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| ON THE OTHER HAND |
| Seize the Moment
By Antonio C. Abaya Written Feb. 18, 2007 For the Standard Today, February 20 issue When it rains, it pours. That was the advertising slogan of Morton Salt several decades ago. Meaning that even when the humidity is high, Morton�s salt granules do not stick to each other and clog up the spout of the salt container. It has also come to mean that news, good or bad, tend to come in torrents. The good economic news have lately been coming in torrents. The stock market hit a ten-year high at 3,447.60 points last week. The peso also strengthened to a six-year high of 48.25 pesos to the US dollar. The Philippine Stock Exchange is the best performing bourse in the developing world, and the Philippine peso is the strongest currency so far this year. In addition, remittances from OCWs also reached an all-time high of $12.6 billion in 2006, while exports grew to $47.6 billion and tourist arrivals reached 2.8 million for the same year, both record highs. The call center industry is also booming, even if we have lost our second-place (to India ) standing to China . The so-called political opposition can offer nothing to top that. And neither can the communists. Elated at this turn of events, President Arroyo is, understandably, in a self-congratulatory mood, and much of the business community are beside themselves in rejoicing that business conditions have never been this good. Said President Arroyo in a recent speech before a gathering of engineers and technologists: �Our eye is on the ball on better-paying jobs, improved infrastructure, including technology-enhanced social services, the alleviation of poverty and hunger, fighting terror and nurturing the environment, all of which will benefit from technology. �The Filipino people are shrugging off the past and looking forward to the fruits of steady growth, trade and investment. �We must all seize the moment, to reach the summit through our unity and hard work, brandishing the Filipino team spirit that has gained renown worldwide. The Philippines is a team to beat when it comes to excellence, resiliency and staying power in a competitive world�..� �Seize the moment!� What a rousing battle-cry to rally the people to the ramparts and involve everyone in the arduous but exhilarating tasks of nation-building. I, too, want to seize the moment. But, frankly, I am not sure what to seize, and at which moment. If I were a regular recipient of, and dependent on, remittances from a member of my family working abroad, I would also not know what moment to seize. Last year, a padala of $300 a month would have given me and my other children and grandchildren P16,500. This year, because of the appreciation of the peso, we would be getting only P14,475, or a net drop of P2,025 every month. That means eight million low-income families are now poorer by a collective total of P16.2 billion a month, or P194.4 billion a year. If I were a tour operator or the owner of a tourism-oriented business, I would also be at a loss on what moment to seize. Last year, a gross monthly income of $100,000 from my foreign clients would have yielded P5,500,000. This year, the same amount of dollars would yield only P4,825,000, or a drop of P675,000 a month, or P8.1 million a year. If I were an exporter of Philippine-made products � such as handicrafts, garments, processed food, etc � a $1 million purchase order from my foreign buyer last year would have given me P55 million. But that same million dollar order this year would give me only P48.5 million, or a net drop of P6.5 million, enough to give me a seizure of some kind. (But not all exporters are created equal. If I were an exporter of Philippine-assembled high-tech electronic products � which make up about 65% of Philippine exports � I would have nothing to worry about since creative invoicing by my parent multi-national company would iron out such erratic bottomlines.) If I were the CEO of a foreign corporation interested in setting up a factory in the Philippines , my feasibility study last year would have told me that I needed $100 million to buy P5.5 billion worth of land, buildings, locally sourced equipment, and operating capital for the first six months. This year, because of the appreciation of the peso, to secure that P5.5 billion worth of land, buildings, locally sourced equipment and operating capital for six months, I would need $115 million, or $15 million more than I had originally planned for. Even the Philippine government is a loser in the appreciation of the peso, since imports would be cheaper in peso terms and, assuming the demand remained constant, the collection of the Bureau of Customs would decline correspondingly. By far the biggest theoretical gainer in the appreciation of the peso would be the