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CBRD Economic Triple Shot
CBRD Economic Triple Shot
TRIPLE
SHOCK
“ The distinctive thing about this crisis is that all three shocks
are present at the same time. We obviously see demand
collapsing; we see all kinds of supply shocks because people
aren’t allowed to go to work; and we see financial markets
seizing up because there isn’t enough cash in the system. All
three things are happening at the same time. It’s a perfect storm.
“
Homi Kharas
Director of the Global Economy and Development Program, Brookings
Institution, IFC Insights, Interview with Alison Buckholtz, April 2020.
“ For policymakers the world over, the corona virus disease … has
monumentally shifted… the horizon of politically acceptable
choices. Measures thought to be once impossible because
of their supposed infeasibility or fiscal irresponsibility have
suddenly gained consensus and immediate traction, even among
fiscal hawks.
Views From An Expanding Overton Window: Tools to Reimagine A More Compassionate
“
Economy In-Crisis, by Cesar Purisima, Laura Deal Lacey, Harvey Chua
Reduced business and *Will COVID-19 Fiscal Recovery Packages Accelerate or Retard Progress on Climate Change?
corporate incomes and tax Cameron Hepburn, Brian O’Callaghan, Nicholas Stern, Joseph and Dimitri Zenghelis,
revenues to government Oxford Smith School of Enterprise and Environment working paper No. 20-02
Purisima, et al.
“
Economic recovery refers to a plan to restart the economy, recover lost ground, and revive. The plan must
consider post-pandemic conditions: hundreds of thousands, if not millions of newly unemployed, including
skilled OFWs returning from abroad, depressed worldwide and economic demand, and the new norm of
social distancing.
IN SUMMARY:
The basic challenge is to optimally reallocate diminishing resources-- forced/unplanned
household savings, government revenues and private financial resources into:
5 Restore and re-create the economy under a new paradigm that is inclusive, and
environmentally sustainable.
“
... the economic recovery plan must also be anchored on making structural changes that will sustain
economic recovery for a long time, and not merely on the sugar high of fiscal stimuli.
“
Recovery packages that seek synergies
between climate and economic goals have
better prospects for increasing national
wealth, enhancing productive human, social,
physical, intangible and natural capital.
“
“
If this recovery is to be sustainable-- if
our world is to become more resilient--
we must do everything in our power to
promote a green recovery.
Kristalina Georgieva,
Stiglitz, et al. Managing Director, International Monetary Fund
SUPPLY
Agriculture: Enhancing Production and Ensuring Food Security:
Plant!,Plant! Plant! -- William Dar
Ensure food security by ensuring the Increase farm value added through
production and supply of rice and other food storage, preservation and
staples (while enhancing farmer income) processing; Expand training programs by
DA, DTI, DOST, SUCs and NGOs
Improve farm productivity and reduce
costs through sustainable water and soil Expand agricultural areas with
management and crop protection, better upland agro-forestry using sustainable
inputs and technology, and use of farm management technologies for soil and
machinery watershed protection;
“
“
… Agriculture is one of the sectors where
old Say’s law still applies. Since most of our
people are still food hungry, the increased food
production will find a ready market. Investing
in agriculture, therefore, is a form of economic
stimulus.
Calixto Chikiamko
Business World, April 19, 2020
Manufacturing
Food processing: ensuring raw Financing of machines and
materials sources, identify and resolve tools via rental/leasing (PPP with
disruptions in supply chains. private sector or NGOs sponsored by
companies to upgrade SME capacity
Increase value added through and capability).
technology improvements and better
design and packaging: Expand DOST, Mobilize SUC faculty and local
DTI and SUC’s and TESDA assistance. business groups to assist and advise
and mentor MSME entrepreneurs.
Government to expand budgets
of DOST, TESDA and DTI’s technology, Expand financial capabilities of small
marketing, packaging and design business loan guarantee entities.
support for small entrepreneurs;
massive training and technology Involve local business
transfer and equipment acquisition. associations for credit information
and assessment.
Develop agro-entrepreneurs in
food preservation and processing.
Construction
Shift investments from urban based Re-evaluate BBB program:
to countryside, from malls and luxury Suspend large, less essential BBB
condos to upland infrastructure and private construction projects not
development, farm to market roads; yet started and re-prioritize and re-
facilitate financing of equipment to direct to labor- intensive countryside
support upland development through projects.
PPP schemes.
Mining
Allow environmentally sustainable mining. Assess all mining permits, and
cancel permits of idle/undeveloped/degraded mines. DENR/PMDC to reallocate
mining permits to parties with financial capacity to develop and operate responsibly.
PMDC to sit in the boards of all mining companies to ensure compliance. Immediate
restoration of degraded mining areas with agroforests and transform abandoned
mines into upland development projects and dug up areas into water reservoirs
wherever feasible.
Import
DEMAND
“
“
There are four reasons that COVID-19 spending might have smaller multipliers. First, if the uncertainty in the
current crisis is deeper than in the previous crises, individuals and firms could engage in precautionary behavior,
hoarding cash. Second, if fear of COVID-19 means that people choose not to engage in travel and social activities,
efforts to stimulate economic activities will be less effective. Third, it may be difficult to target government
injections to where there is a high marginal propensity to spend. Fourth, the impact on expectations may be shaped
more by emerging health risks than by financial responses.
Stiglitz, 2020
Export Demand
Goods Services
Global demand contraction, supply BPO: assess impact, allow remote work
chains disrupted
POGO: assess impact
Tourism: displaced workers,
redeployment challenges.
