PHILIPPINE ECONOMY 46th LARGEST WORLDWIDE, CAN GO UP SOME MORE

Erle Frayne D. Argonza

Let me continue to tackle the matter of glad tidings for my beloved Philippines. I feel the exuberance and optimism of fellow East Asians who wish to share the joy of the growing economies we have here with the rest of the world.

For this note, I will focus on the Philippine’s national income, an update particularly of the Gross Domestic Product or GDP and the Gross National Product or GNP. The Philippines is one of ten (10) members of the Association of Southeast Asian Nations or ASEAN, a grouping of cooperating nations that will integrate economically in 2015. PH’s growth pattern contributes in no small measures to ASEAN’s growing economic might.

In 2009 PH ended the year with a GDP of around PH P7.67 Trillions. Nominally, that translated to around U.S. $186 Billions. At that time, Net Factor Income from Abroad or NFIA, derived largely from overseas remittances and offshore operations, was around$17 Billions. GNP, which adds up the GDP and NFIA, totaled $203 Billions more or less for that year.

2009 was quite a bad year, as the Great Recession of the Northern economies affected PH by a lowering of the merchandise exports. GDP grew so minimally at a mere 1.5% that analysts thought it couldn’t rebound soon enough. The forecast for 2010 was around 5-6% growth range, already considered a very optimistic forecast.

2010 proved to be a relatively bountiful year for PH, as it grew 7.5% during the first three (3) quarters alone. Election spending pumped up the growth rate to a certain extent, while exports and imports grew up at fat sums as the Northern economies were able to re-absorb higher volumes of merchandise imports. The yearend growth could be at 7% more or less.

A figure of $13 Billion is therefore expectedly added to the old 2009 GDP, to yield a 2010 GDP figure of U.S.$199 Billions. NFIA, based on overseas remittances, ends up at $18 Billions, so the GNP for 2010 stands at a least figure of $ $217 Billions of nominal income.

Manufacturing and services are proving to be the most consistent growth drivers of PH economy on the production side. Agriculture turns out to have a weak performance carried over yet from the 2009 incidence of the strong typhoons Ondoy and Pepeng.

With infrastructures and energy gearing up for larger projects, the growth will be sustained at a very positive level, ranging in the area of 6-7% for 2011. Exports will be sustained at upscale rate, and so will be imports. So we expect excitement in PH growth for 2011. We just hope that agriculture will be able to catch up and breach the 5% growth target at least, then sustain it at that level for the long term.

Consumption-wise, domestic consumption has gone up at an appreciable trend for 2010. Overseas remittances continued to sustain driving up domestic consumption. Private consumption was at all-time high, which contributed to heated retail sales of past 10% and housing & realty continuing its dynamic trend. Government consumption is the one that needs catching up here, a sluggish pattern that is a carry over of past years’ trends yet.

Accordingly, PH garnered the 46^th largest economy out of the 200+ nations worldwide in terms of nominal income. At that position, it is clear that PH is among the middle income countries, or that it is way out of the old ‘poor country’ status it had till the years 2002-‘03 when the middle income status was attained.

As the Northern economies are going through stagnation, it is best that PH should target higher growth rates and attain them decisively to be able to move up the ladder of prosperity. In a decade’s time, PH can facilely surpass the performance of European countries one after the other, till it can reach the level of Italy’s or France’s economy as early as 2025.

I am optimistic that in the long run, PH can breach the No. 30 largest economy worldwide. The momentum of growth and prosperity is already there, and a large labor force is proving great as harbinger of wealth production. A large population, with a rising middle class, is also contributing immensely to sustaining consumption in the long run.

As early as 2030, PH can be on the Top 25 economies and maybe even better. PH economy should better double every seven (7) years or so for a straight twenty-one (21) years to be able to make it to the top. When it does so, ASEAN’s aggregate income will surpass Japan’s and possibly the USA’s and EU’s. Let’s all look forward to seeing that day come in the future.

[Philippines, 12 February 2011]

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EUROPE & AMERICA ON DOWNWARD SLIDE TO 3RD WORLD ECONOMIES

Erle Frayne D. Argonza

Magandang gabi! Good evening!

It’s dusk time as I write, and this dusk at a time of intensifying monsoon rains seems to bode images of a grim future for the West at large. The European Union or EU members and the USA, the gigantic pillars of the global economy, are particularly in dire straits as they have entered the zone of flat growth and perpetual recession.

As already tackled by me in diverse articles, the East is surging forward bringing life to the global economy as a whole. In contrast, the West is spiraling downwards, and the strategies their stakeholders are putting into place to arrest the downslide are at best palliative. As the East continues to surge upward, the West continues to stagnate and decay.