Bangko Sentral ng Pilipinas, since the service of our foreign debt would be requiring less pesos. If it were to pay $10 billion of our foreign debt (currently about $57 billion), it would need �only� P485 billion, compared to P550 last year, or a savings of P65 billion. It is the BSP which has the real motivation to seize the moment and pay up, but will it? The biggest actual gainers in the appreciation of the peso would be the fund managers since a placement last year of $100 million or P5.5 billion would now buy $110 million, aside from earning additional millions of pesos/dollars playing the bullish stock market. No wonder President Arroyo was visibly annoyed and walked out of a press conference last week when a reporter from the Daily Inquirer kept asking her what benefits ordinary Filipinos derived from the strong peso and record-breaking stock market. As a trained economist, she knows the answer: not much.. The appreciation of the peso is due partly to the record-high remittances of OCWs, and partly to the entry of hot money or portfolio funds, which are invested in currency and stock market speculations (which employ only a handful of job-seekers), unlike foreign direct investments or FDI, which create real employment for tens of thousands of people. Last year, we took in only about $1.1 billion in FDI, compared to $5.4 billion that went to Vietnam . The appreciation of a country�s currency is not necessarily a welcome development. China has been under tremendous pressure from the US and the EU to appreciate its currency because Chinese products are extremely cheap in dollar or euro terms and have been flooding their markets, to the detriment of American and European producers and their workers. It is �free trade� boomeranging on them. But the Chinese have not rushed to seize the moment and appreciate the yuan. Why should they? With their artificially weak currency, the Chinese have accumulated a trade surplus with the US totaling $670 billion, and other hundreds of billions with the EU.. A strong currency is supposed to make imported goods cheaper. But that has not been the case for me. For the past three years, I have been doing the weekly grocery shopping for my family, so I am familiar with supermarket prices. As a matter of principle, I buy only Philippine-made products. Except for a few items, such as Spam, which is one of my favorite food imports. Last week, following President Arroyo�s exhortation to seize the moment, I rushed to the supermarket to seize an extra can of (cheaper?) Spam. But, alas, it costs exactly the same as it did last year: P101. It is only the importers and the vendors who are seizing the moment, not the hapless consumers. ***** Reactions to [email protected]. Other articles since 2001 in www.tapatt.org. OOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOO Reactions to �Seize the Moment� Hi Sir, Good Day... I am attaching in here an article by a columnist (Alex Magno) from another newspaper as my simple reaction to your "Seize the moment"/The Manila Standard Today column - which, btw, actually appeared on the same day ( 02/20/2007 ) as yours, tackling almost the same topic. Hope this might somehow balance some negativistic views regarding the appreciation of our Philippine currency, its impact on our country's exporters, its overall effect to our economy and "if indeed" the rise of our economy is not trickling down to our fellow Pinoys (not even on the price of "Spam"? - which actually is a favorite of my family, too)... Having said that though, I must confess that I always love to read your different views (which started while you're still with the Phiippine.Star), most especially when you tackle how the Leftists have ruined our country - and still continue to do so. Have a nice day... Alvin Casuga, (by email), Feb. 21, 2007 wwwwwwwwwwwwwwwwwwwwwwwwwwwwwww So sir, ano na ba talaga? Does this mean that because we are just human beings, kahit ano pa ang mangyari, ang pangit at mali lang ang ating nakikita? Pag mababa ang piso - bad for the economy, pag nag appreciate naman - wala pa ring magandang epekto. So ano na ba talaga? Charlemagne Duran, (by email), Feb. 21, 2007 MY REPLY. See below. wwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwww Dear Tony, What you seem to forget is that interest rates are also at a long time low � which means that the more imaginative, diligent, and industrious Filipino entrepreneur can have access to cheaper credit for his business. Economics 101 teaches the correlation between foreign exchange and interest rates. A weak peso works well for exports if we have high value added. But this is not the case. Electronic products, which comprise the big chunk of our export revenue, are heavily dependent on imported materials; hence, a stronger peso translates into reduced production cost. Oil is one