Provide training to SME goods and service exporters and professionals to access global
atomized markets via the internet. Develop credible global market information exchange sites and
applications.
From: A Vaccine Against Social Collapse: A Case for the Economics of Radical Compassion,
Cesar Purisima, Laura Deal Lacey, Harvey Chua
Basic Situation
essential consumption, determine
magnitude of support mechanism, ability
to finance
“
Within the set of expansionary
“
capacity, deficits, national debt, interest rates
INFUSING “
“
The most effective solutions exercise
preferential option for the poor in
economic policy making-- directly
focusing financial firepower on
MONEY TO
the vulnerable-- for good economic
reason.***
From: Views From An Expanding Overton
RURAL AREAS
Window: Tools to Reimagine A More
Compassionate Economy-tIn-Crisis by
by Cesar Purisima, Laura Deal Lacey,
Harvey Chua***
To monetize the upland areas and stimulate basic trade transactions and other economic
activities, upland farmers can be paid a contracted amount based on their ability to deliver
on sustainable upland activities such as terraced farming to prevent soil erosion, planting
hedge crops, forage and fruit trees, assisting in the construction of gabion dams and water
catchment projects, etc. In this manner, the upland and other poverty- stricken rural areas will
be monetized while the natural environment is restored and the farmers provided incomes
in the process. The same can be done for fisherfolks who will plant mangroves, restore the
coral reefs, protect the fish sanctuaries and patrol their fishing grounds from illegal and
destructive operators.
A vigorous countryside economy will reduce migration from rural areas to congested cities
and also help convince marginal income urban workers and shanty town dwellers to return
to the countryside where they will find better chances of earning a decent income and enjoy
a more wholesome environment.
FINANCING SOURCES
Four Pillar Strategy to respond
to the Covid-19 Crisis
1 Emergency support for vulnerable groups: P589.97 billion, 3.0% of GDP
P1.49 TRILLION
GRAND TOTAL
“
NEDA Secretary Karl Hendrick Chua Presentation
May 12, 2020
“
For every debtor there is a creditor, and what matters is whether borrowing is used to invest
in sustainably productive assets. With rates low and the prospect that borrowing will boost
nominal GDP with multipliers greater than one, the cost of servicing debt from a large fiscal
stimulus is low and, in most cases, sustainable.**
Stiglitz et al.**
Eximbank/long term suppliers’ credit BSP liquidity window for bank loan
to finance importation of heavy machinery accounts with difficulty
and equipment needed for upland and
“
countryside development
private sector net financial surpluses, implying greater claims on future taxpayers will be
made by the private sector.**
**From: Will COVID-19 Fiscal Recovery Packages Accelerate or Retard Progress on Climate Change?
Cameron Hepburn, Brian O’Callaghan, Nicholas Stern, Joseph Stiglitz and Dimitri Zenghelis
Oxford Smith School of Enterprise and Environment working paper No. 20-02, 4 May 2020.
Stiglitz et al.
Livelihood and incomes from upland Economic values created for a greater
farms, agroforestry and wood number (and lift the poor out of the
production poverty trap) instead of catering to the
needs and luxury of the moneyed class
Financial value creation through farm
and upland property rights Tax base restored as economy recovers.
The world will not be the same after this crisis. Current economic
models which has resulted in environmental destruction and global
inequity will need to be reconfigured.
This crisis is our teacher and we must apply its lessons through
economic paradigm changes and social transformations. For the
Philippines it is a mandate to recreate our country, restore our land
and nurture our people.
Private spending for private wealth Public spending for common entitlements
“
“
Practicing radical economic compassion, securing social justice, and addressing inequalities
are challenges we ought to meet not just in our post-recession recovery, but here and now
as we figure out how to best deal with this crisis. Social unrest and collapse await as the
alterative.*
*From: Views From An Expanding Overton Window: Tools to Reimagine A More Compassionate Economy In-Crisis,
by Cesar Purisima, Laura Deal Lacey, Harvey Chua
MANPOWER REMOBILIZATION
FROM TO
Manpower employed in planting agro-forests,
Urban employment in low value constructing water catchments, terraced
services, shanty shelters uplands, innovative shelters for rural workers
AFP engineers for agro-reforestation,
Military fighting NPA constructing water catchments, and upland
terraces
INTERNATIONAL TRADE
FOREIGN RELATIONS
FROM TO
Federation with Malaysia to boost economic
ASEAN, Alliance with US growth, Maphilindo for regional security
“
restored
“
GDP counts air pollution and cigarette advertising, and ambulances to clear our highways
of carnage… It counts jails, napalm, nuclear warheads, and the loss of natural wonder in
chaotic sprawl… Yet, it does not pay attention to the health of our children, the quality of their
education and the joy of their play… It measures everything in short-- except that which makes
life worthwhile.
Robert Kennedy, 1968, in hhis run for the US Presidency
FINANCIAL MOBILIZATION
FROM TO
Bank financing private sector Government issue bonds to shift funds to public
wealth projects goods and countryside development
Money spent in urban centers Money invested in the countryside creating rural
employment and reducing poverty
STRATEGIC CONCEPTS
“
This constitutes a vastly new way of thinking about crisis economics and requires more
“
creative solutions. Instead of firing at the financial system with money printing guns, we now
have to inject wide sectors of our society with trickle up economics.
*From: Views From An Expanding Overton Window: Tools to Reimagine A More Compassionate Economy In-Crisis,
by Cesar Purisima, Laura Deal Lacey, Harvey Chua
3 Resource allocation from the socio-economically less desirable to more desirable activities
with high socioeconomic returns.