After World War II, both Europe and America embarked on massive infrastructures and heated industrialization that saw both economies dominating the global economy’s wealth production. The result of that was an OECD producing 60% of Gross World Product or GWP for some decades (today that’s down to 40% of GWP and will still go down).

That was the situation back then. By the 1990s, the situation had been badly reversed as a result of liberal economic policies instituted in the previous decade (80s). The rise of a ‘virtual economy’ dominated by predatory finance was instrumental in the West’s massive de-industrialization, decay of relatively unattended infrastructures, decline in science & technology research, and neglect of the transport sector (only Japan & Germany were actively pursuing maglev railways).

By the early 1990s yet, certain experts among economists and sociologists in America began echoing alarming notes about the possible downslide of the USA into a 3^rd world country should the economic decay, such as that of relatively unattended infrastructures,  be allowed to continue till past 2010s.

In the late 1990s, my own circle of political economists in Manila (Sunday Kapihan/Independent Review) saw such a possibility ourselves as we consolidated the data made available to us thanks to the internet. By 1998 all fellows of our circle were convinced of the catastrophic direction that the USA and Europe were plunging themselves into, which could begin with a depression past 2005 and a thirdworldization by 2010s (both have been hit by recession this decade as a matter of fact).

When Katrina struck the USA and when those floods struck Europe just a few years back, and the same free market policies stubbornly remained in place, I knew the downslide would turn out to be irreversible. The fate of New Orleans, with its residents lining up for food akin to a depressed city, revealed an appallingly decayed 3^rd world city inside the USA which, to my mind, is but a fractional tip of a gigantic iceberg that are America’s decaying cities on the way to 3^rd world infamy.

If, for instance, just about 55% of the top 700 cities of the USA will be so badly decayed by 2015 and be declared as 3^rd world or ‘developing cities’, then we know more or less that America had catastrophically seen its worst state. With 97% of U.S. population living in cities (urban), likewise will the whole of the USA be declared as a ‘developing economy’ as early as 2015.

That is, again, if the destructive ‘virtual economy’ policies will not be taken down and reversed sweepingly. As I’ve declared in previous articles before (when Obama was still campaigning for the presidency), America must quickly return to a New Deal-type policy regime: interventionist, with great stress on revivifying infrastructures, revitalizing transport R&D (railways, shipping, etc), upscaling science & technology investments (including rockets), returning heavy industries (revive steel and many dead manufactures), and ensuring agricultural productivity.

Europe is not far behind such near-catastrophic downslide of the USA, just to remind our friends in Europe and the globe. Decisively institute interventionist policies in the continent, regulate the financial-banking sectors (criminalize predatory finance), and revivify social policy that were hallmarks of a once strong and mighty European economy.

And there’s no better time to act then now. Failure to act soon, by stubbornly instituting the palliatives (e.g. bailing out failing big banks, semi-regulating stock exchange), will be the best sure-fire formula to see a rapid thirdworldization of the West.

Before long, some messianic mad leaders in both continents would be drum-beating their being “stubbed behind the back” and generate  new Hitlers and Bonapartes in their backyards. Act now, Western peoples, to avoid this eventuality from ever taking place at all.

[Philippines, 21 July 2010]

[See: IKONOKLAST: http://erleargonza.blogspot.com,

UNLADTAU: https://unladtau.wordpress.com,

COSMICBUHAY: http://cosmicbuhay.blogspot.com,

BRIGHTWORLD: http://erlefraynebrightworld.wordpress.com, ARTBLOG: http://erleargonza.wordpress.com,

ARGONZAPOEM: http://argonzapoem.blogspot.com]

LUISITA ESTATE, HACIENDAS: ANACHRONISM IN POST-INDUSTRIALIZING PHILIPPINES

Erle Frayne D. Argonza

Magandang araw! Good day!

It’s the 1^st of July, the first day of official reporting by the newly elected political leaders of the country led by President Benigno ‘Noynoy’ Aquino III. Riding astride the air of optimism induced by the new leadership, let me say more notes then about my homeland.

Let me shift to landlordism as this phenomenon seems to have remained unscathed by the ‘scorched earth’ flames of modernization and post-industrial growth. Our newly elected president here, ‘Noynoy’ Aquino, is a scion of the oligarchic family of Cojuancos and is an heir to the 11,000-hectare Luisita Estate in Tarlac province.

I still recall that in the late 1990s, as a graduate student of development studies in De La Salle University-Manila, I underwent the course on constitutionalism and development. I tasked myself to review the constitutions of thirty-five (35) countries, with the aim of unearthing and extracting the theme of agrarian reform from them.

To my amazement, most of the countries I researched on, including Taiwan, Korea, and many developing states, clearly emblazoned in their national charter the theme of agrarian reform. The impeccable intention was to declare land reform as a determinative development policy. The landlords should be enticed to divest from their rural estates and channel their new investments to birthing strategic industries.