of our largest imports and is vital to keep our economy going. It goes without saying that a stronger peso means reduced transport and energy costs. You speak of the cost of land, building, locally sourced equipment (is there any?), etc � now being more costly for the foreign investor due to the peso�s appreciation. But how about the cost of imported modern machinery and equipment and the associated freight costs and import duties and taxes? These are now cheaper as a result. By the way, cost is just one component in the profit equation and decision tree � and not necessarily the most important. You can always say that some of our neighbors, especially Vietnam, are performing much better than us. But we are within shooting range and are still in the competition. With an improved Filipino attitude, we can also get there. Instead of dwelling on the negative, build on the positive. Be less negative and help promote the country; it can be contagious. Regards, Pachelo Lao, (by email), Feb. 21, 2007 wwwwwwwwwwwwwwwwwwwwwwwwwwwwwwww Only three years ago our Canadian Dollar was hovering around $0.70 U.S. worth. The only difference we felt at that time if we were able to travel across the border we did a little more shopping than usual because of the relative lower prices, but to travel purposely for shopping was not worth the time and the expense. At present the Canadian currency appreciated to $0.85 U.S. . For us consumers it translates to cheaper imported goods because most of them are transacted in U.S. currency term. For exporters, a little less profit, but the appreciation is due to our improved in economic activities, which is marked by our over a 50 billion dollars trade surplus with our biggest trading partner, the U.S.A. which in turn enabled the government to subsidize the losing export industries. And also can afford us the luxury of traveling cheaper to most part of the world. That�s how we seized the moment.. Thanks. Victor Sanoy, (by email) Scarborough , Ont. , Canada , Feb. 21,, 2007 wwwwwwwwwwwwwwwwwwwwwwwwwwwwwwww Hi, Tony. I agree with you that the peso appreciation is not all that advantageous for many. I for one earn dollars and am completely aware of the effects of peso appreciation. But I personally feel the advantages of peso appreciation are far greater than disadvantages. You mentioned that our foreign debt in terms of pesos will decrease. This will result in the government having more funds available to finance infrastructure projects which in turn would create a better environment for investors and tourists. (Assuming the Bangko Sentral will seize the moment and pay a significant portion of the debt, which is not a sure thing. ACA) The improvement in economic indicators will help in the upgrading of our credit rating which in turn will result in lower interest rates for our foreign debt which in turn will result in lower interest payments. And again more funds will be available for infrastructure projects, schools, hospitals and others. You forgot to mention that the importation of oil amount to millions or billions of dollars. The peso appreciation will mean lower cost of fuel. The ordinary commuter has benefited from that. Besides that, lower cost of fuel is also good for the economy. You say that the tourist sector will earn less in terms of pesos. But on the other hand, the cost of purchasing steel to construct hotels will become lower. Our main problem in not being able to get as many tourists as we want to, is because of lack of hotels. This will mean more employment. (Latest figures on average hotel occupancy put it at less than 70%. ACA) In the shipping section, now it will be cheaper for ship owners to upgrade and expand their fleet. The mining sector will also benefit in terms of the cheaper imported equipment. The agricultural sector will also benefit from cheaper imported fertilizer. Overall the economy will be able to continue to grow higher and higher. It is about to take off. It is indeed ripe to seize the moment. Cheers! (This is all in the indeterminate future, which may or may not happen. In the meantime, 8 million low-income families � who make up about 56% of our total population - today and at this hour, have lost a substantial part of their meager incomes as a result of the peso appreciation. ACA) Bobby Tordesillas, (by email), Feb. 21, 2007 wwwwwwwwwwwwwwwwwwwwwwwwwwwwwww Tony, What then do you want, that we keep the peso down and weak ? What I would suggest you research and tell your readers is - which is better for the Philippines a strong peso or a weak peso, without any politcal or personal color. In that way your opinion becomes constructive and good for the PHILIPPINES . I am disappointed that your apparent dislike for President Arroyo blemish your well written and informative column. From our perspective abroad - we want