5 Maximize use of low opportunity cost resources (unemployed labor, slack manpower
and equipment capacity, etc.) in the implementation of these new investment activities. Low
global petroleum cost will make the operations of earthmoving equipment much less costly.
6 Ensure food security and the supply of essential goods; Child and school nutrition will be a
vital part of the economic reconstruction as an investment in a healthier citizenry.
7 Decongest crowded urban centers and by providing greater income opportunities in the
rural areas through the massive shift in investment spending to the countryside.
9 Look for business opportunities from disruptions in the global supply chain, greater global
connectivity, and the shift in global investments away from China.
“
“The scope and ingenuity of our social and economic policy responses to these challenges
“
and opportunities will define how succeeding generations will live in a profoundly altered
world.”***
***From: Views From An Expanding Overton Window: Tools to Reimagine A More Compassionate Economy In-Crisis,
by Cesar Purisima, Laura Deal Lacey, Harvey Chua
To pursue these recommended actions, the government will need to mobilize all its
manpower and economic resources. A massive government restructuring and reorientation
may be necessary to effect the desired economic recovery and transformations.
“
“
Leveraging new technologies to adapt governance and social infrastructure should be the cornerstone of
this restructuring. Siloed government bureaucracies have proven to be ineffective. A radical rethinking of new
methods of governance should include digitalization of government services, data-driven decision making, and
enhanced inter-agency coordination. ***
***From: Views From An Expanding Overton Window: Tools to Reimagine A More Compassionate Economy In-Crisis,
by Cesar Purisima, Laura Deal Lacey, Harvey Chua
The danger of deflation means that the Fed’s gargantuan interventions may well save the financial
system but not avert a grinding decade of unemployment, inequality and instability.
The risk now is not doing too much but too little. Supporting credit markets will not reopen locked
down businesses or get unemployed people to buy…
Demand stimulus through normal fiscal and monetary tools -- even on an unprecedented scale
-- are incommensurate to this crisis. People need direct, universal, unconditional income support.
During World War II… the Federal Reserve committed to buying as many Treasury bonds as
necessary… Much of that debt never made its way back to private hands. In keeping those bonds
permanently on its balance sheet, the central bank effectively financed much of the US war
effort through printing money. (Due to horizontal supply curve under excess capacity
conditions, as demand is increased prices remain stable?) When a central bank takes
permanent ownership of its own government’s debt, that debt ceases to exist for all practical
purposes. (What happens to the additional money released? Okay if output/GDP is
permanently increased? (MV = PQ, increase in M matched by increase in Q).
Paul McCulley, former chief economist at Pacific Investment Management Co.: “We’ve had
a merger of monetary and fiscal policy… We’ve broken down the church-and-state separation
between the two.”
The Japanese government has spent the past quarter century effectively financing large fiscal
deficits by purchasing its own bonds… But non one is under the illusion that the Bank of Japan
will ever be fully unwinding its balance sheet.
If implemented perfectly, financing stimulus through direct money creation has clear advantages
over the issuance of debt.
As then Fed Chairman Ben Bernanke argued in 2003, when a government tries to fend off deflation
with debt-financed public spending, some of the stimulative effect is lost to fears about future
debt burdens.
… Today, the Chairman of the Federal Reserve is imploring Congress to stop worrying about the
deficits and start more comprehensively replacing the income that households, firms and state
governments lost to the pandemic…
The myth that all new spending must be paid for is supposed to check politicians’ (allegedly)
from the economy… driving down the purchasing power of the currency in real global terms.
Therefore, the creation on money to purchase government bonds will not translate into inflation
unless there is also sufficient nominal demand to meaningfully outstrip the growth in real GDP
(MV=PQ) or sufficient relative incentive for capital to leave.
It is not the overspending or the deficits per se which provoke the currency runs and (hyper)
inflation. Rather, it is the emergence of disbelief that government will pay its bills by ultimately
raising taxes or cutting spending enough
Thus, to ensure food security, we must restore our soil, water and marine resources. Farmers
and fisherfolks are the poorest sections of Philippine society because of their low productivity
caused in great part by the destruction of the natural resource base that supports and sustains
their livelihood. These issues unfortunately have been largely ignored or not given proper
emphasis in the country’s economic planning and budgeting process. The immediate victims,
the farmers and fisherfolks have little voice or political power and the ultimate victim, the
Filipino food consumer, is unaware of the causes of the limited food supply and the high food
prices. This has led to our country’s high incidence of malnutrition, particularly among our
children.
We need therefore to focus on the restoration of our natural resources as the long-term solution
FROM TO
Low agricultural productivity Restoration of soil fertility and water resources
On the demand side, we need to modify our staple diet to accommodate to our crop production
limitations and in anticipation of the drought that is expected occur in the countries that supply
our rice imports:
FROM TO
Rice import dependence Adding sweet potato and other root crops into the
Filipino’s staple diet
Given that much of the productive lowlands in our country have been converted to residential real
estate, there will be a need to look to the uplands to expand food production in a manner that will
preserve the soil and mitigate flooding in lowland farms and settlements. This will also provide
employment to workers who may be displaced by the COVID19 crisis.
The upland model of development envisioned in this paper will have the following features:
Hillside agricultural terraces using the Water catchments and Gabion dams to
Sloping Agricultural Land Technology store water, prevent soil erosion and
(SALT), (as recommended by the slow down the water flow to lowland
Philippine Council for Agriculture, areas, and as upland fishponds and for
Aquatic and Natural Resources Research duck raising wherever suitable.
and Development (PCAARRD-DOST)).
