Ausan, Delmarie M.

July 20, 2018

BSA-1 Rating:

Individual Task #2

Economic doldrums? Not quite

Cielito F. Habito

President Duterte reportedly told an audience in Davao City last Friday—

participants in the National Information and Communications Technology

Summit—that “now, the economy is in the doldrums… Interest rates are picking

up, are getting high so it destroys the existing (economic gains).”

He went on: “[In] Manila, they’re starting on the mega projects well; I supposed

that they should be doing it on time. [But in the provinces], it’s a doldrums thing.”

It would seem that, in speaking of economic doldrums, what the President

especially had in mind were the regional economies outside of the capital.

One might jump at this as direct admission by the chief executive that his

administration’s economic initiatives aren’t working. And yet he apparently isn’t

aware that the data actually suggest the opposite, especially in reference to the

Page 1 of 15
regions. The Philippine Statistics Authority recently released the 2017 gross

regional domestic product (GRDP) data, breaking down GDP by regions. And

guess what: the numbers are actually encouraging.

The latest GRDP data show that in the last two years, all regions of the country

positively contributed to the growth of the overall economy, and more evenly so.

The same could not be said three years ago, when one region actually contracted,

thereby serving as a drag that pulled down the overall economy. This was the

Autonomous Region in Muslim Mindanao (ARMM), with a negative GRDP

growth rate then of -0.4 percent.

In that year (2015), the fastest grower was the Bicol region, with 8.9 percent.

Growth disparities were wide across the regions, with 12 out of the country’s 17

administrative regions growing more slowly than the national average. Only five

regions were pulling up overall growth: Metro Manila or National Capital Region

(NCR), Bicol, Western Visayas, Zamboanga Peninsula, and Davao region.

Page 2 of 15
But in 2016 and 2017, the top growth rates posted exceeded 12 percent (12.3 and

12.5 percent, respectively, corresponding to the Ilocos and Mimaropa regions), and

even the slowest growth rates were respectable at 5.3 and 4.4 percent, respectively

(NCR in both years). From five in 2015, there were seven regions growing faster

than the national average in 2016, and by 2017, there were eight.

Remarkably, emerging among the faster-growing regions were formerly lagging

economies, including the Cordillera Administrative Region, ARMM, and disaster-

ravaged Eastern Visayas. All these suggest that our economic growth of recent

years has been more geographically inclusive—not quite the doldrums that

President Duterte lamented.

Are the statistics I have been citing spurious, or at least unreliable? Could Mr.

Duterte have a better grasp of the true situation than government statisticians do?

Skeptics and hecklers are prone to belittle the figures reported by our government

statisticians. But I maintain my faith in the integrity and professionalism of our

statistical system, and in the data they regularly report to the general public.

Page 3 of 15
I say this not so much because they were once upon a time under my

administrative supervision, but more out of my direct observations as a member of

an independent panel tasked to review the entire Philippine statistical system more

than 10 years ago.

To be fair to the President’s own economic managers, “doldrums” isn’t exactly the

right word to describe the recent performance of the economy. In fact, the rising

inflation and falling peso would normally be seen as reflective of an “overheating”

economy, or one that’s growing too rapidly to the point of building up excess

steam, reflected in fast-rising prices and surging imports.

I’ve already written of other indicators that more inclusive growth is happening:

much greater numbers (and percentage) of wage/salary workers, as against unpaid

family workers and individually self-employed ones; more investment- and

industry-led growth, as opposed to being consumption- and services-driven; and

faster decline in poverty incidence, whether based on official or self-rated

measures.

Page 4 of 15
The economy is now being buffeted with headwinds, some coming from the

President himself. But that’s a totally different problem from doldrums.

SUMMARY

President Duterte reportedly told an audience in Davao City- participants in the

National Information and Communications Technology Summit- that “now, the

economy is in the doldrums… Interest rates are picking up, are getting high so it

destroys the existing economic gains”. Habito view that doldrums is not the right

term to describe the recent performance of the economy but more like an

“overheating” economy. Economy is now being buffeted with headwinds, some

coming from the President himself. But it’s a totally different problem from

doldrums.

