ROLLBACKS NOT ENOUGH: DIESEL OVERPRICED BY P6.45 PER LITER FROM JAN-SEPT 2008

The series of oil price rollbacks on diesel implemented by oil companies this month are not enough because diesel prices are overpriced by a total of P6.45 per liter from January to September this year, according to research group IBON Foundation.

This estimate was the cumulative overpricing over the January to September period, computed based on the monthly movement of Dubai crude, diesel and pump prices, and the foreign exchange (forex) rate.

According to IBON research head Sonny Africa, the worst overpricing happened in June to August when oil firms used record Dubai prices to increase pump prices, and then rollback pump prices to less than what is justified. Overpricing in those three months amounted to a total of P13.50. Although there was underpricing recorded in some months since January, the price of diesel was still overpriced over the nine-month period.

Africa noted that this pattern has continued since the start of deregulation where diesel pump prices increased 1.7 times faster than Dubai crude prices in peso terms. The cumulative overpricing only shows that big oil firms use their monopoly over pricing to dictate pump prices that are beyond what can be justified by global crude oil price movements.



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INCREASED BUDGET FOR THE POOR URGED AMID GLOBAL CRISIS

With the worsening crisis of the US and global economy expected to further aggravate poverty in the country, independent think-tank IBON Foundation today said that it has become more crucial for government to ensure enough resources are spent for the poor.

IBON said that the Arroyo administration must start by increasing the allocation for social services in the 2009 national budget. The group criticized the allocation of 2.5% of the total budget for health; 13% for education; and 0.4% for housing as atrociously low especially in today’s environment of rapidly rising prices and greater economic uncertainty.

IBON said that the perennially low budget allocation for social services will have a deeper repercussion on the poor and vulnerable sectors as the deteriorating global economic crisis destroys more jobs and livelihood and inflates the cost of living.

Experts count slowdown in export demand, tighter flows in foreign investments and increased speculation in food and fuel prices as among the consequences of the US financial crisis and overall slump in the world economy.

With increased poverty, it becomes more urgent for government to provide sufficient social services such as health, education and housing. But the proposed budget levels obviously could not cover the expected increased demand for public schools and hospitals among others.

For the past ten years, government has been spending an amount equivalent to 2.1% of the gross domestic product (GDP) for education, way below the international standards of 5% to 6%. For health, it has been spending only 3.2% of the GDP, lower than the norm set by the World Health Organization (WHO).

IBON said that the government should at least meet these levels to alleviate the present condition in the country seen to worsen with the global crisis. To increase spending for social services, government should put a stop to burdensome payments and cut back on military spending. The proposed budget for 2008 allocates P683 billion for debt principal and interest payment, while it allocates P5 billion for AFP modernization. In contrast, government allots only P30 million for health care asssitance.

The group added the removal of regressive taxes such as the reformed value-added tax (RVAT) on oil is equally urgent to lessen the inflationary impact of the financial crisis.

The Arroyo government should also abandon its proposal for new taxes because these will further burden the Filipinos already suffering from low incomes and spiraling cost of living. IBON also urged the administration not to use the global crisis as an excuse to impose more taxes in its effort to achieve a balanced budget.