This upland development model can
Planted with short gestation cash crops be implemented as a possible PPP
combined with longer term agroforest between AFP and private contractors
species and bamboo to hold and in cooperation with local communities
conserve the soil. and/or using redeployed manpower from
urban areas.
Use of forage trees and grasses such as
mulberry trees and napier grass as feed
for ruminants.
This approach can take advantage of low opportunity costs from AFP using their manpower and
engineering brigades combined with the expertise of qualified private construction companies.
This also can reemploy workers displaced by the Covid19 crisis and redeploy the idle equipment of
construction companies like bulldozers, excavators and other earthmoving machinery.
Modified container vans can be used as shelter for worker camp sites. There are local suppliers
and builders making these redesigned shelters, such as Storage Providers Inc. and Vantaztic Inc.
The NAMRIA (National Mapping and Resource Information Authority) will provide geographic
information and the DENR can the recommend the sites suitable for this proposed model of
upland development. The Department of Agriculture will provide the technical assistance and
advice to the project implementers.
Aside from sourcing funds through private sector investments under a competitive and solicited
PPP scheme, we may also avail of long-term suppliers’ credit from US and Japan Eximbank for
equipment from Caterpillar, John Deere, and Komatsu, etc. The timing may be opportune as we
take advantage of the massive drop in fuel costs which make up much of the operating costs
for running the machinery. Government can also source funds through a bond flotation for this
purpose.
In the Philippines, companies cited by the Asian Development Bank for their IB operations in the
Philippines include Kennemer Foods which sources cacao from poor farmers in Mindanao, Coffee
for Peace which benefits 15,000 indigenous households in Mindanao, MCPI which supports
20,000 fisherfolk in the Visayas in seaweed farming, Nestle which engages up to 70,000 poor
farming families, and Jollibee, through its Farmer Entrepreneurship Program.
The ADB identified the PBSP, the League of Corporate Foundations, the Management Association
of the Philippines and the Makati Business Club as part of the support platform for government-
business interaction for Inclusive Business (IB), with the DTI through the Board of Investments
as the official government counterparty. The DTI under the Duterte administration continues to
support the IB practice, particularly through the provision of BOI incentives and though business
dialogues and conferences.
Local corporate foundations and business associations, however, will have to have a clearer
distinction between their usual philanthropy and support for NGOs and social enterprises, and
the true practice of IB which engages the poor or the “Base of the Pyramid” in the company’s core
business and value chain, while doing it profitably as well. This is a CSR challenge that requires
imagination and creativity and leaves little room for intellectual laziness.
Potential IB interventions in that may produce significant benefit to agriculture and our farmers
may come from large companies such as San Miguel Corporation, if they decide to engage with
small farmer cooperatives in rice, corn and root crop and dairy production, and the SM and
Ayala malls possibly sponsoring on a regular and continuing basis agricultural fairs featuring
the agricultural produce and food products of provinces from all over the country with DTI and
DOST providing processing and packaging guidance and support and Go Negosyo providing small
business mentoring.
The Filipino diet being heavily rice-based is also not considered the most healthy in the region.
The country may need to modify its eating habits to help ensure its food security and at the same
time eliminate malnutrition among its children.
BACKGROUND:
(Inquirer report, Nov. 12, 2019)
USDA-FAS estimates 2019 Philippine imports at 3 MMT, a 58% increase from 1.9 MMT in 2018. This
is the highest in the world, and the highest in the country, partly due to the liberalization of rice
imports with tariffs set at 35%. This is even higher than China’s 2.5 MMT rice import in the same
year.
On the other hand, PSA estimates a lower import quantity of 1.9 MMT to fill local demand in 2019.
USDA-FAS is expecting Philippine rice imports to slow down in 2020 amid excessive supply and
improved local production. (USDA-FAS: US Department of Agriculture-Foreign Agricultural
Service)
However, long term supply is expected to be endangered by the droughts in Vietnam and Thailand
resulting from China’s damming up of the upstream water sources to the Mekong delta and other
major river systems in Indochina.
Given the precarious long-term rice supply situation for the Philippines, supplementary measures
will be needed to ensure the supply of country’s staple foods. Sweet potato can fill in the gap.
“
“
Kamote, or sweet potato, is a very resilient crop. Farmers are saying sweet potato can be very profitable…
sweet potato production has been declining…. From 250,000 hectares in 1980… now it’s less than 80,000
hectares.
“
Production in the fourth quarter of 2019 increased by 0.6% from 128.61 thousand metric tons in the same
period of 2018 to 129.42 thousand metric tons this quarter. “
Central Visayas is the top producer with 16.79 thousand metric tons or 13.0% of the country’s total
production followed by Zamboanga Peninsula 12.7% and Eastern Visayas 12.3%
The following data points to the high nutritive value of this root crop:
Edible energy,
(‘000 kcal/ha/day) 49 70 27
Edible protein
(kcal/ha/day) 0.9 1.0 0.1
Sweet potato based on the above data is more nutrition-packed than rice in terms of calories and
protein.
To ensure a steady market for farmers who will be planting the sweet potato crop, government
can set aside a budget for a school feeding program that will purchase sweet potato for school
meals on a steady basis. Boiled sweet potato may be mixed with mungbean, eggs, or carabao’s
milk to enhance its nutrition value and as supplied by local farmers.
This will be a vital investment in building a healthy and well-nourished Filipino citizenry while at
the same time providing a secure source of livelihood to local farmers.
