Monthly Archives: December 2011

(Philippine) Gov’t advised to spend now on infrastructure

From BusinessWorld Philippines

27 October 2011

By Eliza J. Diaz

THE PHILIPPINES should step up public spending, especially on infrastructure, to help prod domestic economic activity in the face of a possible long-drawn impact from the debt crisis brewing in Europe, a senior economist of a global bank said at the joint meeting of two business groups on Tuesday.

Developing Asian economies can weather volatilities in the global market in the medium term, thanks to strong balance sheets and resilient domestic demand, Johanna Chua, Citigroup Inc.‘s chief economist for Asia– Pacific, said at the joint general membership meeting of the American Chamber of Commerce of the Philippines and Management Association of the Philippines.

The economist assured that most Asian economies are hardly exposed to the euro zone crisis because of remote linkages with European banks.

Furthermore, the lingering weakness of the US economy is not as serious as public opinion paints it to be, given its slow but encouraging recovery.

“There is a huge divergence in data and expectation of the US economy. People have been very negative about their outlook for the US, when in fact, it shouldn’t be a cause for concern,” Ms. Chua said.

“It won’t go through another recession because, in a way, the US never had a strong recovery from the 2009 crisis anyway. So contractions, if any, should not be as much, since there is no room to fall anymore.”

Governments and businesses, Ms. Chua explained, should worry instead about the European Union as complications of the sovereign debt crises there require a delicate balancing of various political interests.

Because of these, the bloc’s leadership has been slow to agree decisively on a solution.

EU officials meeting on Wednesday were expected to draw up a package that would involve a reduction of Greece‘s debt, recapitalization of European banks, boosting of the euro zone’s E440-billion fund to provide partial insurance for weak countries’ debt and pressuring Italy to embark on serious economic reforms.

Ms. Chua said possible outcomes can have dire consequences.

“Greece can voluntarily leave the euro zone…But if they [sic] leave, the euro zone’s credibility will crumble and this can encourage other countries to leave, leading to the collapse of the currency,” she said.

“If Greece stays but keeps violating fiscal measures required by the ECB (European Central Bank), they will pose a moral hazard to the euro zone. Ireland and Portugal can stop fiscal tightening measures, since they see Greece receiving money even if it doesn’t comply with them.”

Not that emerging economies have been completely insulated from Europe’s problems, which have started to affect global trade.

“In Asia, we’ve seen the biggest weakness posed by the electronics sector because of the fast inventory cycles of technology firms. We’ve seen that in South Korea, particularly, in the semiconductor and LCD (liquid crystal display) industries. The same is true for the Philippines, although it’s not as exposed because of the low value added of its electronics exports,” Ms. Chua said.

“The effects in Asia have been very different for each country. Hong Kong, Singapore and China in a way are the most affected right now by Europe since these are financial centers. The southeast [Asia] has little exposure from the debt.”

The government has blamed uncertainty in the United States and Europe for the nearly flat 0.9% rise in merchandise exports to $33.308 billion in the eight months to August, involving four consecutive months of annual contractions; recent annual drops in electronics exports and imports; as well as the huge rise in gross outflows of foreign portfolio investments to $1.239 billion for the month of September, causing the first annual fall in net inflows – by -69.7% to just $149.68 million that same month – in 2011, so far.

At the same time, Ms. Chua advised the government to take advantage of its improved fiscal space.

The government reported on Wednesday that it posted a budget deficit of P52.994 billion in the nine months to September that was just a bit more than a tenth of the P234.35 billion programmed for that period.

Revenues rose by more than a tenth to P104.337 billion.

But expenditures, at P1.07 trillion, were still 7.31% less than the P1.155 trillion spent in the same period in 2010 and about P200 billion short of the P1.275-billion full-year program.

“The balance sheets of the Philippines have never been better coming into the global slowdown. The Philippines has a lot of room for fiscal stimulus. The question is whether the current administration can overcome its fiscal rigidity and accelerate infrastructure projects,” Ms. Chua said.

“The problems of the Philippines are quite glaring and obvious. It has one of the lowest GDP (gross domestic product) to investment ratios in Asia and the infrastructure is atrocious. The missing link is always infrastructure, which needs public-private partnerships, but the public sector in the Philippines is known to slow down these projects,” she explained.

The government launched late last year its centerpiece public-private partnership program, designed initially to boost spending on infrastructure that would spur economic activity nationwide. That program, however, has encountered long delays, caused purportedly by government reviews to make sure projects concerned will not be questioned later on.

“Now is the time to spend on infrastructure, when the global economy is shaky, to offset the slowdown and stimulate further domestic demand,” Ms. Chua said.

“If these infrastructure projects are done properly, the Philippines can easily become one of the more competitive economies in Asia.”

Philippine BIR to benchmark tax compliance

In Australia, the Australian Taxation Office (ATO) uses benchmarking tools to ensure the right taxes are paid by businesses. Doing the same in the Philippines will yield the same benefits.

From BusinessWorld Philippines

27 October 2011

By Diane Claire J. Jiao

THE BUREAU of Internal Revenue (BIR) has launched a benchmarking system to better measure tax compliance among various sectors and increase revenue collections.

BIR will compile all information from financial statements submitted by companies to determine average sales, income and tax liabilities of each industry, Commissioner Kim S. Jacinto-Henares said in a phone interview on Wednesday.

Averages will be used as bechmarks for a particular sector.

Should a taxpayer of that group fall below the standard, BIR will audit that person or company first.

“The system was initially used mainly by our Large Taxpayer Service; but now, they will be used by all field offices of the BIR,” Ms. Henares said.

“We will set benchmarks for as many sectors as possible so we can cover most taxpayers,” she added.