the Philippines to succeed and our fellow Filipinos to be prosperous. This is all that matters. Help the country progress with President Arroyo or whoever else sits in Malaca�an. Ad Majorem Dei Gloriam. Roger Pe�a, (by email), Montebello , CA , Feb. 21, 2007 MY REPLY. See below. wwwwwwwwwwwwwwwwwwwwwwwwwwwwwww An opportunity for our factories to purchase the needed machineries to increase productivity to compete with other countries in terms of volume production. A good break to purchase construction machineries and equipments to improve roads and highways to attract more foreign investment. Good roads moves inventories efficiently saving time and petroleum consumption. India has mobilized its road construction and development to attract more multinational companies investments. Even ordinary and independent contractors e.g. carpenters, plumbers, masons, farmers, etc. can benefit from this peso appreciation so they can update themselves with electric or power tools to increase their productivity and margins. Call centers can purchase more computers & communication devices. As long Juan dela Cruz spend the money on the improvement of profit margins then that is justified instead of buying IPOD, BMW, Abercrombies, perfumes, PS3, etc. Nonoy Ramos, (by email), Pennsylvania , Feb. 21, 2007 wwwwwwwwwwwwwwwwwwwwwwwwwwwwww Like in a stage play, each character has a certain task to perform. Everyone is important no matter what role he/she plays. Now that government is performing well, maybe it is time likeou and me to show what we got. Maybe we can tell people how to adjust, and show them how to win the situation, and not give in to defeat. Now that, the government is moving on the right track and has regained its strength and credibility; more foreign investments are coming in, dollar remittances are up, doubled with income from business outsourcing. There are so much money in circulation. For me, money is like fish that we should learn to catch, and not scare them away. Maybe, we can teach people how to fish with hook, line and sinker (individual- sariling kayod sariling sikap); use net (networking not pyramiding) or trawl (global business). Anyone will do, just keep the people working, If they don't have work, learn how to create one. When get started to work, don't talk too much. This reduces efficiency. Action speaks better than words. KUNG KAYA NG GOBEYERNO NA UMASENSO, AT NG IBANG TAO, KAYA NATING LAHAT, KAYA MO AT KAYA KO! KAYANG -MARAMI NA NGA ANG NAGTASAMPYON DI BA SAPAT NA PATUNAY YAN? KAYANG KAYA TALAGA NG PINOY UMASENSO. Rodolfo Cada, (by email), Feb. 21, 2007 wwwwwwwwwwwwwwwwwwwwwwwwwwwwww Tony, Thank you for sharing this article analysis with regards to the appreciation of the pesos. So we say that the appreciation is good in a way but also bad in another way. Overall, I think, the ordinary Filipino has the buying advantage especially with regards to low fuel prices. Then it has an effect of bringing goods to the market. A big disadvantage for those who depends on the "padala" from outside. It reduces the buying power of the money they get. It's complicated economics. For us here, we will just wait and see. Best regards, Agustin Bacalso, (by email), Feb. 21, 2007 wwwwwwwwwwwwwwwwwwwwwwwwwwwwwwww Kawawa talaga the hapless consumers in the Philippiness., Tony. Is it true that when Erap was deposed, the exchange rate was 37 pesos to the dollar and everybody was screaming that rate was simply outrageous? Angie Collas-Dean, (by email), Eugene OR, Feb. 21, 2007 MY REPLY. I do not recall exactly what the exchange rate was then. But we have been screaming all the way ever since the exchange rate fell from 2-to-1 to 3.95-to-one in the 1960s. wwwwwwwwwwwwwwwwwwwwwwwwwwwwwwww Dear Tony: You and I and many other Filipinos may not know how to seize the moment but GMA and her cohorts certainly do. They have laid the stage for a May 2007 victory while the opposition was napping. Already, COMELEC has said they won't be printing any additional ballots. (Kasi printed na) Besides, the ballots won't be needed anymore, since it's the CoC's that are important. (2004 experience.) Ominously, Sec. Puno left DILG to concentrate on KAMPI. (Ito ang bantayan!) The opposition can't win as they'll be shut out of the precincts. Only Kampi, Lakas, NPC and local warlord slates are contesting local posts (and opposition slates are absent in most areas). So the cheats will have a field day delivering votes to GMA's ticket! Seize the moment! Tito Osias, (by email), Feb. 22, 2007 wwwwwwwwwwwwwwwwwwwwwwwwwwwwwww Sir, You�re right. It�s only the importers and distributors of consumer products who now have it so good. The peso has appreciated by more than 10%, but I still have to see a reduction of 10% in the prices of directly imported goods, like electronic gadgets, appliances, imported chocolates, and