Private business needs to scale up their poverty reduction efforts, and this could be done through
the practice of inclusive business where the poor are incorporated into the company’s value chain,
with the poor benefiting from big business advantages of superior technology, production
processes, access to markets, and financial resources.
MSME’S can also be a potent force for poverty reduction since they account for more than 90%
of the jobs generated. Government has therefore made it a policy to assist MSME’s. But despite
the series of laws and the many institutions and mechanisms that have been put in place,
success has also been limited. MSME’s by their very nature do not have the large technological
and financial resources and access to international markets that big businesses have. They are
therefore trapped in low value activities and unable to provide higher incomes for themselves and
their workers.
A recent study by PIDS has observed that the grassroots approach adopted by government
for MSME promotion has been inadequate, despite the significant progress in streamlining
registration procedures. It recommended an alternative approach with the private sector as the
entry point for intervention. Using the comparative advantage of the private sector, particularly big
business, the constraints facing MSME’s in marketing, technology and production management,
and access to international markets can be better addressed. This approach implies a grander
vision for inclusive business with the poor (also termed BOP or bottom of the pyramid) and micro
and small and medium enterprises generating higher incomes as they integrate not only with the
value chain of large businesses but also into the much greater global value chain.
2 Business cannot do it alone: systemic barriers can only be tackled in collaboration with
other players.
We have government financial institutions such as the DBP, Land Bank, and guarantee institutions
such as the IGLF and SB Corporation trying to cater to financial needs of MSME’s. We also have the
League of Corporate Foundations and PBSP, supporting CSR and inclusive business respectively.
One missing ingredient seems to be the active participation of large local companies like SMC and
the SM group which have the potential to benefit thousands, possibly hundreds of thousands, by
incorporating the poor, especially the farmers, and MSME’s into their value chain.
There have been strong local advocates and practitioners for inclusive business like Jolibee,
Manila Water, the Phinma group and PR Bank (where IFC invested P600 million in preferred shares
as an acknowledgement of its role in inclusive banking). However their number needs to increase
a hundredfold to scale up the poverty reducing impact of inclusive business.
Promoting the practice of inclusive business as official state policy will push big companies with
high potential impact to follow suit. BOI is studying the possibility of making the practice of
inclusive business as one of the parameters in qualifying for tax incentives.
We will need to define more completely and clearly the Inclusive Business Ecosystem which will
have massive poverty reduction and a much more productive MSME sector as the primary goals
and a synergized network of inclusive business actors as key ingredients for the ecosystem’s
success. We will also need to define the catalytic role PCCI will play to help make this Inclusive
Business ecosystem function effectively through the proposed PCCI Center for Entrepreneurship
and Inclusive Business.
1 Generate greater awareness among PCCI members of the concepts of inclusive business
and their practice , and encourage PCCI to engage in inclusive business activities.
2 Mobilize support among PCCI members for the inclusive business efforts of government
and private sector groups, including the Go Negosyo efforts to assist MSME
4 Keep abreast of efforts by both government and private sector to assist MSME’s and
integrate the poor with business value chains and recommend how PCCI can assist in
these efforts
Through the PCCI Inclusive Business Institute under the center, undertake conferences,
5 workshops and training programs both with PCCI members and other interested parties.
Advocate with CHED and local colleges and universities for the inclusion of Inclusive
7 Business as a subject in business courses, particularly for MBA degrees. Package an
Inclusive Business course to be taught by business professors.
9 Coordinate with academic and other institutions for joint education and knowledge
sharing activities
10 Communicate regularly with other actors and participants in the Inclusive Business
Ecosystem
We can treat drug addicts as zombies, where the hero in the zombie movie exterminates as
may zombies as he can. But given the millions of drug addicts, we will be committing genocide
and become a global pariah. Besides, zombies only exist only in the imaginary world, while drug
addicts are human beings that can still be rehabilitated.
The challenge is how to convert drug addicts and minor criminals from social liabilities to social
assets, by mobilizing their wasted manpower into socially useful activities.
This paper proposes to combine the governments rehabilitation program with reforestation
efforts by drawing on the experience of the program established by President Franklin Delano
Roosevelt during the era of the Great Depression. The program mobilized and employed six
million jobless young Americans to plant three billion trees. It relieved unemployment and kept
the American youth “off the city street corners”. President Roosevelt called them his “tree army”.
The program was officially called the Civilian Conservation Corps or the CCC and was funded by
the US Congress. Its mission was nature conservation and reforestation.
The CCC enrolled 300,000 men between the ages 18 to 25 in 1933, and provided jobs to 6 million
men enrolled between 1933 and 1941. It operated under the US Army’s control (General Douglas
McArthur was placed in charge) with the assistance of National Park Service employees. Seventy
percent of the enrolees were malnourished and poorly clothed. They got paid $1 a day or $30 a
month ($547 in 2015),
The CCC ended with the second world war, but the paramilitary discipline learned in the CCC
provided unexpected preparation for the manpower mobilization needed by the United States for
the war. CCC alumni became corporals and sergeants. It was the most popular of FDR’s New Deal
programs (82% approval with 92% of Democrats and 67% of Republicans in favour). CCC is now
the model for 115 conservation programs in 41 US states.
Using President Franklin Roosevelt’s CCC program as an inspiration and guide, this paper proposes
to rehabilitate the millions of Philippine drug addicts by mobilizing them into a corps of nature
conservation and reforestation manpower thereby making them assets of the State instead
liabilities. The same can apply to those accused of minor crimes living in pitiful and inhuman
conditions in extremely congested city and provincial jails. Standard rehabilitation methods tend
to be expensive and will not be able to solve the problem to the extent required since it has grown
to such humongous proportions. Only a massive social mobilization will match the gargantuan
scale of the social problem.