An opinion editorial written by Mr Cielito F. Habito entitled “Economic doldrums?

Not quite”, published under Philippine Daily Inquirer issued last June 26, 2018.

Page 5 of 15
Ausan, Delmarie M. July 20, 2018

BSA-1

Diplomacy: PH’s only option vs China

Alito L. Malinao

The suggestion by some well-meaning sectors for the government to file another

case against China in the Permanent Court of Arbitration in The Hague, this time

for China’s harassment of Filipino fishermen and for the massive destruction of

our coral reefs in Panatag Shoal, may not be advisable for two reasons.

One, China does not recognize the arbitral court, despite the fact that it is a

signatory to the United Nations Convention on the Law of the Sea that mandates

parties with conflicting maritime claims to settle their differences through The

Hague tribunal.

From the start, Beijing refused to participate in the hearing conducted by the

tribunal on the first case filed by the Philippines. It then ignored the tribunal’s

ruling issued in July 2016 that validated the Philippines’ claims to parts of the

Page 6 of 15
South China Sea. So what assurance can we have that, this time, Beijing would

honor another ruling by the arbitral court that would favor us?

Second — and this is more important because it involves our people’s money: Our

country cannot afford to spend more millions of dollars to file another case with

the arbitral court.

According to the Commission on Audit, the government paid a total of

P149,060,125.61 to Foley Hoag LLP, an American law firm, from 2013 to 2017

for its services in connection with the Philippines’ arbitration case against China.

But, according to Vera Files, the government actually spent $7 million

(P328,996,500 at P47 to $1) in legal fees to support the international team that

gave the Philippines its landmark victory against China. Vera Files said that the $7

million was more than 65 percent higher than the original contract fee of

$4,212,000 agreed upon in December 2012 by the Aquino administration and

Foley Hoag LLP.

To go to war with China is not an option. Everyone, including the critics of the

Duterte administration, knows this.

Page 7 of 15
The only course left for us is diplomacy — vigorous, sustained, unrelenting and

transparent diplomacy.

Former US secretary of state Henry Kissinger once defined diplomacy as “the art

of restraining power.” A good example of this kind of diplomacy is Vietnam’s. The

country, another claimant but to a much bigger chunk of the South China Sea, has

been consistent in protesting China’s incursions both through diplomatic channels

and in the media.

Vietnam got a bloody nose when its naval patrols clashed with the Chinese Navy

in the disputed area in March 1988. Several Vietnamese vessels were sunk, with 64

Vietnamese killed and 11 wounded. In 1979, China also invaded Vietnam for 27

days “to teach the country a lesson”; thousands on both sides died in that brief war.

Probably because of its bloody past with China, Hanoi has been very vocal against

Beijing’s aggression in the South China Sea.

Page 8 of 15
Short of outright hostilities, why not adopt Vietnam’s strong and sustained

diplomacy? Not everything is lost for us. While China’s President Xi Jinping has

attacked the arbitral ruling as illegal and without any effect on China’s “territorial

sovereignty and marine rights,” he has nonetheless assured all claimant countries

that Beijing is committed to resolve the dispute peacefully with its neighbors.

Thus, aside from intensifying our diplomatic protests against China, which can be

done despite our seeming appeasement policy, the Department of Foreign Affairs

should strive hard to push for the adoption by the Association of Southeast Asian

Nations (Asean) of the Code of Conduct on the South China Sea. That document

has apparently been put in the back burner, with Singapore, this year’s Asean

chair, saying it could take years before the COC would be signed. To put more

diplomatic pressure on Beijing, it should be taken up with more urgency by the

Asean.

***

INQUIRER.NET

Page 9 of 15
 SUMMARY

Malinao view that the suggestion to file another case against China regarding the

China’s harassment of Filipino fishermen and for the massive destruction of coral

reefs in Panatag, Shoal, may not be advisable for two reasons. One, China does not

recognize the arbitral court. Second, our country cannot afford to spend more

millions of dollars to file another case. The only course left for us is diplomacy and

not war. ASEAN should take up urgency about this issue.

An opinion editorial written by Mr Alito L. Malinao entitled “Diplomacy: “Ph’s

only option vs China”, published under Philippine Daily Inquirer issued last June

23, 2018.