the like. But then, could it be that there is an agreement between these importers and the government that the reduction in importation costs, instead of being passed to the consumers, will be taken by the government in the form of increased customs duties? Just asking. Thanks a lot and best regards, Bong L. Alba, (by email), Feb. 22, 2007 wwwwwwwwwwwwwwwwwwwwwwwwwwwwwww I am sure you are addressing this piece to those who do not know that what we really need is a stable, rather than just a strong Peso. Having said that, however, your piece is still misleading.... You failed to show that a strong Peso will lower our costs in fuel, which will lower our costs in virtually everything... Does the Inquirer reporter really need to ask PGMA what benefit the strong Peso to the ordinary people are? Or is that reporter really trying to pull the President into an argument which no one can win? It is really very easy to see the bad side of things, even when the country is having a bit of economic gain. It really does not need an Antonio C. Abaya to do that. Good Dude, (by email), Feb. 22, 2007 MY REPLY. Have you forgotten the Asian Financial Crisis of July 1997? The economies of Thailand , South Korea and the Philippines suffered a meltdown due largely to hot money or portfolio funds giving a false illusion of strength. .I�ll try to explain in a future article. wwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwww Tony I wanted to forward your article to my brother-in-law in Cebu , but I sent it back to you by mistake. Sorry. He likes your column but does not get the Standard, so I forward your articles to him. My comments on Spam are true. And the best place to get a Spam repast is Hawaii . They truly love it there. Jose Cabarrus, (by email), Feb. 22, 2007 wwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwww Dear Mr Abaya, I read your comments with some reservations. It's true that we are beset by an appreciating peso but no corresponding reduction in the cost of imported goods such as your favorite Spam. The economic indicators are pointing north but few of these translate to actual benefit for the poor masses down below, at least for now. As these unfold, GMA uses these indicators to trumpet the economic advances of our country, hence to "seize the moment". Sadly, you're analysis implies that whatever gains this government has achieved in the struggle to push our country into the winning circle have no benefit whatsoever to the ordinary masses. While I agree with the content of your assessments, I cannot agree with the logic of your complaint. Before the Israelites reached the promised land of Canaan , there were bitter intramurals among them and they seemed to wander aimlessly in the wilderness. The level of frustration was such that it cost the career of Moses because he could not muster enough leadership to bring the whole nation into the final push to reach the promised land. But we all know that it was not totally Moses' undoing but more from the hardness of the people. He could have also shouted "Let's seizethe moment, guys! We're just a few leagues from Canaan !". But the actual situation shows that although they have reached that point, there is actually no benefit to the poorest member of Israel 's tribes. And any journalist living during that time could have written the exactly the same article as yours, proclaiming that "all these translate to zero gains for the poor!". This logic is actually what you and similar writers of today are saying: "We're not getting there, because there is no tangible benefit for the poor masses!" But if we analyze the situation, many nations in Asia would like to trade places. (Such as, which nations? ACA) Why? because we have done the impossible: surviving the Asian crisis with negligible damage to the economy (You call a drop in GDP from 5.8% in 1996 to negative 0.6% in 1998 �negligible damage�? Where did you learn your economics? ACA) and now positioned with the best economic fundamentals any country can hope to establish to be able to reap the gains in the next foreseeable period of time. All that is lacking is to put our acts together and work out the nitty gritty of REALIZING the gains for ALL through hard work and entrepreneurial activities. Sure, we have a lot of iniquities in the society but that is part of the landscape to be navigated by each one, large or small, rich or poor. All we need is even less interference from the government! There is a saying: "you can lead the horse to the water but you cannot make him drink". We will have to do our own individual business to grab a share in the field. Nobody else can do that. But what are we hearing from writers like you? "There is nothing to be gained from all these!" What a logic. (I didn�t say �nothing can be gained from all these.