The system is expected to help the bureau detect tax leakages and improve collections on income and value-added taxes.

It will also plug loopholes in tax collection and increase voluntary compliance, a statement released yesterday said.

Such loopholes have cost the bureau roughly P218 billion per year, project proponent and BIR Makati City Regional Director Nestor S. Valeroso said in the statement.

Increasing revenue collections through this approach is also in line with the Aquino administration‘s no-new tax policy, he added.

Under the project, taxpayers found to be below industry benchmarks will be issued a Benchmarking Letter Notice.

Such taxpayers will be given a chance to amend their tax returns.

They can also respond to the notice by showing proof to rebut findings of the BIR.

The tax bureau is currently rolling out the benchmarking project nationwide through a series of regional road shows.

Each BIR revenue district office will be tasked to formulate benchmarks for each sector or industry within its area of jurisdiction.

The benchmarking system should be fully ready for implementation before the end of the year, Ms. Jacinto-Henares said.

BIR is the government’s main revenue-collecting agency, responsible for 70% of state revenues. Tasked to collect P940 billion this year, its outlook was recently trimmed to only P935.5 billion given the country’s slower-than-expected economic growth.

The bureau had so far collected P686.26 billion as of September. It must collect P249.24 billion this quarter to meet that outlook or P253.74 billion to meet its full-year goal.

We are all Keynesians now

A nice reality check on the concept of the free market after experiencing the GFC.

11 October 2011

Milton Friedman’s Magical Thinking

CAMBRIDGE – Next year will mark the 100th anniversary of Milton Friedman’s birth. Friedman was one of the twentieth century’s leading economists, a Nobel Prize winner who made notable contributions to monetary policy and consumption theory. But he will be remembered primarily as the visionary who provided the intellectual firepower for free-market enthusiasts during the second half of the century, and as the éminence grisebehind the dramatic shift in the economic policies that took place after 1980.

At a time when skepticism about markets ran rampant, Friedman explained in clear, accessible language that private enterprise is the foundation of economic prosperity. All successful economies are built on thrift, hard work, and individual initiative. He railed against government regulations that encumber entrepreneurship and restrict markets. What Adam Smith was to the eighteenth century, Milton Friedman was to the twentieth.

As Friedman’s landmark television series “Free to Choose” was being broadcast in 1980, the world economy stood in the throes of a singular transformation. Inspired by Friedman’s ideas, Ronald Reagan, Margaret Thatcher, and many other government leaders began to dismantle the government restrictions and regulations that had been built up over the preceding decades.

For the full article please click on the web link below.

One man’s search for divine meaning

In this season rich with religious Catholic meaning consider reading this feature about an agnostic search for God.

From PBS Newhour

26 December 2011

MARGARET WARNER: During a season that, for many, centers on religion and spirituality, Ray Suarez talks to one author about his search for divine meaning.

RAY SUAREZ: Keeping with this country’s appetite for inventing and reinventing yourself, today’s Americans choose their own religion in much higher numbers than ever before.

Writer Eric Weiner, who calls himself an agnostic by default, set out on a worldwide personal quest about his own beliefs, and shares what he found in his book “Man Seeks God: My Flirtations with the Divine.”

As we enter the final stretch of this holiday season, Eric Weiner joins me now.


ERIC WEINER, author: Thank you.

Author Eric Weiner Explores Reasons Why Some Americans Switch Religions

RAY SUAREZ: As many of these stories over the years, this one begins with a health scare. But how would you describe your religious posture before the beginning of your journey?

ERIC WEINER: I didn’t have much of a posture.

I was raised as a secular Jew. We maybe went to synagogue once a year. I like to think of us as gastronomical Jews. It was about the food, and not really about God, not about religion. And, essentially, whatever religious or spiritual inklings I had were suppressed for most of my life.

RAY SUAREZ: What did you head out looking for? What did you think you were doing when you first got started?

ERIC WEINER: I knew I was looking for something, because I found myself in the hospital with a well-meaning nurse who asked me this question, “Have you found your god yet?” That was her question.

And, essentially, I tried to answer her question as seriously as I could and as broadly and ecumenically as possible, so that I wasn’t just looking for the god of the Jewish people or the Christians, but really the broad spectrum of religious options available to us. And it is a huge spectrum. There are some 9,000 religions out there.

RAY SUAREZ: But you have spent much of your adult life immersed in other cultures. And reporters are kind of sociologists on the fly.


RAY SUAREZ: You must have come at this with already a smattering of religious knowledge, no?

ERIC WEINER: Just enough knowledge to get in the way, I would say, actually…


ERIC WEINER: … because I was a foreign correspondent for a number of years for National Public Radio. And, to be honest, I saw a lot of religion at its worst, covering suicide bombings, scandals involving the Catholic Church.

So, I was not particularly predisposed toward religion. But I did have these spiritual yearnings. And that’s what I was trying to satisfy.

RAY SUAREZ: You’re trying to do something, I think, very difficult in this book, which is write seriously about the content of various faiths not your own, but also keep it light.


RAY SUAREZ: Flirtations. They really are flirtations, in a way.


I mean, look, G.K. Chesterton said the test of a good religion is whether we can make fun of it. And I think there’s something to that. Nowhere is it written that religion and spirituality have to be so dour and serious.

Just look at the Dalai Lama, one of the most respected religious leaders in the world, and he has an incredibly infectious laugh. This is a joyful being. And so I did approach it with a light touch, but I took the journey seriously. And they are flirtations, in the sense that I was trying to test out various religions.

And if you think about it, when we’re trying to find a partner for life, a spouse, we engage in a sort of flirtation, where we’re sort of trying on the relationship. And that’s what I was doing in this book.