I did write a paper on the topic, which my professor, Dr. Wilfrido Villacorta (former undersecretary of ASEAN, delegate to the 1986 Constitutional Convention), appreciated very well. The research also enlightened me more about the urgency of decisively implementing agrarian reform in the Philippines that barely made it to the passing mark of successful land reform programs.

Almost a quarter of a century after the new charter was signed and ratified by our citizens, and after the consequent legislation of the Comprehensive Agrarian Reform Law, many large feudal estates still abound. They seem to remain untouched by the law, as if they are autonomous mini-states in a nation that is rapidly urbanizing along mixed industrial and service economy growth trajectory.

Let’s take the case of the Luisita estate. In 2006 yet, the Agrarian Reform department decided that a total of 6,453 of Luisita should be apportioned to the farmworkers. Unfortunately, the Supreme Court blocked the implementation of the decision as it issued a Temporary Restraining Order or TRO that stopped the implementation. A TRO should be in effect only for a maximum of 30 days, yet years have elapsed and it is still in place.

Other large estates are similarly situated as Luisita. For instance, there are the Yulo estate in Laguna and the Pedro Roxas estate in Batangas. I still recall that way back in 1998, I was among consultants who helped agrarian reform beneficiaries of a 500-hectare piece of Roxas estate (out of total 30,000 hectares) in their capacity-building and productivity boosting. The same beneficiaries asked me if I knew anybody from the Agoncillo clan that owned a total of 30,000 hectares of estates…

There are more such huge estates to count. And truly, I am overwhelmed by their gargantuan sizes that are enough to build huge mega-cities such as Singapore or Manila. I could almost puke at the mere mention of their names, and puke much more when I learn about their vast sizes and the slave-driving management styles of their owners that have led to appalling living conditions for the farmworkers.

RP’s population was 66% urban and 34% rural as of end of 2009. Urban population is moving up by 2% every year, while rural population is moving down by the same figure. By 2016, the next presidential election year, urban population will already be at least 80% urban and rural population down to 20%. What are haciendas for in an urban Philippines, one may ask.

Furthermore, RP’s labor force is now past 50% service sector and 15% industrial sector, with barely 34% left to fend for our farms and fisheries. Agriculture now contributes to merely 15% of the GDP, while services comprises a whopping 60% or so (the rest is industries). Tourism, which forms past 10% of GDP today, will most likely surpass agriculture as a contributor to national income by 2016.

Now that brings us back to the question: what are feudal estates doing in an urban-to-suburban Philippines with a rapidly post-industrializing economy? Strange anachronism! All we need to do is follow the footsteps of Japan, Korea, Taiwan, and China to realize that such estates must be released from feudal yokes so as to carve out a win-win growth path between the small planters and their former overlords-turned-entrepreneurs.

When I registered my vote for the ratification of the charter in 1986, I already made up my mind to see that all such estates be transformed to high productivity enclaves beginning with their subjection to the reform program. All the landlords should quickly divest from such landholdings and move their investments in industries and services.

I stand pat on that decision, and will be on standby to help out those agrarian beneficiaries who seek professional help for improving their farm production and quality of life. And I welcome a Philippines that will someday move towards the space age, thanks for a willful departure from an anachronistic feudalism of past dark ages.

[Philippines, 01 July 2010]

[See: IKONOKLAST: http://erleargonza.blogspot.com,

UNLADTAU: https://unladtau.wordpress.com,

COSMICBUHAY: http://cosmicbuhay.blogspot.com,

BRIGHTWORLD: http://erlefraynebrightworld.wordpress.com, ARTBLOG: http://erleargonza.wordpress.com,

ARGONZAPOEM: http://argonzapoem.blogspot.com]

ISLAMIC BANKING RECONSTRUCTED

Erle Frayne D. Argonza

 Islamic banking is part of the totality of ‘best practices’ that originated from Asia. Being among the strong proponents of the ‘Asian way’ as the way out of our capitalist economic malaise and crises of our times, I’d share my own notes of hallelujah to Islamic banking.

I am among those development practitioners and social scientists who propose that let’s all undertake a review of Islamic banking. This banking practice is based on zero-interest banking. The challenge is for us to reconstruct the practice to suit the current context of  information society. 

Usury is among the proscriptions of spiritual masters and sages of the East. It is within the context of a non-usurious finance, embedded in spiritually-guided livelihood practices, that Islamic banking emerged in Western Asia. 

Zero-interest financing contributed immensely to accumulating wealth for the Asiatic polities that engaged in them in antiquity. The same wealth was utilized for social services, ambitious projects, building cities, and advancing the arts, sciences, and philosophy. 

Usury is alien to Asia, even as its massive introduction to the continent brought untold miseries to the marginal folks. It had also tied up Asian economies in debt peonage to the financial cartels of the West and their local banking/financial partners. 