� I wrote that the BSP was the biggest theoretical gainer if it were pay, say, $10 billion of our foreign debt, and the foreign fund managers the biggest actual gainers, from the peso�s appreciation. Certainly 8 million low-income families � about 56 of the population - lost a substantial part of their incomes and are therefore the biggest losers from the peso�s appreciation. Was this also �negligible damage?� What blindness! ACA) Ike Eslao, by email, Feb. 22, 2007 wwwwwwwwwwwwwwwwwwwwwwwwwwwwwwww Dear Antonio, Thanks for your prompt erudite reply. I am not being sarcastic here but I have three genuine questions. First, now that we are warned about the fund managers what is to be done? Second, if a country�s currency is floated does this not mean the economy is basically in the hands of the foreign speculators anyway? Third, is there a �Dummies Guide� to all this that I could lay my hands on? I am affected directly by the �good� economic news but I am not able to �Seize the moment!� because my small fixed income in British pounds and Australian dollars buys me less here in the Philippines now, which I am not suggesting should worry Filipinos, but I find it most confusing for whichever way the currency moves, to appreciate or depreciate, the economist-critics have a field day blaming the government. It seems to me it is a case of �Damned if you do! Damned if you don�t!� There is a saying that if you were able to assemble all the economists in the world in a single line they would never reach a conclusion. Hoping you can throw more light on the subject, Warm regards Doug Adam, (by email), Feb. 22, 2007 MY REPLY. As a general rule, if a currency appreciates because of robust exports, strong foreign reserves, bountiful remittances from OCWs, job-generating foreign direct investments, etc, it is a healthy appreciation. But if its appreciation is due to the entry of hot money or portfolio funds (which are invested merely in currency and stock market speculation and generate negligible employment), I would be wary and cautious, because hot money is volatile and can cause a stampede for the exit by other players if and when it is perceived or rumored to be leaving. In a stampede situation, as happened in July 1997, the exchange rate regime collapsed and thousands of companies in Thailand , South Korea and the Philippines went bankrupt when they could not pay or service their dollar-denominated loans, throwing millions of people out of work. How to prevent a stampede? In 1997, China and Malaysia were not caught in the stampede because their currencies were/are not fully convertible. This means that after investors changed their investment dollars into yuan or ringgit, they were not free to change them back into dollars at a moment�s notice, but had to wait x-months or pay a penalty. This discouraged speculative investments. But it is frowned upon by the IMF and the credit rating agencies. So it takes a lot of guts and independence of mind for a country�s leaders and financial managers to adopt these safeguards. As in 1997, the Philippines is attracting more speculative money than direct foreign investments, so it is vulnerable to another stampede, another meltdown. wwwwwwwwwwwwwwwwwwwwwwwwwwwwwwww If GMA really wants to satisfy poor consumers, she must revert to the old minimum fare of 5.50 for the jeepneys. Almost everybody commutes, and transportation is a direct cost, be it for personal or for business purposes. If this fare is lowered, tsaka natin masasabi na mararamdaman ng tao ang economic optimism of this government. Although what I am saying may not run directly with your topic, my point is, the government should now think of the lowering the fares. Keep sending! Mike Delgado, (by email), Feb. 22, 2007 wwwwwwwwwwwwwwwwwwwwwwwwwwwwwwww Hi Tony, I am one of the many who survive because of hard-earned foreign currency retirement pension. You can imagine how much sense of loss I feel every time I go to the bank to exchange my benefits into pesos. You have the right mathematics on this point. I am also of the same mind as the Inquirer reporter who asked GMA about how all this hullabaloo on economic progress has trickled down to the majority of our population. I watch with bated breath, the reduction of gasoline/diesel fuel by P0.50 per liter, the P0.50 per kilo in LPG, and the jeepney fare, also of the tiresome P0.50. What amazes me is why in the world electric power is getting more expensive? Our electricity is mainly oil-fueled. Since oil has gone down as reflected in the reduction of LPG prices, the reduction of fuel at the gas pumps, and since the only other means of electric power generation is done by hydroelectric plants, why is the price of electricity going up? Our manufacturing industries are powered by electricity, mainly. Their production costs will go up because of higher power costs. Prices of