RAY SUAREZ: You know, immersion journalism is not an easy thing to do…


RAY SUAREZ: … because by habit reporters keep things at, at least one arm’s length. How do you get yourself in there and suddenly find yourself part of the story?

ERIC WEINER: Well, you have to suppress the journalist in you, to be honest, because that was exactly my natural inclination, was, you know, observe, but don’t participate.

And I made a concerted effort from the outset to do more than that, to actually participate and get involved, even if it meant making a complete and utter fool out of myself by attempting to pray in a Catholic mass, which I had no experience doing, or attempting to meditate in Katmandu with my instructor, when I had no experience doing — and so, if we’re going to take this spiritual search seriously, we need to make ourselves vulnerable. And I did make myself extremely vulnerable.

RAY SUAREZ: You know, again and again in the book, you come to small words that mean big things to the people who are in this religion…


RAY SUAREZ: … grace, joy, silence, stillness. And I think you made a sincere attempt to be with those people and understand them. I suspect you also admired some of them and liked them a lot.


And I have to say that was a bit of a surprise in the sense, Ray, that, as a sort of cerebral, East Coast journalist, I always thought that religious people were somehow more narrow-minded or not as expansive in their world view as secularists.

And I have totally changed my mind about that. I found people of all religious stripes who, in fact, are filled with not only intellectual curiosity, but a kind of deep doubt that nourishes their faith.

And let me tell you what I mean. We normally think of doubt and faith as being on polar opposites, they’re not compatible. But, in fact, I found that some of the most religious people who I admire quite a lot have this doubt that actually motivates them and that actually lives quite comfortably within their faith.

RAY SUAREZ: But, again and again, even when you got a glimpse of what joy really meant, of what stillness really meant, it was like you couldn’t make that last step, again and again.

ERIC WEINER: I would get seven-eighths there, and that was about it.

And it’s that last leap that — it’s a cliche, leap of faith, to make that last move that is the hardest. There was always something holding me back. And what I think that something is, is my skepticism.

And this is where I think the whole notion of the spiritual journeys or religious-seeking is so tricky, because we need to maintain a certain skepticism, or we might be lured into something dangerous. I mean, let’s face it. There are dangerous cults out there. And history is replete with these stories.

So we need that skepticism. But in order to have that moment of grace, as the Christians would call it, or a glimpse of nirvana, as perhaps the Buddhists would put it, you need to drop your guard. You need to make yourself vulnerable and actually be devoid of all skepticism. So, that’s what I was wrestling with and what I’m still wrestling with.

How do you approach this — approach this journey skeptically, but also open to the possibility of grace, for instance?

RAY SUAREZ: It seemed like some of the toughest times for you were — came when you were going full circle and back amongst Jews to do a fuller investigation into Jewish mysticism.

ERIC WEINER: Yes, because, let’s face it, we always bring some baggage to any religion that we approach. And I probably brought the most baggage to my own faith, Judaism, because of my history, or lack of history, or whatever feelings of guilt I may have had.

And so I decided to dive into the mystical arm, if you will, of Judaism, which is Kabbalah. And I traveled to Israel. And I wasn’t expecting to find much, but, again, I was surprised by the deeply spiritual lives the Kabbalists I met were leading. And these were people who had sort of cobbled together a kind of freelance Judaism that was very impressive.

RAY SUAREZ: So, we spend 300-plus pages at your elbow as you go through a smorgasbord.

Are you still hungry? Where are you at now?

ERIC WEINER: I’m less hungry and I’m somewhat less confused. But I don’t have a Hollywood ending for you.

I don’t walk off into the sunset with the deity of my dreams or anything like that. And I think, in fact, the question that set me off on this search, “Have you found your god yet?” is not exactly the right question. God is not a destination. It’s not a train station or an airport that we arrive at.

The Austrian poet Rainer Maria Rilke said, God is a direction. And I quite like that. We don’t arrive at a direction. We head in a direction. And that’s where I am right now, heading in a direction, not there yet.

RAY SUAREZ: Eric Weiner, thanks a lot.

ERIC WEINER: Thank you so much, Ray.

Philippine GOCC commission starts overhaul task

2 November 2011

By Diane Claire J. Jiao

COMMISSION created to overhaul the operations of state firms has met for the first time, a Cabinet official said, beginning a process expected to streamline the government’s overall structure.

The Governance Commission for Government-Owned and -Controlled Corporations (GOCCs), Budget Secretary Florencio B. Abad said last week, “just held its first meeting. The general aim is to improve the governance of GOCCs by reviewing their current functions and addressing redundancies.”

Developmental state firms will be monitored since some have overlapping functions, he said, with performances to be reviewed to ensure that responsibilities are performed.

The GOCC commission will also strengthen the oversight powers of regulatory state firms over offices in their jurisdiction, Mr. Abad added. “On the flipside, if they have exclusive functions, we will also review if these are of use to them,” he said.

In a speech at an investment summit for global fund managers last week, Finance Secretary Cesar V. Purisima said the government aimed to privatize state firms that currently perform commercial functions, while those that handle government functions could be absorbed.

“Those in between will have to be improved. There are those that act both as a regulator and an operator, and that is unfair. They also compete with the private sector, which we don’t want,” Mr. Purisima said.

Both Mr. Abad and Mr. Purisima sit in the five-man GOCC Commission. The other members are Angela Linao and Cesar Villanueva. A final seat remains vacant.

Mr. Abad said the commission also tackled administrative and organizational matters during its first meeting. Another meeting will be held this month to set the body’s scope and the direction, he added.

“The commission will be under the Office of the President. It will have a lean staff. It will tap experts in the government and the private sector,” Mr. Abad said.

The commission was established through the GOCC Governance Act of 2011 or Republic Act 10149 that was signed into law in May.

The law seeks to overhaul the existing GOCC structure. It also calls for the establishment of a Compensation and Position Classification System for GOCCs following reports that board members of several state firms were enjoying lucrative perks.

Philippine PERA Rules workable

From BusinessWorld

2 November 2011

By Diane Claire J. Jiao

THE LATEST DRAFT of Personal Equity and Retirement Account (PERA) tax rules has been welcomed by the private sector, paving the way for an official issuance by the Bureau of Internal Revenue (BIR) next month.

Capital Market Development Council members who met last week to review the still-unnumbered revenue regulation had no opposition to the tax bureau’s proposals, CMDC executive director Rescina S. Bhagwani said.

“The private sector finds the latest draft revenue regulation on PERA workable, needing only minor clarifications,” Ms. Bhagwani said in an e- mail.

The CMDC proposed “minor edits” to make the language clearer but the rules have already been “found acceptable,” she added.

The BIR posted the draft on its web site last month to solicit feedback before the Department of Finance (DoF) gives its final approval.

Tax rules are the last thing needed to roll out the PERA law or Republic Act 9505, which was signed in 2008 to encourage people to save up for retirement. Implementing rules and regulations were issued in 2009 by the Securities and Exchange Commission and the Bangko Sentral ng Pilipinas.

Tax Commissioner Kim S. Jacinto-Henares said the rules are now pending DoF approval and could be issued next month.

“The PERA rules will most likely be published in mid-December, to be effective Jan. 1, 2012,” she said in a telephone interview yesterday.

The private sector has long been waiting for the implementation of the PERA law, described as a crucial tool to deepen the country’s capital markets. Under the retirement plan alternative, a resident Filipino can contribute a maximum of P100,000 to a PERA account, while overseas Filipino workers (OFWs) are allowed up to P200,000. A total of five PERA accounts can be held.

PERA contributions will be exempted from a host of taxes such as the final withholding tax on interest, capital gains tax on the sale of bonds and shares, 10% tax on cash and property dividends and regular income tax.

PERA holders are also entitled to an annual tax credit equivalent to 5% of all their contributions for the year. Resident Filipinos can charge this against their income tax liability. OFWs, exempted from paying income taxes, can use the credit to offset any other national internal revenue tax liability.

Given the array of tax breaks available, the BIR mandated in the proposed guidelines that all PERA holders submit proof of income in a bid to ensure that contributions are taken solely from their earnings.

This requirement is new and beyond the provisions stated in the PERA law, Philippine Chamber of Commerce and Industry tax committee chairperson Tammy H. Lipana said in a text message during the weekend.

“This may make it difficult for some people to avail of this retirement scheme. For example, [for] people who earned or saved funds many years ago, they may not be able to show proof of earnings anymore. Hence, they can’t invest in PERA products,” she said.

Some occupations may also not provide proof of income and a number of people could find the procedure a hassle, Ms. Lipana added.

Ms. Bhagwani said the provision was a sticking point during the CMDC review but members accepted it given the need to prevent people from parking money in PERA accounts to avoid paying taxes.

“Without this rule, people can just put all their money in their PERA accounts and the accounts of their siblings and friends to make them exempt from taxes on income and investment income,” she said.

“The new rule may be a restriction, but it is not a dealbreaker. I am optimistic that PERA will be widely taken up by the private sector,” Ms. Bhagwani added.

The PERA law is expected to attract an estimated eight million Filipinos, especially OFWs and self-employed individuals who are not required to contribute to the government-run Social Security System and the Government Service Insurance System.

In the Philippines, the track record of a number of mining companies in protecting the environment has been very poor. I hope my perception is correct that this is more an exception than the rule. However, when I realise the dangers of the chemicals used to extract the minerals like what is mentioned in this PBS NewsHour feature, one wonders if it is really worth having any mining in the first place. Unlike in Australia where mining operations are mostly done in ares far removed from population areas, in the Philippines most of them are in areas near it. Any environmental damage happens it seriously affects lives and livelihood for the rest of the community for a long time sometimes forever.


From the PBS  NewsHour


In Peru, Gold Rush Leads to Mercury Contamination Concerns


GWEN IFILLNow, major environmental concerns over mercury contamination at extensive gold mining operations in the remote regions of the Peruvian Amazon.

Our report is part of a collaboration with the Pulitzer Center on Crisis Reporting.

It comes from special correspondent Steve Sapienza in Peru.

STEVE SAPIENZA: These miners are part of the biggest gold rush the world has ever seen. Recent spikes in gold prices have lured 10 to 15 million people worldwide into the business of small-scale gold mining.

But rising global demand for gold has also fueled demand for a far less prized metal, mercury. The toxic metal is used by millions of miners every day to separate and collect gold from rocks and soil. Miners say mercury is easy to use, readily available, and cheap.

The United Nations Environment Program estimates that small-scale miners use up to 1,350 tons of mercury each year, making it the single largest use of mercury worldwide. In southeastern Peru, the gold rush has attracted some 20,000 small scale miners to the pristine rain forest and rivers of the Madre de Dios region.

The devastation caused by widespread mining is easy to spot, with huge swathes of the forest turned to barren desert, but the damage caused by the heavy use of mercury is harder to detect. Mercury from small-scale mines travels widely, settling in sediments and moving up the food chain into fish, fish-eating wildlife and humans. Scientists and medical researchers only recently started to measure the impact of mercury here.

This fish is called mota. This is a very popular fish around the region. You will find it on a lot of dinner tables, a lot of restaurant menus. This fish is at the top of its food chain. And what that means is it consumes a lot of smaller fish. And a lot of these small fish have mercury in them. And through a process known as biomagnification, this fish accumulates a lot of mercury.

In fact, if a person consumes two servings of this fish per week, they’re getting seven-and-a-half times the safe limit of mercury, according to the World Health Organization.

It takes two ounces of mercury to produce a single ounce of gold. That means 50 tons of mercury are used to extract the 25 metric tons of gold mined here each year. Miners mix the soil with mercury, often using their hands and feet, creating a clump of amalgam that contains gold. And yet most miners are unaware of the dangers posed by mercury to the environment and to their health.

CESAR ASCORRA, biologist (through translator): There are very few studies about the contamination of people due to mercury.

STEVE SAPIENZA: Biologists Cesar Ascorra has closely monitored the dramatic increase of mercury use in the Madre de Dios region.

CESAR ASCORRA (through translator): We recently finished one study made on a sample of 30 people in one mining area, and they were all contaminated with mercury above allowable levels. The people that have the worst levels of contamination are those who are not miners, those not linked to the activity itself. They are the merchants, family members, the people who live near the shops where the gold and the mercury is sold.

STEVE SAPIENZA: Gold shops use stoves to heat the miners’ clumps of mercury gold amalgam, releasing the vapors into the shop and then outside, further spreading the toxic threat to towns across the region.

Epidemiologist Dr. Manrique Arada Estrada has worked in Madre de Dios for 20 years collecting data on diseases and health risks like mercury poisoning.

DR. MANRIQUE ARADA ESTRADA, director of regional health, Madre de Dios (through translator): We have been able to find cases of acute intoxication. People arrive with abdominal pain. They arrive with a metallic taste in their mouths or headaches. And all of this is related to the handling of mercury.

But we have not been able to find patients with chronic intoxication because we do not have the equipment to make that type of diagnosis.

STEVE SAPIENZA: Dr. Arada thinks small-scale miners need more education on the dangers of mercury and also alternatives to its use.

DR. MANRIQUE ARADA ESTRADA (through translator): There is good mining carried out in a clean way. Finding acceptable methods for obtaining gold without the use of mercury, for example, that would be a good alternative to avoid all this contamination.

STEVE SAPIENZA: With well over 3,000 mining operations to monitor, the unbridled gold rush is overwhelming Ernesto Montanos and his tiny staff at the region’s mineral and gas ministry.

ERNESTO MONTANOS, minister of energy, Madre de Dios (through translator): I currently have over 500 environmental impact studies to evaluate. But I only have two professionals, two people who do evaluations.

STEVE SAPIENZA: In Peru, small-scale mining is often the only means of survival for people in poor rural communities. Past government efforts to rein in illegal and destructive gold mining have often resulted in civil unrest and deadly clashes with miners.

While Montanos acknowledges the government must do more to stem the flow of mercury and enforce environmental laws, he also thinks consumers can help change the way gold is mined.

ERNESTO MONTANOS (through translator): All the countries that are consumers of gold, recipients of gold, what they have to demand is to buy green gold, ecologic gold, gold that adheres to all quality standards, to the point where there is no excuse to buy illegal minerals.

STEVE SAPIENZA: Last year, when the government imposed tough new environmental laws on small-scale miners in Madre de Dios, tens of thousands of miners across Peru launched protests.

I’m in Chala, the small fishing and mining town on Peru’s southern coast. Last year, six people died on this highway when police tried to remove a roadblock set by small-scale miners who were protesting government plans to impose stricter environmental controls on them.

But in a nearby mining area known as Relave, a small-scale mining company is changing its practices and going green. The AURELSA mining cooperative is a two-hour drive up desolate canyons from the coast. In the wake of the protest violence in Chala, the government singled out AURELSA as an example of best practices in small-scale mining.

Founded by mine workers in 1997, AURELSA is part of growing trend of South American small-scale mines seeking to produce gold with less impact on the environment and more benefit to the miners.

MAN (through translator): Well, with informal mining, the difference is that more is sacrificed, more is risked. There are days when you get money. There are days when you do not get paid. But, here in AURELSA, it is a business with a secure paycheck.

STEVE SAPIENZA: While area miners still rely heavily on crude tools and mercury to extract gold, AURELSA miners have moved to a safer option. Using a method recently approved by Peru’s environmental health board, AURELSA miners use cyanide leaching as an alternative to mercury processing.

DANIEL ENRIQUE VALVERDE, general manager, AURELSA Mining Company (through translator): Cyanide can contaminate if it is dumped to a water source. If there was a river nearby, then it is completely poisonous. But if we see that the cyanide is recycled back into the process, then there is no contamination.

STEVE SAPIENZA: General manager Daniel Enrique Valverde hopes AURELSA will soon become fair trade and fair mine certified. For consumers, this means gold is extracted in a way that limits pollution of harmful chemicals like mercury and cyanide. For miners, it means better income, job security, and 10 percent of profits set aside for the community.

DANIEL ENRIQUE VALVERDE (through translator): There is a percentage of that which goes directly for projects in the community, the local population. We are already seeing projects such as recycling, forestry, that are not just at our company, but projects for the schools and the municipality.

STEVE SAPIENZA: Fair trade and fair mine certified gold is already available in Europe, and shipments are slated for the U.S. market next year.

So far, only a handful of small mining companies in South America are adopting fair mine practices, but mines like these offer a hopeful alternative to the unregulated and destructive mining in places like Madre de Dios.

GWEN IFILL: There are more stories by Steve Sapienza about mining in Peru’s rain forest at the Pulitzer Center’s Crisis Reporting website. You can find their link on our site.

Count our blessings and hope to do more in 2012

I know Mr Marbella as a marketing guru back in my days in graduate school having been the man behind the marketing success of many of the consumer products of San Miguel in the 1980-1990s. So its interesting for him to have developed an economic focus since that period. I guess all roads lead to taking an economic focus (the other focus other people develop is running for public office but that is a more demanding  option) if you want to try to make sense of how to make the Philippines going. The many economic problems it faces requires every man to help steer the country to better future particularly to benefit the more disadvantaged in society.

And while in principle I agree with his view the government failed to provide the needed public spending to spur the economy, one has to look from where we came from to see we already did a lot. From a government lead by someone who is said to be masterminded some of the biggest political frauds (think the Hello Garci conversation) to the biggest economic con jobs (think NBN ZTE proposal), we now have a president whose motto is “walang mahirap kung walang kurup” (no one will be poor if no one is corrupt) and where governance and pursuit of the law has been its mantra. Still, I agree life continues to be a struggle particularly for the many jobless and poor who need to feed themselves never mind the other basic necessities in life. While its possible the poor performance of the government in the economic front may be considered criminal, I would then to think, you can describe the performance in less unpleasant terms. You see the actions taken where not done with malice but with caution to avoid any possible fraud.  One other possible reason could be the limitations of what you can only do in a day or in this case in a year. Being in public office has a save the world kind of responsibility which is a daily challenge even for the most organised and focused among us. Which issue is a priority today may not be the same tomorrow if the urgency of the situation requires refocus. Still that does not mean the second priority is forgotten only to become a priority for another day.

What is important is the intentions are there and will continue to be there to address them (hopefully until the end of their term). They will have to develop the stamina to try  to double their efforts in addressing all of these needs. While we will have to continue to keep monitoring and assessing their performance, we also need to have some patience and understanding on the roles they are doing. At the end of the day, a day’s work in the public service may feel like a longer particularly when you are in a position that has to address all these competing needs (one reason why I admire FVR’s work ethic when he was President and even he could do only so much). Let’s us count our blessings and hope they continue with the same enthusiasm and vigor in the goals set when they came to office in 2012.


From BusinessWorld

December 27, 2011

Why economic neglect is criminal

Finally, the Aquino administration says it will bid out 16 Public-Private Partnership projects in 2012 the slew of programs it announced 18 months ago in its first State of the Nation address. The delay in the construction projects contributed to the slowing down of economic growth to 3.7% (or thereabouts) over the past four quarters.

In the frenzy to jail Gloria Macapagal-Arroyo and to impeach Chief Justice Renato Corona, equally important matters of governance — perhaps of even higher priority to the growing number of starving poor — are being swept under the rug.

The holidays and yearend give us pause — and time to lift the rug for some vacuum cleaning. These are some of the worrisome things we see:

The Aquino administration submitted to Congress a 2011 budget that targeted a GDP growth prospect of 5%, and a best-scenario growth target of 7 to 8%. For 2012, it submitted a budget that projects a slightly higher growth of 5.5 to 6.5%, with the same best-scenario growth target of 7 to 8%.

With the year about to end, the bad news is certain: The Philippine economy is expected to grow dismally much slower at 3.7% in 2011 and 4.2% in 2012.

What happened? The slow GDP growth in the first three-quarters will drag down the entire year. But why?

The International Monetary Fund earlier predicted a moderate GDP growth of 5% for 2011 and 2012. Now it says that the Philippine economy has slowed because of government underspending and weak exports.

Nearing yearend, the IMF further cut its 2011 GDP forecast to 3.7%, and 4.2% for 2012 — a full point cut for 2011 and 0.5 in 2012.

The global economy is seen to be approaching recession next year. Philippine exports of goods and labor will suffer. Overseas remittances will plateau, and OFW families will constrict spending, further aggravating a slowing economy.

Social tensions will rise when overseas employment shrinks from a deteriorating world economy and we are not able to create new jobs fast enough at home. We are beginning to see this already, but it is hidden behind the more sensational popularity ratings of the President which grab the headlines.

Ominous rumblings

The November 2011 Pulse Asia survey showed growing disenchantment in the way the government is addressing issues that affect the poor.

The survey showed a sharp decline in approval of the administration on issues that affect the stomach: reducing poverty (approval rating of 47% to 32%, down 15%), controlling inflation (from 45% to 32%, down 13%), increasing the pay of workers (from 56% to 43%, down 13%), creation of jobs (from 59% to 48%, down 11%), and fighting criminality (from 62% to 53%, down 9%).

The disapproval ratings of the administration doubled on issues that affect the poor the most. In October last year, 18% of respondents disapproved of the way the administration was addressing poverty reduction. In November this year, the disapproval rating doubled to 36%.

More people now disapprove (36%) than approve (32%) the way the administration is handling its poverty reduction programs.

Criminal neglect

Poverty reduction is related to other issues like job creation, improving the pay of workers, and moderating inflation. The disapproval rating on the government’s programs to create jobs rose from 11% in October 2010 to 21% in November this year, or nearly double.

On other gut issues the deterioration was equally serious: controlling inflation (from 21% to 37%, an increase of 16 points), raising the pay of workers (from 14% to 25%, or by 11 points) and enforcing the law to all, whether influential or ordinary citizens (from 9% to 18%, or by nine points).

The rumblings of social unrest are growing. Why?

One glaring reason is that just a little over half of the economic stimulus package was spent by the government to spur economic growth, budget department figures show.

In brief, the government fell asleep in implementing programs for which funds were available, aggravating joblessness and poverty. In a country where some 3.41 million children suffer permanent brain damage from hunger, this economic negligence borders on the criminal.

Asian laggard

The Philippines is seen as a laggard compared to its Asian neighbors and needs increased government spending, among others, to catch up.

Periods of growth were not sustained in the absence of strong and persistent economic reforms, says the International Monetary Fund (IMF) Working Paper titled “The Determinants of Economic Growth in the Philippines: A New Look.”