To allow for a centralized coordination of what I propose to call the Citizen’s Rehabilitation Program
, it will be necessary to form a special coordinating body under the Office of the President. This
coordinating body will be composed of the secretaries of the DND, DENR, DILG, DOJ, DA, TESDA,
and the heads of the Governors’ and Mayors’ leagues. The President can choose to chair this body
himself or designate the executive secretary or one with his full trust as the chairperson.
The first agenda item would be determine the target number of drug addicts to be covered over a
time period, the areas to be reforested and rehabilitated, and the resources required from which
department or agency of government. Pilot programs can be immediately started in military lands
and critical watersheds based on the resources currently available. A special appropriation will
then be proposed to Congress for the full implementation of the program on a nationwide scale.
We can include in this Citizen’s Rehabilitation Program character building and skills training
together with food production activities. The cooperation of religious groups , NGO’s and military
reservists may be needed. Among the resources that need to be budgeted are food and clothing
Depending on the budget, the enrolees to this program may be given a daily allowance
and incentives based on their productivity. Should the budget not allow for any monetary
compensation, the graduates may be given a certificate of completion with an entitlement share
to the economic resources the program may eventually produce, such as commercial forests and
fruit orchards.
Miguel Lopez de Legazpi initially established his first settlement in Cebu. But due to scarcity of
provisions, in 1569 he founded a second settlement on the bank of the Panay River. In 1571, having
heard of the rich agricultural resources in Luzon, Legazpi established a settlement along the bank
of the Pasig River and ordered the construction of the walled City of Intramuros. He proclaimed
the town as the island’s capital and the seat of the Spanish government in the East Indies.
The Manila of old had clean rivers and esteros that were used for transport and flood drainage.
As the city grew and roads and commercial buildings intruded into and obstructed the esteros
and other waterways and residences expanded into the surrounding marshlands and rice
fields, it created the problem of regular floods inundating the lower residential areas. The new
construction obstructed the flow of flood waters to the sea. As trees were cut and the surrounding
mountains and hills denuded of their forest cover, the rivers and remaining streams silted and
deprived the Pasig River delta the badly needed draining of its flood waters. Now Metro Manila is
an environmental disaster-- overcongested, flood prone, and a dying city.
The same phenomenon is replicated in the Central Luzon river deltas. Worse yet, Central Luzon
is a marshy floodplain and a natural water catchment, with the Cordillera mountains to the
north, the Sierra Madre mountains to the east and the Zambales mountain range to the west.
The rainwaters from these mountains rush towards the Central Luzon with disastrous results,
flooding houses and destroying crops. This is aggravated by the construction of fishponds and
new housing subdivisions which obstruct the flow of the flood waters to the sea. The denudation
of the surrounding mountains, the silted rivers, and the ground subsidence from deep water wells
and the man-made obstruction to water flows all make Central Luzon likewise an environmental
disaster area.
There have been talks of transfering the country’s capital to Clark in Pampanga. This would
not be advisable. While Clark is relatively elevated, the surrounding areas are prone to flooding.
Developing Clark as an urban center to replicate Metro Manila will encourage the urbanization of
the surrounding towns which are geographically better suited for rice growing and as a marshland
shelter for migratory birds. We would be replicating the problems of Metro Manila with even graver
environmental and disastrous human consequences.
Clearly we need a major paradigm shift in our strategy for urbanization, away from our ancestral
Malay tradition of building settlements on fertile river deltas, where rice was the main source of
livelihood and rivers and streams the main avenues for transport. This traditional strategy driven
by historical momentum and commerce has in the end destroyed both the natural environment
and the urbanization process as well.
Some decades ago, an Israeli agricultural expert remarked: You Filipinos are crazy. You build
houses on the fertile lowlands and destroy your agriculture and you get flooded every time it
rains. We in Israel build houses on the hillsides and reserve our lowlands for agriculture.
President Duterte had said during his presidential campaign that Metro Manila had to be
decongested, and the only option was to develop new urban areas. We can follow the examples
of other countries where the political capital is located away from the business centers like
Canberra in Australia, Putrajaya in Malaysia, Brasilia in Brazil, and Washington DC in the USA. In
this way political activities are not intermixed with commercial activities, and in our case, serve
the objective of decongesting Metro Manila and help resolve its presently insurmountable traffic
problem. This reasoning also precludes the possibility of relocating the national capital to Clark
because it is now emerging as a business center.
If we need to relocate the national capital, we need a place that is not prone to flooding, with
easy drainage for rainwater, enough land area for expansion, with easy access, and strategically
located. The Lucena Tayabas Pagbilao corridor seems to fit these specifications. With an elevation
of 15 to 19 meters above sea level, highlands to the east and with a broad coastal frontage, it
There are already old railway lines from Lucena to Calamba which will link it to Metro Manila up to
Clark. The revival and modernization of these railway lines have been approved and construction
should start during President Duterte’s term of office. Eventually the new capital can be linked to
Metro Manila up to Clark via bullet trains and to the nearby Pacific coast with modern highways.
Another railway line can link it to the Batangas port. A small airport can also be built to give it
direct air access to other parts of the country.
To avoid repeating the environmental blight that is Metro Manila, the new capital city should
be well planned with plenty of parks and broad tree lined roads and avenues. Environmentally
friendly buildings with rooftop gardens should be mandated. The pattern of water flows during
heavy rains should be well studied and efficient drainage systems built. Telephone and electric
cables should be placed underground. The adjacent uplands should be well reforested and water
catchments built to absorb and store the rainwater from the mountains.