Before the Asian economies, notably the emerging markets, will go down the drain and lose their growth gains due to usury and predatory finance, their own stakeholders should rethink their borrowed paradigms. They better review those golden Asiatic economic principles taught by spiritual masters, and make ways to re-carve their financial systems following such principles. 

Asia is indubitably the driver of the global economy today. It is time for Asia to set the trends by beginning with new financial paradigm such as the one offered by Islamic banking. 

[Philippines, 07 June 2010] 

[See: IKONOKLAST: http://erleargonza.blogspot.com,

UNLADTAU: https://unladtau.wordpress.com,

COSMICBUHAY: http://cosmicbuhay.blogspot.com,

BRIGHTWORLD: http://erlefraynebrightworld.wordpress.com,

ARTBLOG: http://erleargonza.wordpress.com,

ARGONZAPOEM: http://argonzapoem.blogspot.com]

RE-ECHOING BASIC NEEDS

 

Erle Frayne D. Argonza

 

[Writ 22 March 2008, Quezon City, MetroManila]

 

“Go back to basic needs,” I declared in the same article on New Nationalism.

 

Sometime back, the ‘basic needs’ framework rang strong bells in the development field as a potent framework for development. Having started with the defunct Ministry of Human Settlements in 1981 as a community development specialist, I still recall then how brilliant and exquisitely crafted was this Ministry’s adoption of the ‘basic needs’ framework as its guiding light.

 

“Higit sa lahat, Tao!” is the core premise of the Ministry’s development paradigm. Roughly, this translates as “man precedes everything else.” Meaning, man should be at the core of all development efforts, and not the objects of a synthetic (infrastructures, industries) or physical nature (raw materials, livestock, plants).

 

Till these days, the powerful Ministry premise had stuck with me. At that time too, the same Ministry already recognized ‘ecological balance’ as among the 11 Basic Needs of Man, and organized ‘ecology brigades’ in advancement of this contention. That was a time when environmentalism wasn’t even born in the country but was just being planted.

 

It need not be overstressed that meeting the basic needs of peoples is a fundamental yardstick for addressing development problems leading to further cooperation and peace among diverse communities. I therefore find it still a potent discourse to re-echo the ‘basic needs’ premise.

 

The excerpts from the article are entirely quoted below.

 

Go back to basic needs.

 

“Spend for your needs but save as much as you can!” would be an apt idiom that could  encapsulate the need to build up national savings within the context of an increasingly consumer-driven economy. It is argued that moderate consumption would be a most fitting behavior in today’s context, while under-consumption and over-consumption are out as they could burn us all out in the process. Consumption saved the day for us in the aftermath of the Asian crisis in 1997, so there is no reason to be morally repulsive about consumerism—provided that it should be a moderated consumerism. Low consumerism brings us back to export-driven strategies, our aggregated wealth production subjected to the vagaries of external markets that are beyond our control; high consumerism, contributing further to high debt levels, as the credit card culture entice people to acquire more articles of consumption through debts, perennially driving our economy to ‘bubble bursts’.

 

The emerging situation should have taught our market players the appropriate lessons at this time. The era of omnipresent and omnipotent markets—for goods of relatively ageless utility, stored in large inventories—is now a foregone era. What we have now is fragmented markets (chaos economics explains this well; see Tom Peters’ works), so the adjustment would be in the form of market niches. Market players should veer away from storing large inventories of a broad array of products, as obsolescence and changing consumer taste undermine the profit-gaining side of such a practice. Rather, they should be sensitive to emerging demands, and customize services and/or tangible goods based on such demands. We Filipinos particularly change taste so often, “madaling magsawa” as we  say it in the vernacular. Which means that fixed products, based on fixed ideas, are simply out of context and out-of-date, and must be reformulated towards more flexible product mixes matrixed with constantly  emerging ideas.

 

On a macro-scale, there is the continuing need to ensure ‘food security’ and its expression in other sectors as well. We should continue to be sensitive to the needs of the larger economy, such as the need for capital goods. We should design ‘vital & strategic commodity security’ frameworks and policies through a combination of domestic production of such goods as well as importation strategies. The continuing absence of strategic industries such as integrated steel could prove degenerative for development efforts such as it has done to our country, while completely shutting us off the international markets for some other goods could likewise be deleterious in the long run since domestic producers would be exercising rent-seeking, pricing articles way beyond five hundred percent (500%) of their opportunity costs as amply demonstrated by industrial chemicals (before the country began importing from China). As current experiments in grain & livestock management show, with appreciable success, the strategy should be to combine domestically produced goods with imported articles, the proper mix of which should be the subject of continuing eco-scanning and constant studies. In the end, all of our individual, community and national needs will be met, building stability and security amid a ‘chaotic’ or turbulent global condition.