imported raw materials do not necessarily go down in the books of accounts of manufacturers for these manufacturers still keep their selling prices as long as the product is saleable at current levels. The manufacturers only change their sales prices when there is an actual increase in the costs of raw materials. So the net result is not felt by the buying masses. Our economic history will tell you that once the price of a commodity goes up, rarely does that commodity sell at lower prices even if its costs go down. Pagtaas, wala nang baba. What GMA is blowing her horn about is largely touching on the surface of things, not the substance of the effects. I agree with you in all respects. Edmundo Ledesma, (by email), Feb. 22, 2007 wwwwwwwwwwwwwwwwwwwwwwwwwwwwwww Great and balanced article! Though you did it in a funny or sarcastic way, it's still worth to write it... If we were only 20 million Filipinos, then we can really seize and savor the moment/s. At least, we have moment/s to seize. Do we have one during Erap's time? Cory's time? Ramos' time? Chinese people are diligent, disciplined and smart. We should learn from them. They came to the Philippines as refugees and some of them are now billionaires. Can't beat those "true-to-life" stories! Something to be inspired by.. China and the Philippines are doing well economically. China has become the muscular dragon (trying to really fly high before spitting its fire:) while the Philippines has become the muscular puppy who barks (trying to become a dog and then, tiger) economically. That's their "moving forward" similarities... but maintaining China 's weak currency helps them mostly (remember, they're smart businessmen/women) while Philippines badly needs the strongest peso as early as possible. China is the lender or loan shark while Philippines is the borrower or bait (who is tired but still keeps on feeding the sharks to survive). That's the difference. You know what I mean... Thanks, idol! LF, (by email), Feb 23, 2007 wwwwwwwwwwwwwwwwwwwwwwwwwwwwww Dear Tony, A quick note to congratulate you on your Carpe Diem article. It was time someone told the empress that she had no clothes! Time also for the Filipino people to understand where she is leading this country and what she is doing to our people: celebrating a development that is tragically transferring massive amounts of pesos from our poor OFWs to favor the oil companies, the foreign drug dealers, and all the importers of the luxury goods that cater to the gentry Congratulations again . Ting (Sixto) Roxas, (by email), Feb.23, 2007 wwwwwwwwwwwwwwwwwwwwwwwwwwwwww Tony, Another of your straight-from-the-shoulder, forthright and realistic articles. The Philippine exports sector, an area that most needs attention, is adversely affected. Your shots land in the bulls eye, and I hope you get properly read, understood and appreciated by those straddling the fence. I have even seen those who once seemed committed to Communism face reality, when they see what happens when the Manifesto is applied in practice. On another subject, I finally got the CD back this morning, that I said I would send you, which has to do with the 9/11 TT Tragedy. I lent it to a friend who then lent it to another friend, etc. I would like to have your thoughts on it. I hope to have it in the mail tomorrow. Jack Sherman, (by email), Feb 23, 2007 wwwwwwwwwwwwwwwwwwwwwwwwwwwwww Dear Ike and ACA, You guys provide me with economics education I didn't get from school. Is this good or bad? It depends. It is good if I benefit from it. It is bad when I don't, even if what is taught is true or quite sound. Am I better off after the lecture, the same or worse off? Are we better off now from a year ago? two years ago? or from the start of GMA's reign? The appreciation of the peso didn't make ACA's Spam price go down. Why? Perhaps the businessman wants to recover his losses during slack times, or may even be building a buffer reserve. His peso may now buy more but did that make him reduce the price of Spam? If the Spam is still being bought at the old price, why should he reduce its price? Besides there is no guarantee that by reducing the price in direct proportion to the lowered acquisition price, additional demand would result into greater profits. So, maybe we are better off by letting the competition stimulate the downward trend. What is to be gained by the current positive indicators paraded proudly by Gloria? Well, it is what are being projected as "future gains." But will they come forth? Positive indicators used to be accurate guides. But economics today is not as easy as it was yesterday. If indicators are true guides then we would not have crisis after crisis. The games that businessmen play today hardly conform to trendy rules. In fact, the smart businessman will hide his winning moves from his