The JICA had done a study for the Infanta Real development as a new urban center and port
facing the Pacific Ocean. These two projects were scheduled for implementation under President
Marcos but were shelved after the EDSA revolution.
Mount Irid is much cooler and closer to Manila than Tagaytay which is getting commercialized and
developing in a disorganized way, and much nearer than Baguio which is congested, polluted, and
showing signs of urban decay. Mount Irid, because of its closer distance can be developed as a
people’s nature resort, once better access roads are built (but only after proper planning and area
protection to avoid damage by illegal settlers). A military camp and a nature park with lodgings
and camping areas open to the public will serve to initiate development. Eventually hotels, golf
courses, and other amenities can be built.
Mount Irid will showcase how upland development can sustain and enhance the natural upland
habitation by planting pine forests and fruit orchards, building water catchments, and nature
parks incorporating bird and wildlife sanctuaries. We can also establish a 1,000 hectare botanical
garden featuring all the trees and plants endemic to the Philippines.
The objective of decongesting Metro Manila would also be served by the development of
new settlement areas towards the east up to the Pacific, while preserving and enhancing the
watersheds in the Sierra Madre mountains. With the construction of a Laguna Lake circumferential
highway, the eastern and southern sections of the lakeshore areas will be more accessible. This
will also facilitate the access to the Pacific coast and an eastern access corridor to the proposed
new capital city in the Lucena Pagbilao corridor, up to Tayabas Bay.
To ensure that development will be well designed and its implementation well organized, a
national government plan will be needed drawing on the expertise of urban and regional planners,
considering also how these areas will evolve economically. This will ensure that the momentum
of urbanization will not repeat the mistakes of Metro Manila, and will produce an environmentally
and people friendly system of human settlements.
I then raised the question to DPM Anwar Ibrahim, why don’t we unite our two countries?
After all, Malaysia and the Philippines come from the same Malay racial stock and heritage
and by uniting our two countries, he would have the 70 million new Malays that he wanted.
I added that this will also solve our festering Sabah problem since Sabah will now become
our common territory. I related to him my visit to Kuala Lumpur where my taxi driver asked
me where I was from. When I told him I was from the Philippines, the taxi driver remarked,
“Kita sama-sama” which I thought to mean “We are the same people”.
Secretary Almonte was surprised at my proposal and told Mr. Anwar that I was just joking.
But Anwar Ibrahim interposed and remarked that he liked my proposal. He added that he
would be willing to take a Filipina wife to unite our two countries. I was informed later after
the conference that Anwar Ibrahim was a great admirer of Jose Rizal.
Mr. Boo Chanco in his article in the Philippine Star in June 20, 2011 quoted Anwar Ibrahim’s
remarks on Rizal fifteen years before in a conference in Kuala Lumpur: “Certainly for us in
Malaysia Jose Rizal is not merely a national hero of the Philippines. He was not only the
first Malayan but also the first Asian to set the standards in the struggle to restore human
dignity and self-respect to subjugated peoples the world over.” Anwar described Jose Rizal
as “one of the greatest sons of Asia”. Rizal has been termed by writers and authors as the
Great Malayan.
This Malayan unity is evidenced by our common physical features and the many common
words between the Bahasa Malaysia (and Bahasa Indonesia) and Tagalog and the Visayan
dialects..
This desire for Malay unity has been expressed by our national heroes Jose Rizal, and
Apolinario Mabini. Wenceslao Vinzons and other political activists and leaders of his
generation also advocated the unification of the Malay communities. This group also included
Domocao Alonto, Manuel Roxas, Carlos P. Romulo, Jose P. Laurel, Rafael Palma, Mariano
Kalaw, who together formed the “Pan Malayan Union” which called for the establishment of
a “Confederation of Free Malayan Republics”.
“
On July 27, 1962, President Macapagal launched his own proposal for establishing a greater
Malayan Confederation among the Philippines, Malaya, Singapore, North Borneo, Brunei and
Sarawak:
The unity of the Malay peoples is an objective that goes back to the beginnings of their
history. Realized once or twice in historic times, this unity was destroyed, first by dissension
among themselves, and in more recent times by the coming of western colonial powers.
President Diosdado Macapagal together with Tunku Abdul Rahman of Malaysia and Sukarno
of Indonesia worked out the Manila Accord of 1963 which “envisaged the grouping the three
nations of Malay origin” and aimed to “strengthen cooperation among peoples who are
bound together by ties of race and culture”.
“…We have agreed to make joint studies of appropriate machinery for Maphilindo which will
facilitate and enhance the effectiveness of such cooperation.” (Closing Statement: President
Macapagal at the Summit Conference in Manila, August 5, 1963)
In his speech before the Manila Overseas Press Club (August 21, 1963), President Diosdado
Macapagal proposed the grouping of the three Malay nations which he termed Maphilindo
in the “tradition of the empires of Sri-Vijaya and Madjapahit” but along the “voluntary
association of independent and sovereign states held together by their affinities of race
and culture…” He cited the example of Nordic countries that “have been able to closely
coordinate very closely their political, economic, social and cultural activities…”. He called
Maphilindo as “the beginning of a new golden age for the peoples of Malay stock..” and the
embodiment of “the dream of Dr. Jose Rizal, President Manuel L. Quezon, Claro M. Recto,
Wenceslao Vinzons, and other Malayan statesmen…”
This momentum was halted when the governments of the Federation of Malaya and
the United Kingdom signed an agreement on August 1, 1962, in London to establish the
Federation of Malaysia.
While this historical tradition and desire for Malay unity has since been broken by Western
powers and colonizers and mutual mistrust, this paper will analyze the advantages of
reuniting the Malay countries, starting with the Philippines and Malaysia.
GEOPOLITICAL SYNERGIES
The union of the Philippines and Malaysia will have an impressive geographical territory
stretching from Luzon and Palawan to Mindanao to Sabah and Sarawak all the way to
Peninsular Malaysia. This unification may be done in phases starting with economic and
military cooperation leading to eventual political union as the final phase. Should this
process prove to be advantageous to both the Philippines and Malaysia, Indonesia may later
be invited into this union.
This close cooperation and eventual unification will also enhance the ability of the Malay
countries to face up to Chinese encroachments in the Western and help the peace and order
in the Southern Philippine Seas. Close military cooperation and coordination with Malaysia
and Indonesia will enhance common maritime defense and anti-terrorism efforts.
ECONOMIC SYNERGIES
While Malaysia is relatively more prosperous with a GDP per capita of US$12,415 against the
Philippines US$3,550, the two countries have about the same GDP, with US$402 billion for
Malaysia and US$ 389 billion for the Philippines. Malaysia has a smaller population base of
32.3 million vs. the Philippines 109.6 million in 2020.
Malaysia has a much lower population density of 98/km2 compared to the Philippines’ 368/
km2. Seventy nine percent (79%) of Malaysia’s population live in Peninsular Malaysia.
Sabah and Sarawak are sparsely populated with population densities at 35/km2 and
17/km2, respectively.
Malaysia seems to lack workers, with Malaysia having 6 million migrant workers in labor
intensive industries and plantations. The Philippines, on the other hand, is a labor exporter
with about 10 million Filipinos working abroad.
Peace and order in Mindanao particularly in the Zamboanga, Basilan, Sulu and Tawi Tawi
area will lead to more investments and economic progress in the Southern Philippines and
boost to their economies. Freer movement of peoples, trade and other business transactions
between Sulu, Tawi Tawi and Sabah will promote greater economic development in that area
and enhance the labor pool of Sabah and Sarawak and reduce Malaysia’s need for migrant
labor.
Reduced religious and racial tensions in both countries will subside as the Philippine
Muslim population (6%) can better relate to the Muslims particularly in Peninsular Malaysia.
Malaysia’s Chinese population may better relate to the Filipino Chinese while the Christians
of Sabah (26%) and Sarawak (43%) may better relate to Filipino Christians. Racial and
religious harmony will be enhanced as the minorities in both countries will no longer feel as
alienated or discriminated.
MILITARY SYNERGIES
The Malaysian Military in 2020 has total military personnel of 410,000 with an active force of
110,000 while the Philippines has a total of 305,000 with 125,000 active. Malaysia’s defense
budget is US$4 billion against the Philippines US$3.47 billion.
The Malaysian has 179 airpower composed of 26 fighters, 13 dedicated attack planes, 18
transport, 40 trainers, 4 special mission, and 65 helicopters. Its land forces have 74 tanks,
1,387 armored vehicles, 211 towed artillery, and 54 rocket projectors. Its naval forces is
composed of 6 frigates, 6 corvettes, 2 submarines, 41 patrol, 4 mine warfare.
The Philippines has 171 airpower with 0 fighters, 19 dedicated attack planes, 23 transport,
24 trainers, 8 special mission, and 97 helicopters. Its land forces assets are 7 tanks, 513
armored vehicles, 286 towed artillery 286, and 0 rocket projectors. Its naval forces comprise
2 frigates, 1 corvette, 0 submarines, 76 patrol, and 0 mine warfare.
Malaysia ranks 44 out of 138 with a Pwrindx rating of 0.6546 (with 0.0000 as perfect).
Philippine ranks 48 out of 138, with a Pwrindx rating of 0.7852. (Source of data: Global
Firepower) Malaysia is covered by the Five Power Defence Arrangements (FPDA): UK,
Australia, New Zealand, Malaysia, Singapore (no specific commitment to intervene militarily,
consult each other “immediately” in the event or threat of a military attack)
Philippines is covered by the Mutual Defense Treaty between the Republic of the Philippines
and the United States of America (MDT) signed August 30, 1951. The treaty dictates that both
nations would support each other if either the Philippines or the United States is attacked
by an external party.
This treaty was reaffirmed on Nov. 11, 2011 with the Manila Declaration
On April 28, 2014, the two governments executed the Enhanced Defense Cooperation
Agreement (EDCA) (10 year term, 1 year notice of termination).
On December 28, 2018, a review of the MDT was ordered by DND Secretary Delfin Lorenzana
with the end goal of “to maintain it, strengthen it, or scrap it”. On February 11, 2020, the
Philippines notified the US that it intended to withdraw from the Visiting Forces Agreement.
While both countries may be considered weak militarily, defense synergies may be achieved
through coordination in defense and maritime patrol. This military unity and coordination
may help discourage the aggressive designs of foreign powers and limit incidences of piracy
and kidnapping by terrorist groups.
1 Free border trade leading to free trade area between Malaysia and the Philippines
4 Common border patrols, common anti-piracy patrols and exercises, common military
coordination headquarters in Mindanao-Sabah area leading to a joint decision-making
process
8 Immediate formation of a Working Group from the business, political, military and
diplomatic sectors of both countries to work out the steps towards this unification
process.
9 Reach out to Indonesia as a possible future participant in the Malay unification process
as envisioned in Maphilindo.