Transport Strike Paralyzes RP

PISTON President George San Pedro said that today's transport strike paralyzed 80 to 90% of all transport operations from Luzon to Mindanao. The Bicol region has been rendered 90% paralyzed while other areas report between 60 to 90% paralysis.

As a reaction, small oil players reportedly planned to slash their pump prices by as much as 5 pesos per liter. This is still lower than the 8 pesos they're supposed to give us, based on calculations by the Consumer Oil Price Watch and the NEDA.

There's unfortunate news however. The regional president of PISTON-Condor in the Bicol region was shot and killed allegedly by military agents. Joel Ascudia was shot in broad daylight this morning. He sustained two bullet wounds in the back. Assassins riding in a motorcycle shot Ascudia.

11 million Pinoys to lose their jobs in 1st Quarter 2009

Estimates made by the Ibon Foundation show that eleven million Filipino workers will probably lose their jobs this year. Add this to the 10.7million Filipinos walking like ghosts and have lost their shirts last year. That's a whooping 23 million jobless Pinoys needing government assistance.

Labor groups are now worried that this figure might probably increase due to reports that export companies are closing shop one after the other. Some banks have also reported quarter losses. Manufacturing firms, particularly garments factories have cut down on production. Many service establishments have also intimated a desire to temporarily decrease the number of their workers due to the tremendous financial stresses they are experiencing.

Question---is the economy able and strong enough to absorb this? A higher unemployment rate will simply decrease the attraction of the Philippines as an investment site since it shows how weak economic performance is. Likewise, how will these multitudes survive the onslaught of a full global recession? Singapore, for example, has already entered the worst recession in decades and they are really clueless as to how to support their citizens. Japan, China and Korea are now on the verge of economic collapse and are expected to declare recessions.

Question number 2---how strong or weak is the economy? Latest figures from the National Economic Development Authority (NEDA) shows that first quarter economic figures in 2009 could reach a negative or at best, one percent growth. So, contrary to government pronouncements, the Philippine economy is actually in worse shape. Arroyo has been bragging that we can survive this global recession but in truth, and in fact, we are now losing the game and at an early stage at that!

A stimulus package is being prepared but many sectors worry that this plan is just a pre-election budget meant to buttress local government and grassroots support for the administration bet come 2010. The economy really needs a stimulus plan. But the problem right now is even this stimulus plan is being politicized by the very same people we repose trust on and we elected as our government administrators.

These political maneuverings in the midst of a devastating economic crisis could really create a solid groundswell of dissent that could explode before the faces of Mrs. Arroyo and her gang of thieves this year.

Rural banks are vulnerable in an RP sub-prime crisis

Gloria pictured a stable financial environment for the Philippines yesterday (there was a Philippine economic briefing yesterday at Shangri-La Makati), even saying that the government is on top of the situation. Bangko Sentral ng Pilipinas backed her up, saying that we have enough reserves to help ailing banks and financial institutions in the event of a full-blown financial crisis. Former senatoriable and now NEDA Chief Ralph Recto was quick on his feet, saying that the reason why the government remains confident is the fact that it has collected billions of billions of revenue from VAT, which is being cursed right now by consumers.

What we failed to recognize is this---Recto failed to say that we are just experiencing the beginning of woes, so to speak, and we're still not out of the woods, no, not yet. He failed to say that the economic slowdown would affect government revenues and yes, even the dollar reserves. Up to what extent will government extend its hand to help ailing banks, insurance firms and financial institutions? 

A slowdown would surely affect VAT collections and taxes. Firms have to raise their commodities prices more to cope up but what will the impact be for the people? Hey, consumers have been experiencing the effects of the global financial crisis since the start of the year and it's not true to say that we are really insulated.

What I fear the most are the rural banks. Rural banks have billions of pesos worth of mortgages that are still in their books. How would they possibly free these mortgages is anybody's guess at this point. The sheer enormity of these mortgages could eventually paralyze the entire rural economy and would definitely affect even the national economy.

The BSP should look into the rural banking sector and try to implement measures that would keep these banks afloat. Bear in mind that thousands of home mortgages have been absorbed by these rural banks which eventually would be affected by an economic slowdown. If these rural banks fail to transform these mortgages into financial instruments, what would happen to our economy? It would surely impact on the entire economic superstructure!

That explains why Speaker Nograles is really hell-bent on allowing foreigners to buy Philippine real estate because the Speaker knows that we have a ticking time bomb, what with these billions pesos worth of bad mortgage accounts being mismanaged by some rural banks.