Page 10 of 15
Ausan, Delmarie M. July 20, 2018

BSA-1

Individual Task #2

‘Tubong tubig’

Joel Ruiz Butuyan

Not too long ago, we drank water from our faucets, and it was all right. We who

are members of the generations that grew up until the ’90s drank tap water, and we

all turned out okay.

There were no outbreaks of serious diarrheal diseases blamed on our water system.

And yet we woke up one day with our minds instilled with fear that we would

become victims of water-borne illnesses if we didn’t ditch the habit of drinking

from our faucets, and instead turned to bottled water to quench our thirst.

The fear that was implanted in our minds gave birth to a hugely profitable business

created out of thin air (mixed with a dash of hydrogen to form water). This year

Page 11 of 15
alone, bottled water companies will earn P144 billion in total revenues. This

reveals that Filipino consumers are impelled by fear to set aside P144 billion of

their income to spend for an artificial basic necessity: bottled water.

In a March 2018 survey by Social Weather Stations, 9.8 million families, or 42

percent of all families in our country, considered themselves poor. The survey

respondents answered that, to be considered not poor, their families needed a

monthly income of P20,000 for residents in Metro Manila, P10,000 for Balance

Luzon and Visayas, and P15,000 in Mindanao.

The modest income aspirations of many families reveal that the expenditure for

bottled water as an added basic necessity reduces their already meager budget.

That a gallon of filtered water is now a common fixture in modest homes shows

that bottled water has become a basic necessity even for struggling families.

In contrast, businesspersons engaged in the bottled water business are earning huge

profits accumulated from deductions in the meager income of toiling families.

Page 12 of 15
The bottled water business generates minimal employment, because all it needs is

equipment to filter water from the faucet and to bottle them in plastic containers.

It’s a business that contributes minimal jobs to our country, but it’s raking in vast

profits for the entrenched rich.

If tubong lugaw (profit from rice porridge) is the colloquial term for a business that

makes a stream of easy profit, those engaged in the bottled water business even

have it better, because it is tubong tubig (profit from water) for them.

The water utility companies that serve Metro Manila and its surroundings,

Maynilad and Manila Water, both guarantee that their pipes supply safe drinking

water. But the tiny effort they exert to publicize this assurance virtually amounts to

a conspiratorial silence to allow bottled water companies to flourish.

The Duterte administration should compel these public utilities to make repeated

and well-publicized assurances that their regular tests confirm that their pipes

supply safe drinking water. These companies and the government should also

embark on a joint project to provide tests and assistance to households with old

Page 13 of 15
water pipes that may affect water quality. The additional costs these

advertisements and consumer services will entail are immaterial to the utility

companies, because they have guaranteed profit of up to 12 percent on top of all

costs which they charge to consumers.

The provincial water districts present a different story. Many of them supply water

that are unsafe for drinking. Those who recklessly manage these water districts

deserve a tongue-lashing from the President, and cases should be filed against

them, if warranted. But those that genuinely need help to upgrade their facilities

should receive government assistance, because the benefit redounds to entire

communities freed from the necessity of buying expensive bottled water.

Our dependence on bottled water worsens poverty, and it presents a perfect

illustration of why we have a dysfunctional society where the rich are getting

richer while the poor remain stuck in poverty. Here’s an opportunity for the

government to address this worsening economic anomaly.

Page 14 of 15
The human body consists of 60-percent water. Clean drinking water must not be a

costly luxury, but an affordable basic necessity.

SUMMARY

Mr Butuyan stated that on the mid 90’s, people drank tap water from faucets and

there were no outbreaks of serious diarrheal diseases. On the survey reveals that

the expenditure for bottled water as an added necessity reduces their skimpy

budget. In contrast, businesspersons engaged in the bottled water business are

earning huge profits. Our dependence on bottled water worsens poverty, and it

presents illustration why we have dysfunctional society. Clean drinking water must

not be a costly luxury.

An opinion editorial written by Mr Joel Ruiz Butuyan entitled “Tubong Tubig”,

published under Philippine Daily Inquirer issued last June 11, 2018.

Page 15 of 15