that growth will slow down this year. DUH! We expect government to be more than cautious. It must be proactive in making sure everything is being done to protect us from the more brutal effects of this economic downturn. They have to do better than the general promises they made last week.

Government’s financial managers are dangerously speculating when they express confidence we will weather the global financial crisis just because they say so. A press conference is not going to do us any good without concrete action. In fact, our economy is more vulnerable than we realize because our economy depends on a single engine — OFW remittances.

Global Source, a New York-based think-tank notes that OFW remittances today comprise over 10 percent of GDP, making it a crucial source of strength for the economy. It exceeds “earnings from net exports and surpassing other flows (net investments and net debt) combined.”

But even Finance Secretary Gary Teves admitted that overseas Filipino workers would be affected by the US economic slow-down, leading to weaker remittances. Jose Katigbak, our PhilStar Washington Bureau Chief, reported last Friday that remittances of Pinoys living in the vicinity of the US capital have started to decline.

Filipinos living in the Washington DC metropolitan area, Katigbak reports, are sending less remittances and balikbayan boxes to relatives back home because of the economic and financial crisis in the United States. Carmen de Jesus, chief financial officer of Forex, a leading door-to-door cargo and money remittance company serving the Philippines noted a two-percent drop in remittances and a three-percent decline in balikbayan boxes sent over the past few months.

“Some of our customers have complained about money being tight or losing their jobs,” she said, adding, “I don’t see the US economy getting better anytime soon.” De Jesus described the drop in value of the US dollar and the tightening credit situation in the US as a “double whammy.”

But on the whole, official records of the Bangko Sentral still indicate a rise on OFW remittances coursed through banks by 24.6 percent year-on-year in July 2008 to reach $1.4 billion. This is the fourth month this year remittances have grown by a double-digit rate. The January-July level of remittances was higher by 18.2 percent than the level during the comparable period in 2007. The year-to-date remittance level is now US$9.6 billion.   

That’s probably because of the continued deployment of Filipino workers overseas.  Preliminary data from the Philippine Overseas Employment Administration (POEA) showed that during this period, the number of Filipinos that left for employment overseas reached 761,836, an increase of 28.2 percent from last year’s 594,445. But will the need for our workers in economies that are expected to suffer or are already suffering from the economic downturn continue indefinitely? Luckily for us, our workers are spread around the world and not just in the US as is the case for Latin Americans.

As portent of things to come, the Wall Street Journal reports a reversal in the trend for immigrants: they are starting to go home. A new study by the Pew Hispanic Center, an independent think tank in Washington, D.C., estimates that annual undocumented arrivals from Mexico are down about 25 percent this year from 2005, to about 350,000. Undocumented arrivals from Central America have been halved since then, to about 120,000, according to the study.

The economic downturn has had a disproportionate impact on foreign-born Latinos, many of whom work in the housing and construction sectors. “People come to work, and they come because there is a job. They are not accidental tourists,” Angela Kelley, director of the Immigration Policy Center in Washington told the Los Angeles Times. She added that she believes the economy is the primary factor driving down numbers of illegal immigrants.

As a result, flows of money to Latin America from U.S.-based workers have slowed for the first time since the Inter-American Development Bank began tracking remittances in 2000. And it is a big blow to Latin American countries like Guatemala, where worker remittances are bigger contributors to their economies than coffee.

According to the Central American Institute of Social and Development Studies, an independent think tank in Guatemala, some 3.5 million people in Guatemala depend on these remittances to get by. Remittances are the top foreign-exchange earner for Guatemala, at $4.12 billion in 2007, ahead of coffee, sugar and other exports. That sounds so familiar.

So our economic managers are saying they will adopt a ‘conservative’ outlook as they reduced the growth outlook for this year.  Finance Secretary Teves said the worst case scenario would be growth falling to 3.8 percent. The most probable outcome would be 4.7 percent, while the best case outlook is a 5.5 percent gain.

What big ideas do they have to mitigate the impact of the crisis? According to Economic Planning Secretary Ralph Recto, “It’s the same. We are looking at infrastructure and agriculture. The FIELDS (fertilizer, irrigation, education and training of farmers and fisher folk, loans, dryers and other post-harvest facilities, and seeds) program has proven to be successful.”

Secretary Teves said the same things. He reiterated that government would boost spending on infrastructure, agriculture, and social services to pump prime the economy. He even sounds bored already. He is saying it is business as usual and that probably explains why there is no call to reconsider the budget submitted to Congress to take into account this fast deteriorating world economic environment.

This means, we will more than ever hope we can indefinitely send more of our workers abroad and that the economic crisis will not sour the international market for our workers. Thus far, it is only the US which seems to be sending signals that it is no longer as it was before. The Middle East countries, thanks to their oil exports, seem somewhat immune to the impact of the meltdown on Wall Street.

We are also banking on the recently concluded arrangement among ASEAN nations to standardize, regulate and monitor professional standards (such as those for accountants, dentists and medical practitioners).  This arrangement is expected to facilitate the mobility of professionals within the region.  

Perhaps Congress should not just rubber stamp approval of Malacanang’s budget proposal and should instead do more than add their pet insertions. They should cut the proposed budget to more realistic levels and ban insertions. Additionally, Congress should act on the proposal of Secretary Teves, to approve bills rationalizing fiscal incentives and index excise taxes on “sin” products to inflation. Teves is right when he said that “we need more revenues to handle difficult times and therefore we like to pursue these two important measures.”

Teves is looking at additional revenues of about P10 billion annually for the rationalization of fiscal incentives. For the inflation indexation of ‘sin’ taxes, the Finance department is looking at a low of P12 billion to a high of P25 billion.”

Of course Ate Glue can cut down on non essential foreign trips, like the last one to meet with Lilliputian states that was particularly ill advised. Tongues wagged that she rushed to New York, after earlier deciding not to go, because of personal worries about the Wall Street crash. The UN session was just a convenient excuse.

In this regard, she must do more than issue press releases on the drive against corruption and waste in government to save money. Another international survey portrayed the country as among the most corrupt countries in the planet.  In 2000, Transparency International ranked the Philippines 69th out of 91 countries, or 76 percent down the scale. Today, it’s 141 out of 180 countries, or 78 percent. Compared to Indonesia, it looks like they are making progress in fighting corruption. Indonesia moved to 126 from 143 compared to our 141 from 131. How can Ate Glue say she is addressing corruption?

Then again, it could be a hopeless case for as long as we have a President with very little credibility. She will have to do something more drastic, if warranted, than sending her husband to exile, which she once did, for people to take notice. That’s probably too much to ask and to expect.

Pre-marital sex

 PhilStar reader Artemio Tipon e-mailed this one.

Two guys were discussing popular family trends on sex, marriage, and values.

Pete said, “I didn’t sleep with my wife before we got married, Did you?”

Leroy replied, “I’m not sure, what was her maiden name?

Boo Chanco’s e-mail address is [email protected]