The BSP should look into this immediately and avert a possible crisis in the provinces. Billions worth of investments are exposed and it would not be fair if government would absorb these losses via the PDIC (Philippine Deposit Insurance Corporation).

Tipping Point

Columnist Willy Esposo wrote yesterday that Lozada could be the tipping point that would lead to the ouster of Arroyo. Basing on the testimony of Lozada before the Senate last Friday, it could be. Yet, the most crucial moments would be the days after today when the prime personalities are expected to testify before the Senate.

Malacanan has allowed its officials to testify before the Senate today, hoping to cast aspersions to the integrity of the star witness. Palace strategists want to neutralize the effects or implications of Lozada's testimony. Obviously, they would try to manage this through the media. How would they do it?

1. They would try to insulate the First Family from any links so to speak, with the ZTE issue. DOTC officials will try to justify the project and refute the overpricing charge of Lozada. It would be a showdown between Lozada and DOTC Undersecretary Formoso. Formoso succeeded in neutralizing Joey de Venecia with his so-called "technical know-how". However, I think, this time, Formoso would be hard pressed in justifying the overprice.

IN their press conference at the palace, Formoso admitted that, indeed, the DOTC jacked up the price because they said, the project should cover the entire country. Bull. This statement admits that DOTC has been remiss in totally studying the project. Imagine, agreeing on a 200 million dollar plus project just to cover a miniscule segment of government? Likewise, the press con attempts to delimit the importance of NEDA in this entire thing by saying that it was the DOTC's function to review the project, not NEDA. It marks the halmark of a spin which I believe, the public would definitely not accept.

Observations

Anti-Arroyo groups should create sub-stories so to speak to expand this issue. Time is not on their side. Malacanang's interest meanwhile, is to end this issue expeditiously by massaging the media. I am very sure that Malacanan has unleashed its "dogs of war" so to speak, which includes former secretary Mike Defensor to take care of the media. They would be successful in some dailies, I know. However, they can't prevent radio stations and TV channels from broadcasting or airing this.

Both would be using time as their ally. Anti-Arroyo groups should unleash their forces in a calibrated manner to cause maximum damage against this administration. This is a make-or-break for them.

Same as Arroyo's. Police would be hard-pressed justifying the "abduction" of Lozada. Malacanang's decision to allow officials to testify could prove deleterious to their interests. Why so? Because this is not the time for them to allow their enemies any room to maneuver against them. Any space given to their detractors in the guise of transparency could spell the start of the end of this administration.

Slower Economy, Higher Prices in 2008 and the Sumilao Model

NEDA has just raised the bar of economic growth for the Philippines in 2008: from 6.1 to 6.7%. Compared this year, this is lower than the nearly 7% growth the economy achieved. NEDA's projection is still higher than the projected 6% growth of the World Bank, the International Monetary Fund and the Asian Development Bank.

Whether its 6% or 7%, there's one undeniable fact--the growth rate of the Philippines is catching up with its neighbours. However, there's a catch--slower growth, higher prices of commodities. And government is helpless to stem its rise.

It may be good news for foreign and local investors. It's surely bad news for 89 million Filipinos. Without a rise in pay, Filipinos will surely find 2008 as one of the hardest, if not the hardest year to date.

Government should form a task force that would address the issues Filipinos will confront in 2008. For example, with the rising strength of the peso, how many hundreds of thousands of Filipinos will join the under and unemployed? Will our export industries also catch up with their strong foreign counterparts? What safety nets would government setup to protect the poor?

The World Bank says agriculture is the best bet of the Philippines in 2008. Agriculture Secretary Arthur Yap should now plan ahead to make agriculture a prime engine for growth. The rise in agriculture production in 2007 is still not competitive because there's still a gap or a shortage between local and foreign demands. Food security levels are still not stable. Chinese agricultural products continue to flood the market, yes, threatening local agri companies. These and some other threats continue to affect millions of rural-based Filipinos, making them a fertile ground of insurgencies and terrorism.

Net of discussion

The agricultural sector is the poorest sector of Filipino society. Almost 65% of Filipinos still get their livelihood from the fatness of the land. Without a safety net, government will surely have their hands full containing pockets of resistance and dissent from the countrysides. It is not surprising that millions of Filipinos are dying due to hunger in the rural areas precisely because of the disparity in their incomes with that of the commodity prices. A stronger economy in the case of the Philippines does not mean a better life for the Filipino. In fact, we are the only country who continues to grow economically but slowly stagnate because the people who's supposed to benefit from these economic gains continue to be in the end of the bargain. Such inequality will eventually "catch up" with us in a form of a revolution.