RP, ASEAN NATIONS NOW POWERLESS TO PROTECT OWN ECONOMY WITH JAPAN-ASEAN TRADE PACT

A recently-signed free trade agreement between Japan and the Association of Southeast Asian Nations (ASEAN) would grant Japanese corporations unhampered access to the region’s markets, prohibiting ASEAN members to protect their own economy while allowing Japan to protect its domestic advantages. According to IBON research head Sonny Africa, the signing of the Agreement on Comprehensive Economic Partnership among ASEAN members and Japan (AJCEP) is another step toward Japan ‘s plan for an overarching economi c p artnership agreement with the countries of East Asia . The agreement would allow Japanese corporations to take advantage of ASEAN markets, labor and natural resources. “The Japan-ASEAN trade pact is part of Japan ‘s campaign to cement its economi c p ower across the region,” said Africa . He noted that Chapter 2, Article 15 of the AJCEP calls for each party to the agreement to accord “national treatment” to the goods of the other parties in accordance with Article III of the General Agreement on Tariffs and Trade (GATT). This means that ASEAN countries must treat imported products from Japan the same as their locally-made products. He warned that this provision prevents the Philippines and other developing ASEAN countries from using trade barriers, such as tariffs, as policy tools for economic development. Like the experience of countries who liberalized prematurely, the pact could stifle the growth of many domestic industries in ASEAN nations as they are overwhelmed by a flood of cheap imports from Japan . Under this unfair deal, ASEAN countries will be prevented from using the same protectionist policies that Japan itself used early in its economic development and may find themselves ultimately reduced to being sources of cheap labor and mineral and agricultural resources.

GOV’T CLAIM OF BILLIONS OF INVESTMENTS FROM JPEPA TO SPELL DOOM FOR RP MANUFACTURING


As the Senate resumes its sessions today, independent think-tank IBON Foundation again urged senators to reject the Japan-Philippines Economic Partnership Agreement (JPEPA) saying that the P365 billion in investments that the deal will supposedly bring is too high a price to pay for the death of the local manufacturing sector.

As it is, the long-term liberalization of the economy has further weakened the country’s manufacturing base. But the implementation of the JPEPA, and the free trade pacts that will inevitably follow in its wake, would end any chance of improving the local manufacturing sector and will permanently reduce it to being a mere assembler of imported inputs for re-export.

This trend is already evident in recent export figures from the National Statistics Office, which showed that industries which use imported raw materials or assembled parts, have overtaken those sourcing chiefly domestic raw materials.

IBON research head Sonny Africa said the trade liberalization brought by the JPEPA would further worsen the already dire situation of the country’s manufacturing sector. The “national treatment” and “most-favored-nation (MFN)” provisions in the free trade pact would prevent the country from imposing policies to help local manufacturers, such as restrictions on imported products and local content requirements.

Africa pointed out that the JPEPA is merely a way for Japan to promote the interests of its transnational corporations along with their local elite partners. Japanese companies already dominate many of the sectors in the local electronics manufacturing export industry, with its three biggest electronic firms accounting for over 53% of total gross revenues in the computer manufacturing sector as of 2006.

Instead of passing exploitative free trade pacts like the JPEPA, Africa said the government should instead implement national industrialization policies, which would lead to the creation of millions of much-needed permanent jobs and the country’s long-term economic development.

LOW PAYING, POOR QUALITY JOBS CREATED FROM 2001-2006

A significant factor of the growing poverty, despite the much-hyped 28 quarters of economic growth, is the poor quality of jobs created during the first six years of Arroyo’s term.

Data from the National Statistics Office Labor Force Survey showed that the most number of jobs created from 2001 to 2006 were in agriculture, wholesale and retail trade and private households with employed persons. “These are among the lowest paying and most insecure jobs in the country,” said IBON research head Sonny Africa.

For example, the informal sector of wholesale and retail trade created 1.02 million jobs during the period. The average daily wage for those working in the sector in 2006 was P228.72 even as the legislated minimum wage in Metro Manila as of July 2006 was P300.

Meanwhile, the agriculture, hunting and forestry sector created 681,000 jobs but were mainly unpaid family workers. Private households with employed persons or household help, accounted for 409,000 of the new jobs. Household help would be lucky to earn P2,500 to P3,500 a month, Africa pointed out.

Meanwhile, the growth of the agriculture and manufacturing sectors from 2001 to 2006 was tepid, averaging 3.6% and 4.3%, respectively, thus unable to create regular and productive jobs. The number of new manufacturing jobs from 2001 to 2006 was just 153,000 and the sector even lost 18,000 jobs in 2006.

This is significant given that these sectors constitute the base of any genuinely developing economy, he said.

The sectors with the biggest annual average growth over the period, and thus the biggest contribution to overall economic growth, were mining and quarrying, transportation, communication and storage, and finance. These sectors however have low and short-term job generating capacity.