competitors. Thus, with so many things hidden how can one make reasonable projections from "known indicators" and be deemed "credible?" Economics is tough; it does not lend itself to the precise rules of mathematics. But keep on with the teaching, guys. I do learn much from you. Ogie Reyes, (by email), Feb 24, 2007 wwwwwwwwwwwwwwwwwwwwwwwwwwwww Hi! Tony Your gift of prose explains the complexities of our macroeconomic situation like it were dinner chat. In the 60s or the 70s, I'm not so sure anymore, a group of Latin American Economists has tried to examine why positive movements in macroeconomic variables do not benefit the poor in underdeveloped countries as much as in more developed countries. Their findings have been revealing. The poor in underdeveloped economies lack the capacity to respond to opportunities created by a favorable economic situation. They are unskilled and cannot be employed despite an increase in demand for labor. They have no access to technology, capital, and natural resources to serve increasing consumption. This is why the price of your spam hasn't gone down. Not too many people in this country can easily open a letter of credit for the importation of the commodity despite the opportunities created by the strengthening peso. Otherwise, the market would've been flooded with imported spam bringing prices down. Moreover, our economy is held hostage by cartels and oligopolies. A local trader here in Davao City is now battling the influence of the cement cartel on government for permission to import cheap cement from China . Cheap cement would spur the construction industry which has a deep multiplier effect. Should the peso weaken we shouldn't expect a dramatic rise in tourist arrival. The airline oligopoly would make sure that air fares would be high enough to maximize profit and never mind if tourists don't come. The tourism industry also has a deep multiplier effect on the economy. We can go on to the shipping oligopoly, the banking oligopoly, and so on and so forth but I think the point has been made. We've a government that's captive to narrow interests and unable to serve the interest of the greater number of Filipinos. This is why our country is going down while all the rest in Southeast Asia are on the way up. Other countries in the region don't seem have the same problem of a greedy economic and political elite conniving to ensure that public policy serves only their interests. All of Southeast Asia has always been ruled by an elite class of industrialists and politicians. But they've been wise enough to spread the money around and keep everybody contented with their fair share. Former Prime Minister Thaksin of Thailand has tried to take it all and has been promptly booted out. The key really is good governance to make things right. But looking at the political landscape in this election year, its seems to be more elusive than ever. I surely hope that our democratic space can hold out just a little longer for a more credible political force to emerge and correct things. Otherwise, everything may just explode in our faces with the extent of poverty, misery, and unrest now prevailing in our country. Regards, Gico Dayanghirang, (by email), Davao City , Feb. 25, 2007 wwwwwwwwwwwwwwwwwwwwwwwwwwwwwww (Unedited) I am not economist but peso appreciate will have more benefits than depreciation not as you are painting. First, the imported oil will be cheaper, this will prevent inflation, and so far we have record low inflation as a result. Then, if there is low inflation, our workers will directly benefits from this because of stable price of basic commodities. Also, demand for salary increase will not be very strong compared if inflation is very high. So, foreign investments will not be turn off from salary increases. Presently, Vietnam have minimum wage of US$1.8 compared that to our US$7 and you are still wondering why investment keep pouring in Vietnam. Second, I am OFW and although my earning went down because of peso appreciation, I am not complaining because the electricity, cooking gas, car gas, etc are getting lower or not increasing to the least. That�s neutralizing my lost in exchange rate. And now I am planning to invest in Subic or Cebu because I can see many investors are putting investments there which mean many people will have jobs and therefore will have money to buy. Third, peso appreciate means the labor content of export product in terms of dollars is lesser, the electric rate, the oil content, etc,,, overhead cost is lower, compensating for lower export price. Let us admit we can no longer compete against china or Vietnam and lest just concentrate on what we potentials like call centers, high-tech electronics, tourism, ofw, others Alex Yalung, (by email), Taiwan, Feb. 25, 2007 OOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOO |