In today’s news: Philippines and Australia sign security agreement.
Still-unidentified people tried to assassinate Namfrel spokesman Atty. Jose Bernas yesterday, but no one can say whether it was due to other pending cases or his Namfrel stint.
Speaking of Namfrel, they’re going to end their counting on June 2. Uh-oh.
Ricky Carandang, it turns out, wrote about his now-famous scoop, and asks four questions:
Was it because there was actually no order at the time they were removing the ERs and that it was issued after the fact in an attempt to cover their asses after the people in the treasurer’s office blew the whistle on them?
Is Sarmiento saying that the ERs were safer in the hands of the so-called Garci boys?
Was he lying or was he just so utterly out of the loop that he didn’t know?
Could it be that the story sabotaged an operation to use those ERs to rig the election for some candidates?
Carandang says he doesn’t know the answers to those questions. Inside PCIJ zeroes in on Commissioner Sarmiento in the context of another controversial election -in Maguindanao. South Cotobato recount reveals 9-1-2 says Ellen Tordesillas; Gabby Claudio: 12-0 was just a slogan. Oh?
On to other matters…
I was talking to a friend who is a manager-entrepreneur, about the economy. He pointed out something I found very interesting. Where is all the money being made, I asked. He said, in real estate. Look at the stock market, he pointed out. The property holdings companies are driving the stock market boom. But there isn’t a corresponding boom in consumption, he added. If there was growth in consumption, he clarified, the stock of Jollibee would be leading the market. And it’s not.
Which goes to show, he said, that OFW money is going into buying property, hence the boom in construction (for developments that may be on the lunatic side, as Walk This Way points out), and thus, the attractiveness of property companies. But it’s not filtering through to increased consumption (hence, only a limited trickle-down effect). And he suggested, this means that in 15 years, the OFW’s investing in property now will be coming home to retire: but the question is, what kind of country will they be retiring to?
The scrimping in health and education made possible tiding over the deficit. But it has further underscored the gulf between those who benefit from the boom and the rest who do not feel the boom in services and the property market.
If you visit the Philippine Stock Exchange website, you’ll see the biggest gainers are in Holding Firms (up 2.2568%), Property (2.2663%), and Services (3.0865%), with Services being the biggest gainer for May 31, 2007. If you look at the list of Active Stocks, you’ll see that Property is top of the heap; the list of Top Gainers (APR, PEP, CEU, etc.) is interesting when compared to the Top Losers (LFM, BKD, SFI). But most of all: these are a relatively small number of companies, all of which are significant players anyway, and the market (according to the PSE person who guested on my show) is composed of about 80,000 players (or investors, and that includes corporate investors) in a nation of 80+ million.
So the boom and success –“Let’s keep the nation surging!” Rick Saludo croons (and is echoed by the Palace propaganda machine) is happening, but it’s a boom and success relative to what? This is the perspective that news like a booming stock market requires: it’s booming for 80,000 players, most of them in the big leagues as it is, and again these are gains that are more likely to end up spent on say, new Mercedes Benzes than in economic activity that will make a serious dent on the living standards of the public. Money Smarts points to where the growth is taking place:
The gross national accounts capture benefits from remittance money as they are transferred here, as they are placed in savings and investment instruments, as they are used by your family to buy things they need to live, as they are used by your beneficiaries here to set up businesses. Your efforts not only bring in the cash, but also keep a lot of local companies afloat.
You might be curious what your money bought. Based on figures from the National Statistical Coordination Board (NSCB), your money was spent on: food, clothing and footwear, tobacco, fuel, light, and water. These are the items that showed fast increase in growth. Hmm… I wonder what ‘tobacco’ is doing in that list.
The items transportation and communication, household operations, and beverage all exhibited lower growth, so money was still being spent on these items, just not as much as before. Household furnishings however, suffered cutbacks.
Today’s Business Mirror editorial says this kind of growth isn’t enough (Tingog.com gives a homespun example to say something similar, too):
An almost 7-percent growth in GDP for a country with barely a $1,000 per capita GDP is actually quite ordinary.
But let’s drink to that pretty new and higher number, if only because for years now we have been used to being thrashed by the world’s number crunchers, including those from multilateral institutions who kept on telling the international community we “lack global competitiveness,” have “poor infrastructure,” or we have less “economic freedom.”
But this new number may actually give us a hint that good things could happen if only some elements are present, like higher public spending, to compliment people’s expenditures.
On hindsight, this encouraging figure could actually be just an unusual bleep in the economic screen. We just had a midterm election and, certainly, politicians may have started throwing out money around as early as January to beef up their electoral chances. We have a construction ban on election season; the ruling party may have tried to ratchet up spending to put some spine to its hopelessly limp Senate lineup. That is clearly shown in government’s pump-priming activities that caused a 16.9-percent growth in public construction.
Looking at the rest of the numbers, however, it appears that the numbers do look real. As usual, personal consumption explained much of the growth figures. The people purchased more food, clothes, shoes, tobacco and spent more for fuels and light.