Economic growth is valued not for its own sake but for the improvement in people’s livelihoods and welfare,” said Africa. “In this sense, Arroyo’s 28 continuous quarters of growth are worthless as tens of millions of Filipinos are as poor as ever.”

AS OFFICIAL POVERTY DATA SHOWS :‘28 QUARTERS OF ECONOMIC GROWTH’ DON’T BENEFIT FILIPINO MAJORITY

The trend of worsening poverty in the country noted by the FIES confirms how the majority of Filipinos in the country don’t benefit from economic growth. Independent think-tank IBON Foundation issued this statement in response to the paid advertisement published by Malacañang allies saying that the economy enjoyed 28 quarters of economic growth under the Arroyo administration.

According to IBON research head Sonny Africa, growth in gross domestic product (GDP) averaged 5.4% in the period 2003-2006, yet the number of poor Filipinos even increased by 3.8 million.

“In contrast to the government’s underestimated poverty levels, IBON notes that some 70%-80% of Filipinos try to live off around P100 or less every day,” said Africa.

The problem lies most of all in government neglect of the manufacturing and agricultural sectors, which are at their smallest shares of the economy since the 1950s, added Africa. This decline in the country’s economic foundations drove the unemployment rate to an average of 11.4% in the 2003-2006, which is the worst four-year period of unemployment in the country’s history. There were 11.6 million Filipinos jobless or otherwise underemployed and looking for additional income in 2006.

Backward industry and agriculture cannot create jobs and the labor force is being forced into low-paying, irregular and insecure jobs in the service sector.

For instance while the government hyped 2007 as seeing the fastest economic growth in three decades, the most jobs created last year were in the additional 142,000 working as domestic household help.

The trend of worsening poverty also exposes the folly of relying on overseas Filipino workers (OFWs) and remittances to support domestic household incomes. Poverty has increased despite ever-increasing number of OFWs going abroad and record remittances. By last year, nearly 3,000 Filipinos were going abroad to find work every day and the stock of some nine million overseas Filipinos remitted a record US$14.5 billion. Yet the government is continuing with this retrogressive cheap labor export policy.

The government also continues to promote economic activities that profit foreign corporations rather than benefit the domestic economy. It is promoting foreign investment-intensive call centers and business process outsourcing (BPO), mining, and manufacturing in export enclaves. Unfortunately these are sectors of weak job creation, little multiplier effect, no technological spillover, and poor contributions to the domestic capital stock. It is also pushing free trade policies such as the JPEPA and through ASEAN even if such trade and investment liberalization has been among the main factors that have undermined the domestic economy.

“Without fundamental changes in economic policies, the country’s joblessness and poverty situation can only get worse, and the so-called sustained growth will only benefit foreign and big local business,” said Africa.

8 OUT OF 10 FILIPINOS DOUBT GOVERNMENT’S CLAIM OF

IBON SURVEY
8 OUT OF 10 FILIPINOS DOUBT GOVERNMENT’S CLAIM OF
IMPROVING ECONOMY

As Malacañang continues to hype the country’s economic gains, most respondents to the latest IBON nationwide survey remain doubtful of this claim.

Asked if they believe there is truth to the government’s pronouncement that the economy has improved, 79.7% of the 1,503 respondents said no. This is an increase from the 75.4% share in the October 2007 survey round.

The January 2008 IBON survey was conducted across various sectors nationwide from January 7 to 14. The survey had a margin of error of plus or minus three percent. (end)

Below is the tabulation of results of respondents’ perception of government’s pronouncement of an improving economy.  

In your opinion, is there truth to the government’s pronouncement that the economy has improved?

 

October
2007

 

January 2008

 

 

Frequency

Percentage

Frequency

Percentage

Yes

         187

      12.48

         165

      10.98

No

      1,130

      75.43

      1,199

      79.77

Don’t Know

         157

      10.48

           94

        6.25

No answer

           24

        1.60

           45

        2.99

 

      1,498

 

      1,503