“To catch up with its East Asian counterparts, the Philippines will need to maintain macroeconomic stability, expand its fiscal space and redirect public spending to agriculture, infrastructure, and research and development,” wrote author Willa Boots J. Tolo, who was a former researcher at the IMF Manila office.

Development goals

In 2000, the members of the United Nations (UN) gathered at the Millennium Summit to renew their commitment to battling poverty and other forms of human deprivation. The UN Millennium Declaration set specific targets to combat poverty all around the world. The Millennium Development Goals offer a good yardstick for measuring our performance against targets.

In eradicating extreme poverty and hunger, the Philippines is behind by at least six years and at most eight years in achieving its goals. Prevalence of underweight children is yet to be halved, and incidence of poverty in the population has not improved either, the UN said.

We need to act fast. Sleeping on the economy is tragic. Further neglect is criminal.

(Comments are welcome at

Article location : economic neglect is criminal&id=44000

2011 in Philippine economic terms

Dr Diokno gives us a review of the year from an economic perspective on how the Philippines performed.  I agreed with the recent natural disaster in Cagayan de Oro, next year will be a greater challenge for the government to try to address the many goals it has to address particularly in creating job opportunities and reducing poverty.

From BusinessWorld

December 27, 2011

Hopes and realities

By Benjamin Diokno

As the year came to a close last year, when asked about his number one wish for 2011, President Benigno Aquino said, “I hope the economy will take off.” “I hope the number of jobless will be lowered by 2011,” he added.

The economy turned out much worse than expected, and while the jobs market turned out much better than planned, the quality of jobs has apparently deteriorated. About one of four new jobs created were in the nature of unpaid family workers.

The average hours worked declined, as the number of part-time workers soared. Those who worked for less than 20 hours per week rose by 1.5 million, those who worked more than 40 hours rose by half a million.

The Aquino administration hoped that the economy would grow by 5.5 to 6.5%, but with an aspirational growth of 7 to 8% in 2011. The emerging reality is that the economy would grow at a much slower pace of 3.7%. Blame the Philippines’ poor performance to the Aquino administration’s inept execution skills and to a harsher and slower world economy.

The emerging growth of 3.7% is based on the actual 3.6% growth in the first three quarters of the year. Assuming a faster growth of 4.0% in the fourth quarter, the economy would hit a full year growth of 3.7%. This is the emerging consensus among the international financial institutions (IMF, World Bank, and Asian Development Bank), other international organizations and individual economists.

As the economy slows, there is a discernible rise in disenchantment by Filipinos on the way the government is addressing issues that affect the ordinary man on the street, the November 2011 Pulse Asia survey results show.

A year ago, in October 2010, a majority of Filipinos approved of the Aquino administration’s performance in eight of 10 selected national issues: fighting corruption(57%), fighting criminality (62%), enforcing the law to all citizens (58%), increasing peace in the country (56%), stopping the destruction and abuse of the environment (51%), creation of more jobs (59%) increasing the pay of workers (56%), and efforts to control population growth (53%).

But in two gut issues, the Aquino government registered less than majority rating: controlling inflation (45%) and reducing poverty (47%).

Falling approval, rising disapproval rating

Fast forward to a year after. A comparison of the November 2011 survey results and the October 2010 survey results shows a sharp decline in citizens’ approval of the Aquino administration on issues that affect them the most: reducing poverty (approval rating of 47% to 32%, or a loss of 15%), controlling inflation (from 45% to 32%, or loss of 13%), increasing the pay of workers (from 56% to 43% or minus 13%), creation of jobs (from 59% to 48% or minus 11%), and fighting criminality (from 62% to 53% or minus 9%).

Worse, the disapproval ratings of the Aquino administration has doubled on issues that affect the poor majority the most. In October last year, 18% of respondents disapproved of the way the Aquino administration was performing on the issue of poverty reduction. In November this year, the disapproval rating on poverty reduction has soared to 36%, double the level a year ago.

As of the November Pulse Asia survey results, more people disapprove (36%) than approve (32%) in the way the current administration is implementing its poverty reduction programs.

But poverty reduction is related to other national issues like job creation, improving the pay of workers, moderating inflation, and, in the long-run, controlling fast population growth.

On other gut issues the deterioration was equally serious: controlling inflation (from 21% to 37%, or an increase by 16 percentage points), increasing the pay of workers (from 14% to 25%, or by 11 percentage points) and enforcing the law to all, whether influential or ordinary citizens (from 9% to 18%, or by 9 percentage points).

The number of citizens who feel that the Aquino administration has failed to enforce the law unbiasedly has doubled. Perhaps many people were reminded of the slow progress in prosecuting those responsible for the abominable Maguindanao massacre. The survey coincided with the second anniversary of the tragic incident.

People’s dissatisfaction with the way the Aquino administration is handling issues to control fast population growth is also rising. From a dissatisfaction level of 13% in October 2010, this has jumped to 25% in November 2011, or by 12 percentage points.

On other issues the disenchantment with the Aquino administration has grown too — fighting graft and corruption lost 7 percentage points; fighting criminality, 7 percentage points; equal enforcement of the law to all citizens, 9 percentage points; increasing peace in the country, 6 percentage points; and stopping the destruction and abuse of the environment, 6 percentage points.

Puzzling jobs numbers

On the government’s program to create jobs, the disapproval rating rose from 11% in October last year to 21% in November this year, or a difference of 10 percentage points. In brief, the number of citizens who disapproved the administration’s performance on job creation has nearly doubled.

It is in this sense that the October jobs number came as a surprise. Official labor survey results show that unemployment rate fell from 7.1% in October 2010 to 6.4% in October 2011. How is that possible in the face of a slowing economy and the rising people’s dissatisfaction with the way the government is addressing the problem of unemployment?

The answer is in the details. Two million new jobs were created, but half a million of those were in the nature of unpaid family workers. By occupation, close to a million (956,000) were in the nature of labor and unskilled workers. This category of workers rose from 32.4% in October 2010 to 33.2 % in October 2011, or from 11.8 billion to 12.8 billion in October 2011.

The number of part-time workers increased. The average hours worked declined: those who worked for less than 20 hours per week rose by 1.5 million, those who worked more than 40 hours rose by half a million.

More workers are looking for a job now than ever before. The labor participation rate rose from 64.2% to 66.3%, year-on-year. This suggests that with hard times, there may be a need for a second or third worker in the family.

Overall, 2011 was a disappointing year. It ends with a major catastrophe in Southern Philippines — a grim reminder of what lies ahead. The new year begins with the same old problems and new challenges. More than ever, these require focus, hard work, innovativeness, steadfastness, competence, and firm commitment to the common good on the part of public officials.

Article location : and realities&id=44002

Full text of Pope Benedict’s Urbi et Orbi Christmas Message

The following is this year’s Christmas message of the Pope (Urbi et Orbi) where this year prayed for people in the southern Philippines who were affected by the recent floods.

From CatholicCulture.Org

December 25, 2011

Dear Brothers and Sisters in Rome and throughout the world! Christ is born for us! Glory to God in the highest and peace on earth to the men and women whom he loves. May all people hear an echo of the message of Bethlehem which the Catholic Church repeats in every continent, beyond the confines of every nation, language and culture. The Son of the Virgin Mary is born for everyone; he is the Saviour of all.

This is how Christ is invoked in an ancient liturgical antiphon: “O Emmanuel, our king and lawgiver, hope and salvation of the peoples: come to save us, O Lord our God”. Veni ad salvandum nos! Come to save us! This is the cry raised by men and women in every age, who sense that by themselves they cannot prevail over difficulties and dangers. They need to put their hands in a greater and stronger hand, a hand which reaches out to them from on high. Dear brothers and sisters, this hand is Christ, born in Bethlehem of the Virgin Mary. He is the hand that God extends to humanity, to draw us out of the mire of sin and to set us firmly on rock, the secure rock of his Truth and his Love (cf. Ps 40:2).

This is the meaning of the Child’s name, the name which, by God’s will, Mary and Joseph gave him: he is named Jesus, which means “Saviour” (cf. Mt 1:21; Lk 1:31). He was sent by God the Father to save us above all from the evil deeply rooted in man and in history: the evil of separation from God, the prideful presumption of being self-sufficient, of trying to compete with God and to take his place, to decide what is good and evil, to be the master of life and death (cf. Gen 3:1-7). This is the great evil, the great sin, from which we human beings cannot save ourselves unless we rely on God’s help, unless we cry out to him: “Veni ad salvandum nos! – Come to save us!”

The very fact that we cry to heaven in this way already sets us aright; it makes us true to ourselves: we are in fact those who cried out to God and were saved (cf. Esth [LXX] 10:3ff.). God is the Saviour; we are those who are in peril. He is the physician; we are the infirm. To realize this is the first step towards salvation, towards emerging from the maze in which we have been locked by our pride. To lift our eyes to heaven, to stretch out our hands and call for help is our means of escape, provided that there is Someone who hears us and can come to our assistance.

Jesus Christ is the proof that God has heard our cry. And not only this! God’s love for us is so strong that he cannot remain aloof; he comes out of himself to enter into our midst and to share fully in our human condition (cf. Ex 3:7-12). The answer to our cry which God gave in Jesus infinitely transcends our expectations, achieving a solidarity which cannot be human alone, but divine. Only the God who is love, and the love which is God, could choose to save us in this way, which is certainly the lengthiest way, yet the way which respects the truth about him and about us: the way of reconciliation, dialogue and cooperation.

Dear brothers and sisters in Rome and throughout the world, on this Christmas 2011, let us then turn to the Child of Bethlehem, to the Son of the Virgin Mary, and say: “Come to save us!” Let us repeat these words in spiritual union with the many people who experience particularly difficult situations; let us speak out for those who have no voice.

Together let us ask God’s help for the peoples of the Horn of Africa, who suffer from hunger and food shortages, aggravated at times by a persistent state of insecurity. May the international community not fail to offer assistance to the many displaced persons coming from that region and whose dignity has been sorely tried.

May the Lord grant comfort to the peoples of South-East Asia, particularly Thailand and the Philippines, who are still enduring grave hardships as a result of the recent floods.

May the Lord come to the aid of our world torn by so many conflicts which even today stain the earth with blood. May the Prince of Peace grant peace and stability to that Land where he chose to come into the world, and encourage the resumption of dialogue between Israelis and Palestinians. May he bring an end to the violence in Syria, where so much blood has already been shed. May he foster full reconciliation and stability in Iraq and Afghanistan. May he grant renewed vigour to all elements of society in the countries of North Africa and the Middle East as they strive to advance the common good.

May the birth of the Saviour support the prospects of dialogue and cooperation in Myanmar, in the pursuit of shared solutions. May the Nativity of the Redeemer ensure political stability to the countries of the Great Lakes Region of Africa, and assist the people of South Sudan in their commitment to safeguarding the rights of all citizens.

Dear Brothers and Sisters, let us turn our gaze anew to the grotto of Bethlehem. The Child whom we contemplate is our salvation! He has brought to the world a universal message of reconciliation and peace. Let us open our hearts to him; let us receive him into our lives. Once more let us say to him, with joy and confidence: “Veni ad salvandum nos!”

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