And where did they get the money? As usual, the rising personal spending came from the dollars sent in by overseas Filipinos. The number of deployed workers actually went down, but the money coming in is rising since we are increasingly responding to jobs that require greater skills and brainpower (like engineers and medical professionals).
Exports also maintained their double-digit growth, apparently because of the continuing robust demand for electronics and semiconductors.
Also, despite the super typhoons, the farm sector did look stable, and the increased productivity from the fishery sector may also have helped a lot. Manufacturing also remained stable, while mining recovered.
All these factors translated to more money being transacted through banks, money being spent in malls and sari-sari stores, more cash being burned in cellular phones and Internet games, and more money being used to buy vehicles.
No wonder the services sector grew by more than 9 percent, contributing 4.4 percentage points to the 6.9-percent growth rate. Industry contributed 1.9 percent and the farm sector 0.8 percentage points.
Now that we have praised ourselves with this new growth figure, we need to ask whether or not the service-driven economy is the most desirable growth path for us. Growth per se is good; an expanding pie somehow means that more and more people got the crumbs. But crumbs are crumbs and they are not going to create adequate nourishment for the broader sectors of the economy.
Consider these facts: interest rates are low (read: capital is cheap) and the peso has been “strong” (read: imported machines, technology, packaging products and equipment are cheap). And yet, durable equipment has not been rising. That could be interpreted to mean that business organizations are not investing in new machines and are not refurbishing their offices. Isn’t that a sign of a wait-and-see attitude? If it is, investor confidence, therefore, is not yet fully restored.
The real reason probably lies in the structure of the economy, i.e. its being a service-driven one. Service companies, business-process outsourcing (BPOs) for instance, usually don’t import huge machines, nor do they build factories. That means they are not likely to hire workers en masse the way a factory, requiring thousands of skilled and unskilled workers, would. Do we ever wonder why despite all the decent growth we achieved in the last three years, we can’t seem to address joblessness? That’s the reason.
The counterpoint seems to be that the services economy actually creates jobs fast, since setting up a service company like a BPO doesn’t require so much capital infusion. All that is required is a nice building with reliable broadband Internet connection and voilà! hundreds of call-center agents or software programmers are hired.
That’s true in the case of the country’s cyberservices industry. But the one thing that is ignored in this debate is the fact that the services sector has the tendency to hire call-center agents, accountants, medical transcribers, lawyers and software engineers first before they get janitors, street sweepers and errand boys. The ideal thing to do is to provide jobs for both accountants and the like, as well as janitors, street sweepers, farmers and factory workers.
And again, keeping Saludo’s purring in context, read yesterday’s editorial of The Business Mirror:
Citing constrained growth in the region and around the world, the DBCC recently adjusted its revenue assumptions for this year after the Asian Development Bank released its growth projection of only 5.4 percent for 2007.
The revised revenue target of the Bureau of Internal Revenue is P718.67 billion, down from the original target of P765.9 billion; and the Bureau of Customs target to P165.12 billion from the original P228.2 billion.
This means the tax collections of the two agencies will be lowered by more than P100 billion from the original target of P994.1 billion. The new tax revenue is expected to hit P890.209 billion, which includes income from other government agencies.
The DBCC had earlier explained that the committee changed its assumptions as a result of the softening prices of oil in the world market, which will translate into lower collectible taxes by the agencies.
Yet, in the view of some independent fiscal experts, there’s more than meets the eye in the downscaling. It signals, they said, that the government’s technical people are not really sure where the money can still be sourced if the original, high assumptions are rammed through.
This only means that people will be squeezed further in the next few months, and instead of payback, we may see more calls for “sacrifice” from the same people who gave us the expanded value-added tax.
Therefore, when Romulo Neri starts muttering darkly about political risks intruding on long-term prospects, and Saludo starts flogging the don’t worry just surge and be happy line, there’s probably a setup somewhere. And the setup is as old as politics itself: passing the buck, away from the President, and towards everyone else. Quickly, just in case things go wrong, with news like this: Gulf states threaten to ban Filipino workers. Now suppose the government mishandles this? Where will the stock market and the Peso go?
On a related note (remittances and the Peso) read, too, John Mangun’s thoughts on a new paradigm for the Peso.
Anyway, compare the performance in past and recent months of Ayala Land, Filinvest Land, Robinson’s Land, Megaworld, to San Miguel Corporation, and Jollibee Corporation, and perhaps do some comparisons of your own, depending on the types of companies you think are interesting/relevant.
Gladstone Cuarteros of the IPD examines how showbiz candidates did in this election.
Inquirer editorial calls Defensor’s concession a “class act.” Marichu Lambino on why she isn’t giving Mike Defensor a medal just yet. Patsada Karajaw and nina bumanglag on why the Comelec ordering a Maguindanao recount is the wrong move.
Blackshama reflects on closer Philippine-Australian defense ties.
Torn & Frayed on women in politics and society. And these two entries are of a piece: Mongster’s Nest on campaigning and Kataspulong with a particularly fine entry on what candidates can do when they win.
Philippine Commentary continues the language debate; A Nagueno in the Blogosphere weighs in.
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