BIZ COLUMN:  STORMS  WON'T  IMPROVE  ECONOMY

MANILA, OCTOBER 9, 2009
(STAR) DEMAND AND SUPPLY By Boo Chanco - Administration economists must be pretty desperate. I don’t know what they are smoking but they have been reported seeing “perverse” gain from the two devastating storms. This must be flood economics, Arroyo style.

A Neda official, the one I previously called “the good Arroyo” said there is no need to revise the government’s 0.8- percent to 1.8-percent GDP target because of the “perverse” benefits from the typhoons. The aftermath of the typhoons, he said, will induce increased economic activities such as household repairs, private and public construction, manufacturing-production increase due to retail demand, and a spike in overseas Filipino worker (OFW) remittances as OFWs send more sums home to help their families cope with the aftermath.

But Director Dennis Arroyo of the Neda National Planning and Policy Staff (NPPS), according to Business Mirror, said that with the damage to infrastructure and agriculture of the two typhoons now reaching P9.76 billion, the country’s gross domestic product (GDP) is expected to decrease to within a range of 0.6 percent to 1.6 percent. But not to worry because “the typhoons can even help increase GDP,” Arroyo was quoted by Business Mirror.

I think Mr. Arroyo may have spoken too soon. Supermarket shelves may have been cleaned out of such things as instant noodles and canned food products but the ability of manufacturers to meet increased demand may not be there. At the Tuesday Club this week, I was told that a factory of Purefoods in Marikina, for instance, is under water and it would take weeks for them to clean the facilities and put all the machinery back in shape.

Worse, there is no stopping increase in prices. With the massive damage to agriculture specially in our food basket in Cagayan Valley, food prices can only go up specially with the holiday season approaching. It will be good if government can be clear and truthful on what’s being done to mitigate the problem. The best that Art Yap could do is to give assurances we are alright for the rest of the year but he was non committal for next year.

Already, inflation is rising as consumer prices rose at a faster pace in September, the first time in seven months, and that’s even before the typhoons. With manufacturing capacities under flood rehab, prices can only rise.

Price control is at best a very temporary measure during an actual crisis. A year long state of calamity to justify keeping it for an extended period is a mistake. It will only tend to bring more products off the shelves and may even develop a black market if the authorities insist on rewriting the basic economic law of supply and demand. Margins of retailers and manufacturers are already pretty thin… they cannot be forced to losing money.

Typhoon losses will also mean lower tax collections and that should have a pretty worrisome impact on our fiscal health, which in turn affect the country’s credit rating. My point is, the government may try very hard to see a silver lining amidst the calamities of the past weeks but calamities will always be bad.

The administration’s attempt to devise the concept of flood economics is understandable. But the earlier they snap out of their delusional notion, the better it will be for the country.

Power blackouts again!

What is this I hear that the new private owners of Transco are not investing the right amount of capex expected of them to assure the reliability of the system? No wonder we are experiencing power blackouts, ironically, after the typhoons have left.

Energy Secretary Angelo Reyes does not need emergency powers to make sure the new Transco owners keep to their side of the bargain. Could they be just skimming the profits off a fattened Transco? They likely don’t even have adequate spare parts in storage which is why it is taking so long to fix yesterday’s failure. This column is being written under emergency generator power.

If there will be power failures in Luzon on election day, it will not be because we do not have enough power generating capacity as Secretary Reyes invoked as reason for the emergency powers he is seeking to spend P3 billion audit free. It will be because of Transco failure.

But Secretary Reyes probably does not have the balls to insist that the new Transco owners put in the resources they are expected to put to modernize the system. The new Transco owners are just too close to Ate Glue and family for Secretary Reyes to tangle with. Takot lang nya!

Floating houses

During our visit to Amsterdam early this year, my wife and I noticed how a good number of people actually live on “boat houses” almost permanently moored along the canals. This part of Holland, as we all know, has battled floods for centuries. They have built dikes and other engineering solutions that try to control water levels enough to have dry land.

I was just thinking, perhaps the folks in Provident Village and other villages that suffered greatly from Ondoy’s flood can consider a different architectural approach when they rebuild. Why not rebuild their houses like Noah’s Ark? I read this article by Manuel Buencamino in Business Mirror that reports the exact same thing now being done by the Dutch.

As the Buencamino article reports it, “floating houses are like houseboats; they float on water all the time. Amphibious houses, on the other hand, are structures that sit on dry land, built on a hollow concrete base for buoyancy, and attached to mooring posts that allow the houses to float upwards, and in place, when there is flooding.”

The best thing to do is to really implement a zoning and building code that would most likely ban human settlements in the flood plains of Marikina and Cainta. But realistically, that’s not going to happen. Too much money is already invested in real estate in those areas. It is probably not possible to flood-proof structures already built, but the building code should be revised to incorporate new provisions that take flooding into account.

Those houseboats in Amsterdam are actually quite lovely. But I was told that the city is no longer issuing permits to moor more houseboats. So the amphibious house concept is something they are adopting and perhaps the folks in Provident Village should also consider with their architects when they start rebuilding their damaged homes.

Pants down

Here are excerpts from a long e-mail from reader Alex Lim.

Please allow me to first say that you and a number of thinking, reflecting Filipinos have you in high regard for your practical insights and level headed opinions on matters that greatly affect us Filipinos and the Philippines.

Your article today was focused on the ineptness of the NDCC before, during and immediately after the onslaught of Ondoy. On the very first call by a distressed citizen last Saturday, heard over RHTV, I was already fuming mad at how NDCC could have been so inept, they were really caught, as the Pilipino saying goes, natutulog sa pancitan.

I don’t care if this was a natural calamity and that the volume of water rained down by Ondoy was twice the amount that of Katrina. I don’t care that we are a third world country. These will all be reduced to nothing but flimsy excuses.

I will not expound anymore on the apparent blunders of NDCC since you have already well wrote about it on your column. I just want to react as loudly as I can and I know that this is also the same sentiment of many other Filipinos. You ended your article with this: Before Gibo resigns to run for President, he owes it to this country to go back to the drawing table and work on part 1...and this time with feeling.

If elections were to be held today, I believe that Dick Gordon would win hands down. And yes, Bayani Fernando should also resign immediately as MMDA chairman. I don’t know why God brought Ondoy to us at this time. Whether it is by fate, chance or mere coincidence that elections is going to be held next year and both Secretary Teodoro and Chairman Fernando were caught with their pants down. I am sure that there’s a handwritten message on the wall that needs to be read by all.

Katrina and Ondoy

During the Katrina aftermath in the US, Jay Leno made this quip about Michael Brown, the head of FEMA, the American equivalent of the NDCC. Substitute the names with the local counterparts and Leno’s joke is pretty funny here too in the wake of Ondoy. Nothing lost in translation.

“Brown said he was stepping down because he was an ineffective leader who had lost the confidence of the people, to which Bush said, ‘That’s no reason to quit your job.’”


Chief News Editor: Sol Jose Vanzi

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